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Better Than Competition

By Stephanie Dunlap · December 15th, 2004 · All The News That Fits
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It certainly seems corporations have had the upper hand in the city's economic development lately.

"Give us this or that or we're out of here. We're moving to -- " (choose one: Blue Ash, Northern Kentucky or Kenwood).

Think: Convergys, Kroger, Cincinnati Bell ...

As long as corporations are playing the city and outlying areas against each other, jurisdictions might as well play with each other. That way everyone gets a piece of the action and the action might less resemble blackmail.

It's in that vein that Cincinnati City Councilman Christopher Smitherman is pushing the city to adopt two relatively new approaches to regional economic cooperation: Joint Economic Development Districts (JEDDs) and Cooperative Economic Development Agreements (CEDAs).

Businesses often move to take advantage of tax incentives, but their lucky suitors might not be as well equipped to create or maintain the infrastructure needed to support their newest corporate residents.

In an online issue of Finley's Ohio Municipal Service, editor-in-chief Price D. Finley writes, "JEDDs are often used to provide for water and sewer, fire, police and EMS, street maintenance, trash pick-up and planning and zoning services." In turn, JEDDs pick up the tab for all that by charging income tax to non-residential property owners within the district.

The city of Cincinnati already imposes a 2.1 percent earnings tax, but Hamilton County's revenue comes from property and sales taxes.

Businesses that move outside the city to avoid taxes also forego some of the services they pay for.

But through JEDDs and CEDAs, two or more areas -- for instance, a municipality such as Cincinnati and Columbia Township -- agree that a certain geographical area is fertile ground for development. That area might lie within both jurisdictions or only in one.

But the two jurisdictions essentially contract with each other, agreeing ahead of time how each will contribute to the infrastructure and maintenance of that area and then how each jurisdiction will benefit from the resulting development.

"What this will help us do is not cannibalize off businesses in the area," Smitherman says. "They don't have to cut all these crazy deals."

He thinks a prime candidate for a JEDD is Columbia Township, which will soon be home to the Kennedy Connector.

Unlike JEDDs, CEDAs don't allow for the imposition of new taxes, but also don't require as many factions to consent. Just as a JEDD is a step beyond a CEDA, creating "uni-government," as Indianapolis has done, would be a step beyond the JEDD.

But Smitherman says he doesn't see Greater Cincinnati taking that step. He doesn't think areas such as Norwood or Saint Bernard would buy into the uni-government idea even if the city of Cincinnati wanted to pursue it.

He thinks a JEDD or CEDA offer the best of both worlds, because they don't infringe on local jurisdictions.

"The city of Cincinnati has no interest in annexation," Smitherman emphasizes. "We have to be clear in our contracts that we have no desire at all to do that."

Smitherman has submitted two motions calling on the city to seek out JEDD and CEDA partnerships. The city administration has to report back on them, but Smitherman hopes council will embrace the idea.

"I think it's been very well received," he says. "It is definitely a pioneering step for the city of Cincinnati to say we want to cooperate economically with our regional partners."

Besides, "If our city doesn't do this, other municipalities will hook up and do this anyway," Smitherman says. "We must work together and improve our competitive position against other regions."

They could also prop up the city's faltering finances. In his recent budget motion, Smitherman estimates that between taxing stock options and implementing JEDDs and CEDAs, the city can bring in $3 million more per year.



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