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Seeking More Accountability: A Fresh Take On Economic Development

Lillian Henegar is director of policy and outreach for the California Redevelopment Association. She can be reached at lhenegar@calredevelop.org.

 


Greg LeRoy, founder and director of Good Jobs First, spoke at the California Redevelopment Association (CRA) Annual Conference held Feb. 28–March 2, 2007, in Long Beach. LeRoy is author of The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation. In his speech, he shared several ways California’s local governments could better drive job creation and economic development in their communities.

 LeRoy began his talk by citing recent studies by the Public Policy Institute of California that indicate “businesses are not leaving the state in droves, and companies that pay better are more likely to be staying and growing here.”
LeRoy’s concerns are with corporations that receive huge tax subsidies while promising quality jobs and other benefits such as increased tax revenues for communities where they locate, and then failing to deliver. Furthermore, studies have shown that these subsidies often support sprawl, benefit affluent communities and discourage public transit.
Job Creation Strategies
While praising its redevelopment efforts, LeRoy suggested that California could improve its job creation efforts by adopting several strategies, including:
  • Annual, company-specific, deal-specific disclosure of costs and benefits for the local community;
  • “Clawbacks” or recapture clauses where contract provisions ensure that taxpayers have money-back guarantees if things don’t work out; and
  • Registering site location consultants as lobbyists and regulating them through ethics boards and fee disclosures, and eliminating success fees (commissions).
Job quality standards are critical. He suggested that a local government might impose wage, healthcare and full-time hours requirements on a company in exchange for providing incentives or subsidies when it relocates there. Another suggestionwas instituting “anti-piracy” agreements among localities regionally. The objective of these agreements is for local governments to actively cooperate and encourage retention and expansion.
Meeting Land-Use Goals
Location efficiency is a criterion used to ensure that subsidies are not allotted to a relocating firm unless the worksite is transit accessible or meets some other land-use goal. One example is San Francisco’s Mission Bay, from which residents and workers can access the Bay Area’s mass transit systems. This mixed-use development is expected to provide 31,000-plus jobs, more than 6,000 residences (28 percent of which will be affordable), 6 million square feet of office and commercial space, 500,000 square feet of retail, 49 acres of public open space and a new public school.
The Program in Diversity, a set of local hiring and job quality standards that have been agency policy for years, is one tool that the San Francisco Redevelopment Agency uses with developers and businesses. Marcia Rosen, CRA’s current president and San Francisco Redevelopment Agency’s executive director, explained, “In Mission Bay, we are creating a higher density, mixed-use neighborhood with excellent transit access that will provide jobs and housing, including affordable housing, for San Francisco’s future. In the agreements we have reached with the developers and companies in Mission Bay, we’ve been gratified with the quality of life that’s been ensured for everybody who lives, works and plays there.”

For more information on LeRoy’s book, ideas and the work of Good Jobs First, visit www.goodjobsfirst.org. For more information about Mission Bay and the San Francisco Redevelopment Agency, visit www.sfgov.org or call (415) 749-2400.