Don’t rely on the feds for economic development

I recently attended part of a meeting that takes place every year in Washington, D.C. — the Federal Forum organized by the International Economic Development Council.

With more than 5,000 members, the IEDC bills itself as the largest organization of its kind. The core of its membership consists of economic development practitioners, who may operate in government, the private sector, nonprofits and universities. According to the IEDC, they are the professionals who “promote economic well-being and quality of life for their communities, by creating, retaining and expanding jobs that facilitate growth, enhance wealth and provide a stable tax base.”

Many in the profession had high expectations for the new administration in Washington. After all, noted Jeffrey Finkle, IEDC’s president and CEO, the new national leader had been a real estate developer. He knew about economic development incentives. He would be familiar with arrangements such as TIFs (Tax Increment Financing). He had probably used various incentives on his own projects. This would bode well for economic development professionals and the communities they represent.

The Federal Forum takes places after the president’s annual budget is released. With the arrival of the fiscal 2019 budget, the high hopes would crash into selective fiscal austerity.

Over the years, the IEDC has had a strong relationship with the Department of Commerce’s Economic Development Administration. What would the budget have to say about its role in assisting economically distressed cities and towns? Well, according to Finkle, the EDA “was caught in the rear-view mirror of the Heritage Foundation.”

The FY 2019 budget document reference to EDA comes under the heading “Eliminates Duplicative and Unnecessary Programs.”  In order to direct funding to highest priorities, “the Budget eliminates the Economic Development Administration, which provides small grants with limited measurable impacts and duplicates other Federal projects, such as … formula grants to States from the Department of Transportation.  By eliminating this Agency, the Budget reduces waste and saves approximately $300 million from the 2017 enacted level.”

Begging to differ

Those in Baltimore familiar with its development history could take issue with this cursory assessment. Checking in with Bernie Berkowitz, who served as Mayor William Donald Schaefer’s physical development coordinator and later as head of the predecessor to the Baltimore Development Corporation, I was reminded of EDA’s local impact. The agency’s money assisted in transforming the U.S. Army’s Fort Holabird into the Holabird Industrial Park. It provided funding for infrastructure for the Johns Hopkins Bayview Medical Center, the Seton Business Park and Park Circle Industrial Park.

Baltimore County and the region benefited from EDA funding to assist in the creation of the UMBC Research Park. Arts and cultural institutions were also beneficiaries. Small grants leveraged larger investments to complete the Baltimore School for the Arts and the National Aquarium.

Returning to the president’s FY 2019 budget, another source of assistance for community and economic development has come from the Department of Housing and Urban Development, in particular its Community Development Block Grant. In Baltimore City’s perspective, CDBG is “one of Baltimore Housing’s greatest success stories … a HUD program designed to give local jurisdictions power to distribute federal funds directly to nonprofit and public agencies that support housing and public-service programs. CDBG’s primary objective is to develop viable communities by providing low- to moderate- income families with decent, affordable housing and to expand local economic opportunities.”

The current federal administration has a different take: “the Budget eliminates HUD’s community and economic development as well as affordable housing production programs. The Budget eliminates CDBG, a program that has expended more than $150 billion since its inception in 1974, but has not demonstrated sufficient impact.” I would argue that positive, measurable impacts can be found in Baltimore from the redeveloped Uplands in West Baltimore to the stabilized housing market in Belair-Edison.

The budget document provides similar refrains with regard to discretionary TIGER grants in support of economic development from the U.S. Department of Transportation, rural development grants and other sources of support for state and local governments.

EDA has supporters

As we know in matters of the federal budget process, the president proposes, and the Congress disposes.

That unnecessary agency, the EDA, has suddenly become very necessary. With expertise built up over the years in responding to the economic devastation caused by natural disasters, the Congress sees a vital role for the agency right now.

Under the Bipartisan Budget Act of 2018, Congress appropriated to EDA $600 million in additional Economic Adjustment Assistance Program funds for disaster relief and recovery as a result of Hurricanes Harvey, Irma, and Maria, wildfires and other natural disasters that occurred in 2017.

Through the misfortune and misery experienced by communities in Texas, Florida, Puerto Rico, California and elsewhere, EDA is now funded at its highest level in history.

Joe Nathanson heads Urban Information Associates, Inc., a Baltimore-based economic and community development consulting firm. He writes a monthly column for The Daily Record and can be contacted at [email protected].