In times of economic hardship, more communities are looking beyond their borders to form partnerships that can benefit each other and offer new, innovative ideas.
Twinsburg and Solon were recently recognized for their collaborative efforts to retain businesses and develop good economic relationships.
The cities, as a team, are finalists in the award for New Economic Development Practice for the 2011 Team NEO Economic Development Plus Awards by Team NEO Cleveland and Inside Business magazine.
Larry Finch, the director of community planning and development for Twinsburg and Peggy Weil Dorfman, Solon's economic development manager, put their heads together to come up with an agreement that would be mutually beneficial.
“It made sense for Solon and Twinsburg to work together because they are similar communities with a solid industrial base and similar incentive programs offered to new and expanding businesses,” Dorfman said.
Both she and Finch felt the amount of bookkeeping and administrative burden for the cities was too high in the typical revenue-sharing programs they were used to, and wanted to try something different.
Instead of sharing tax revenues or creating an open competition between the two, they decided to cooperate when a company seeks incentives to relocate from one to the other. The agreement that both of them decided on limits either city from offering incentives to companies beyond 50 percent of new payroll tax or real estate tax abatements.
“She (Dorfman) thought restrictions on the (tax) abatements would be adequate, without going through the process of sharing taxes,” Finch said.
A business can relocate for its own reasons, but the company knows it won’t get any extra incentives from the other community.
“It will allow the company to move without any interference,” Finch said. “They just know if they’re going to come to us from Solon, they won’t get any more than 50 percent.”
This process had a few goals in mind. They first wanted to make sure a business would be encouraged to stay where it was, Finch said. They also wanted to cut down on the amount of paperwork created by the different aspects of communities sharing revenues.
“There’s just all kinds of opportunities for problems in that scenario,” Finch said. “It’s complicated.”
This process keeps both cities from competing against each other with incentives, which would result in both cities losing money. Every time they offer an incentive, they would get less money and “erode” the revenue stream, Finch said.
“You want to retain the businesses that are in your community,” Finch said. “This allows for us and Solon to compete evenly, but it’s not going to pit us against each other.”
“The fact that these border-sharing communities – which happen to be in two different counties – shows that cooperation can work,” Dorfman said.
Finch believes this collaboration gives both communities the freedom to compete at a higher level, rather than against each other.
“It helps preserve the tax base, limits intercity competition, doesn’t interfere with a business’ decision, and it simplifies the whole process,” Finch said. “But yet they can compete nationally for any company. It’s kind of the best of both worlds.”
Look for the second part of this two-part series Friday, focusing on the achievement of this agreement and how this could affect future partnerships.