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GUEST COMMENTARY: EEZ: Scourge, savior or waste of time?

Tuesday, May 29, 2012 | 6:00 a.m. CDT

Gosh, this Enhanced Enterprise Zone is a hot topic in Columbia.

Economic development advocates such as REDI are constantly looking for "job creation" strategies and found the state's EEZ program as something that might fit here. It turns out several census blocks in town would qualify, so they went and fast-tracked it for approval, as companies looking to come here were shopping for such municipal offerings. However, it turns out a diverse local opposition arose unexpectedly, and legal complications bring us to reforming the EEZ board.

The EEZ has gotten a lot of flak for the "blight" connection, which makes people feel discouraged about their homes. Other American communities have seen blight designations as a gateway to eminent domain abuse. There is something to this. When both George Kennedy AND Bob Roper agree on an issue, you know something must be up.

Although EEZ is new jargon here, related strategies (TIF, Chapter 100, etc.) are not unique to our town.  More broadly, every political leader on Earth seems to offer a solution on how to "create jobs."

There's basically three ways to "create jobs" these days:

1. Direct subsidy payments from the public treasury to receiving businesses — aka "corporate welfare" (free money tends to help a business thrive and hire more people).

2. Lower business taxes (and regulations) overall, freeing up opportunities for free enterprise to occur (lower costs help any businesses thrive and create jobs and allow workers to create their own jobs).

3. A combination of the two, whereby special tax treatment is extended to selected industries and firms, in selected geographic areas, and even within certain periods of time (so a largely market-based economy, but just tilt it in certain desirable directions).

So in my three job-creation options above, EEZ is not (1) a check cut from tax coffers, nor is it (2) a free market situation, so it's (3) a complex work-around to favor at least a few targeted types of enterprises, to achieve limited autonomy over a little of their taxes. Oh, and create jobs.

It's complicated, and as far as I can tell, the EEZ really doesn't do a lot overall. If implemented, authorities get to pick qualifying geographic areas, in which they choose only a few types of businesses, who if they expand their business operation, they can abate half the increase in property taxes. They can also get tax credits if they can prove to the state they made some new hires. Those are awfully limited benefits.

Still, this is less restrictive than the TIF program used by the two downtown hotels, which has: a more limited area, few types of projects, a $10,000 application fee and individual approval from the City Council. That's a big wad of red tape.

Will EEZ "create jobs?"  Maybe some. In fact, some jobs likely will be created. When a company that qualifies for EEZ benefits gets this government-granted business advantage, it stands to reason some companies will locate here, and some existing firms here will expand and hire more people.

That is what is seen. However, what is not seen? What about the business just outside the zone? Or the business that expanded last year already locking in full-price property taxes? Or the homeowner who is leery (legitimately or not) that there's less use in hiring a contractor to remodel their kitchen if a future city council decides to force a sale to some private entity? These equally reasonable disadvantages are not being calculated as "jobs lost" to present us with a net potential jobs created from EEZ.

People can bicker about these theories all day. But what I don't get is whatever happened to the old-fashioned business platform of free enterprise? An agenda that advocated for (relatively) low taxation and a reasonable regulatory environment? That seems a lot less complicated; and then at least socially-oriented, left-leaning activists would know what they're fighting against.

It seems that well-meaning business leaders and business-friendly public servants have become resigned to the perpetual existence of significant tax burdens and regulatory regimes (mostly from Washington) that no mere mortal can comprehend, and so have instead committed huge efforts and staked their reputations on complex economic development programs, to help at least some types of business. This with the promise that employment opportunities for the everyman will flourish as a result.

This is a darn spot we're in to resign job creation possibilities to hopes of scraps from the economic table on one hand, and/or an open door to cronyism on the other. But I guess local leaders have given up on truer free enterprise, so EEZ, etc. are the "tools" the state grants so local leaders are empowered to at least "do something." So here we are.

Steve Spellman hosts “The Mid-Missouri Freedom Forum” on KOPN/89.5 FM on Tuesday from 5 to 6 p.m. He is a member of the Missourian Readers Board. Questions? Contact Opinion editor Elizabeth Conner.


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Comments

Mike Martin May 29, 2012 | 9:09 a.m.

Steve's right: EEZ's are questionable means to achieve business success, as KOMU has just reported:
http://www.komu.com/news/phelps-county-q...

"But what I don't get is whatever happened to the old-fashioned business platform of free enterprise?" Steve asks.

That platform exists here, but it's not nearly large enough to catalyze the entrepreneurialism of a Silicon Valley or an Austin, Texas tech corridor.

Firstly, we don't have a leadership culture that prizes risk. Instead, it dissuades risk-takers by supporting insider groups and organizations that concentrate public, private, and start-up capital into a select few hands.

What little private capital is available for entrepreneurs is itself tied in with REDI, Mizzou, and other local insiders.

EEZ, TIF, and other programs are reserved for insider deals, as Mayor McDavid made clear the other night. He doesn't want to support the capacity or the smarts of our own citizens to create businesses, capital, wealth, and jobs.
http://www.columbiaheartbeat.com/index.p...

Councilman Trapp followed suit with the silly remark that "jobs just don't happen by themselves or they'd be happening." He doesn't understand entrepreneurialism, but why should he? He hails from one of few sectors booming in CoMo: non-profits that pay no taxes and do not create the capital or wealth required for jobs.

We also have an economy based on a few large players in a few industries -- medicine, insurance, education -- and several smaller players in one industry -- development/construction. If there's nothing to build -- and with garage startups the likes of Apple and Google, there rarely is -- our leaders and capital culture aren't interested.

They want factories, shopping centers, parking garages. Tech scares them because -- as Apple has proven -- tech is all about shrinking, not growing, a physical footprint.

If we want a business culture that prizes risk and helps start-ups based on an "old fashioned platform of free enterprise," we first need new leaders with better ideas.

(Report Comment)
linda green May 29, 2012 | 11:58 a.m.

Please forward the following announcement to everyone you can.
This is a very important meeting for the future of Columbia......

Should large parts of Columbia be legally designated as "Blighted" to qualify
corporations to locate in Enhanced Enterprise Zones EEZs where they get
huge corporate tax write-offs? If this is a good way to provide jobs, where
is the data to prove it? Will EEZs cut our city's tax base, leaving less
funding for schools, libraries, police and fire departments, and for solving
environmental, infrastructure and energy challenges, etc.?

Hear answers to these questions from Mr. Greg LeRoy, Executive Director
of Good Jobs First, www.goodjobsfirst.org, speaking live by large screen
interactive webcam in the Friends Room, Columbia Public Library, 7pm,
on Thursday, May 31st.

Mr. LeRoy's book, "The Great American Jobs Scam: Corporate Tax
Dodging and the Myth of Job Creation", is available online for free at:
www.GreatAmericanJobsScam.com. (Click on "Book", click on
"preview the complete book ", click on each chapter.) Mr. LeRoy has
also recently testified in Jeff City where he provided model legislation
before the House Economic Development Committee on this issue.

Sponsored by CiViC Citizens Involved and Invested in Columbia, Columbia
Climate Change Coalition, Keep Columbia Free, midmo-WILPF Women's
International League for Peace and Freedom and the local chapter of NOW
National Organization for Women.

Here's one article among many for more information--google the
following title in the Columbia Missourian for Sunday, May 20, 2012:
"Columbia's blight debate: EEZs' value as job-creation tool unclear".
See also comocivic.org for many articles on this topic.

(Report Comment)
Louis Schneebaum May 29, 2012 | 12:26 p.m.

I'm going to ask Frank Christian to go to this with me!

(Report Comment)
frank christian May 29, 2012 | 4:10 p.m.

"I'm going to ask Frank Christian to go to this with me!"

Why? I have been dismayed at the insistence of the EEZ program that requires Columbia home owners property be placed in "Blighted" designated areas in order to lure businesses and jobs to this city? Those in the REDI camp have invited the concern that they have other, more personal motives than "jobs for Columbia". No accusations, but the wonder that "blight" for a hard working home owner, with the recent real estate disasters, costing us all, would not be immediately seen with suspicion and thus rejected by REDI still persists.

I agree with Spellman and his quest for "the old-fashioned business platform of free enterprise" and association with the non-profits, named above, whom have (my guess) supported the same "pick and choose" mantra, targeted tax cuts, "stimulus" payments, etc. for preferred business by this Obama Administration unconditionally, is not uppermost for me on this local problem. Thanks, but, No Thanks.

(Report Comment)

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