Last week Indiana Gov. Eric Holcomb announced the distribution of roughly a half-billion dollars for READI Grant proposals. To many readers, this will seem like governmental inside baseball, or just another big spending program. It is not, at least not yet. The plain fact is that clusters of counties and cities that have good working relationships with regional organizations have faster employment and income growth.
However, achieving those better outcomes isn’t as easy as joining a regional group. The only statistically discernible growth effects come to regions that participate with federally recognized Economic Development Districts. There also seems to be some benefit from state recognized groups, but it is too early to say that definitively. At the other end of the spectrum, there are no measurable economic benefits from participating in a regional marketing groups, or associations of local economic development organizations.
Faster growth comes to more effective regions for pretty obvious reasons. Most quality of place investments have some regional flavor to them, so it is helpful to have every local government focusing on improving those areas. Likewise, considerable federal spending on economic development and transportation focuses on regions. Clusters of cities and counties do better with sharing ideas, vetting proposals and hiring talented staff than those who don’t.
The stated purpose of the READI Grants are to build more quality of life and human capital supporting infrastructure across the state. The unstated intent of the program is to cause Indiana’s county and municipal governments to work together to make their regions more attractive to current and future residents. In this way, the READI Grant is a noble descendant of the Daniels administration’s Stellar Communities Program and the Pence administration’s Regional Cities Initiative.
To reiterate, it is important to make these types of spending decisions across county and municipal boundaries because there just isn’t enough money to spend on all the things a city or county may want or need. Working across regions means there is less duplication and more focus on spending that will benefit several communities. Bottom line, clusters of cities and counties that participate fully in their public infrastructure spending do much better than places that go it alone. These READI Grant applications revealed that fact forcefully.
Last month I wrote that the quality of the proposals was surprisingly good. The staff at IEDC performed marvelous work in making this program a success, with a full 16 out of 17 proposals exceeding the quality of the 2015 Regional Cities Proposals. This made the decision process far more difficult, so they modified the grants, giving 5 full awards and 12 partial awards to applicants.
In my previous column, I noted several high-quality proposals, noting the three previous regional city applicants, the Southern (Louisville suburbs), Western (Terre Haute) and North Central (Tipton to Cass counties) regions. As I anticipated, these regions all received full or nearly full funding from this proposal.
Some regions received large sums on a per county basis, though it was less than the full amount they asked for. For example, the smallest grant was $5 million to a small portion of two counties, which was large for such a small place. The three weakest proposals received $15 million each. This meant the weakest of these received just under $2 million per county, the smallest grant.
There was clear demarcation between proposals. The very best proposals were made by organizations in regions with lengthy, sometimes two-decade-long history of regional development. The good proposals had projects with mature cost analysis, oftentimes detailed engineering plans, and solid knowledge of multiple funding sources. Normally, these projects were supported by multiple municipal and county governments, and there was an overwhelming presence of private sector input to the plans and financing.
The successful regions had mature, talented staff with a track record of working across city and county borders. These groups had a track record of handling state and federal money, hiring consultants and reporting finances and regulatory compliance on large projects. These organizations had both public and private oversight. Successful groups were not composed primarily of local economic development professionals.
Successful regions also were able to attract large, and diverse private sector employers, and had committed support from legacy institutions in their region. Only one university asked for money in this READI Grant round, while many, including private institutions, committed significant resources to the proposals. Every successful region had at least one regionally influential elected leader and several regionally influential private sector employers presenting their proposals to IEDC.
All the good proposals were easy to read, and made clear the individual project priorities from first to last, and were able to explain how they prioritized projects. Again, many of these projects have been in the works for decades, so the prioritization happened long before anyone heard of the READI Grant. By my count, six or seven proposals had all these characteristics. The remainder were missing parts of this, and the more they were missing, the smaller the grant.
This process of working together is devilishly difficult; in fact, other than improving school quality, this may be one of the hardest things local government does. On top of that, there are eccentric reasons why some regions find it harder to cooperate than others. Clusters of counties don’t always share a common economic center of gravity, and may instead be pulled in different directions. This caused one region to pull together several discontinuous counties.
It is also true that some regions just don’t have a strong local elected official who can represent various stakeholders. Large employers won’t always have the region’s best interest in mind, and local parochialism is hardly an emerging phenomenon. I should also note that hiring a good consultant won’t overcome bad local dynamics. The worst proposal came from a region who hired a first-rate firm, while some better proposals came from weaker consultancies.
In the final analysis, I can find zero fault with the award decisions. The staff at Indiana Economic Development Corporation did a superb job with this process, as did the IEDC board. Those regions who are disappointed with these results should find time for disciplined introspection. It is worth noting that the strongest proposal and best presentation came from the Our Southern Indiana group. This region failed to even meet the submission criterion for the Regional Cities Initiative back in 2015. Importantly, Holcomb is proposing another round of these grants. That gives regions time to reflect, learn and reassess their work. So, if you fell short with this award, a field trip to Madison, Scottsburg or New Albany is in order.