the polo outlet Amazon bid highlights region’s disjointed approach on economic development
Northeast Ohio’s bid for Amazon’s second North American headquarters is in. But conversations during the weeks leading up to the announcement of a local bid on Amazon’s deadline day, last Thursday, Oct. 19, highlighted the fractured nature of the region’s business development apparatus.
As the deadline approached, active and even retired economic development professionals suggested that there might have been various bids in the works in Northeast Ohio. One emailer heard that the Greater Cleveland Partnership, the chamber of commerce that draws members from the Greater Cleveland area, was leading one bid, while Team NEO, the regional economic development nonprofit that is affiliated with JobsOhio, the state economic development nonprofit created by Gov. John Kasich, was leading another.
On the question of multiple bids, Rick Batyko, senior vice president, marketing, communications and development for Team NEO, issued this email response: “The public private collaborative has been working effectively. We are delighted with the hard work, responsiveness and creativity of all working on this proposal.”
Multiple bids made no sense to any of these economic development pros; a lack of community consensus would be a strike against the region when Amazon evaluated the bids. And it’s likely there may have been only one bid; they were just hearing different versions of it.
But they all had seen first hand local fights for leadership on development projects, so they weren’t surprised that separate bids might have been in the works.
In the end, of course, there was a single bid, announced jointly by Cleveland Mayor Frank Jackson and Cuyahoga County Executive Armond Budish. A joint statement said that their offices joined “the Greater Cleveland Partnership, TeamNEO, JobsOhio, the state of Ohio and numerous local partners in submitting a bid for Cleveland to be the site of Amazon’s second headquarters.”
More than 20 organizations played roles in the bid, the statement said, though it did not disclose any details of the proposal.
There’s been chatter for months about discord among the organizations, though no one in the relatively small economic development community will speak on the record about it.
“Our clients always seem confused by the Cleveland area economic development network,” wrote one economic development pro with a national practice in an email. “In most other places, you might deal with the state economic development agency, a regional group and a municipality. But regardless of who you call first, the project will be handled the same. In Northeast Ohio, who you contact first will dictate how the project is handled and what assistance (financial and otherwise) is provided.”
Others said they had seen the same thing, and had to worry that the wrong first call could shortchange a project.
When he came to office seven years ago, Gov. John Kasich created the nonprofit JobsOhio to promote Ohio as a place for businesses to expand. Previously, 12 regional economic development officers around the state would respond to requests from mayors and others for state help. Now, JobsOhio would be the focal point but it would ally itself with a group of regional business development organizations to serve as JobsOhio regional offices.
Team NEO became JobsOhio’s regional partner, covering 18 counties in Northeast Ohio.
Team NEO predated JobsOhio by several years. It was created, and is funded,
by a group of chambers of commerce, including GCP, the Greater Akron Chamber and the Youngstown Warren Regional Chamber. The goal was to do a better job of stimulating business development in the region than the cities, counties and chambers of commerce could do on their own.
Wooing new businesses or offering financial incentives to existing businesses that want to expand has become a collaborative effort with different partners able to offer different incentives.
Cities like Cleveland control the granting of tax abatement and tax increment financing, both valuable incentives. Mayors would call in the state when it needed state loans or grants to help seal a deal.
In Greater Cleveland, GCP has long worked to identify existing businesses that might need help expanding and it has played a significant role in real estate finance.
Now, though, Team NEO would be the contact for state assistance and play a key role in winning loans or grants from JobsOhio or job tax credits from the state Development Services Agency.
While some community leaders complained privately, former Akron Mayor Don Plusquellic objected strongly to the new organization in an interview in August 2011 with Crain’s, believing it would hamper his ability to attract business investment to his community. “We are appalled at what’s happened,” Plusquellic said in the interview.
Plusquellic could no longer directly call the governor, or the governor’s Akron regional development director. He, and others in the region, would have to work through Team NEO and JobsOhio. That meant that Akron and Youngstown, distinct labor markets with what they saw as strong local identities, were lumped together with Cleveland.
Among the chambers, GCP in particular saw Team NEO, which it funded, as subordinate to its economic development effort, all of the economic development professionals familiar with the Cleveland market said.
“GCP is committed to providing those services and the fact is, that when a project in the Cleveland metropolitan effort requires real estate they are frequently asked to invest,” said one economic development pro. “They were looking at Team NEO to support their effort, not the other way around.”
Through its Cleveland Development Advisors affiliate, GCP has raised millions of dollars from local corporations for investment funds that have invested more than $320 million in housing and commercial development in Greater Cleveland. That gives it disproportionate clout that has allowed it to assert a lead role in many projects.
“So Team NEO had a real problem,” said one consultant.
Most agreed that Team NEO is the optimal point of contact for helping a company considering expansion into Northeast Ohio identify potential sites. Also, they agreed, large companies conducting nationwide searches for manufacturing or distribution sites will want to work with someone who can show them sites across a region, not deal with each metropolitan area within that region.
“Team NEO has pretty good people and a pretty good process to help identify sites throughout the 16 or so counties,” one said.
But, said another, Team NEO and what it can do is too easily overlooked in national searches. It doesn’t show up as high as it should when site selectors who’ve never worked in Northeast Ohio start their work with a Google search, as many now do, he said. All they know is Cleveland.
“So if you do a Google search for, ‘Cleveland Ohio economic development,’ almost the entire first page of Google results point to the city of Cleveland’s economic development department,” he said. “While the city of Cleveland has some fine economic development folks, they do not have a lot of incentive to share leads (resulting from this Google search) with anyone else in the region, including GCP or Team NEO.”
In part because site selectors know Cleveland but don’t know what comprises Northeast Ohio, nearly everyone agreed that adds to the friction in the Greater Cleveland area between GCP, Team NEO and the city of Cleveland.