Regional guide shares concepts to strengthen local incentive practices

The Chicago Metropolitan Agency for Planning (CMAP) recently released “Improving local development incentives. Effective practices for local governments in northeastern Illinois.”  This new guidebook offers a set of principles and strategies to improve the use of development incentives in the Chicago region.

The guide’s four key principles are:

1. Equity – supporting development in disinvested communities, providing equitable access to amenities and employment, and keeping incentives from contributing further to inequitable outcomes;
2. Performance-driven use – establishing clear goals and performance measures and recognizing that incentives are just one among many community tools for development;
3. Pursuit of regional benefits – avoiding race-to-the bottom competitions among neighbors that do little to improve the region and are costly at the local level;
4. Transparency – publishing clear incentive policies, sharing agreement details, and conducting evaluations.

Ten strategies address goal setting, public accountability, and judicious and targeted use of incentives. The strategies also recommend assessment of economic benefits related to racial and economic equity, regional gains/losses, and local employment that go beyond the narrow fiscal impact metrics that often drive local incentive offers. 

CMAP’s approach is consistent with Smart Incentives fundamentals. Good incentive policy is always about accomplishing economic development objectives. And incentive programs should be managed with an eye toward greater transparency and accountability in the service of those objectives. 

The next step will be translating the report’s principles and strategies into practice. Reframing incentive use is a challenging undertaking, and it will take time to see results. For now, CMAP has been engaging in conversations with leaders around moving beyond a purely local, fiscal lens when assessing incentive offers to also considering regional implications and including equity considerations. In the coming months, more attention will be devoted to technical assistance to enable incentive management practice improvements.    

For more information and to learn more about CMAP’s incentives work, please see: https://www.cmap.illinois.gov/programs/innovation/local-incentives.