The primary difference between Public versus Private Economic Development (ED) is rooted in the source of their funding. Public ED utilizes tax dollars and is therefore subject to the laws, regulations, and scrutiny of spending taxpayer money. Private ED is funded by individuals and/or corporations and follows the spending guidelines of the organization or individual providing the money. Both entities are beneficial and, when available, together expand a community’s ability to successfully draw business, investors, and people into the area.
Locally, our Public ED entities consist of the City of International Falls’ Economic Development Authority (City EDA), the Koochiching Development Authority (KDA), and the Koochiching Economic Development Authority (KEDA). Since KEDA was developed as a joint economic development effort combining the County and the City, their individual economic development entities primarily exist in name alone and they have deferred most of their ED efforts over to KEDA.
Public ED efforts are traditionally concentrated on filling community commerce gaps to provide needed jobs or services for the community. However, when it comes to “recruiting jobs,” the focus is to both keep the existing workforce working as well as provide community growth through expanded employment opportunities that will attract individuals and families to move into our area. These jobs are created by targeting industries and businesses that could operate successfully and profitability in our area and employ a large workforce.
Points of consideration in identifying and recruiting these businesses lie in details like their transportation needs (air, rail, road, etc.); distance of materials/resources to production; as well as the distance from production to their consumers, as each of those components will impact their cost of doing business and ultimately the decision to locate here. Additional factors can include things like weather, specialty workforce requirements (education, skills, etc.) and other items that help identify and target the right type of business to put efforts towards. While these factors may not work for everyone and limit the field of businesses we can choose from, we can absolutely be the hidden gem community to the right one! It takes time and money to research, recruit, and attract these businesses, however, and the challenge of Public ED is maintaining public support for the continued use of taxpayer dollars to find and match these companies to our community.
Public ED efforts focused on recruiting “services” will also create jobs. Still, the focus is more about bringing in businesses that can provide needed goods or services that our community lacks entirely or does not have enough of to be a full-service community. This includes recruiting entrepreneurs by presenting start-up or “owner-operated” opportunities for smaller businesses that help fill gaps for services needed by local businesses, citizens, or tourists. Again, public input can help drive Public ED in these areas by identifying these gaps and supporting their efforts to secure these businesses.
Beyond recruiting, Public ED often involves additional financial project support from local government through the various channels they are allowed to spend taxpayer money to support business: providing low or no-cost land parcels, abating taxes, installing utilities, demolishing buildings/clearing sites, building roads, etc. and these are often touted in their recruitment messaging.
In contrast, Private ED can vary from an entrepreneur identifying a community need, to an investor recognizing a business opportunity, to a private entity fulfilling a mission. Funding for Private ED projects can come from angel investors, private investors, or venture capitalists. These investors may choose what types of projects they fund by focusing on a specific industry (healthcare, technology, etc.) or a specific geographic area. While Public ED efforts are more transparent, Private ED projects are traditionally worked out privately and public notice is provided once the project is green-lighted and ready to start. These projects can vary and may or may not align with the interests or intentions of Public ED efforts but have been well vetted by their development group. These opportunities are equally critical to our community as they still provide needed jobs, taxes, and services to our area. Supporting the people and projects who have made the decision to take on the risk of starting a business in our community should be rewarded and appreciated by everyone.
Requesting financial support from local government or seeking local investors into a Private ED project is a way to tie in with the local community. Developers want to ensure that their decision to invest millions of dollars into our community is appreciated and will be supported. Receiving a tax abatement or other financial support from local government and/or bringing in local investors is a traditional way to secure that support and make a local connection to the new business.
To continue the excitement and momentum around the various new businesses starting in our area, it is critical that we continue to support the efforts of all new development projects and not create any unnecessary divide amongst them. Competition creates a healthy economy. People appreciate the opportunity to have options and it is rare that one of anything can serve all. So to that end, we applaud all those who invest in our community and appreciate the efforts extended by both new and existing local businesses every day!