FAYETTEVILLE -- City officials hope to use a proposed $3 million bond issue to attract institutions to Northwest Arkansas that specialize in job-skill training and workforce expansion.
That would in turn improve the economy, officials say.
Economic development project under state law means the land, buildings, furnishings, equipment, facilities, infrastructure, and improvements that are required or suitable for the development, retention or expansion of:
• Manufacturing, production, and industrial facilities
• Research, technology, and development facilities
• Recycling facilities
• Distribution centers
• Call centers
• Warehouse facilities
• Job training facilities
• Regional or national corporate headquarters facilities
Source: Act 685 of 2017
Fayetteville residents will go to the polls April 9 to decide whether to continue the city's 1 percent sales tax to pay for about $226 million in projects. Each type of project will have its own ballot question, and the one for economic development covers public investment in private enterprises.
The city would have at least $3 million to put toward economic development if the bond issue passes. An extra $170,000 is included in the ballot language to cover whatever the maximum interest rates might be at the time the bonds are issued.
Devin Howland, the city's economic vitality director, said economic development is about creating opportunities in the job market. The city's workforce development plan, which is still in the works, would help residents find careers through job training and employer recruitment.
The two go hand-in-hand, Howland said. Creating a talent pool attracts businesses, and more businesses mean more jobs, he said.
The city is targeting corporate services, entrepreneurs and innovators, legacy manufacturers, retail, and specialized technologies, according to its website. Also, Howland said, the city wants to assess what job-training options are available regionally and fill in the gaps.
Howland used registered apprenticeship programs in information technology or health care as possible examples. Those kinds of programs offer pay-as-you-learn models with high job-placement rates well above minimum wage, he said.
Howland said there's no way to know what opportunities might be out there until they appear. Flexibility in spending the $3 million would serve as another tool in the incentive toolkit, he said.
"It's on a case-by-case basis, as those potential projects come to be," he said. "We don't know the future."
The bond money could help programs that train workers by paying some of the cost to build a facility. Money could be spent for land acquisition or site development such as water and sewer pipeline construction, roads or entryways, for example.
The money would foster public-private partnerships, Howland said. It would not be used to build a city-owned job-training facility.
The Fayetteville Chamber of Commerce would recruit businesses and screen for those it thinks would be good fits, chamber President Steve Clark said.
Bond referendums typically cover capital projects, meaning one-time expenses for infrastructure such as roads, trails, water and sewer pipes.
In 2016, voters approved an amendment to the Arkansas Constitution that, among other things, allows municipalities to put money toward or issue bonds for economic development projects. The state law that followed in 2017 outlines parameters for how the money can be spent.
For instance, money can be used for land acquisition, anything to do with a facility or equipment or road construction for a variety of businesses -- including manufacturing companies, call centers, corporate headquarters, job-training sites and distribution centers. The law, just like the bond issue, is intentionally flexible, Howland said.
Jim Fram, an economic developer of more than 30 years who has worked in Arkansas, Texas, Oklahoma, Missouri and Nebraska, said Texas in particular is years ahead of Arkansas. Texas has allowed cities to use sales-tax revenue for economic development since the 1980s, he said. The Arkansas law was largely influenced by the Texas law.
"You have little towns in Texas, that you and I probably have never heard of, that have multimillion-dollar budgets for economic development," Fram said.
Fram said he dislikes incentives, but knows that cities and states have to be able to compete. He said that offering infrastructure improvements, as Fayetteville is proposing, is a better option than money on the table. That way, if a company fails, there's at least a building left behind for someone else to use.
Economic development is not an exact science, he said. But states and cities that do their due diligence and calculate the likely return on the investment find the most success, he said.
Fayetteville's bond money would not go into the city's general budget or to the chamber. The city already has contracts with the chamber and consulting firm Startup Junkie for economic development.
"We would not see even 99 cents coming over here for anything," Clark said. "We won't see it to send us to a trip or to go to a trade conference. We'll see it literally spent to enhance the recruitment of a business, as it's directly related to that business."
He said the city has missed opportunities to attract large-scale operations because of limited funding options. The option to use bond money as a financial incentive could make the difference, he said.
Giving bond money to private entities doesn't come without risks, City Attorney Kit Williams said.
"The way the law was worded before was to protect taxpayer money so municipal officials wouldn't get tricked into get-rich-quick schemes," Williams said. "I guarantee you cities see get-rich-quick schemes all the time."
Howland said the first question his department would consider is whether a proposal would result in net new jobs, and if those jobs would give employees a living wage.
The idea is to attract related businesses -- ones that make Widget B for another company's Widget A, for example -- that can grow and feed off one another, he said.
The direct and indirect impact would create a ripple effect throughout the city's economy, Howland said. More employees means more spending power being pumped back into the economy, and like-minded companies that see similar business ventures setting up shop in the city might do the same.
"We look at all of those things," Howland said. "What is the ask on the table -- that's probably the next biggest question. Then we weigh everything against it."
Metro on 03/13/2019
Print Headline: Fayetteville wants $3M to boost city's workforce