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The Bi-Monthly Newsletter of the New York State Economic Development Council

Volume 1, Issue 13

August 2012

THE EVOLVING ECONOMIC DEVELOPMENT MISSION OF IDAs

By Brian T. McMahon Executive Director New York State Economic Development Council (NYSEDC) "Change before you have to," Jack Welch, the former CEO of the GE, once said. He also said, "If the rate of change on the outside exceeds the rate of change on the inside, the end is near." These quotes have never been more relevant to IDAs than they are today. The role of the IDA is evolving every day, and leaders of IDAs drive that change. Placeholders, in contrast, simply respond and try to adjust. Typically, an IDA is the lead economic development organization for a county, city, or town it serves. In the good old days, the IDA focused almost exclusively on providing financial assistance and tax management services to manufacturers that locate or expand in the community. Today, the IDA is involved in implementing a comprehensive economic development blueprint that requires them to work with many different parties on many kinds of problems. IDAs work with colleges and universities, which are more vital than ever as engines of innovations and innovation-driven enterprises. IDAs work to develop or enhance infrastructure, improve broadband access, and develop and promote industrial and technology parks. They collaborate with workforce service providers. They help existing businesses grow. They foster and support the entrepreneurial ecosystem, implement urban core revitalization strategies, and develop affordable housing. IDAs also market their regions and their assets secure new prospects. And, of course, they work with state partners at ESD and other agencies to close deals. Effective IDAs must do all of this while also complying with a labyrinth of regulatory requirements that could strangle a goose, let alone eviscerate whatever entrepreneurial spirit the IDA may what to exhibit. For these reasons, executive directors of IDAs limit their effectiveness as economic developers when they view their role simply in terms of administering an organization that provides financial assistance to businesses. On the other hand, IDA Executive Directors who act as "connectors" to the disparate elements of economic development in their communities become leaders who drive economic change. Today, economic development is community development. It is tech-based economic

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development. It is workforce development. It is infrastructure development. That is why NYSEDC has made it a legislative priority for 2013 to enact legislation that changes the name of Industrial Development Agencies to Economic Development Agencies. How many times have you been told that IDAs are exceeding their original purpose, which was to attract industrial projects to their communities? That may have been the role of IDAs 40 years ago. No longer. Our growth agencies should have names that reflect this evolution and their current missions. In his column in this newsletter, Michael Stamm, NYSEDC chairman, highlights the role economic development leaders play in community development. NYSEDC's focus in recent years on tech-based economic development is another example of the expanding mission of IDAs. Ten years ago, how many IDAs worked with business incubators, let alone understood their role in the technology commercialization process? And when IDAs work to retain or expand existing businesses, the economic development solution they seek most often relates to finding skilled workers, not tax abatements. There are many partners in economic development. The key is to make sure they all work together. New York State's development professionals recognize that the rate of change in the world is rapid and accelerating. Our charge is to make sure we heed Jack Welch's warning by making sure our rate of positive change keeps pace.