Gov. Mike Pence’s focus on attracting jobs and economic investment in Indiana includes a measure in his proposed state budget that would help fund strategic plans pitched by region-al communities.

The purpose of the Regional Cities Initiative is to attract talent to Indiana and build upon efforts to make the state a business destination.

Pence’s budget seeks $84 million during a two year period for the initiative, and House Bill 1403 creates the Regional Cities Fund, which would enable the state to be a financial partner in regional economic investment plans by providing grants or loans.

While the concept is appealing on the surface to the head of the Columbus Economic Development Board, Jason Hester and two state lawmakers serving Columbus have some questions on how it will be funded, whether it will work as intended and whether — if approved — it will actually benefit the Columbus area.

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“It’s a great idea,” said state Rep. Milo Smith, R-Columbus, referring to the approach as “creative.”

He said it could be an opportunity for Columbus and Bartholomew County to band together, or even with neighboring communities such as Edinburgh or Seymour.

However, Columbus Economic Development Board President Jason Hester expressed concern about how much local funding Columbus and Bartholomew County, for example, would have to contribute to receive state funding, and whether that amount would be prohibitive.

“It’s a great concept, but for cities of our size we’ll have to see if it’s a game we can compete in,” Hester said.

Based on presentations he heard last fall by the Indiana Economic Development Corp., which would administer the Regional Cities Fund, the corporation envisions projects that could leverage $1 billion in investment in eight years, Hester said. However, that could mean hundreds of millions of dollars in local investment, Hester said.

Strategy for growth

The Regional Cities Initiative started March 24, 2014, when Pence signed HB 1035 into law.

As part of the initiative, the IDEC commissioned a study of peer cities of large, medium and small populations across the country that have transformed their economies during the past 20 years. The purpose of the study, completed in October, was to provide benchmarks and understand how they increased talent recruitment and economic investment.

Economic development leaders in Cedar Falls, Iowa, for example, cited broadband access as a driver of growth. From 1990 to 2007, the Cedar Falls Industrial Park grew from 27 to 155 companies, and 750 to 5,000 employees, according to the peer study.

Indiana’s economic potential is limited without an influx of new talent, according to an initiative summary by the IEDC.

“Finding the pulse of the next generation and bringing that energy to our regional communities will provide the tools to grow our population and retain our best and brightest in the place they want to call home,” according to the IEDC’s initiative summary.

Stagnant population growth threatens economic development in the state, and regional collaboration to turn cities and regions into national brands is a solution, the summary states.

“It’s the state’s goal to amplify our quality-of-place message, inspire regional collaboration and invest in excellent plans that come from city and regional leaders working together,” the IEDC said.

The idea is that cities, towns and counties collaborate on economic investment plans and compete for state funding. According to HB 1403, applications would be judged on:

Which projects have the greatest economic development potential.

The degree of regional collaboration.

The level of state financial commitment and potential return on investment.

Money concerns

If Columbus and Bartholomew County were working together as a regional community, Smith said, the need for the county to create a tax-increment financing district near Taylorsville — nearing the final stages of approval — might not be necessary. Columbus has several TIF districts to help foster development.

“Hopefully this allows us to work together and do what’s best for the whole region,” the Columbus lawmaker said.

Smith noted that cross-community collaboration already exists locally with the Edinburgh Premium Outlets mall. The Edinburgh/Bartholomew/Columbus Joint District Plan Commission has jurisdiction over an area of about 2.5 square miles bounded by a triangle formed by County Road 900N, Interstate 65 and U.S. 31.

The concern with the Regional Cities Initiative, Smith said, is funding and the questions that are raised by it:

Where will the money come from?

Will it generate a maximum return?

Why fund the initiative when the money could be used for road maintenance or a prekindergarten program?

Smith supports the initiative because he said better jobs lead to better quality of life in communities. Regional collaboration is a way to do that, he said.

While a funding source for the initiative has not been made public, Smith said he’s heard lawmakers suggest a couple of possibilities. One possible funding source is the state’s $2 billion surplus, Smith said. However, Smith said he doesn’t like the idea of dipping into the state’s 45-day cash reserve.

Another idea is tapping into the Underground Storage Tank Fund. It pays for removal of unused, underground gas tanks and environmental cleanup. Smith said his understanding is that the fund has a sizable surplus.

However, state Sen. Greg Walker, R-Columbus, opposes using money the Underground Storage Tank Fund to support the Regional Cities Initiative.

“I’ve got a problem with that,” he said.

More and more tanks are being added to the list the state needs to assist with as businesses consolidate, and retail stores, schools, law enforcement agencies and farm businesses that once used the tanks no longer do, Walker said. The underground tank fund meets a long-term need, he said.

Walker said the Regional Cities Initiative is a great idea in practice. However, he wonders whether it will create turf wars rather than collaborations. With significant money and local impact at stake, a community might not want to split an effort with other communities, he said.

For Hester, the greatest concern is how much money local communities would need to provide in investment plans to leverage funding from the state. Based on what he’s heard so far, his concern is that the initiative may benefit only the state’s largest metro areas.

“A community of our size may not be able to muster enough local match for what they may be planning, but we could potentially partner with other cities,” Hester said.

“A tiered competition and award structure for small, medium, and large cities would be something that would excite us, but that may just be a hope, as it’s not something we’ve heard suggested yet by anyone,” Hester said.

The IEDC’s national peer study examined cities in three populations: less than 99,999; 100,000 to 999,999; and 1 million and greater.

The most money could be reserved for the largest metro cities, a smaller amount for medium-size cities and an even smaller amount for the small cities, Hester said.

Doing so would mean less local investment would be required, he said.

For the time being, Hester said he’s monitoring the legislation and funding for the initiative to see what unfolds and if they pass.

“We’ll just have to see how we can compete. If we can, we will,” Hester said.

About the initiative

WHAT: Regional Cities Initiative.

WHEN: Signed into law March 24, 2014.

WHY: To attract talent and jobs to Indiana to grow the state’s economy.

HOW: Through regional collaborations and, according to proposed House Bill 1403, matching state funds from a Regional Cities Fund administered by the Indiana Economic Development Corp.

GOALS:

  • Maintain a 3 percent compounded population growth over the next decade.
  • Build cities and regions into national brands.
  • Encourage and inspire functioning regional collaboration across political boundaries that breeds economic and population growth.

ONLINE: Learn all about the state’s Regional Cities Initiative on the Internet. It’s at this address: http://indianaregionalcities.com

Contacting state lawmakers

State Rep. Milo Smith, R-Columbus, District 59, Committees: Elections and Apportionment (chairman); Select Committee on Government Reduction; Family, Children and Human Affairs. Contact: h59@in.gov or 317-232-9620 or 800-382-9841.

State Sen. Greg Walker, R-Columbus, District 41, Committees: Elections (chairman); Civil Law (ranking member); Ethics (ranking member); Insurance and Financial Institutions (ranking member); Pensions and Labor; Tax and Fiscal Policy. Contact: Senator.Walker@iga.in.gov or 317-232-9984 or 800-382-9467.

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Kirk Johannesen is assistant managing editor of The Republic. He can be reached at johannesen@therepublic.com or (812) 379-5639.