Understanding Economic Development 3: History & Reporting

In addition to understanding the meanings of the term “economic development,” as well as the fundamental laws at play with respect to its impact, it’s important to have a very basic understanding of the origins of the profession nationally as well as in Seneca County. It’s also worth exploring how economic development professionals report on economic development projects, as it is the primary way they evaluate the performance of both the economy and their organization.

Economic Development History

Here are a couple of references and summaries of the origins and history of the profession:

History of the Profession (US) – Economic Development as a profession has a long history. You can check out Ron Coan’s 2017 700+ page tome A History of American State and Local Economic Development, which details the profession in America from 1790 onward. For those who want an overview of this 300 year history, you can check out this C2ER summary. A nice glimpse into where the profession has been and how it has developed since 1926 can be found at the IEDC’s page celebrating its 10 year anniversary in 2010. There are articles on the development of its predecessor organizations – the American Economic Development Council (AEDC, est. 1926) and the National Council for Urban Economic Development (CUED, est. 1967).

History of the Profession (Seneca County) – In Tiffin and Seneca County, Economic Development as a practice goes back almost to the years of its founding. The first economic development project where people provided economic development services (marketing and attraction, incentives, site selection) is Heidelberg University, when in the late 1840s, members of the Tiffin community worked to secure the German Reformed Church’s next seminary and college. Free land, utilities, and a grant were involved. The attraction of and National Machinery in 1882 and Webster Industries in 1907 to Tiffin were also good early examples. The Seneca Regional Chamber was formed in 1915 and included some economic development as part of its responsibilities, but it was not until 1983 and the establishment of the Seneca Industrial and Economic Development Corp. was there a single organization truly focused on economic development and its practice.

History of TSEP – The Seneca Industrial and Economic Development Corp. (SIEDC) filed its articles of incorporation with the State of Ohio on August 9, 1983, with the exclusive purpose of “advancing, encouraging, and promoting the industrial, economic, commercial, and civic development of Seneca County, Ohio.” It was the first dedicated economic development organization in the county’s history. It was granted its 501c3 status the following year. It added community development activity in 1990; downtown development and revitalization in 2014; workforce development in 2016; rural and entrepreneurship development in 2019. In September of 2018, the organization changed its business name to the Tiffin-Seneca Economic Partnership to reflect the increase in the scope of its activities, to emphasize the importance of collaboration, and to clearly communicate that it acts as the official economic development agent for both the City of Tiffin and Seneca County, Ohio.

Economic Development Reporting

Economic Development is often reported by economic development organizations. Understanding what gets reported and

What is project reporting?

When TSEP reports that Seneca County has ranked in the top ten percent nationally for economic development among rural counties for seven years in a row, it is referring to economic development projects. Specifically, TSEP is referring to the fact that the community has more announced large, private economic development investment and job creation projects in those years than 90 percent of the other communities in the US. See “Seneca County Ranks 6th For Economic Development” for more details. Site Selection Magazine, which started recording projects across the US in 1988, has the following requirements projects have to meet (at least one): $1 million or more in investment, 50 or more new jobs, and 25,000 or more new square feet of building construction. Another example is when TSEP reports that 50 net, new businesses have opened up in the downtown since 2014. Indeed, much of TSEP’s communication and marketing strategy is built around identifying, defining, reporting, sharing, and promoting economic development projects that are announced or take place.

Microeconomic v. Macroeconomic – One could also say that this use of the term “economic development” refers to microeconomic (individual business) decisions and activity in the area of investment and job creation, as opposed macroeconomic indicators like unemployment or tax revenue generation. Reporting on (project) economic development in this sense usually involves talking about an individual business’s announcement that they plan on (1) hiring employees and/or (2) making investments into the business for machinery; real estate purchase, leasing, or renovation; training or research and development; or other business purpose. Although TSEP will report on unemployment decreases and tax revenue generation increases as signs of increased economic development, they themselves are not the economic development themselves (in this sense).

What are projects? – Projects may include the start-up of a new business, the expansion of a local business, or the attraction of a new business to a community. It almost always involves the creation or retention of jobs and/or capital investment into the business. They sometimes, but not always, involve incentives, or programs that encourage a business to move forward with a project. It could be as small as a company looking for one person or a downtown building owner investing $2,000 into its facade. They could also be new businesses like Releve Barre Studio or as large as Church & Dwight’s $38 million expansion in Old Fort, which expected to create 60 new jobs. Projects also typically involve a time frame, which usually ranges from one to three years.

Different approaches to project reporting

Each instance of investment or job creation can be considered a “project” worth tracking and reporting on, but there is a lot of variation in terms of which projects economic development organizations (EDOs) include in their lists. Three key reasons for the different approaches by EDOs include the following:

  • Role of the EDO: Some economic organizations report only on projects where they directly provided services to assist. This is not uncommon with regional EDOs (also called REDOs) and with state-level organizations. For example, RGP Northwest Ohio (the REDO covering northwest Ohio) and JobsOhio (the state economic development organization) report this way in their annual reports – they report on projects where they provide incentives. It is also common for local EDOs (also called LEDOs) to report on all projects, given they usually have a better understanding of all projects that take place and have such a strong impact on the local business climate that they often have an indirect role in those projects, even if a “causal link” can’t be directly established.
    • Local organizations also use project reporting primarily as a marketing tool to express and communicate all of the positive economic development activity in their community. Accordingly, TSEP reports on all projects that it tracks. In 2020, TSEP tracked 199 projects, and it assisted 135 (or roughly 70%).
  • Industry: Some EDOs restrict their project counting or reporting to certain industries; for example, they include manufacturing and distribution but exclude retail and healthcare. Sometimes the restriction of industry stems from the industries in which the EDO operates. If an EDO only focuses on industrial projects, then they may choose not to report on retail activity, whereas an EDO that does will likely report on those projects.
    • TSEP is involved in all industries, and therefore it does not restrict the list based on industry. In years past, the Seneca Industrial and Economic Development Corp. (SIEDC) was more industrially focused and tended to not to report commercial investments and other projects that didn’t fall within the industrial sectors.
  • Public v. Private, For-Profit v Non-Profit: Some EDOs do not report on public investments, also known as community development projects. For example, a new courthouse would not be included in a project tally by every EDO. Some don’t include not-for-profit projects by hospitals and/or universities. The annual Site Selection Magazine private investment database and rankings are an example of a reporting mechanism that does not include public investments. It also does not report on certain industries, such as healthcare (e.g., hospitals) or hospitality (hotels).
    • As TSEP practices community development, believes it is critical for economic development, and desires to market the investments the public and non-profit sector are making to improve the quality of life in the community, it reports on both private and non-profit projects that involve investment and/or job creation.

Additional Considerations

There are some additional points to make on economic development (project reporting):

  • Limitations – Economic developers understand that project announcements (reported projects) as a representation of economic development is limited in its ability to provide a complete picture of the economic well-being or quality of life of a place. Macroeconomic and other demographic statistics such as economic attainment, literacy, poverty, household income, and other statistics are also important indicators. See the Human Development Index for a discussion of this topic at a national level.
    • Although its limitations are understood, there are two key reasons EDOs track and report on project statistics: (1) They do represent the economic development (first meaning) happening in a community and therefore are a valid measure of one aspect of the economy and quality of life; (2) they are a standard KPI (Key Performance Indicator) of EDO’s, since so much of an EDO’s (Economic Development Organization’s) time and effort are devoted to facilitating those projects. TSEP’s mission is “to facilitate (economic, community, and downtown development) projects.”
  • Announcements v. Actual Jobs & Investment – What is typically reported and tracked are announcements by individual businesses. EDOs often do not track, have access to, spend the significant time to research, or have permission to discuss the information about what actually takes place one, two or three years after a project announcement in to determine what actually happened.
    • The exception is when there is an incentive agreement in place that has reporting requirements. As most of the projects TSEP works on do not involve legal incentive agreements, it has not typically tracked this information or invested time into tracking after the fact, as is standard practice with most local and regional economic development organizations.
  • Sales & Sales Tax – In addition to investment and job creation, TSEP also occasionally estimates and projects the sales of new commercial businesses that generate sales tax, as this is an important generator of county tax revenue.
    • It is understood that these are estimates only.
    • In addition, it is an important metric in TSEP’s downtown revitalization (Main Street) efforts, and it is working on developing a general sales tracking system for downtown businesses, regardless of whether their products and services are sales taxable.

Proceed to the next article in the series – Functional & Practice Areas.