Local-Level Economic Development Conflicts: Factors that Influence Interactions with Private Land Developers

Abstract

Private developers seek to locate their projects within a specific region. Local governments try to attract those businesses by offering tax incentives. In order to extract favorable terms from local governments, developers sometimes threaten to relocate or abandon their project. Seeking to minimize the overall harm to the community if the threats are realized, local governments will simply approve what was demanded by developers. Using survey data from across the U.S., I investigate the kinds of threats that are made by developers in an attempt to push local governments to compete against each other for projects and which factors make it more likely that those threats will succeed. The logistic regression model revealed that municipalities with inter-municipal cooperation and public participation in real estate development projects are more likely to decrease the chance of private developers’ threats succeeding. Conversely, neither having economic development staff nor an economic development plan did.