Boyle must be cautious with plans for industrial development
Boyle County’s economic development leaders are taking a serious look at buying land, developing it and selling it at a loss or even giving it away in order to attract more industrial employers to the area.
Given the thorough explanation from the Economic Development Partnership’s task force on this issue last week, we think it’s clear such a project comes with a lot of drawbacks and risk. That doesn’t mean it couldn’t ultimately prove to be a good idea, but it means leaders should be extremely cautious and skeptical before moving forward.
It takes a lot of money to become a player in this field of economic development. Land alone can cost millions; developing the land so it’s ready for immediate use by an industrial facility with heavy utility demands costs many millions more. One example from the task force: Another Kentucky community spent $1.4 million for land and $6.3 million for development of roads and utilities.
Once the land is ready, it’s still just an empty property. An industrial prospect must then choose that property for its first facility or next expansion. That could happen right away, but it’s far more likely it could take years.
Whenever a prospect is landed, there is a strong likelihood the governments that spent millions preparing the land will give the land away or sell it at a substantial loss.
The new industrial prospect would hopefully bring a lot of jobs — in modern terms, 75, 90 or 120 jobs would be amazing. But it would also no doubt qualify for tax incentives, so the payroll taxes that could potentially pay back the government for its investment wouldn’t be realized for years.
Even when the payroll taxes do start flowing, it would be many more years until they make up for government’s initial investment. A business with a $5 million annual payroll (100 jobs averaging $50,000 salaries) would generate $95,000 annually in payroll taxes for Danville and $62,500 for Boyle County. If each government had invested $1 million and given away the land, the new payroll tax revenues would make it a break-even investment after 10 and a half years for Danville and after 16 years for Boyle County.
Considering all of this, it could easily take two decades or more before the local governments could truly say their investment was paying off.
Danville Mayor Mike Perros was clearly right last week to characterize industrial land development as a long-term, not a short-term investment.
None of this means land development shouldn’t be investigated, pursued or completed. You can just look down Lebanon Road today to see what’s possible when long-term investments are made.
But leaders must educate themselves thoroughly, be measured in any approach they take, and avoid letting anyone believe land development will have any immediate benefits.
If the community needs results right now, prepping industrial sites is not the answer. If the community can wait, it could be a good move, even with the risks involved. But we won’t know without a lot more investigation.