Not long ago, we witnessed a bizarre competition among more than 230 North American cities vying to become the home of Amazon’s second headquarters. The competing communities were generous in the extreme, dangling offers of grants, incentives and tax breaks that in one proposal — from New York City —topped $1 billion.
In the end, Amazon, with a market value of $900 billion, accepted the proposals from Nashville and northern Virginia and will now split its expansion plans between them. Time will tell whether the employees’ payroll in those host communities will pay back the subsidies provided to the online retail giant.
The question arises, must economic development always follow the Amazon model, with companies pitting one community against another while expecting them to bear all of the up-front financial risks for the promise of a payback in the distant future? Is it possible to devise a more sustainable and equitable approach to economic development?
Let’s start by imagining an economic development model where prospective new businesses make it clear to the host community that it is not competing with other locations.
Under this model arrangement, businesses would not ask the host community for any improvements, incentives or tax breaks prior to breaking ground, nor would they require an expansion of municipally provided services like water or sewerage for their operations.
Let’s go further. Under this model, businesses are expected to generate a stream of revenues that support local governments and schools over their entire lives. This arrangement takes effect in the first year and remains in place until the businesses close their doors.
This model would also preserve existing community assets as well as the underlying land. For example, businesses operating under this model must repair any damage to the local roads caused by their construction. Moreover, they are obligated to restore the land to its previous condition once they have ceased operating.
Is such an approach to economic development possible? Not only is it possible, there are several working examples of it here in Wisconsin. The driver that makes this arrangement a reality is utility-scale solar wind and solar power.
One such example is the 49-turbine Quilt Block wind farm in southwest Wisconsin. The developer, EDP Renewables, was drawn to that location for its accommodating topography, proximity to existing transmission lines and agricultural orientation. Neither Lafayette County nor the Town of Seymour had to extend subsidies or other forms of preferential treatment to steer the project inside their jurisdictions.
Online since November 2017, Quilt Block yields nearly $400,000 annually to local governments while it’s producing power. The county and the town have the option of directing this revenue flow to upgrade services or to reduce property taxes. At the same time, the wind farm provides fair compensation to host landowners for the use of their land. And it was the developer, not local taxpayers, who paid for the repair of local roads damaged during project construction.
Now it’s solar energy’s turn to deliver an economic jolt to rural Wisconsin. In April, three large solar farms — located in Iowa, Richland and Manitowoc counties — were approved for construction. Over the next 18 to 24 months, project owners will invest a combined $700 million to build these arrays, and this infusion of capital will directly engage hundreds of workers and local companies, and indirectly buoy many other businesses in the area.
Rural Wisconsin communities are discovering that there is more to renewable energy than just clean power. It is also a sustainable form of economic development that provides benefits to everyone in the communities hosting these developments. This is a real, if underappreciated, facet of Wisconsin’s renewable energy transition.
Michael Vickerman is policy director of RENEW Wisconsin, a nonprofit organization which promotes renewable energy in Wisconsin.
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