Michael Hicks: READI grant is great for most of Indiana

Indiana’s Stellar Community Grants and Regional Cities Program are among the nation’s most innovative and effective place-based economic development efforts. Although it is too early to say for certain, the recent READI grants likely do much the same for local population growth as did the two earlier programs (Stellar Communities and Regional Cities). Indiana has been doing place-based development for a decade and a half. There’s a case to be made that the Hoosier efforts should be a national model for this type of investment.

While place-based economic development policy is not a panacea, there are no thriving places in America that aren’t engaged in significant public investment in infrastructure. Still, the evidence is clear that businesses and households value public services more highly than public infrastructure spending. This mostly means the quality of education, which is important because the state legislature is planning a second round of READI funding this year.

However, I don’t think the state dollars invested in any of these programs are their most important feature. The impact on population growth is too large to be explained by tax dollars fixing roads, sewers and sidewalks. There’s something else successful going on here. There’s also room for improvement.

The Stellar Communities Program and its later derivatives really served as the model for all the subsequent Regional Cities and READI grants. Indiana’s Office of Community and Rural Affairs, and my current Ball State colleague David Terrell, developed the Stellar program in the midst of the Great Recession. This program required communities to undertake extensive community development planning, which meant listening to citizens and creating priorities and purpose for spending scarce tax dollars. The results were local plans that were supported by the vast majority of citizens, local civic groups, employers and elected officials from both parties. This process takes years, not months.

Communities that did the difficult grassroots planning mostly developed solid plans that would survive change in political leadership. It is the ability to craft a long-term investment plan that made these cities successful. We know that because OCRA worked with many of these cities for years, helping them climb the ladder of success, starting with Main Street plans and capacity-building programs, then ending with Stellar Community designations.

The Regional Cities Program of 2015 followed much the same process. This program focused on cities in larger regions, not just rural communities. The Indiana Economic Development Corporation managed the process that selected three winning regions from among six submissions. Today those cities and surrounding communities have seen more than a billion dollars apiece in private investment to revitalize their downtowns. This was huge value for the state’s investment of roughly $40 million each.

The READI grant, which was unveiled last year, extended the Regional Cities Program to the entire state. All 92 counties participated, and from the perspective of grassroots regional planning, it was a huge success. Of the 17 regional submissions, 14 were as good or better than the 2015 plans for Regional Cities.

This means that much of the state is getting better at the basics of long-term community planning. In other words, across most of the state, municipal leaders, civic groups, employers and citizens largely agreed on priorities for public spending. They agreed on how they’d pay for improvements, and when and where they’d make those improvements. Most importantly, they agreed about why they’d spend scarce public funds. This is old-fashioned civic participation at its best, but is isn’t working everywhere. There were a few regions who performed poorly, both in the Regional Cities and READI grants. There are ways that IEDC could better help guide these communities.

Worst-performing regions for both the Regional Cities and READI grants had several things in common. First, they were poorly designed regions—either too big, too small, or cobbled together. Second, they had the wrong organizations leading the effort. The worst proposals had no real grassroots engagement effort and did no formal analysis of their spending proposals. One group couldn’t even explain their own funding priorities during the proposal presentation.

From what I can learn, none of those regions that performed poorly in the READI grants have made meaningful progress over the past year. There are no new regional groups around which to focus new plans, and no grassroots efforts to build a new READI proposal. The lack of action is sad, but not surprising.

Doubtless, there will be significant political pressure to award money to these places, but that’s a surefire way to waste this money. I recommend that the state pursue a developmental approach to these regions. Simply giving regions READI money when they have failed to self-organize or follow time-honored community development practices is just bad governance. This is a place where IEDC can find substantial support elsewhere in state government.

The IEDC is intentionally a transactional agency, designed to facilitate business attraction in Indiana. They do that well, but the investments in Regional Cities and READI aren’t transactional; they are long term. State agencies that are organized to assist in local capacity building would be a better source of assistance for those regions that cannot self-organize. The Department of Transportation, Environmental Management, and especially the Office of Community and Rural Affairs have long histories of improving local capacity to plan, develop and fund projects.

I would encourage IEDC to enlist these agencies, as well as their partners in the private sector and at universities, to help Indiana’s lagging regions. This could take many forms ranging from an anonymous critique of existing plans and regions, to a more formal technical assistance plan. The strongest region is only as good as its weakest community, and these places really need some assistance if they are to thrive.

To be clear, private consulting firms alone will not adequately address these regions’ many problems. Consultants are great at answering questions, but in many of these organizations that failed the last round of READI, no one is even asking the right questions. Often, the organizations convening the planning process lack the capacity to do so, and they are organized around the wrong counties and led by the wrong civic groups. In most cases, an intervention is warranted.

Indiana’s most effective and innovative economic development efforts involve our place-based Stellar, Regional Cities and READI grants. These investments have helped elevate several regions and are showing progress in much of the state. Still, we need more critical thinking to spread the benefits to places with deeper, and more intractable problems.

Michael J. Hicks is the director of the Center for Business and Economic Research and the George and Frances Ball Distinguished Professor of Economics in the Miller College of Business at Ball State University. Send comments to letters@dailyjournal.net.