DDA is encouraged in thoughtful deliberation of incentives

August 20, 2011
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The Grand Rapids Downtown Development Authority’s decision to delay action of its plan to award selected business owners incentives such as rent subsidies is welcome news. The DDA early this year decided to use its revenues to create an incubator program to foster start-up business development. It was one of several components to “reframe” the objectives of the city entity. The group apparently is focusing on start-up retail business.

The “economy committee” within the DDA has suggested the group wait to gather new information on retail activity, including demographics and consumer buying patterns. The committee also suggested that rent subsidies for such selected businesses may not be as helpful as financial assistance to build out a retail space in existing buildings.

Grand Rapids Business Journal in January urged the DDA to be cautious in its new approach and finds an even greater number of reasons to continue that appeal. In January, the Business Journal noted one could consider the “incubator districts” to be a 2011 form of Renaissance or brownfield funding for the “right” projects, and therein lies lessons from past experience with government “subsidies” and government agencies that would pick winners and losers. This is especially true if the DDA is not including in its task force or structure the “creative class” of entrepreneurs and builders who have framed the downtown to date. To date the “incubator properties” have been targeted for Monroe Center, prime downtown real estate, for which plans should be driven by market forces rather than governments. Reporting this week indicates such space may be more likely along Division Avenue.

It must also be noted that while the DDA is seeking to encourage “new, young” entrepreneurs, the Edward Lowe Foundation last week released a white paper showing that existing businesses create 71 percent more jobs than startups. The foundation notes in its release of the study: “There is a large gap in recognition and resources for growth-oriented companies. Better understanding their needs and providing appropriate resources and capital to fuel their growth would help spark a more robust economy — and greater innovation for our country.”

As the DDA considers using its resources to develop downtown retail business, it is encouraged to view existing businesses and expansion potential into the district, providing opportunity for growth.

Patient planning and discussion are encouraged.

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