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We must invest in order to reap dividends

January 15, 2008 12:35 am

TODAY, 15,000 com- munities in America are aggressively engaged in activities to promote economic development. All over America, people are in pursuit of a better quality of life, for themselves and for their most important asset, their children.

Mayor Tomzak, members of City Council, and the city manager and his staff are to be commended on their efforts and hard work to attract the Kalahari Resort and Conference Center--developers of the largest indoor water park in America--to the city of Fredericksburg. The company has a proven track record of success while being a great corporate citizen. Congratulations on landing this $200 million project in the face of strong competition from other historic cities in what was a multistate search. This is an outstanding accomplishment for the city of Fredericksburg and the region!

The use of incentives in attracting large corporate development has become a major part of doing business domestically and globally, and is the "norm" in corporate recruitment. CEOs today are looking for the best location to expand or relocate their businesses. They are intensely interested in reducing costs, and asking for incentives is one way to achieve that goal.

Communities are often left with one decision: Do we wish to compete for a project that will increase the tax base, create many new jobs, and provide much-needed revenue for necessary government services? The issue is one of competitiveness, on global terms. When a corporate decision is ready to be made, if one community chooses not to act, another community will.

In terms of incentives, the ones offered in our region are rather conservative in comparison to what other communities in the global marketplace offer. Economic models show financial support to businesses will be paid back in the future in the form of increased employment, an increased tax base, and public revenue for services that support education, police, and fire and rescue, while shifting some of the tax burden from the homeowner. In the case of Kalahari, there will be approximately $64 million in new revenue over 20 years.

While public officials sometimes find themselves working out the details of incentives through confidential negotiations initially, it is important to recognize that this is a normal part of conducting business in a fast-paced environment. To a business executive, the passage of time is lost revenue while speed in decision-making is the key to success, especially when other communities are considering the same opportunity at the same time!

Locally, over the years, the use of incentives has helped to provide turn lanes, traffic signals, and roads serving shopping centers in our area. Indeed, incentives played an important role in the American Canoe Association's decision to locate in the city. The largest part of those incentives came from the private sector.

In the real world, many factors contribute to a community being placed on the short list for a project, but it is often financial support that closes the deal. When a corporate decision-maker is faced with several communities, the localities that fail to offer assistance usually contribute to the speed with which the list grows shorter! Many localities do not have an opportunity to discuss incentives. Unfortunately, no one places them on a list for consideration to increase the tax base and provide new jobs. All jobs are important, especially to those who have those jobs.

Along with our colonial, Revolutionary, and Civil War history, the Kalahari Resort and Conference Center will contribute significantly to making Fredericksburg a better-known tourist destination, and will add to the region's visibility when corporate decision-makers accompany their families on vacation or when industry trade shows are held at the convention center. A high percentage of those who visit the Kalahari Resort and Conference Center will be bringing outside money into the region, allowing that new money to be re-spent throughout the area and further strengthening the economy.

The significant economic impact of the Kalahari Resort and Conference Center, which will create more than 800 jobs, is added profitability for restaurants, shops, and boutiques, and increased bank deposits, all while maintaining a family-oriented, environmentally friendly atmosphere. Businesses in downtown Fredericksburg will benefit significantly from the opening of Kalahari and from an expanding regional economy.

Development decisions are best judged in the context and environment in which they exist. It seems that financial support for a company that enhances the quality of time that a family spends together and brings smiles and laughter to children is a good thing.

While tourism is certainly one of the largest industries in the Fredericksburg region, Kalahari will increase its recognition as a first-class tourism destination, and allow for larger association and professional meetings to be held here, making our existing businesses more profitable. We should be excited that Kalahari chose Fredericksburg!