Pact cans 'poaching'

A regional economic development group asks municipalities to refrain from stealing each other’s businesses

GREATER PORTLAND — As area cities and towns try to weather tough economic times, they are being asked to refrain from attempting to steal away each other’s businesses.

A “Prospect Protocol” – called by some an “anti-poaching” measure – has begun circulating among the six member towns of the Greater Portland Economic Development Corp., which finalized wording of the document on Nov. 13.

So far, councilors in Westbrook (on Dec. 3) and Scarborough (Dec. 19) have approved the document. Falmouth reviewed the protocols on Nov. 26 and referred it to the town’s Economic Review Committee. In South Portland, the Economic Development Committee gave assent Dec. 5 and the agreement is expected to go before councilors in January.

Cape Elizabeth Town Manager Michael McGovern said he is waiting to see what the other towns do before presenting it to his council. Portland Economic Development Director Greg Mitchell could not be reached for comment. However, the protocols have not appeared on any recent council agenda in the largest GPEDC member, cited by some as the most recent practitioner of poaching, based on reports in October that it has been working since last spring to lure payment-processing firm WEX from South Portland to a new development on Thompson Point.

Informal anti-poaching agreements were in place at the time and some question how realistic it is to ask that municipalities not go after the lowest-hanging fruit on the nearest growing tree, even when formalized in writing.

“At the end of the day, I am a representative for Scarborough,” said Town Councilor Jessica Holbrook, when she and her peers reviewed the protocol on Dec. 5. “Although I like the idea of building our base, I don’t believe this is in the best interests of Scarborough.”

“The fact is, 99.9 percent of all economic development in Maine is businesses moving from one town to another within the state,” said Harvey Rosenfeld, executive director of the Scarborough Economic Development Corp., on Friday.

But GPEDC Executive Director Tom Turner says that’s precisely the reason his group exists, and why it’s so important that area cities and towns not try to cannibalize each other’s tax base.

“What we’re trying to do is stop the churning of local business, because that really doesn’t increase the size of the economic pie for the region,” he said, last week. “For the region, that’s a zero-sum game.”

Turner, hired from the Metro Atlanta Chamber in June to be GPEDC’s first executive director, says his group’s goal is to bring new business into the area from out of state, and to facilitate a fair shot for each town at that firm. Maine, he says, has promise, with quality-of-life selling points that can countermand the strategy in Atlanta, and places like it, to throw money at prospects.

 

“It was like, we’re such a miserable place, we’ll give you $40 million to relocate here,” he said, referring to the effort as “trolling for smokestacks.”

However, Keith Luke, a former economic development director in Westbrook and Windham who is familiar with all the players in the area, says the advantage may still go to the place with the most cash on hand. There’s a strategy at play in the Thompson Point project that won’t mean much for GPEDC’s prospect protocol.

“This poaching agreement only scratches the surface of a much larger issue,” he said.

The prospect protocol allows municipalities to work in secret with businesses when they request confidentiality. However, Luke says, so much for keeping mum.

“To do that secret, practically speaking, it almost can’t happen,” he said. “There are too many people in the mix to keep something like that under wraps.”

Turner and Rosenfeld agree with Luke’s assessment, and also back his assertion that real poaching is “actually quite rare.” A municipality may create a tax increment financing deal for a specific business, as Westbrook did for Idexx in the mid-90s, when it made the jump from Portland. However, that deal, says Luke, was less about the tax deal – which he said is only worth about $30,000 a year to Idexx – than the fact that Westbrook had the facilities the firm needed at the time.

“Basically, it's less about luring a business with deals than simply being able to show them something that meets their specific needs, for square footage or the number of loading bays and things like that,” said Luke.

When Westbrook adopted the prospect protocol, Mayor Colleen Hilton said that during recent battles between Idexx and Pike Industries regarding the latter’s rock blasting, some communities tried to entice Idexx to abandon expansion plans in Westbrook and relocate to their turf.

“I think there’s a lot of precedent for setting up that protocol,” she said.

While Hilton did not name names, Luke outed Rosenfeld, who admits to showing Idexx around town. However, while insisting his group's policy has always been to refrain from soliciting businesses in neighboring communities, Rosenfeld says that if the business comes knocking, “that’s not poaching.”

Proving Luke’s point, Scarborough did not have a site to meet the company's needs.

“We have a lot of land, for someone who wants to build something to suit their needs,” Rosenfeld said. “But it takes some pretty deep pockets to build it for them.”

However, in a case of the rich getting richer, that’s exactly what Portland did at Thompson Point and that he says, represents an end run on the GPEDC and an “important policy consideration for economic development on a regional basis.”

What makes Thompson Point different from standard TIF deals that don’t stay secret for long and that name a specific business once revealed, he said, is that Portland used its economic leverage to “essentially underwrite construction of new, untenanted office space."

Although Portland Mayor Michael Brennan has said Portland never engaged in direct discussion with WEX, Luke says it didn’t have to, and not just because WEX Chief Executive Officer Michael Dubyak is a part-owner of the Portland Red Claws basketball team, which is slated to get a stadium in the new site.

"When Portland subsidized TIF-supported office space, that was an indirect invitation to businesses from around the region,” said Luke. “Assuming the council that approved it didn’t know who was going to fill that space, they had to know that not all of it could be filled by businesses that were new to greater Portland.”

Or, to put it another way, said Luke, “If you build it, they will come, and they won’t be coming from far away.”