FOX17: Inside Nashville's Recent Investments 44_FOX17_nashvilles_investments

April 26, 2024 01:06 PM


1. There’s a lot of focus on the development of Nashville’s East Bank that will bring affordable housing, relocate the performing arts center, and build more complete streets. But there have been hundreds of millions of dollars spent by the state Tennessee over the years. Tell us more.


A: In the last five years, Tennessee Department of Economic and Community Development has given over $500 million in FastTrack incentive grants to projects to theoretically expand existing businesses and recruit new businesses to the state all to create new jobs.


$100 million of those grants has been spent in Davidson County, awarded for the promise of a $2 billion capital investment from those companies, the largest of which haven’t come about.


Software company Oracle got the largest investment from the state — $65 million economic development grant in 2021 — and the company spent $277 million buying land on the East Bank three years ago, but the company hasn’t started construction yet. It had promised to create 8,500 jobs.


Smile Direct Club received over $10 million in grants for job training and economic development in 2019, but late last year filed for bankruptcy and announced it’s closing up shop in Nashville. They were supposed to bring 2,000 new jobs, and while it looks like they did add some jobs initially, but then cut workers before shutting down completely.


Now, that’s not to say that since the two companies with the largest grants — 75% of the funding — aren’t working out as planned, the other 31 that got funds are failures. But it leaves one to question whether this corporate welfare of giving tax breaks and incentives to big companies is the best way to spend taxpayer money.


Economists rightly question the effectiveness of giving these incentives to private businesses to expand or come to the state, but state and local governments continue handing out the goods.



2. How does this compare to economic development spending around the country?


A: Pew Charitable Trusts looked at states all over the country and found that research has shown that these geographically targeted, or “place-based,” economic development programs—mostly in the form of financial incentives—designed to boost job creation and business investment, incentivize real estate development, or increase property values in specific places often fail to benefit the places and people they are intended to aid.


Pew’s analysis found that the criteria that states use to geographically target their programs are often ill-conceived or out-of-date, with the result that initiatives end up serving wealthy locations instead of disadvantaged ones. And even when programs do reach the intended communities, they often are not well-suited to help residents.


So it’s not just Tennessee’s or Nashville’s grants that appear to be misguided.


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