The report, Remaking Local Economies: A Community-Centered Approach to Economic Development in Small and Midsized Cities, was published in September by the Lincoln Institute of Land Policy. Over three years its authors analyzed 305 cities with populations between 50,000 and 500,000. They studied 20 of those cities closely and interviewed more than 50 community and economic development professionals, mostly in 2023. They sorted the cities into three groups: “thriving inequitably,” “middle of the pack” and “strong legacies, uncertain future.”
They found that many cities are still chasing smokestacks, if only metaphorically. Practitioners often used “talent” to mean college-educated workers recruited from outside the region. As one Midwest economic developer put it, “When we say ‘talent,’ we don’t mean traditional workforce development at the educational system or the local level.” More than half of interviewees said their cities had programs dedicated to “high-growth,” “scalable” or “high-tech” firms. Small businesses got less attention. Among those focused on downtown redevelopment, some insisted they needed more power to incentivize private investment. That was especially true where tax increment financing (TIF) was the main tool available.
The report’s review of the research is the part local leaders should read most carefully. It cites a study of Midwestern cities which found that TIF was associated with new business establishments but not with job growth since the Great Recession. The Lincoln authors conclude that “the evidence is relatively weak that TIF helps increase the number of jobs in a locale.” Where jobs do come, the gains tend to go to people who move in rather than existing residents. Tim Bartik and John Austin, writing for Brookings, estimate that at least three-quarters of the time incentives don’t change a company’s decision at all. In those cases, they write, incentives are “all cost and no benefit.” The report also notes research finding little evidence that high-tech firms reduce local poverty. To its credit, it cites other work showing targeted incentives for smaller firms are associated with job gains.
None of this will surprise regular readers of Better Cities Project, and it shouldn’t surprise anyone at the Lincoln Institute, either. A 2012 Lincoln report on property tax incentives found “little evidence that these tax incentives are an effective instrument to promote economic development” and urged governments to “consider forgoing these often wasteful incentive programs.” A 2018 Lincoln report found TIF’s impact “mixed,” then concluded that “if used properly, TIF can be an important tool,” and offered only reforms. The new report follows the same pattern. Lincoln’s researchers keep finding that these tools underdeliver, yet their recommendations stop short of saying cities should abandon them.
This report is no exception. The authors write that conventional strategies “are important and can be effective, but for too long and in too many places, they have been pursued exclusively.” They suggest their approach can run “alongside” the old one. A reader who works through the evidence chapter will wonder why a tool with “relatively weak” evidence behind it should stay in the toolkit at all.
The report’s alternative is called the “3L Framework:” looking in, leveraging and locking. “Looking in” means taking stock of the assets a community already has. “Leveraging” means using those assets to attract more resources through partnerships. “Locking” means putting policies in place so existing residents share in growth. The case studies are modest and practical. A study of Chicago’s Genesis Movement, which helped manufacturers improve training and workplace practices, found that more than half of participating firms saw higher returns. Workers at those firms saw wages rise an average of 12% after inflation. Montgomery, Alabama, built a one-stop shop for small businesses. In Yakima County, Washington, described as “a child-care desert,” the local economic development association began helping child-care providers with the business side of their operations.
The instinct to look within before reaching out is a good one. But the report rarely wonders which existing policies are, for example, making child care scarce in Yakima County. In many places, licensing rules, staffing ratios and zoning limits on home-based providers are part of the answer. The report’s cover photo is a food truck rodeo in Durham. Many cities still make it difficult to open a food truck, run a business out of a home or add an apartment over a garage. Those rules are barriers to growth and removing them costs little.
The “locking” step deserves caution. Among its suggested tools are income-restricted units, inclusionary zoning, housing subsidies and community land trusts. Some of these, inclusionary zoning in particular, can discourage the new construction that keeps rents in check. The report itself states plainly that “concerns about gentrification should not prevent investment or development in a place.” The most reliable anti-displacement policy is letting more housing be built.
The authors admit that the evidence for the new approach is thin. Genesis is the only case study with measured results. They write that it is “too early to measure the organization’s full impact” in Yakima, and the Montgomery effort has only been fully operational since 2024. They also acknowledge that their findings rest on “a few select cities, all of which are idiosyncratic.” That candor is welcome. It also means cities should treat the framework as a promising idea rather than a proven model.
Bottom line for city halls
This report’s own evidence review gives local officials little reason to treat TIF and abatements as reliable growth tools. Before the next incentive deal, ask what evidence suggests it will work. Before launching a program for small businesses or child care, review your own codes for the rules that hold them back. And whatever you try, decide in advance how you will measure it. Looking in is a good start, as long as city hall is part of what you look at.
