I have a few thoughts about what some of the principles for determining how the County invests might be:
1) EVERY investment should leverage private participation that is at least several times larger than the public's participation.
2) EVERY investment should be judged, at least in part, by its potential return on investment for Cuyahoga County's residents/communities AND for its potential ROI for the development fund. Whenever possible, the fund should have a plan in place with the companies/projects in which it invests for how it will recover its investment and receive a reasonable return on that investment, just as a private investor would. While an investment from the County should reduce risk for an enterprise being undertaken in Cuyahoga County, it shouldn't necessarily be free. The fund should try to generate a return from its investments that can be used to make future investments.
3) SOME investment should be targeted at incentivizing and removing impediments to Cuyahoga County benefiting from greater external investment, both national and international. Ultimately, people are making decisions about where to invest based on the return they can expect to achieve in different locations. The fund should consider investments that make Cuyahoga County's economy and markets more attractive to external investment.
4) SOME investment should be targeted for seed capital investment, to counterbalance the tendency of Cleveland-area investors to keep local start-ups at arms length until the enterprise has already proven itself and risk has been significantly reduced. This should help Cleveland move back to a culture of "wealth creation" and away from its culture of "wealth preservation."
5) SOME investment should be targeted at purposefully and thoughtfully planning the creation of "virtuous circles" to combat the "vicious circles" that drive economic decline. We should be able to think through how to construct and invest in positive feedback loops that encourage growth.
6) EVERY investment should have a plan for how the enterprise/effort will ween itself off of government support and become self-sustaining. This is particularly relevant when and if the fund considers incentivizing/supporting specific types of development, whether it is residential housing, office space, bio-tech, etc. Before the investment is made, there should be a clearly understood path for the industry/market the fund is trying to catalyze to become sufficiently robust to be able to attract private investment that would make ongoing public investment unnecessary.
7) The fund should combat our "edifice complex." We shouldn't build buildings just for the sake of building buildings. Every construction project should be evaluated on its individual merits AND on the role it will play and the impact it will have on the rest of the County's economy. A new office building will create construction jobs, but if it only attracts tenants from other county locations, we are just rearranging deck chairs.
Posted Apr 21, 2011