More Can Be Done To Ensure That Industrial Parks Create New Jobs

CED-81-7: Published: Dec 2, 1980. Publicly Released: Dec 2, 1980.

Additional Materials:

Contact:

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Industrial park projects funded by the Economic Development Administration (EDA) have helped distressed areas attract businesses, which in turn have saved or created jobs for area residents. GAO reviewed 101 park projects to assess the projects' effectiveness and to determine what management improvements are needed to maximize project accomplishments.

A number of park projects have problems. They have not attracted businesses, are not well utilized, and have not created as many jobs as anticipated when the projects were proposed. EDA must improve its assessments of the need for and location of proposed projects. EDA does not require feasibility studies; as a result, projects are being approved without adequate justification. EDA should also establish a management assistance program to help the park applicants attract business to their parks. Although a primary purpose of EDA-funded industrial park projects is to attract new businesses or business expansion, about 46 percent of the businesses reviewed were business relocations. Despite an EDA policy which prohibits businesses from relocating from outside of the immediate area of the park, such relocations are occurring. Many of the relocations did not provide additional jobs. EDA has not systematically gathered, monitored, or evaluated data on project accomplishments to judge their overall effectiveness. It will be several years until park project accomplishment data will be available. EDA has designed a system to monitor and evaluate all projects, including industrial parks. However, the criteria used may be too high and too easily attainable to be a realistic measure of project success, timeframes are too short for realizing employment projections, and the number of businesses required to submit employment reports is too limited to effectively measure employment data.

Recommendations for Executive Action

  1. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should direct the Assistant Secretary for Economic Development to administer EDA non-relocation policy to clearly prohibit businesses from other areas from relocating in EDA-funded parks.

    Agency Affected: Department of Commerce

  2. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should direct the Assistant Secretary for Economic Development to disseminate previous studies on park projects to appropriate regional offices for their use when considering the funding of future projects.

    Agency Affected: Department of Commerce

  3. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should direct the Assistant Secretary for Economic Development to monitor the effectiveness of the non-relocation policy through periodic field visits before final disbursement of funds and when determining the parks' successes.

    Agency Affected: Department of Commerce

  4. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should direct the Assistant Secretary for Economic Development to issue instructions to EDA field staffs clearly stating how EDA will administer its non-relocation policy for industrial park projects and revise the EDA application form so that applicants are fully aware of how the policy is administered.

    Agency Affected: Department of Commerce

  5. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should direct the Assistant Secretary for Economic Development to require regional offices to prepare periodic reports identifying vacant and underutilized parks and develop possible solutions to attract businesses to them. The reports should also assess the applicants' marketing and promotion plans and their progress in attracting businesses to the parks.

    Agency Affected: Department of Commerce

  6. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should direct the Assistant Secretary for Economic Development to develop criteria to minimize relocations from within park areas and emphasize to EDA applicants that park projects are designed to provide new employment opportunities rather than to be used to relocate existing area businesses into more attractive sites.

    Agency Affected: Department of Commerce

  7. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should direct the Assistant Secretary for Economic Development to identify and gather accomplishment data needed to properly monitor and evaluate park projects not covered by the Operational Planning and Control System. To preserve limited staff resources, EDA shold request that park applicants periodically submit this data to the appropriate regional offices.

    Agency Affected: Department of Commerce

  8. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should direct the Assistant Secretary for Economic Development to establish a management assistance program to help applicants that have problems attracting businesses to their industrial parks. After this program is established, the Industrial Location Service should be used to determine the types of businesses that would be best suited to locate in the parks, and the recommendations made by the Office of Management and Administration on management assistance efforts should be adopted.

    Agency Affected: Department of Commerce

  9. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should direct the Assistant Secretary for Economic Development to refine the Operational Planning and Control System. These refinements should include (1) reducing the cost per job criterion if actual results show the criterion is too high, (2) developing and using criteria on park utilization rates along with the cost per job criterion to measure park success, (3) revising the time frames for realizing employment projections from 7 years after the year of approval to 10 years after park completion, and (4) requiring that actual employment data be received from all businesses in the parks.

    Agency Affected: Department of Commerce

  10. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should direct the Assistant Secretary for Economic Development to require applicants to perform feasibility studies on all proposed industrial park projects, which include an assessment of whether the project is needed and whether it is favorably located to attract businesses.

    Agency Affected: Department of Commerce

 

Explore the full database of GAO's Open Recommendations »

Nov 17, 2020

Jul 16, 2020

Jun 25, 2020

Jun 11, 2020

Apr 28, 2020

Mar 9, 2020

Jan 28, 2020

Oct 8, 2019

Looking for more? Browse all our products here