Stephanie Vozza [1]

Tennessee has several distinct geographic regions—the Smoky Mountains and Cumberland Plateau are two—but can you name an economic region in Tennessee? Maybe, but maybe not.

“Regionalism is when local governments come together to work together to promote the economy in a cooperative spirit,” says Matthew Murray, professor of economics and associate director of the Center for Business and Economic Research at the University of Tennessee, Knoxville.

The concept makes sense. The sum is often greater than the parts. “Companies look for a variety of attributes: skilled workforce, public schools, amenities that will make executives and workers happy, etc.,” Murray says. “One county may not have all of those attributes, so a bundling of counties pools resources and appeals to a broader audience. Small or large communities may not have a deep enough labor pool. The regional approach overcomes that obstacle.”

Regionalism was the economic buzzword of the ’90s. It continues into this decade, but its history in Tennessee is much shorter. “There is not much regionalism alive in Tennessee today,” Murray says. “It’s growing in importance, but to date, there are no real hard numbers to support it.”

“When I became commissioner, the first thing that became abundantly clear was that municipal boundaries were meaningless—companies look at regions,” says Matthew Kisber, commissioner of the Tennessee Department of Economic and Community Development. “We were not organized around a regional approach.”

Murray says regions are often defined by like characteristics: geographically contiguous, a shared population, commuting patterns, etc.

Kisber contracted U.T.-Knoxville to do a study to identify Tennessee’s economic regions. “It was the first step to organize a principle for what would be our initiatives,” he says. “The news wasn’t shocking, but it was extremely enlightening to see similarities and differences among regions in the state. The East and West look different, but the regional economic statistics were similar.”

As a result, Kisber restructured his department. “In the past, we had separate divisions: marketing (for recruiting new businesses) and existing industry,” he says. “Now we no longer differentiate between new and existing. We’ve structured our office into regional job development specialists who are experts in how their regions work.”

While the U.T. study identified 10 distinct economic regions, Kisber took the information and formed six regional specialists, each of whom center around a metropolitan area: Memphis, Jackson, Nashville, Cookeville, Knoxville and Chattanooga. Malcolm Getz, associate professor of economics at Vanderbilt University, says Metropolitan Statistical Areas are often good indicators of regions.

“They are defined by the number of commuters,” he says, “which is a pretty good indicator of economic integration.” “We’ve made significant progress in our efforts,” Kisber says. “A part of the initiative is to increase the number of regional economic development efforts. Since our restructuring, we’ve seen the Tri-Cities Economic Development Alliance begin to form, and five counties in the Upper Cumberland Plateau have come together to form the High Cumberland Regional Economic Development Council.” While the new alliances are a sign of new direction, one area of the state had been working as a region since 2001.

“It was spawned from the Tennessee Resource Valley, a private marketing effort in the late ’80s,” says Mike Harvey, vice president of marketing for the East Tennessee Economic Development Agency (ETEDA).

“ETEDA was one of the early innovators of the idea,” Kisber says. ETEDA brings 16 counties together in an economic region. Knoxville and Oak Ridge are well known communities within ETEDA and are at the region’s center. By pulling together and acting as a region, the area is much more powerful. ETEDA created the brand “Innovation Valley” to form a unique identity.

“Businesses don’t look at city or county lines when they choose a location,” Harvey says. “They look at regions. If a customer wants a product this way, it serves us well to give them what they want. ETEDA serves as a regional marketing and business arm of that. We work as one unit; we have one budget and one staff.”

“ETEDA is the only good example that I’m aware of in the state of how regionalism should work,” Murray says. “It markets itself as a multi-county region. Local governments all contribute funds in support of the organization’s marketing efforts to draw businesses to the area. Communities participate because they hope that at some point a company will pick them. Even if a company doesn’t locate within their city limits, they will enjoy economic and fiscal benefits. Workers that work in one county may live in another, and that will expand a property tax base. Income is an issue, as is sales taxes. There are spill-over benefits.”

“I’m a big supporter of regionalism and ETEDA,” says Leslie Henderson, president of the Roane County Alliance, the umbrella organization for the county’s economic development, chamber of commerce, industrial development and convention and visitors bureau services. “The agency handles most of our marketing and business recruiting,” Henderson says.

“Businesses don’t much care about county lines or political boundaries. To serve businesses, we have to have a regional approach. It is so much more effective to work together as a team,” she says. “A rising tide raises all boats.”

Proponents say there are many benefits of regionalism, foremost being perception. “Businesses always like public leadership that knows where it is taking its community,” Kisber says. “Regionalism gives the perception to businesses that there is no local infighting, that the area has a team strategy.” Harvey agrees. “The number one benefit is the formation of strong leadership,” he says. “People at the local level work together to do the right thing and get it done.

“[Regionalism] gives communities the ability to market collective assets. Knoxville can sell the Smoky Mountains. Sevier can market the University of Tennessee. Blount County markets the heck out of the Oak Ridge National Lab.”

Regionalism also is efficient and cost-saving. Communities pool resources and can equally share the greater benefit from results. “[Regionalism] makes financial sense,” Harvey says. “Scott County puts little into the pool but gets much more money out.”

“On its own, Monroe County, which is part of ETEDA, would not have sufficient money to engage in the marketing efforts it can as a result of pooling resources, brainpower and more,” Murray says. “They can achieve more as a group than they can independently.” Henderson agrees: “We have a $1 million marketing fund,” she says. “That’s huge.”

In other states, having a regional approach to economic development has been a catalyst to using the approach in other ways. Murray says Minnesota has had a regional approach for decades, sharing taxes across communities.

“It’s a novel approach, but there are not many examples of that,” he says. Getz says other cities have done much more with regional thinking. “Boston has a regional form of government,” he says. “New York City’s five boroughs have an overarching government power. It’s a patchwork quilt of sorts.”

Kisber says he’s seeing some crossover thinking in Tennessee. “As community leaders come together, they see other areas where regionalism is beneficial,” Kisber says. “In the creation of regional industrial parks, regional jails and regional landfills, for example.”

“We are starting to see this discovered locally. The three communities in Coffee County are forming a regional industrial park. Manchester and Tullahoma had a reputation of being the most bitter rivals in the state, and they have come together and seen how the benefits of this approach can work.”

Regionalism isn’t always easy to achieve. Your mother probably raised you to play nice and to share, but this is a hard concept when it applies to business, especially since there are winners and losers.

“I don’t see a fundamental flaw with the outcome,” Murray says. “But we are all self-serving. Taxpayers and city council members are often not excited about kicking in money if the company locates in another town. After all, if a company locates the facility in one city, property tax revenues will go to that city only. Some may ask, ‘Why should we foot the bill if we do not directly benefit?’”

“The traditional downside to regionalism is that most of the funding of economic development originally comes through a political body—taxpayers,” Henderson says. “Taxpayers expect that what I do will directly benefit Roane County. Elected officials are more interested in what voters want, and sometimes it’s hard to get an understanding of the regional focus. It’s a matter of education.” Getz agrees that it’s hard to get government officials past the self-serving concept and to the realization that working as a region can benefit everyone.

“[Former Nashville Mayor Phil] Bredesen spent $50 million to bring Dell to Davidson County,” he says. “If he had not spent the money, Dell would have located in Wilson County. Bredesen did not take a regional approach. If Dell had located in Wilson County, it would have been the same employment and the same economic development impact. The only thing different would be the commute pattern. It was not money well spent.”

While Getz says regionalism has its benefits, he’s not completely onboard with the concept. “I’m a fan of local government,” he says. “Each area shapes the level of taxes paid and services it buys. Smaller school systems are more manageable. Residents and businesses can shop for the level of taxation they want instead of a one--size-fits-all approach.”

Kisber says he sees the downside to regionalism being the concern that individual communities might lose their identities or distinctions. “But I don’t subscribe to that argument,” he says. “Regionalism attracts interest; it’s up to the individual communities to differentiate themselves and close the sale.” Harvey says he doesn’t see any pitfalls.

“If you do it the way we do it here, there are no disadvantages,” he says. “But you have to build a consensus.” For geographic regions that want to form economic regions, Harvey gives some advice: “Put issues aside and be a team player,” he says. “If you work together smoothly, you can be effective.”

Henderson says regions need a good brand. “Innovation Valley is a good brand,” she says. “Part of the challenge for a region is to increase visibility and not be scattered on how it presents itself. Nashville is the Music City; they know who they are. We have more PhDs per square mile than any other county. That goes a long way to making us unique.”

Kisber says at the state level he’s learned to practice what he preaches. “Regionalism applies to my office, and I take that thinking into the Southeast United States Japan Association,” he says. “We go to Japan to talk about our region and why the Southeast makes sense for Japanese companies. Then we compete for the opportunity.

“We’re talking about other ways to work with other states for a common goal. It’s important to realize that 50% of our state’s population lives in a county that borders another state.” What does the future hold for regionalism in Tennessee? “Regionalism in Tennessee as an approach will continue to grow and provide communities with opportunities to work together,” Kisber says. “We’ve just begun to see the benefits that a regional effort can yield.”