Dear Fellow Local Officials: Please Don't Regulate the Investment Out of Your Community

By Bob Knight, CEO, Harry

I have spent a good portion of my career sitting on both sides of the table.

Professionally, I work with companies investing hundreds of millions of dollars in infrastructure and communities across the country. In my public life, I've spent years in local economic development, trying to attract investment, grow the tax base and make my community a better place to live and do business.

Those two perspectives have taught me something that I think those of us in local government occasionally forget:

Just because somebody wants to invest in your community doesn't mean they have to.

And we should probably stop acting like they do. This is becoming particularly important as communities across America work to attract broadband infrastructure.

Fiber construction has become really expensive. Labor costs have increased, materials cost more, financing costs more, engineering costs more, and construction costs more. Meanwhile, many of the easiest and most economically attractive markets have already been built.

That means the economics of the next generation of broadband expansion are only becoming more difficult to build.

A Competitive Landscape

Local government plays a crucial role in infrastructure deployment. We should protect our roads and taxpayers, and we should insist on safe construction. We should coordinate utilities and establish reasonable standards for restoring public rights-of-way (nobody is suggesting otherwise.) But there is a difference between regulating a project responsibly and seeing a private infrastructure investment as an opportunity to extract revenue.

Across the country, broadband providers encounter dramatically different requirements as they cross municipal and county boundaries. One jurisdiction may have a straightforward permitting process and reasonable inspection requirements. Drive five miles down the road, and another may require additional engineering, surveys, inspections, fees or administrative processes that add hundreds of thousands—or even millions—of dollars to what is essentially the same project.

The National Telecommunications and Information Administration (NTIA) has identified state and local permitting as an area where governments can reduce barriers by eliminating duplicative requirements, improving coordination and streamlining approvals. The reason for that is simple: Every requirement has a cost.

Municipal Officials Need to Understand the Spreadsheet

Sometimes, we who serve in government forget that projects have thresholds. A broadband provider evaluating a community is looking at homes passed, expected customers, the costs of construction, labor, financing and operation, and the years required to recover its investment.

The margins can be surprisingly thin. Add another $500,000 to a project and it might still work. Add another million and maybe the return becomes questionable. Add several million, delay construction for a year, introduce an unpredictable inspection process and your community has lost the project.

And before we dismiss that as corporate greed, remember something important: there is always another community that wants fiber, that wants a data center, that wants a manufacturer, or that needs a developer for its downtown.

Don't Confuse a Big Investment with a Big Margin

This is where I think local officials can unintentionally get into trouble. We hear that a company is proposing a $50 million or $100 million infrastructure investment and think: They can afford it.

Maybe.

That’s because the size of an investment tells us almost nothing about the project's profitability. A company spending $100 million isn't necessarily swimming in $100 million of profit. A lot of that money may already be committed to labor, equipment, materials, engineering, financing and construction. So, when a municipality adds another fee because "they can afford it," the money doesn't magically appear. With enough changes to the economics, the project risks getting delayed, reduced or canceled.

Congratulations--we just won the negotiation and lost the investment.

A Better Way is Possible

None of this means municipalities should roll over; quite the opposite, actually.  Meaningful local government should establish clear expectations and enforce them consistently. Our objective should be cost recovery, predictability, safety and partnership, rather than revenue maximization. If inspection is necessary, charge a reasonable amount reflecting the actual cost of inspection. If engineering review is necessary, require it. If construction damages a road, make sure the road is restored.

Before creating a new requirement, ask a few questions:

• What problem are we solving?

• Does another regulation already solve it?

• What will this requirement cost?

• How much time will it add?

• Would we impose the same requirement on another utility?

And perhaps most importantly:

• Could this requirement change the investment decision?

Those are economic development questions as much as regulatory ones.

The Best Permit Is Often a Conversation

Some of the best economic development work happens long before somebody submits an application. Get the provider, public works department, engineers, economic-development officials and permitting staff around a table. It’s an opportunity to show them where the problems are, ask what they need, and share what you need. These planning meetings can also be used to figure out where construction is already planned, coordinate road work, look for opportunities to dig once, identify difficult rights-of-way early, and most importantly, establish predictable timelines. 

Remarkably, sophisticated infrastructure problems can occasionally be solved with the revolutionary municipal technology known as a meeting. The federal government is increasingly encouraging exactly this kind of coordination because permitting delays do more than inconvenience companies. They delay infrastructure reaching residents and businesses.

Your Community Is Competing, Whether You Like It or Not

In essence, economic development is understanding the consequences of saying yes, saying no, and saying "yes, but first we'd like you to complete these seventeen additional studies."

Every community has the right to establish reasonable standards, but we should remember what we're trying to accomplish. If we want better broadband, more housing, new businesses, stronger commercial corridors and modern infrastructure, somebody has to invest the money to build them. Our job as local officials is to protect the public interest while making good investment possible.

Believe it or not, sometimes the smartest economic-development incentive a community can offer isn't a tax break, grant, or ribbon-cutting ceremony. It's simply being reasonable.

You'd be surprised how competitive that can make you.

Bob Knight is the CEO of Harry and is a five-term Commissioner of Economic & Community Development for the Town of Ridgefield, Connecticut. He was elected Chairman of the Commission in 2025.