Alexandra Schantl and Johannes Watzinger, KDZ Centre for Public Administration Research Austria
Relevance of the Practice
For many individual local governments (LGs) increasing the attractiveness of local building land to companies constitutes a significant challenge. Particularly small LGs often struggle to make large sites available for companies, i.e. to provide the necessary infrastructure and also efficient marketing due to their limited financial resources.
For this reason, the Land Upper Austria has launched the INKOBA Initiative in 2001 to economically stimulate the locations in particularly peripheral regions of Upper Austria. Several municipalities join to form a Gemeindeverband (municipal association) to develop and promote business locations as partners. This form of cooperation contributes to bridging the gap between smaller and larger, rural and urban municipalities: It reduces the competitive pressure in the provision of business locations between LGs and enables especially financially weaker LGs to benefit from the combination of efforts with other LGs in the region. Due to the crucial role of the Land in actively promoting INKOBAS, the INKOBA model of the Land Upper Austria, organized in Gemeindeverbänden, cannot only be considered a good-practice example for inter-municipal cooperation in the securing of business locations but also for successful intergovernmental relations between the regional and local level, since the initiative is supported by clear provisions of the Land, such as the demand for increased cooperation and inter-governmental dialogue, as well as a comprehensive system of incentives both financially and non-financially. The latter through permanent support by the Upper Austrian business agency. Due to this practice´s financial scheme (sharing of municipal tax between the LGs involved in the INKOBA) and the model of cooperation between the LGs in a Gemeindeverband, the practice is related to report section 3 on local finances as well as section 4 on local government structure.
Description of the Practice
Business Upper Austria (formerly Technologie- und Marketinggesellschaft – TMG), the business agency of the Land of Upper Austria, has been promoting inter-municipal cooperation since the mid-1990s. INKOBA (Interkommunale Betriebsansiedelung) was established with the main goal of attracting companies to the region and thus creating jobs. An INKOBA-Gemeindeverband is formed by several municipalities (according to the OÖ Gemeindeverbandgesetz, Upper Austria’s Municipal Associations Act). One municipality then prepares a building site for its use by one or more companies as business locations. Both, the cost for the preparation and provision of adequate infrastructure as well as the taxes earned from the companies´ activities (municipal tax) are shared between the involved municipalities.
Thereby, the optimal framework conditions for the companies as well as the cooperation among the municipalities are ensured in order to increasingly strengthen the business location through joint efforts. Since 2001, 30 such corporations were established through INKOBA, 28 of which are currently active and 2 are in development. 69 per cent of all local governments in Upper Austria participate in this initiative. Although the INKOBA initiative does not explicitly exclude large Upper Austrian cities INKOBAs comprises in general smaller and medium-sized municipalities in less developed regions. However, for urban agglomerations there are other initiatives of the Land that target these areas such as the ‘Power Region Initiative’ or the ‘City Region Initiative’.
Business Upper Austria is an outsourced GmbH (Ltd.) of the Land Oberösterreich (Upper Austria). As majority owner, the Land controls the company both at the level of the company bodies and at the process level. In addition, and in order to be able to ensure the range of services in the long term, Business Upper Austria is granted an annual subsidy by the Land Upper Austria to cover the annual deficit. Business Upper Austria accompanies the INKOBAs in the development process and provide further assistance and advice. The INKOBAs themselves are legal entities, mostly established according to the Oberösterreichisches Gemeindeverbandgesetz (Upper Austrian Municipal Associations Act) as so-called Gemeindeverbände (municipal associations). Although they operate outside of the control of the municipal council, as public bodies they are subject to more transparency and oversight as well as to a higher degree of liability/bindingness regarding its decisions. Thus, it can be considered a more democratic model than e.g. a GmbH (Ltd.) or Verein (association) and may better reflect processes of intergovernmental dialogue between the local level and the Länder. Because the INKOBA initiative is managed by Business Upper Austria, INKOBAs also have the support of the Land Oberösterreich.
This is the central advantage of INKOBA compared to other business locations. Due to the joint funding as well as the support of the Land, the sites are in optimal condition when a company inquires. The INKOBA initiative is characterized by an efficient combination of bottom-up and top-down processes, as the Land Oberösterreich actively incentivizes with subsidies for setting up inter-municipal cooperation and supports the cooperation, mainly through its business agency Business Upper Austria as mentioned above.
There are no noticeable differences between INKOBAS which include more urban local governments (ULGs) or rural local governments (RLGs), because the entire region benefits from these projects. In addition to the direct effects of the additional tax revenue (municipal tax, property tax, etc.) for the municipalities, the business locations can also be expected to cause positive agglomeration effects such as influx and increased purchasing power for the entire region. However, in addition to the higher income (e.g. municipal tax, income shares, etc.), rising expenses in infrastructure costs can also be expected. INKOBAs between urban and rural LGs may offer an additional advantage for all involved LGs: Larger municipalities and medium sized cities often lack available building land within their territory, but on the other hand may bring increased know-how and marketing expertise into the cooperation, also due to more personal resources and capacities.
The district Rohrbach in Oberösterreich is a very good example for successful regional management. The Donau-Ameisberg INKOBA business park was founded in 2003 and is developing into a real model for success. Renowned as well as newly founded companies have settled and, so far, created 150 jobs, both strengthening the region’s economy and preventing emigration.
In the future, more cross-border Gemeindeverbände for INKOBA projects are to be established. The INKOBA Inneres Salzkammergut, joining together 7 LGs from Upper Austria and 2 LGs from Salzburg, serves as role model for further cross-border INKOBAS.
In conclusion, INKOBA projects benefit both rural and urban LGs and cushions the urban-rural divide. The financial risk is divided and through the distribution of municipal tax revenues, the competition between local governments in the provision of high-quality business locations is reduced to the benefit of all while, on the other hand, the negotiating position of the LGs towards economic actors is strengthened. Through cooperation and joint efforts, INKOBAs contribute to a win-win situation for all involved local governments.
Assessment of the Practice
Inter-municipal cooperation in the area of business settlements enables the equal distribution of the benefits and burdens between the municipalities, which subsequently profit from increased attractiveness and competitiveness in relation to other regions. INKOBA is a good example for successful and practice-oriented inter-governmental dialogue, in which both the local governments as well as the Land play central roles and are in steady exchange, supported by the Business Upper Austria agency as intermediary.
However, there are several factors which influence the success or failure of INKOBAs and equally affect rural and urban municipalities. Establishing an INKOBA cooperation in a Gemeindeverband holds the advantage of a higher degree of liability but also entails a more difficult and time-consuming set-up process, which requires, among others, a resolution of the involved municipal councils. The intermediary role and support of the Land and the Business Upper Austria agency in the process are therefore pivotal. The Land provides subsidies for the establishment of inter-municipal cooperation and supervises the INKOBA associations. The supervision of the associations is incumbent upon the provisions of Article 22 of the Upper Austria Municipal Association Act (Oberösterreichisches Gemeindeverbändegesetz). For the management of assets and budget management of the association, Article 20 of the Upper Austria Municipal Association Act applies. The Business Upper Austria’s support for INKOBAS on the other hand, includes setting up both the association structure and management structure, providing relevant technical know-how for chairmen and managing directors, providing up-to date information on legal issues, infrastructure facilities and financing, drawing up contracts to secure land, establishing and maintaining contact with Länder institutions, in particular with political advisers and specialist departments.
The lack of full legal obligation in connection with remaining competitive pressure or developmental gaps between municipalities of an INKOBA has also led to some issues in the past. It has occurred, for example, that despite their membership in an INKOBA, an involved LG independently developed and sold their own building land, directly competing with the jointly defined building site.
The potentials of the Upper Austrian INKOBA cooperation model can be summarized as follows:
• opportunities for growth through increased economic strength in the region;
• creation of additional jobs (direct/indirect);
• positive effects on the choice of residence in the region – especially for the LGs surrounding the company locations;
• shared financing of joint activities may reduce the individual costs for every LG involved, while shared revenues benefit all LGs involved;
• development of attractive business locations and coordinated regional support policies;
• professional location marketing;
• bundling of competences and relieving the pressure on the individual LGs.
References to Scientific and Non-Scientific Publications
Upper Austrian Municipal Associations Act (Oberösterreichisches Gemeindeverbändegesetz), LGBl. no 51/1988)
Scientific and Non-Scientific Publications:
Dallhammer E and others, ‘ÖREK‐Partnerschaft, “Kooperationsplattform Stadtregionen“. Mehrwert stadtregionaler Kooperation‘ (expert paper, ÖROK 2013) <https://www.oerok.gv.at/fileadmin/user_upload/Bilder/2.Reiter-Raum_u._Region/1.OEREK/OEREK_2011/PS_Stadtregionen/%c3%96REK-PS_Stadtregionen_Expertenpapier.pdf>
Interview with Klara Wagner, project manager for investor and location management at Business Upper Austria (Vienna, 2020)
Letter from Upper Austrian Land Councilor Achleitner, ‘Acht Rohrbacher Gemeinden haben gemeinsam Musterbeispiel für gelungene Ansiedlungspolitik geschaffen‘ (Linz, 2020)
Sturm F and Pilz P, ‘Interkommunale Betriebsansiedlungen – rechtliche und wirtschaftliche Rahmenbedingungen‘ (Land Carinthia 2019) <https://uniclub.aau.at/wp-content/uploads/2019/10/FranzSturm_PeterPilz.pdf> Tauber F, ‘Interkommunale Standortentwicklung und Betriebsansiedlung in OÖ. INKOBAs und Wirtschaftsparks gewährleisten professionelle Standortentwicklung‘ (Business Upper Austria 2015) <http://www.vision-rheintal.at/fileadmin/VRuploads/PDF/Themen/Regionale_Betriebsgebiete/Interkommunale_Betriebsgebiete/INKOBA_in_OOE_Nov2015.pdf>
 OÖ Landesholding GmbH (65%), Kammer für Arbeiter und Angestellte für Oberösterreich (15%), Wirtschaftskammer Oberösterreich (15%), Vereinigung der Österreichischen Industrie Landesgruppe Oberösterreich (5%).
 There are also inter-communal business locations in other Länder which, due to the different legal provisions across the Länder regarding the establishment of a Gemeindeverband between LGs, were founded as a Verein (association) or GmbH (Ltd., e.g. in Carinthia). Realising and managing investments inter-municipally is less complex and bureaucratic in a Verein or GmbH. Therefore, such inter-municipal cooperation models in Austria are commonly used for cross-border cooperation between LGs of different Länder.
 LGBl. no 51/1988 (GP XXIII RV 102 AB 186/1988 LT 25).