Local Government Fragmentation & Retail Competition

Local government fragmentation refers to the distribution of power across many small local governments within a given area. In Cuyahoga County, there are 59 cities, villages, and townships, each with its own elected officials, zoning codes, and economic development strategies. This fragmented structure creates competition between neighboring communities as they each try to attract private investment, new residents, and tax-generating businesses.

One of the most common ways local governments compete is by subsidizing retail projects with tax incentives, infrastructure improvements, and direct subsidies. While these projects can generate short-term gains, the broader regional effect is often inefficient. Communities end up chasing the same stores and restaurants by offering bigger incentives than their neighbors, without adding much new economic activity to the region. In some cases, these projects simply shift existing business from one suburb to another rather than creating real growth. This approach can drain public resources and weaken collaboration between cities that should be working together to strengthen the region as a whole.

One way to limit this type of behavior is through anti-poaching agreements. An anti-poaching agreement is a formal or informal pact between local governments to stop competing for existing businesses (particularly retailers) by offering incentives or other inducements to move from one community to another within the same region. The goal is to prevent “zero-sum” relocations that shift jobs, tax revenue, and retail activity across municipal borders without creating new economic value for the region. By reducing this kind of inefficient competition, anti-poaching agreements encourage communities to focus on projects that strengthen the region’s overall economy rather than simply moving existing stores or restaurants from one location to another.

In 2013, all 59 municipalities in Cuyahoga County agreed not to recruit a company already located in the county unless the company reaches out first. Learn more here. When a business initiates a move, the “receiving” city is expected to notify the “sending” city and loop in county partners, so retention options can be considered before relocation. The goal is to focus incentives and staff time on net new jobs and investment, not shuffling tenants across city lines.

This is an example of interlocal cooperation, which is a term that refers to collaborative arrangements between two or more local governments to address common issues and provide public services more efficiently.