Butler County cities, such as Hamilton and Middletown, are learning — sometimes the hard way — that attracting and retaining companies these days is about more than just pulling together lucrative tax incentive packages.

Businesses looking to attract top talent and retain key personnel consider the quality of life in an area to be an important ingredient in deciding where to locate their operations.

The ability of a business to attract top talent is critical to remaining competitive. And what a city has to offer in terms of quality schools, entertainment, dining and recreation could be a deal-maker or a deal-breaker when key personnel are deciding whether to stay put or take a job elsewhere.

But public sector investment in quality of life amenities such as parks, swimming pools, community festivals and even roads are among the first line items reduced or eliminated from city budgets during lean economic times. And for cash-strapped cities like Middletown and Hamilton those budget choices are beginning to have some negative economic development repercussions.

Western States Machine Company recently relocated its operations from Hamilton to Fairfield. Company officials cited a lack of amenities, such as hotels and restaurants, to offer clients as a key reason. The availability of those amenities in Fairfield were more appealing to company officials than the lucrative incentives offered by Hamilton to stay, according to Hamilton officials.

When AK Steel moved its corporate headquarters and 300 high-paying jobs from Middletown to a state-of-the-art office tower in West Chester Twp. in 2007, company officials cited similar reasons such as a better proximity to Interstate 75, better hotel and restaurant options and being closer to the Cincinnati/Northern Kentucky International Airport.

James L. Wainscott, AK Steel’s president and CEO, said at the time, the move would assist in attracting and recruiting professionals “who desire proximity to the abundant amenities and services in West Chester and northern Cincinnati area.”

“We need to have the amenities that people want in today’s world,” Hamilton City Manager Joshua Smith said, noting such amenities could include a Starbucks or Panera Bread downtown. “If not, then people will look elsewhere to have those amenities.”

Smith has been advocating to City Council the need to re-invest in Hamilton’s roads and parks and even re-opening its swimming pools. Council and city staff have been developing a strategic plan designed to make the city “a purposeful destination for working, living and playing,” he said.

Shortly after Smith arrived a little more than two years ago, he established the “City Manager’s Blue Ribbon Committee for Economic Vitality.” The committee of 23 CEOs is working to provide him with information on the needs of local businesses and companies, as well as, developing a plan to help local businesses and industries. Among the concerns that have been raised by the local CEOs is the difficulty they have to recruit executives to move to Hamilton.

“It all starts with business attraction and that you have to have the demographics to do business,” he said. “Some of those are the basics such as pools, a good park system and a clean and safe community to bring people back.”

Smith said he was told by one casual food restaurant company in a “cordial” way that Hamilton didn’t have the demographics that they need to locate in the city.

“As people have moved out of Hamilton to other cities and townships, retail (businesses) have followed them over the past 20 years,” he said.

An example of this residential and business migration can be seen in Liberty and West Chester townships which have blossomed into dozens of subdivisions and retail centers, much of which has been spurred by the Ohio 129 connector between Hamilton and Interstate 75.

While the city faces various budget constraints, Smith said one strategy is to develop public/private partnerships to revitalize the city. He cited projects such as the Historic Mercantile Lofts, the Butler Tech Fine Arts Academy that found a new use for the former JournalNews building, the Robinson-Schwenn Building and the Artspace project. Smith said the city worked with private developers to obtain state tax credits and other incentives to take these projects from concepts to reality.

The city has also created Community Reinvestment Areas for business and residential use to get people to move into to the city and reinvest into their properties. Smith said the city is also working to find new users for other vacant buildings downtown such as the Ohio Casualty complex and the former Elder-Beerman department store.

“There are a lot of variables for site selection,” Smith said. “But quality of life is an important criteria.”

Middletown has experienced many of the same issues. Several years ago, AK Steel Corp., which was founded in Middletown, opted to move their headquarters to West Chester Twp. near the Interstate 75/Union Centre Boulevard interchange.

Denise Hamet, Middletown’s economic development director, said things are changing from when AK decided to move to West Chester.

She said the city is working to improve its image and develop its gateways, thanks to a $500,000 state grant. In addition, she said the city is also working to improve its signage.

Hamet said the city has lost two companies but they were due to corporate development reasons and not issues with the city.

She said First Financial Bank moved its operations to the Pictoria Tower in Springdale “because that was part of their overall agenda and that’s where they wanted to be.” Hamet said the other firm, Clark Schaefer Hackett & Co., moved to Austin Landing in Montgomery County to be within 20 miles of their customers.

“We have plenty of hotels near the interstate and there are four new restaurants opening downtown,” she said.

Middletown’s downtown is improving with the establishment of a branch campus of Cincinnati State Technical and Community College that is re-purposing former office buildings into a college campus. City officials are banking on the campus to become an economic catalyst in reviving the downtown area and the city as a whole.

Hamet said the city has some quality of life positives such as two YMCA branches and Atrium Medical Center, a state of the art Level 3 trauma hospital. The city does not have any public swimming pools and offers splash pads at two of its parks.

One concern that Hamet has heard raised is a demand for more meeting space in the city.

“We’re going to try and look at this in the coming year so they don’t have to go out of town to hold meetings,” she said.

Middletown is also working to improve its infrastructure issues and will be pooling $2 million from several city funds to pave more of its pothole-riddled and deteriorating roadways in 2013, which is four to five times more than has been invested in the past few years.

The city must invest at least $5 million a year for 20 years in order to just maintain the 600 lane miles of roads in the city, according to a recent study. Middletown residents have been complaining for years about the city’s crumbling streets, the poor image of the city they portray and the toll potholes have taken on their vehicles.

The city spent $400,000 in 2011 and $300,000 this year to pave roadways. Typically, the city would spend $200,000 to $500,000 a year on streets, but in some years the city spent nothing because of other needs, officials said. About three-quarters of the city’s streets are in need of either resurfacing, repaving or, in a few cases, rehabilitation.