east-west gateway board of directors_development incentives research presentation

8/9/2019 East-West Gateway Board of Directors_Development Incentives Research Presentation

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Board of DirectorsEast-West Gateway Council of GovernmentsJanuary 28, 2009


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authorizethestafftoundertakeastudyoftheeffectivenessof localdevelopment

incentives

to

help

determine

potential

actions

by

the

Board. Thestudyshouldincludeaninventoryoftheamountofpreviousincentivesgrantedbylocalgovernmentandtheresultingeconomicactivityfromtheprojectsfinancedthroughincentives. Thestudyshouldalsodeterminetheeffectoflocaldevelopmentincentivesonthe abilityoflocalgovernmentstofinanceessentialpublicservicesandthedegreetowhichtheextensiveuseofincentivescontributestoeconomicandracialdisparitiesintheregion.


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Acompleteinventoryoftheuseofdevelopmentincentives

An

accounting

of

local

and

regional

economic

effects

of

incentives

Anassessmentofthestateoflocalgovernmentfinancesand

theeffectsofincentives

Interviewswithexpertsandstakeholderstosolicitpolicy

recommendations

Conclusionsandlegislativerecommendations


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Includes:

80%ofTIF/TDDetc.

Regionaleconomic

impacts

Doesnotyetinclude:

Abatements Stateincentives


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Duringthelast15years,conservativelyestimated,$2.5

billioninpublicmoneyhasbeencommittedtosupporting

privatedevelopment

through

TIF

and

taxing

districts

80%ofpublicinvestmentsupportsretaildevelopment

From1990to2007,theretailsectorgrewfromabout

142,100to147,500,againofroughly5,400jobs

Thistranslatesto$370,370inpublicmoneyperretailjobcreated


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St.Louis$864,523,668

St.LouisCity

$598,200,561

St.Clair$347,898,516

St.Charles

$251,228,102

Madison

$120,532,441

Monroe$2,007,194

Franklin$12,448,695

Jefferson$39,862,000


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Acrossallincentiveprogramstheprovisionsforuniformreportingofrevenues,expendituresandoutcomesarenon

existent,unenforced

or

very

weak

Nomeaningfulpenaltyforfailuretoreport

Nolocalmechanismstorequireaprivateprojectsponsortodelivereconomicoutcomes


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Comparedto35metropolitancompetitors,

St.Louis

ranked

25th injobgrowth,increaseof14%

27th ingoodsproducing,adecreaseof16%

25th inserviceproviding,anincreaseof23%

31st inincomegrowth,anincreaseof1.7%

34th ingrossregionalproduct,adecreaseof.8%


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Thereisademonstratedneedtoprovide

developmentincentives Theregionscompetitiveeconomicstandingremainsweak

Thereisaclearpublicpurposeinaddressingactualblightand

providingservicesinunderservedorhistoricareas


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Theinvestmentofcurrentandfuturetax

dollars

in

private

development

has

been

massive $2.5billionspentandcommittedsince1990

Addingtaxabatements,stateprograms,couldaddbillions

more

to

the

total


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Identifiableregionaleconomicbenefitsofpublicdevelopmentincentivesforretail

developmentare

minimal

Mostincentivesarenotusedinareasofactualblight

Mostincentives(approx.80%)areusedforretaildevelopments

Whiledistrictsselfreportthecreationof32,000+jobs,netofonly

5,400

jobs

retail

jobs

were

actually

created

since

1990 Regionaltaxablesalesarenotincreasing


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Salestaxeshaveaproblematicfuture;aregionaleconomicdevelopmentpolicybased

defactoonretailsaleswillnotbesuccessful Salestaxreceiptsarenotincreasing

Localspendingpercapitaisnotincreasing

Highersalestaxrateswillsuppresslocalsalesanddrivehigher

untaxedinternet

sales

Providingincentivestogrowretailsalesisaredistributivestrategy,notastrategyforgrowth


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Reportingofrevenues,expenditures,andoutcomesisseriouslydeficient

Reportsto

state

agencies

are

required,

but

no

penalty

for

non

reporting

Onlyabout6080%ofdistrictsreport

Qualityofreportsishighlyvariable

Goodlocalandregionaldecisionmakingrequires

better

information


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CompleteanalysisrequiredbyBoardresolution

Data

collection Abatements

Stateincentives

Determinelongtermimpactsonlocalgovernment

finances Determineimpactsoneconomicandracialdisparities


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Draftmodellegislationrequiringmorecomplete

and

centralized

recordkeeping

and

disclosure

of

costs,revenuesandoutcomesassociatedwith

localdevelopmentincentives

Draftmodelaccountabilitylegislationallowing

localgovernments

to

recover

costs

when

outcomesnotachieved

east-west gateway board of directors_development incentives research presentation

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