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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
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