During the past few months, there have been a few high-profile development projects in the news. There is an important reason that we, as at community, are pursuing economic development in our region.
Simply put, the cost and quality of life for every household is directly dependent upon local economic conditions. Business activity creates the revenues to fund local services such as Police and Fire services, Public Works and the Health Department. But businesses have opportunities to locate anywhere in the country or, in some cases, anywhere in the world. If we don’t think we’re competing with every other community in this regard, we’re kidding ourselves. That is why we have numerous economic development tools available to businesses considering bringing their operations – and jobs – to Springfield. These same incentives also are available to local businesses seeking to expand their operations or workforces.
The city’s economic development incentives policy, adopted last year by City Council, outlines four vehicles by which a project can receive property tax abatement. Those are chapters 99, 100 and 353, and the Enhanced Enterprise Zone.
We are interested in both community development and economic development. Community development activities, such as building parks and greenways and assuring safe neighborhoods and good schools, aim to make Springfield a better place to live, work and play. Economic development – encouraging business investment and job creation and retention – provides similar community benefits, secondarily.
The secondary benefits of economic development can be significant. For example, for every 50 percent abatement a company receives, the school district and other taxing jurisdictions receive 50 percent new tax revenue from the company that they would not have had without the abatement – not to mention the 100 percent new tax revenue the jurisdictions receive at the end of the abatement period. One of the city’s policies states that taxing jurisdictions should receive an immediate benefit from projects receiving economic development incentives. That’s the reason most abatements are granted at the 50 percent level.
We’ve recently received a question about how, and if, we consider the impact on the services those property taxes support when recommending tax abatement. Before making recommendations to council on implementing economic development tools, we provide analyses that help councilmembers consider the risks and rewards of using the incentives.
A proposal for the renovation of the former Solo manufacturing plant requested Chapter 353 property tax abatement. In accordance with state statute, the developer’s application included an analysis of the impact on all taxing jurisdictions during the life of the abatement. The analysis estimates without improvements, the Solo redevelopment area would generate only $5.8 million in real property taxes during the next 25 years. However, with redevelopment and partial real property tax abatement, the redevelopment area is estimated to generate $10.2 million in real property taxes during the same time period for a net gain of more than $4.3 million.
The city of Springfield also publishes annual reports on each of the Enhanced Enterprise Zones – a practice established in the mid-1980s. Those reports provide abatement figures for individual properties and in the aggregate. In addition, last year we began publishing annual reports on all properties receiving abatement under chapters 99 and 353.
We believe in encouraging business development and job creation, but with a balanced and transparent approach in doing so.
Greg Burris is Springfield’s city manager. He can be reached at gburris@springfieldmo.gov.[[In-content Ad]]
