FINANCING & INCENTIVES FOR SUSTAINABILITY PRIORITIES Session: Finance and Added Value Makeover Montgomery II May 9, 2014

Incentives Basics A working definition of incentives: •  Tools to influence business decisions in order to spur the

growth of companies and jobs in specific locations •  Taxpayer-financed programs that support individual

businesses Development finance: •  Fostering job creation and economic growth through the

use of tax-exempt and other public-private partnership finance programs

Blurred lines between the two categories

Incentives Basics • Categories

•  Direct business financing •  Indirect business financing •  Community-oriented •  Tax-related

• Types •  Bonds •  Grants •  Investments •  Loans •  Tax abatements, credits,

deductions, exemptions

• Business Need •  Capital access •  Facility/site location •  Infrastructure •  Marketing •  Product or process

improvement •  Regulatory climate •  Workforce

• Discretionary - Y/N • Targeted – Y/N

Incentives and Sustainability • Support economic growth strategies • Environmental objectives

•  Renewable energy projects •  Brownfields redevelopment •  LEED •  Green tech/clean tech

• Social objectives •  Job training and hiring •  Distressed communities •  Wages and benefits •  Smart growth

STAR Communities and Incentives •  The STAR Community Rating System is a voluntary, self-

reporting framework for evaluating, quantifying and improving the livability and sustainability of US communities.

•  3 pillars & 7 goals, including built environment and economy & jobs

• Several incentives receive points within the framework •  Property tax abatement, local sales tax rebates and TIF for

business expansion or retention •  Supporting business development in special investment zones •  Incentives for rehabilitation, reinvestment or redevelopment

TBL Tool and Incentives •  The TBL Tool is an online platform to help achieve and

describe triple bottom line performance in economic development.

•  Industry-vetted, research-based framework to evaluate community projects

• Can be used to ensure incentives align with community goals and deliver a strong performance across economic, environmental and social factors •  Prioritize proposals •  Conduct due diligence •  Communicate with stakeholders

TIF/Special Districts and Sustainability • Special assessment districts and tax increment financing

(TIF) are 2 categories of “targeted tools to catalyze investment and transform the real estate values of a geographic area” (via CDFA)

•  TIF, tax credits and incentives can be used for smart growth and sustainability initiatives

• Maryland’s Sustainable Communities Tax Increment Financing Designation and Financing Law

Incentives and community development financing programs should help achieve community goals Using incentives – Can this incentive deal generate net benefits for your community?

•  Project Benefits •  Fiscal Impact •  Economic impact

• Managing incentives – Did this incentive deal generate net benefits for your community? •  Monitor compliance •  Assess effectiveness •  Reporting and policy feedback

Examples Austin, TX

Rigorous analysis of incentive agreements, including criteria related to economic, environmental and social performance.

Atlanta, GA The Atlanta Beltline is sustainable redevelopment project along a 22 mile corridor circling downtown. Financing is “anchored” by a Tax Allocation District, a form of TIF.

Madison, WI Part of the NLC Sustainable Cities Institute. Committed to sustainable development, including Department of Planning & Community & Economic Development. TIF goals include several sustainability elements.

Concluding Thoughts •  Incentives and related tools can help close the financing

gap for sustainability priorities •  Investment partnership approach • Create processes to make incentives and financing tools

work well for the community •  Due diligence •  Transparency •  Accountability

Contact Information Ellen Harpel President 571/212.3397 eharpel@businessdevelopmentadvisors.com www.businessdevelopmentadvisors.com www.linkedin.com/pub/ellen-harpel/a/448/266 ‎ ellen@smartincentives.org http://www.smartincentives.org/ Twitter: @SmartIncentives