Evaluating Incentives Using an ROI Approach
You’ll learn about:
- What constitutes a smart incentive and unwise incentives using a tax-based approach.
- How to determine the amount of tax revenue on a square-foot basis for a proposed development.
- How to estimate the unfunded infrastructure liabilities of a municipality and how this knowledge can be used to set proper expectations for the use of incentives within a community.
As budgets get tighter, incentives are facing closer scrutiny. Explore how communities are addressing this through an ROI approach to viewing land within a municipality. The City of St. Louis' innovative approach is the case study on estimating the needed tax return on developments that utilize various incentives tools.
First is a discussion of the challenges and opportunities facing municipalities in today's post-Great Recession environment. Using available data, panelists determine the estimated amount of property, sales, earning and payroll tax generated per square foot of land in the City. The City of St. Louis model aims to differentiate the tax value per square foot of land based on its geographic location within the City (neighborhood/ZIP Code) its land use designated according to the Strategic Land Use Plan (SLUP), and its classification for tax assessment purposes (commercial, residential, or exempt).
The model also includes an effort to estimate the currently unfunded infrastructure liabilities of the City. Combining the estimated taxes generated per square foot, with this estimate of unfunded liabilities, the model then goes on to estimate how much city revenue needs to be generated per square foot in order to fund all of its unfunded infrastructure liabilities. An intermediate session for experienced planners.