Intro Lecture 7- Economic Development v2

Module Overview

• Course: URSI 100 - Introduction to the City Economic Development

• Instructor: Professor Miriam Porter

Understanding Economic Development

• Definition: Economic development refers to the material wealth of an area, encompassing the goods and services available.

• Importance: It provides job opportunities for the economically active population.

• Context: The documentary "The Survival of a Small City" highlights the challenges faced by economically deprived areas.

• Role of Cities: Cities utilize various tools to enhance economic development in their regions.

Tools for Economic Development

A. Tax Abatement

• Definition: Waiving business taxes for a specified period.

• Goal: Enable businesses to reinvest saved tax money to foster growth and create jobs.

• Example: JOBZ program in Minnesota, which allows businesses to abate local and state taxes to strengthen their economic foothold.

B. Incubators

• Definition: Facilities designed to support start-up businesses.

• Function: Provides shared resources (offices, phone systems, internet, etc.) to reduce high overhead costs.

• Outcome: By keeping costs low, incubators help businesses reinvest in growth, thereby generating more jobs in the community.

C. Business Loans and Planning Assistance

• Function: Cities connect businesses to financial assistance from state and federal governments.

• Features: Planning assistance and low-interest loans are provided to aid start-ups in their development.

D. Tax Increment Financing (TIF)

• Definition: A financing method where cities prepare land and provide necessary infrastructure for business growth using borrowed funds.

• Revenue Source: Generated through the sale of bonds; debt repaid via increased revenue from the economic development.

D. Tax Increment Financing (TIF) - Cont.

• Controversy: TIF is contentious as new tax revenue generated primarily pays off debts rather than immediate demands for public services (police, fire, etc.).

• Long-term Benefit: Once debts are cleared, additional tax revenue can contribute to city services, promoting overall economic development.

E. Retaining Existing Businesses

• Importance: Existing businesses provide employment and tax revenue for city services.

• City Role: Cities should identify and address the needs of local businesses to support their growth.

• Examples of Support: Finding suitable relocation options for growing businesses, offering incentives to retain them within city limits.

Conclusion

• A healthy city economy plays a crucial role in enhancing the quality of life for residents in the community.