Total Economic Potential of a community Labor Capacity Land =

Total Economic Potential Labor Facilities Land Available Capital Labor Land Used resources Unused resources Unemployed Vacant Idle Facilities

Economic Activity of a community Employed citizens Thriving Businesses = Money Motivation Available Capital Desire to spend and invest Economic activity is a direct relationship to availability of money and motivation.

Economic Activity of a community Employed citizens Thriving Businesses = Money Motivation Available Capital Desire to spend and invest When the money supply contracts, so does business and consumer confidence, resulting in lower economic activity Unemployed Closed Businesses

Economic Activity of a community Employed citizens Thriving Businesses = Money Motivation Available Capital Desire to spend and invest If money is not forthcoming from the outside, then a community needs to look inward, and fill the shortfalls with creativity and innovation. Unemployed Closed Businesses Local stimulus Local alternatives

How does a community make up for the loss money from the outside? By creating monetary alternatives for business transactions

Any alternative to cash must: Be universally accepted (within the community) Have an easily determined dollar value be convertible to cash

Be universally accepted (within the community)

Have an easily determined dollar value

be convertible to cash

Proposal: monetize property tax credits against new projects How? By paying with credits against future property taxes to willing suppliers By facilitating easy transfer of such credits between private parties

How?

By paying with credits against future property taxes to willing suppliers

By facilitating easy transfer of such credits between private parties

Monetizing property tax credits… Example: The city budgeted $5000 for a section of the river walk in next years budget. But the city recognizes times are tough this year, and there are lots of contractors have surplus resources and idle labor. So the city offers up bids for the river walk section with payment to be in a $5000 credit against next years taxes. Some contractors recognize that this will immediately improve their bottom line. A winning contractor does the work and accepts the property tax credits as payment.

Example:

The city budgeted $5000 for a section of the river walk in next years budget. But the city recognizes times are tough this year, and there are lots of contractors have surplus resources and idle labor.

So the city offers up bids for the river walk section with payment to be in a $5000 credit against next years taxes.

Some contractors recognize that this will immediately improve their bottom line.

A winning contractor does the work and accepts the property tax credits as payment.

Monetizing property tax credits Immediate advantages For the contractor Puts idle people and resources to work frees up cash set aside for taxes Increases sales For the city puts future dollars to work against current economic problems citizens get use of the project results a year earlier No increase in taxes or costs

Immediate advantages

For the contractor

Puts idle people and resources to work

frees up cash set aside for taxes

Increases sales

For the city

puts future dollars to work against current economic problems

citizens get use of the project results a year earlier

No increase in taxes or costs

Monetizing property tax credits But that only adds a single transaction of $5000 to the economy… The real magic comes from making these “property tax credits” easily transferrable between private parties. This can be done as simple as the city accepting “letters granting transfer”, or as sophisticated as a web-based app similar to on-line banking.

Monetizing property tax credits When “property tax credits” (PTCs) become easily transferrable…. … they can be used for purchasing goods and services with anyone who needs to pay property taxes.

Monetizing property tax credits And in our example For sidewalk work, contractor accepts $5000 in PTCs Contractor buys $1000 in gas cards from local station, and $4000 toward auto repair from a local garage. Local gas station uses $1000 in PTCs against rent. Local garage uses $4000 in PTCs as bonuses for staff At end of year: Gas station landlord applies $1000 to property taxes Garage staff applies their bonuses against their property taxes Economic Activity generated ……… ..$5000 +……..$1000 +……..$4000 +……..$1000 +……..$4000 $15,000

And in our example

For sidewalk work, contractor accepts $5000 in PTCs

Contractor buys $1000 in gas cards from local station, and $4000 toward auto repair from a local garage.

Local gas station uses $1000 in PTCs against rent.

Local garage uses $4000 in PTCs as bonuses for staff

At end of year:

Gas station landlord applies $1000 to property taxes

Garage staff applies their bonuses against their property taxes

Monetizing property tax credits The more accepted PTC’s are within the community, the more economic activity that can be generated. Each additional transaction enriches the community by the equivalent amount in additional goods and services. Economic Activity generated ……… ..$5000 +……..$1000 +……..$4000 +……..$1000 +……..$4000 $15,000

Monetizing property tax credits Why it works Trading with assets is as common and as old as bartering itself Since virtually everyone pays taxes (directly or indirectly), PTC’s would have broad acceptance No changes are require for city tax accounting systems as these already track debits and credits for tax payers (though procedures would be needed for handling PTC’s) No changes needed for private accounting systems as PTCs would be handled as other non-cash financial assets

Why it works

Trading with assets is as common and as old as bartering itself

Since virtually everyone pays taxes (directly or indirectly), PTC’s would have broad acceptance

No changes are require for city tax accounting systems as these already track debits and credits for tax payers (though procedures would be needed for handling PTC’s)

No changes needed for private accounting systems as PTCs would be handled as other non-cash financial assets

Monetizing property tax credits How a city government would get started Identify future funded projects that seem like good candidates Discuss with suppliers: Would they accept PTC’s for the project if it was moved into current year? (If not, the project is performed in the scheduled year) Discuss with subs: Would you accept PTCs from prime if it meant work for this year rather than next year. Build and share list of suppliers and subs that will accept PTC’s. Begin project funding

How a city government would get started

Identify future funded projects that seem like good candidates

Discuss with suppliers: Would they accept PTC’s for the project if it was moved into current year? (If not, the project is performed in the scheduled year)

Discuss with subs: Would you accept PTCs from prime if it meant work for this year rather than next year.

Build and share list of suppliers and subs that will accept PTC’s.

Begin project funding