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Financing and incentives for sustainability
This document discusses how financing incentives can be used to promote sustainability priorities. It defines incentives as tools that influence business decisions to spur growth and jobs. Incentives include direct financing, tax-related programs, bonds, grants and loans. They can support environmental, renewable energy and social objectives. Frameworks like STAR Communities and the TBL Tool evaluate how incentives achieve economic, environmental and social goals. Tax increment financing and special districts are targeted tools that can catalyze investment in smart growth. Incentives work best when they generate net benefits for the community and are closely monitored for compliance and effectiveness. Examples from Austin, Atlanta and Madison show how incentives have supported sustainable redevelopment projects.
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Financing and incentives for sustainability
- 1. FINANCING & INCENTIVES FORSUSTAINABILITY PRIORITIES Session: Finance and Added Value Makeover Montgomery II May 9, 2014
- 2. Incentives Basics A workingdefinition 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
- 3. 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
- 4. 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
- 5. STAR Communities andIncentives • 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
- 6. TBL Tool andIncentives • 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
- 7. TIF/Special Districts andSustainability • 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
- 8. Incentives and communitydevelopment 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
- 9. Examples Austin, TX Rigorous analysisof 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.
- 10. Concluding Thoughts • Incentivesand 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
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