1. POLICY MANUAL Economic Development Incentives

2. Prior Actions December 2007  State Audit questions City actions regarding development incentives  City responds to audit with commitment to adopt policy regarding use of economic development incentives May 27 & 28, 2009  City Council receives briefing on draft Interim Economic Development Financing Policy Manual Summer 2010  Market Street Services, Inc. provides Incentives Analysis to Springfield Business Development Corporation February 15, 2011

3. Economic Development Goals Create and retain quality jobs Increase private investment in the community Increase the property tax and sales tax base Pay for public infrastructure Remove blight from the community Improve the quality of life for all citizens February 15, 2011

4. Government’s Role in Economic Development February 15, 2011 “Now the true engine of job creation in this country will always be America’s businesses. But government can create the conditions necessary for businesses to expand and hire more workers.” President Barack Obama State of the Union Address January 25, 2011

5. Economic Incentives February 15, 2011 Special Taxing Districts  Community Improvement District  Transportation Development District  Neighborhood Improvement District  Special Business District Tax Abatement / Exemption  Land Clearance for Redevelopment Authority (Chapter 99)  Industrial Development Bonds (Chapter 100)  Urban Redevelopment Corporation (Chapter 353)  Enhanced Enterprise Zone

6. Economic Incentives February 15, 2011 Increment Financing  Access and Infrastructure / Developer Agreement  Tax Increment Financing Loan Programs  Small Business Development Loans  Façade Loans  Microenterprise / Business Incentive Loans  Business Incentive for Home-Based Businesses Loan Brownfields Assistance  Brownfields Assessment Program  Brownfields Revolving Loan Fund Program

7. Economic Development Incentives February 15, 2011 Program Sales Tax Property Tax Business License Tax Fees Special Assessment Bond Financing Eminent Domain Real Property Tax Abatement/Exemption Personal Property Tax Abatement/Exemption Sales Tax Exemption Redirect Property Tax Increment Redirect Sales Tax Increment Loans Grants Community Improvement DistrictXXXXXX Transportation Development DistrictXXXXX Neighborhood Improvement DistrictXX Special Business DistrictXXX Land Clearance for Redevelopment AuthorityXXX Industrial Development BondsXXXX Urban Redevelopment CorporationXX Enhanced Enterprise ZoneX Access and Infrastructure AgreementX Tax Increment FinancingXXXX Small Business Development LoansX Center City Façade LoansX Microenterprise/Business Incentive LoansX Brownfields Assessment ProgramX Brownfields Revolving Loan FundXX

8. Considerations in Developing Policies February 15, 2011 Statutory requirements Project management experience Best practices from other Missouri communities Market Street Services, Inc. Incentives Analysis

9. Sample Policies February 15, 2011 Clayton Columbia / Boone County Crestwood Grandview Independence Kansas City Liberty Osage Beach St. Louis Smithville Olathe, Kansas Topeka, Kansas Wichita, Kansas

10. Incentives Analysis February 15, 2011 “Many respondents in the stakeholder input process expressed that the competitiveness of state and local incentives was limiting the success of the Metro Springfield business climate. Input participants identified stronger advocacy at the state level and better leveraging of existing incentives as necessary means to encourage the growth of new and expanding businesses that contribute to the economic prosperity of Metro Springfield and Missouri. Some respondents felt that local incentives were focused more on center city and blighted area redevelopment than strategically attracting and growing targeted firms.” – Market Street Services, Inc.

11. IBM Technology Service Center – Columbia, MO February 15, 2011 800 jobs at average annual wage of $55,000 “The tools used by Columbia, Missouri to successfully recruit IBM are available to the City of Springfield to attract prospects to the community. While Springfield did not make IBM’s short list, the City could have theoretically matched Columbia’s offer if the opportunity presented itself. However, Springfield Area public input participants said that, while there is a way to more effectively incentivize companies, there is often not the will to do so by local government.” – Market Street Services, Inc.

12. Incentives Analysis Key Conclusions February 15, 2011 Many other cities and states have more flexibility and capacity to offer a broader range of incentives The City needs to be both more creative and more aggressive in the incentivization of firms.  Creative – leverage partners including colleges, banks, and local companies  Aggressive – maximize the capacity of the incentive tools at the City’s disposal Caveat - “There is even a growing sense among certain states and regions that, rather than showering incentives on prospects, the business of corporate attraction largely entails providing a competitive business, labor and quality of life environment.”

13. Incentives Analysis Key Conclusions February 15, 2011 Consider the following initiatives to make the city and the state more competitive:  Passage of the “Grow Me State” initiative  More flexibility in the use of TIF outside center city  Flexibility to abate more than 50% of a prospect’s real property taxes  Flexibility to abate 50% or more of a prospect’s personal property taxes  Creation of a rate rider to lower commercial power costs for the highest-volume users  Creation of a “deal closing” fund to offer customized incentives to high-value prospects

14. GENERAL POLICIES INCENTIVE-SPECIFIC POLICIES February 15, 2011 Economic Development Incentives Policy

15. General Policies (Policy Manual page 2) February 1, 2011 15 Judicious use of incentives Developers are encouraged to discuss projects with staff prior to applying Developers are encouraged to meet with taxing jurisdictions All discretionary incentives will be subject to a “but for” test. Discretionary incentives will be granted only at the level necessary to make the project financially feasible Sustainable development will be encouraged through incentive bonuses City will consider additional incentives for projects that create or retain quality jobs

16. General Policies - continued February 1, 2011 16 City’s “annual appropriation”, or General Fund, guarantee will not be pledged Taxes will not be reduced below the base year City will not waive City permit, development, or incentive fees. Projects must be consistent with the City’s Comprehensive Plan and comply with zoning and building codes. Since each project is unique, every proposal will be evaluated under the City’s Policies on its individual merit and overall contribution to the local economy and the City’s goals. Periodic reporting required that demonstrates compliance with program requirements and measuring economic benefit

17. ENHANCED ENTERPRISE ZONE INDUSTRIAL DEVELOPMENT BONDS TAX INCREMENT FINANCING February 15, 2011 Significantly Changed Policies

18. Enhanced Enterprise Zone Substantial increase in eligible area since 2009 Primary incentive for new and expanding businesses 50% abatement on improvements for 10 years 25% bonus abatement for LEED Silver or higher February 15, 2011

19. Purpose Process February 15, 2011 To encourage private investment through real and personal property tax exemption and sales tax exemption on purchases May be used to finance land, building, fixtures and machinery for warehouse and distribution facilities, research and development facilities, office industries, service industries engaged in interstate commerce, industrial plants, and certain types of commercial development City Council issues bonds Company transfers ownership of development site and/or equipment to City Company buys the bonds and repays them After repayment, City conveys title back to the company Council may issue bonds after notice to taxing jurisdictions and public hearing Could provide for 100% real and/or personal property tax exemption for 25 years unless a payment in lieu of taxes (PILOT) is required Industrial Development Bonds (Chapter 100)

20. Relationship of Chapter 100 Incentive to Missouri Quality Jobs Program February 15, 2011 Missouri Quality Jobs Program (MQJ)provides state tax credits to companies which create at least 100 jobs with an average wage equal or greater than the county average wage Greene County average wage = $33,924 MQJ “local incentive bonus”  Local community must provide a local incentive equal to 50% of the total tax benefit for 10 years Chapter 100 can be used to grant real and personal property tax incentive, thus triggering the MQJ local incentive bonus

21. Chapter 100 Policy Highlights February 15, 2011 Real Property Tax Exemption  Existing business - $5 million investment AND create or retain 100 jobs with average wage equal or greater than Greene County average wage  New business - $5 million investment OR create 100 jobs with average wage equal or greater than Greene County average wage  Prior policy - $20 million investment AND 100 jobs Personal Property Tax Exemption  Existing business - $5 million investment AND create or retain 100 jobs with average wage equal or greater than Greene County average wage  New business - $5 million investment OR create 100 jobs with average wage equal or greater than Greene County average wage  Prior policy - $25 million investment AND 100 jobs

22. Chapter 100 Policy Highlights February 15, 2011 Sales Tax Exemption  Council must find extraordinary public benefit or savings General Policies  Abatement will typically mirror Enhanced Enterprise Zone (50% for 10 years)  City may consider an increased exemption level where the jobs created or retained pay 150% or more of the Greene County average wage  Annual employment reporting required  Tax exemption will be terminated if company reduces labor force by more than 25% from preceding year or by more than 50% from the first year of exemption

23. Purpose and Benefit Eligible Activities February 15, 2011 To fund project-related costs, infrastructure and capital improvements through the redirection of the incremental increase in sales and property taxes TIF captures 100% of the incremental increase in property taxes (PILOTS) and 50% of the incremental increase in sales taxes (EATS – economic activity taxes) TIF can last up to 23 years Plans and specifications Land acquisition and site preparation Public improvements Private improvements can be funded only if TIF District is declared blighted Tax Increment Financing

24. TIF Process February 15, 2011 City Council establishes TIF Commission  2 members appointed by County Commission  2 members appointed by School District  1 member appointed by “other taxing districts”  6 members appointed by Mayor and confirmed by City Council – 1 a representative of Springfield – Greene County Library and 1 a member of City Council TIF Commission recommends approval of TIF Redevelopment Plan to City Council TIF Commission solicits requests for proposals consistent with the Redevelopment Plan City Council conducts public hearing and establishes TIF District and approves developer selection after notices to property owners and taxing jurisdictions

25. TIF Policy Highlights February 15, 2011 Must demonstrate that alternative financing methods have been thoroughly explored Must demonstrate substantial and significant public benefit by constructing public improvements in support of development that will create new jobs and retain existing employment, eliminate blight and/or strengthen the employment and economic base of the City Most favorable consideration to projects that propose no more than 20% of total project costs will be reimbursed with TIF revenues Minimum 15% developer cash equity investment in project. Projects with equity contributions in excess of 25% will be viewed more favorably

26. TIF Policy Highlights February 15, 2011 Retail projects must demonstrate the project will encourage inflow of customers from outside Springfield or will provide services or fill retail markets currently unavailable or in short supply. Additional consideration will be given to projects in excess of $15 million or the development of vacant property in areas where the project will be the initial development or will serve as a catalyst for further quality development TIF projects that propose a reasonable and certain end date for construction and occupancy and demonstrate how goals will be achieved will be viewed positively. Projects with tenant commitments will be viewed with greater favor.

27. TIF Policy Highlights February 15, 2011 TIF term will be the minimum necessary Most favorable consideration will be given to projects that provide immediate benefit to the taxing jurisdictions. Notwithstanding the foregoing, TIF applications which do not meet the above criteria will be viewed favorably if the application clearly demonstrates that the project is of vital interest to the City and will significantly assist the City in the elimination of blight, financing desirable public improvements, strengthening the employment and economic base of the City, increasing property values, reducing poverty, creating economic stability, upgrading older neighborhoods, and/or facilitating economic self-sufficiency.

28. Questions? February 15, 2011 It is the policy of the City of Springfield to consider the judicious use of incentives for projects which demonstrate a substantial and significant public benefit by constructing public improvements in support of developments that will, by creating new jobs and retaining existing employment; eliminate blight, strengthen the employment and economic base of the City, increase property values and tax revenues, reduce poverty, create economic stability, upgrade older neighborhoods, facilitate self- sufficiency, and implement the City’s Comprehensive Plan and economic development strategy.