Incentive Programs Overview
Mary Lilly Smith
Economic Development Director
840 North Boonville
Springfield, MO 65801
The City of Springfield seeks to be a community that welcomes new business investment and supports the businesses that have chosen the City as their home. A vibrant business community improves the quality of life for all residents. Quality of life and economic development are interdependent goals. Private investment and job creation can build a stronger community. Community improvement leads to maintaining a vibrant community that will keep existing businesses and attract new ones.
Economic development incentives, if used carefully, can help maintain and build employment opportunities and the property tax base the City needs to be strong. The purpose of this document is to establish the official policies of the City of Springfield for the use of economic development incentives. All projects will be evaluated using both the General Policies and the policies specific to the particular incentive.
- Special taxing districts – Pursuant to State law, the City may establish or approve the establishment of special districts that can impose special assessments and/or taxes in order to pay for public improvements or to eliminate blight. These districts require the cooperation of a majority of the property owners in the district. Typical taxing districts include Neighborhood Improvement Districts (NID), Community Improvement Districts (CID) and Transportation Development Districts (TDD).
- Property tax abatement – Tax abatement is offered through a variety of programs geared to job creation, private investment, and redevelopment. Typically, the development continues to pay taxes on land and improvements based on their value prior to the new investment. All or a portion of the incremental increase in property taxes is abated for a set period of time. This incentive is sometimes referred to as Chapter 99 (Land Clearance for Redevelopment Authority), Chapter 100 (Industrial Development Bonds), or Chapter 353 (Urban Redevelopment Corporation).
- Redirection of the incremental increase in taxes - The development pays all taxes owed and a portion or all of the incremental increase in taxes resulting from development are captured and redirected to pay redevelopment project costs. Taxing jurisdictions continue to receive the taxes based on the pre-development value. A TIF may also capture new taxes imposed after the TIF is approved. This incentive is known as Tax Increment Financing (TIF).
- Small Business Loan programs - Loans are offered in targeted areas for acquisition and redevelopment of commercial properties and for working capital, inventory, and equipment.
The incentives can be further divided into discretionary and non-discretionary. While most of the City's incentives are discretionary, a few are not. In the case of nondiscretionary incentives, the City must provide the incentive if the applicant meets certain conditions.
- 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.
- Developers are strongly encouraged to discuss their projects with staff prior to filing any applications for incentives.
- The City encourages developers to meet with taxing jurisdictions that will be affected by the incentive.
- All discretionary incentives will be subject to a &but for& test. There must be a finding by the City Council that the project would not occur, or would only occur at a significantly smaller scale, or will not be financially feasible or stable, or that public benefit will not occur if the incentive is not provided. Discretionary incentives will only be granted to those projects that would not otherwise occur if incentives were not provided, unless the City Council finds there to be an overriding public benefit or a reduction in costs that would otherwise be paid by the City.
- Discretionary incentives will be granted only at the level necessary to make the project financially feasible.
- The City encourages sustainable development and will consider additional incentives for those projects that achieve a Silver rating or higher from the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) program.
- The City will consider additional incentives for projects that create or retain quality jobs that pay wages equal to or higher than the Greene County average wage and offer competitive benefits.
- The City's "annual appropriation", or General Fund, guarantee will not be pledged for economic development projects, except in extraordinary cases.
- Taxes will not be reduced below the base year, as established by the individual redevelopment plans, after an incentive is approved.
- The City will not waive City permit, development, or incentive fees.
- All projects receiving incentives must be consistent with the City's Comprehensive Plan and must comply with all applicable City 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.
- The City shall require periodic reporting evidencing compliance with the requirements of the program and measuring the economic benefit to the City and the region.
Economic Development Incentive Fees
The use of economic development incentives is subject to the fees set forth in General Ordinance 5490, adopted August 22, 2005. Please see page three of General Ordinance - 5490 for the fee schedule.
Preliminary Funding Agreement
Some projects requesting incentives are fairly straight-forward and can be handled by existing staff and within current work programs. Larger projects, particularly those that request establishment of a Tax Increment Financing District or use multiple financing tools, require substantial staff commitment and usually necessitate engaging outside consultants. The City does not have a source of funds to pay for costs incurred for additional legal, financial and other consultants or for out-of-pocket expenses and other costs resulting from services to research, analyze and plan for the most appropriate mix of funding sources. In those cases, the City will require that the applicant enter into a Preliminary Funding Agreement.
State of Missouri Economic Development Incentives
The State of Missouri offers economic development incentives including programs directed at job creation projects and downtown development. The City works closely with the State of Missouri to coordinate the economic development incentives administered by the Department of Economic Development.