Tuesday, October 14, 2008

Shared Investment Policy to Promote Regional Development

The EDC was asked by local government officials to provide an initial policy framework for local incentives or shared investments. The following is a brief summary. Click here to see the entire policy document.

The overriding objective of the local government shared investment policy is to foster the public benefits of economic development and placemaking that will enhance the overall quality of life of the region. Furthermore, in acting as an agent of the public interest to promote growth and economic development in the City of Owensboro and Daviess County, the local governments take it in their authority to offer inducements to projects and firms that promote the following economic development and sustainable growth objectives:
  • Create jobs, increase investment, enhance property values and tax base which increase the overall economic development of the region;

  • Promote development of venues and placemaking that makes the region attractive;

  • Leverage sustainable growth or redevelopment according to principles of sustainable development;

  • Stem retail leakage, which is a major competitive reality in the Owensboro market area.

  • Improve regional competitiveness;

  • Promote redevelopment and downtown development rather than unplanned suburban development (“urban sprawl”) that is not tied to placemaking.

The shared investment policy is designed to be flexible with the ability to negotiate each deal differently rather than according to a prescriptive program. Rather than a prescriptive approach, policy standards will guide the development of all shared investment agreements including an evaluation of the overall fiscal impact of the development, based on pro forma data submitted through an application process. A scoring mechanism will be used to determine the term and percentage of public investment. All inducements will use a “but for” provision indicating that the project would not take place without the inducement. All shared investments will be performance-based using a reimbursement rather than cash up front. The following types of shared investment inducements will be outlined:

Firm-Based Inducements-To protect, strengthen and expand the region’s economic base, the local governments rely upon the creation and/or retention of high quality, permanent fulltime “primary” jobs for its residents. As such, developments that have the greatest potential in producing these types of jobs shall be given priority when evaluating multiple funding requests.

Project-Based Inducements-While this proposal does not propose to offer inducements directly to retailers, there may be cases where projects that include a retail component should be considered. In particular, mixed-use projects that are "New Urbanist" in character may qualify. Known by a variety of names, the defining characteristics of new urbanist projects appear to be walkable neighborhoods, a mix of land uses that integrate housing, shops, civic facilities, and work places, and preservation and respect for the natural environment in the form of maintaining greenspace.

Current Option—City of Owensboro Annexation Ordinance -- Public infrastructure only, maximum five-year term with incentive parameters that are under the existing ordinance, the disadvantage of this plan is that it only incentivizes suburban development and, possibly, urban sprawl.

New Option 1— Project Redevelopment Financing (PRF)-- Redevelopment of the urban core/ urban central area, including downtown and adjacent downtown areas, the use of public funds are limited to infrastructure or public benefits. The development must conform to the Owensboro Urban Design Principles (see attachment A) and adopt a form-based code.

New Option 2—Project Development Financing (PDF)--Developments in the urban belt and urban growth areas according to the Comprehensive Plan; must conform to the Owensboro Urban Design Guidelines (see attachment A) and adopt a form-based code.

New Option 3—Project Based Financing Districts-- Local governments can opt to spur development in an area of land (district) targeted and identified for redevelopment or new development. Projects that develop within the district may be eligible to use the same guidelines for a PDF or a state blight area TIF (if eligible) as a source of financing. The local government would identify the district and term for which projects could qualify for local incentives.

The proposal also contains current inducements and incentives utilized for entrepreneurs and business startup and inducements specific to downtown redevelopment, many of which will be forthcoming with the downtown master plan being presented to the local governments in November 2008.

Project Evaluation Criteria- The primary consideration when evaluating whether or not to offer a given firm or project a package for relocation/expansion should be the potential economic and fiscal impact on Owensboro. At the same time, the “goodness of fit” of the firm or project with Owensboro should be reviewed, along with consideration of the potential impact on infrastructure and the environment. A scoring mechanism will be utilized by an Inducement Review Committee consisting of professional staff in economic development, planning and zoning, and the local governments. The committee, using the scoring mechanism, will rigorously evaluate the project pro forma based on the following criteria: 1) Overall Economic Impact, 2) Labor Force, 3) Linkage to the Regional Economy, 4) Cultural and Quality of Life, and 5) Environmental Track Record.

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