Last week I had the opportunity to speak about financing and incentives for sustainability priorities. Here are a few takeaways from our program:
- The lines are blurring between traditional incentives - intended to support individual businesses - and development finance – intended to foster job creation and economic growth through the use of tax-exempt and other public-private partnership finance programs.
- Both traditional incentives and development finance programs are frequently used to support sustainability priorities, including environmental and social/equity objectives.
- Several tools and frameworks already exist that bring incentives and sustainability together:
- STAR Community Rating System – multiple incentives receive points within the rating framework
- Triple Bottom Line Tool – can be used to ensure incentives align with community goals and deliver performance across the three pillars of sustainability
- Tax increment financing (TIF), special assessment districts, and tax credits – can be used for smart growth and sustainability initiatives and have been put in place in communities across the country
- Incentives used for sustainability priorities should undergo the same type of analysis as incentives used for business development efforts to make sure they are helping to achieve community goals. Specifically:
- Can this incentive deal generate net benefits for your community, based on:
- Project characteristics
- Fiscal impact
- Economic impact
- Afterwards, did this incentive deal generate net benefits for your community?
- Monitor compliance
- Assess effectiveness
- Reporting outcomes
- Policy feedback
The Council of Development Finance Agencies (CDFA) also recommends a similar series of tests to understand whether TIFs and special assessment districts are good investments for the community. Further, we both agree that transparency and communication are critical to success. Check out their resource page on TIFs for more great information about how to use this financing tool effectively in your community.
If you are interested, you can download my full presentation here. This presentation was part of the Financing session at MM2|Moving Forward Montgomery, a conference devoted to suburban transformation and the ways communities can adapt to change while making themselves more sustainable. Thanks to the National Center for Smart Growth Research and Education and the Montgomery County Planning Department for hosting this interesting and informative conference.