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CITY OF PARKVILLE, MISSOURI
Policy Title: Economic Development Incentive Policy
Policy Number: 100-08 Category: Board
Effective Date: October 4, 2011
Resolution No. 10-01-11
Updates:
INTRODUCTORY STATEMENT
The Board of Aldermen of the City of Parkville, Missouri (the "City") adopted the Parkville Plan
for Progress (the "Plan for Progress") on September 21, 2010 pursuant to Resolution 09-01-10
setting forth a strategic plan for economic development for the City. The Plan for Progress
called for the formation of the Parkville Economic Development Council ("EDC") to encourage
and facilitate responsible economic development within the City and outlined several goals and
implementation recommendations to achieve those goals. The EDC completed one of the
implementation items by the adoption of an Economic Development Incentive Policy.
The City recognizes the importance of the efficient and effective use of limited public and private
resources and incentive programs to facilitate responsible economic development. The City
further recognizes that the City's adoption of an economic development incentive policy is
essential to its responsible use of these limited resources. In furtherance of the Plan for
Progress, the City adopts this Economic Development Incentive Policy ("EDI Policy") to guide
the City and City staff in the responsible use of incentive programs within the City.
PURPOSE OF THE POLICY
The purpose of this EDI Policy is to provide a general guide for the use of the various economic
development incentives available for public and private economic development projects. Each
potential use of any one economic development incentive for any one project should be
evaluated in light of the given circumstances and economic climate and overall public goals at
the time overview.
GENERAL POLICY GUIDELINES
When Incentives Should be Used. Generally, incentives should be used only when the City finds
that incentives are necessary to attract private and/or other public investment that would (a) not
otherwise occur in a timely manner that would result in (i) sustainable quality residential or
commercial development, or (ii) the attraction of new businesses or retention or expansion of
existing businesses which are anticipated to generate new wealth and growth in Parkville, and
(b) have an overall positive impact on the community. Incentives should be used in a manner
that leverages the most investment from other public and private resources while eliminating or
minimizing the risk to the general fund. During times of recession, economic development
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incentives should be more favorably considered in order to jump-start the economy. As the
economy improves the use of incentives should be more limited.
What Incentives Should be Used. All incentives that are available should be considered. No one
incentive should be considered to be unavailable in all cases. The key to the effective and
efficient use of incentives is determining "when" and "how" any one particular incentive is used
in general and in particular.
Extent Incentives Should be Used. Once the City finds that any one or more incentives are
necessary to attract public and/or private investment in a particular project, the amount or extent
of the use of the incentive(s) should be limited to that which is necessary to attract the desired
investment with the desired result, whether it be a particular type of quality development,
business, number of jobs and/or increase in the tax base. Depending on the project, there could
be numerous factors to consider in determining the amount and extent of the public incentives
that are necessary. The factors to be considered will depend on the particular project, type of
investment and investor and the desired result. In most private investment cases, the bottom
line for the private investor will be the investor's projected return on investment. In some cases
the developer will be focused on the short term and in other cases the long term. Whatever
factors are considered, it will be necessary to consider them on a case-by-case basis with the
review being based upon the principles that underlie this EDI Policy.
Financing Methods. The method of financing the project or monetizing the incentive in question
is an important factor to be considered in determining the use of the incentive. The use of public
financing for private development which puts the City's general fund at risk, such as general
obligation bonds, should be used only when there is a compelling public interest at stake.
Likewise, the use of City credit enhancement such as a City annual appropriation guarantee to
finance private development, although less risky than general obligation debt, should be used
only when a compelling public interest is at stake. In which cases, the risk to the general fund
and City's credit should be minimized to the extent possible. The use of public revenue bonds
should be considered when there is no other readily available private source of financing or
when tax-exempt financing would be available to reduce the overall financing costs, resulting in
a more viable and economically sustainable project. Projects that have substantial private equity
investment in which the public incentive is financed on a "pay-as-you-go" basis and/or which
receive incentive based on performance should be viewed more favorably than projects in which
the public incentive requires public financing.
Involvement of Community Partners. The impact the investment and use of the incentives will
have on the City's community partners should be considered. The City's community partners
include but are not necessarily limited to the other affected taxing districts. Early communication
with the City's community partners will be essential to determine the impact the use of
incentives will have on community partners and to maintain good relations with community
partners. The level of communication and involvement should depend on the type of incentive
being considered and the level of impact on the City's community partner.
Master Plan and Zoning Issues. As a general rule, projects seeking the assistance of public
financial incentives should comply with the Parkville Master Plan and Parkville Municipal Code
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before the Board of Alderman will evaluate or support the use of incentives for a particular
project; however, there will be instances in which an amendment to the Parkville Master Plan or
Parkville Municipal Code may be necessary, compelling and in the public interest.
OTHER FACTORS TO CONSIDER
There are many other factors to consider in determining whether or not and to what extent to
use any one particular public incentive for private development. Below is a list of general
factors to consider and questions to ask. This is not intended to be an exhaustive list and some
will not be applicable in all situations.
1. The leverage of other funding sources by the proposed project financing: (a) Does the
use of the local public incentive leverage other state or federal funds? (b) Has the
developer sought or will the developer seek other state or federal funds or public or
private grants? (c) Will the developer seek self-help tools such as a special assessment
district or special district sales tax? (e) Is the amount of private funding sources including
developer equity substantial?
Projects which leverage substantial other public/private investment would be considered
more favorable if such funding enhances the project and its feasibility.
2. Is the developer a good community partner with a track record of excellence? The use of
incentives for a proposed project in which the developer has a consistent poor track
record should not be considered.
3. Will the proposed development provide additional funding or security for existing public
investments or outstanding general obligations?
4. Is the proposed development located within an area which has been identified as a
priority for development or adjacent to existing major nodes of development or will it
connect existing areas of development? It would be substantially less desirable to use
public incentives for a proposed project which is in remote proximity to other
development because remote development generally results in a greater drain on public
resources because there are fewer economies of scale in the delivery of public services.
In the cases of remote development, incentives should only be used if there is an
overwhelming public interest to be served and/or the net public revenues generated are
significant.
5. Will the proposed development provide sufficient public infrastructure to support its
development, upgrade existing infrastructure, and/or serve other existing or future
development?
6. Will the proposed development generate net public revenues, sooner rather than later?
Projects that generate public revenues or provide public benefits within a short period of
time are more favorable than those that will not result in net public revenues or benefits
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for long periods of time. Projects that generate a relatively substantial public return
compared to the public incentive granted will be viewed more favorably.
7. What, if any, public opportunity costs would result from the proposed development or
use of the proposed incentive? In other words, does this development or the use of this
incentive prevent the community from seeking or realizing any other opportunities?
8. Will the proposed development be a catalyst to other desired private development?
9. Will the proposed development generate desired jobs for Parkville residents or potential
future residents?
10. 1Is there any financial risk to the City? If so, is the risk minimal relative to the anticipated
public benefits and have steps been taken to minimize the risk as much as feasibly
possible, such as private collateral?
11. For redevelopment projects, will the redevelopment result in the property being brought
up to current building and/or zoning codes? All redevelopment projects that receive
public incentives should be brought up to current building codes where physically
feasible, with some reasonable exceptions related to historic rehabilitation.
12. Does the proposed project include public improvements or other enhancements that
serve the public at large and at a substantially lower cost than might otherwise be the
case?
A positive answer to the foregoing questions/factors for consideration should not be
considered to be a condition precedent to the use of any one tool, but should be
considered in evaluating the overall benefit and potential impact of the proposed
development.
DEVELOPMENT AGREEMENTS
The use of incentives gives the City a unique ability to achieve the type of development it
desires through contract that cannot be achieved through zoning or building codes. Incentives
should be used to leverage and attract desired development. To that end and as appropriate
given the type and amount of incentive at issue, the City should require that the developer enter
into a development agreement which clearly defines the project to be undertaken and any
conditions to be met before the incentive is released or as a condition to the continuation of the
grant of the incentive.
CASE-BY-CASE REVIEW
This EDI Policy is merely a guideline to follow in reviewing the use of public incentives for
proposed projects. Each project must be viewed on its own merits under the market and public
conditions that exist at the time of the request.