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Street Talk

Downtown Incentives Have Proven Worth

By Mickey Howley

This week’s column is part of series on downtown business incentives. Incen-tives are not sexy or funny or even hipster cool, but they exist because lots of economic development folks think they work. And one needs look no further than the incentive packages for industry. The recent Yokohama plant in Clay County has state incentives of 70 million on an initial 300 million company investment. The total state incentives will be 130 million on a billion dollars of Yokohama money. Big bucks, but more than that, look of the ratio of public dollar incentives to private dollars invested. The state economic developers feel they must offer these to stay competitive with other states and also believe that the state money incentives will return in multiples over time. I’ve heard and seen this again and again, and no matter the scale, it is often the smaller money upfront is what kick starts the larger projects into being.

Smaller incentives have a different priority. Call it a different philosophy, but the idea it is easier to encourage and expand the people and businesses already in a place than to bring in some project from far away. Much easier to retain and expand than recruit. And more cost effective. And you’re helping folks who are already invested and have a track record. And that help benefits everyone over time way more than the incentive dollars.

Incentives that were featured in the Place Economic presentation at the National Main Streets Conference (other than Water Valley’s) were six other towns like Dodge City, Kansas. They have grant/loan combination for facades and interiors. Dodge City with a population of 27,000 might have more money, their 50/50 matching deal is up to 10 thousand dollars and since 2011 they have had 19 commercial exteriors and 4 business interiors make use of this incentive.

Washington, Missouri is a Water Valley size town and they have a specific sign and awning matching grant of up to $500. Sounds a lot like our façade grant. They’ve granted $3,200 and had $14 thousand in private money, so about  4.5 to 1 ratio. Water Valley’s is about 10 to 1. Just saying, not bragging.

Meza, Arizona has a $10 thousand dollar 50/50 matching grant for sprinkler systems. Buildings must be in the historic downtown. Mesa is a much bigger town at half a million people and two of the city council people are also firefighters.

Smithfield, North Carolina (pop. 7,000) is really targeting restaurants and retail for their downtown. They’re giving first year rent assistance of up to 10 thousand dollars based on square footage. Restaurants receive four dollars per square foot and retail businesses get two dollars per foot. While no one will go in business for that money alone, it still is a very creative way to encourage startups and get them concentrated downtown.

Beatrice, Nebraska (pop.12,000) has a low interest revolving fund targeting downtown business for the purpose of retention and expansion with a loan maximum at the low rate of $50 thousand. This is similar to the Main Street loan program we have with Mechanics and Renasant Banks.

Birmingham, Alabama has a sales tax refund. It is given on a case-by-case basis and for a limited time, but the example from the presentation was a return of the hotel/motel tax directly to the hotel/motel. That is an extra 2 percent tax, but that goes straight to the bottom line. Birmingham is using that to assist hotels in historic properties.

That’s just the examples Place Economics featured, along with Water Valley’s Creative Economy grant, as positive examples in the range of smaller downtown incentives. And many of these incentives in terms of return percentage out perform the big industrial incentives.

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