Incentivizing Developers In A Slump

How should cities incentivize developers in a down market? And should they? William Fulton reflects on the price cities will pay to get new buildings, and if it is worth it.

"It is the natural inclination of state and local governments to try to make something happen in a recession. Faced with stagnant tax revenues and a dwindling jobs base, elected officials - and their appointed economic developers - feel tremendous pressure to do something to turn things around.

But how do you respond in the face of a worldwide economic crisis? If even the most powerful central bankers around the globe can't quite figure out how to deal with it, what can a state or a city or a county do?

The answer boils down, as always, to the carrots and sticks economic developers and their elected bosses have at their disposal. In the end, this means money - how much of it does the government extract from businesses to cover its own costs, and how much money does the government provide to businesses in the way of subsidies or incentives?"

Full Story: Going for an Upturn

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