State-Based Financing Tools. Rob Hunden Hunden Strategic Partners

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1 State-Based Financing Tools Rob Hunden Hunden Strategic Partners

2 Recently, states have been most active in creating new incentive programs for economic development: Manufacturing (typical) Sciences (more recent) Tourism/Real Estate Development (recent) Film State Incentives

3 State Incentives Missouri (MoDESA) Kentucky (KTDA); West Virginia (WVTDA) Kansas (STAR Bonds) Colorado (Urban Renewal Authorities) Nebraska Mississippi Sales Tax Rebate Washington (Public Facilities Districts)

4 Missouri Missouri Downtown Economic Stimulus Act (MoDESA) Downtown Revitalization and Economic Assistance fro Missouri (DREAM)

5 Downtown Revitalization and Economic Assistance fro Missouri (DREAM) Three-year framework and funding Funding for technical and related downtown studies to further revitalization plans Surveys Market & Financial Analysis Design Guidelines Parking Studies Missouri

6 Missouri DREAM Initiative

7 Missouri Downtown Economic Stimulus Allows project to qualify for tax-exempt bond funding with repayment by project s taxes: City Earning Tax 100% State Income Tax 50% State Sales Tax 50% County Sales Tax 50% City Sales Tax 100% Transportation Tax 100% Restaurant Tax 100% Utility Tax 100% Property Tax 100% Act (MoDESA)

8 Kentucky Kentucky Tourism Development Act

9 Kentucky Tourism Development Act Rebates up to 25% of project costs over 10 years from sales tax Must return more to KY than project cost; self-policing Must generate at least 25% of visitors from outside of Kentucky by 4 th Year of Operation Must be unique Must generate net employment for Kentucky Helps make projects, even cultural facilities, feasible for private sector

10 Kentucky Tourism Development Act Kentucky Speedway Newport Aquarium Newport on the Levee 21C Hotel Galt House Hotel Renovation Owensboro Hampton Inn/Event Center Ark Encounter Glassworks 4 th Street Live!

11 Kansas STAR Bonds Allows city governments to issue bonds that are repaid by revenues received by city or county from transient guest, local sales taxes, and use taxes that are collected from redevelopment district to retire special obligation bonds. STAR Bond is a Sales Tax Revenue Bond with a 20-year repayment period. A project with at least a $50 million capital investment and $50 million in projected gross annual sales revenues. A major commercial entertainment and tourism area as determined by the Secretary of Commerce.

12 Kansas STAR Bonds Example Projects Kansas Speedway $283 million Village West Shopping District (The Legends Outlet Mall, Nebraska Furniture Mart, Cabela s) $300 million Schlitterbahn Water Park $750 million Overland Park Lionsgate $575 million mixed-use City of Mission The Gateway (Kansas Aquarium) $180 million Manhattan Downtown Redevelopment $41 million Wichita River District $13 million

13 Colorado Urban Renewal Authorities Similar to STAR Bonds. Allow authority to be created that can then collect new sales and property tax for the purpose of funding projects. Nearly every city in Colorado has created a URA Hundreds of millions of projects funded Some backlash due to overuse $294 million Stapleton $36 million Pepsi Center $31.5 million Denver Pavilions on the16th Street Mall $95.5 million Belmar in Lakewood $74 million Northgate in Westminster $40 million Mandalay Gardens/Shops at Walnut Creek in Westminster $61.8 million TOD in Broomfield $45 million Arvada city center $30.2 million Englewood CityCenter

14 Nebraska LB1018 LB1018 allows cities to rebate local share (1.5%) of sales tax to qualifying economic development projects Goes directly to developer for 10 years Project type and size limitations Must be approved by local vote First project being considered in La Vista Southport West Outlet Mall & Entertainment District

15 Nebraska LB562/GBOT LB562 or Gross Business Occupancy Tax allows cities to assess additional (up to) 2.0% tax on sales within qualifying districts (enhanced employment areas). Proceeds can repay GO bonds used for public infrastructure Long-term bonds/benefit

16 Mississippi Sales Tax Rebate 80% of Sales Tax Generated over 10 Years Up to 30% of Project Costs

17 Washington Public Facilities Districts Provides for a portion of locally-generated sales tax to be redirected to a Public Facilities District (municipal corporation, but can be for larger area). District can use funds to fund projects such as: Arenas Stadiums Convention Centers Cultural/Performing Arts Centers Related Facilities

18 Washington Public Facilities Districts Three Rivers Convention Center & Coliseum - Kennewick Town Toyota Center - Wenatchee Vancouver Conference Center & Hotel Cowlitz County Expo, Convention & Community Center Kent Events Center Safeco Field Greater Tacoma Regional Convention & Trade Center

19 Thank you Rob Hunden

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