Economic Development

Why Does the City Use Economic Incentives/Investment Tools?

Economic incentives are not just financial benefits for businesses; they are strategic investments in De Soto’s future, ensuring our community remains economically diverse and and resilient.

In today’s competitive economic environment, the City of De Soto uses economic incentives to position itself as an attractive destination for businesses. These incentives are crucial tools for encouraging companies to choose De Soto over other locations. Without these offerings, businesses looking for the best possible conditions to grow might opt to invest in other communities where financial and developmental support is available.

Here’s why economic incentives are essential for our community:

• Revitalize Areas: Some incentives allow us to target growth in underdeveloped parts of the community, bringing new life and opportunities to these areas. 
• Competitive Edge: Incentives like tax breaks, grants, and development bonds give De Soto a distinct advantage, highlighting our commitment to supporting business growth and making our city a top choice for new and expanding companies.
• Stimulating Local Economy: By attracting businesses, we fuel job creation, increase local spending, and enhance the overall economic vitality, which benefits everyone in the community.
• Long-Term Investments: These incentives are not just about short-term gains; they're about building lasting relationships that lead to sustained economic activity and prosperity.
• Ensuring Economic Diversity: By attracting a wide range of industries, we secure a balanced economic base that can weather economic downturns better than those dependent on a single sector.

Economic Investment Tools Overview

Please review the Types of Economic Investment Tools page for an incentive tool comparison chart.

• Tax Increment Financing: Tax Increment Financing is a tool that captures the future increase in property taxes resulting from a development project to finance the public infrastructure improvements necessary for that project. TIF is typically used to promote development in areas that would otherwise see little economic growth. These are usually blighted, hard-to-develop areas.
• Property Tax Abatements: Property tax abatements reduce or eliminate property taxes for a specific time to encourage development and investment. This incentive helps lower the initial operating costs for new and expanding businesses, making projects financially more attractive.
• Industrial Revenue Bonds (IRBs): Industrial Revenue Bonds are issued by municipal or county governments to help finance commercial and industrial projects. These bonds typically offer tax-exempt interest rates to the investors and can include tax incentives such as property tax abatements and sales tax exemptions for the duration of the bonds. The City is financially liable if the project fails.
• Sales Tax Exemptions on Construction Materials: This incentive removes the sales tax on materials used in construction, significantly reducing the cost of building projects - which is roughly 10%. It's designed to lower the upfront expenses for developers and attract more construction activity in the area.
• Community Improvement Districts (CID): Community Improvement Districts allow local governments to collect additional taxes (property or sales) within a specified area to fund improvements within that district. These improvements might include upgrades to public spaces, streetscapes, and infrastructure enhancements that directly benefit the businesses and residents in the area.
• Payment in Lieu of Taxes (PILOT): A PILOT program involves agreements where a business agrees to make specified payments to the local government instead of paying traditional property taxes. These payments are usually less than what the property taxes would be and are used to offset costs for public services or infrastructure improvements needed due to the project.