How do cities make money

Successful examples of the effective use of leveraging resources from multiple sources include:. Although the Oregon Convention Center is owned and operated by Metro, its success directly affects the economic health of the City. General taxpayer dollars were not used to fund the project. The vast majority of the funding comes from visitors to Portland and from facility events. Financing the expansion of the Convention Center focused on using projected revenues from anticipated increases in tourist and convention activities.

The Esplanade, which gives citizens long-denied access to the East bank of the Willamette River, has received national attention and many design awards since its completion. Classical Chinese Garden. The Portland Classical Chinese Garden grew out of a friendship between Portland and its sister city Suzhou, China, a city renowned for its exquisite gardens. The Garden is a wonderful showcase for Chinese culture and has become one of the most popular tourist destinations in Portland.

A non-profit organization brought funds together from a mix of sources for the construction of this facility.

Portland Streetcar. The idea for the Portland Streetcar first emerged in the Downtown Plan of the s, when creative Portlanders talked about a "circulator" - a public transit system to carry people through downtown neighborhoods, quickly and reliably. The Portland Streetcar is the first modern streetcar operating in the United States.

The streetcar is another example of a project that was financed through a combination of funds from private industry and governmental resources without affecting the general citizenry.

As pointed out earlier, these revenues may only be used for transportation-related activities. The City funds were one-time and would not have been available to fund the on-going costs of existing programs. It was financed primarily by private industry. PGE Park. Originally called Multnomah Stadium, this facility was dedicated in Despite several minor renovations over the years, it had fallen into disrepair. Because of its historic and cultural significance, the City could not let the facility continue to deteriorate and become a liability.

Seismic and structural upgrades were funded through several sources, none of which were drawn from City General Fund discretionary resources. The costs are largely passed on to visitors of Portland. As you can see, financing City projects and programs is complicated and the potential for confusion is great.

However, there is another important question that residents ask. They want to know how the City chooses its projects and programs for example, why the city spends money on bicycle lanes instead of on schools and textbooks, or why we discuss burying the water reservoirs instead of healthcare for seniors and the disabled.

Without doing the math my gut says that even with the increased density on the outskirts the additional roadway to move people daily from the suburbs to their jobs and back mean that the taxes still do not pay for the second lifecycle. One item that has been changed recently is city council has allowed for almost all of the pre single family lots to be split, and remov[ed] the minimum parking requirements. While this is a good move there still must be more of an incentive to use the existing infrastructure, meaning more people must have a way to live comfortably on the existing land stock.

I feel like I have an example of a project in my small town that exemplifies many of the concepts in this lesson. There has been a multi year effort by the city to improve the core downtown area in our small town.

First new apartment buildings were constructed as well as new townhouses and condos. Many of these were built on open lots in the area.

Additionally a couple of local business people built new buildings or rehabbed existing ones to house their mid size businesses. Much of this new property tax revenue was used to help finance an infrastructure project in the downtown area. Replacing decaying year old water main pipes, etc. On top of that, the streetscapes have been redesigned to allow more pedestrian use and also use for restaurants, for example, to have outdoor seating.

I am seeing many empty buildings rehabbed to house new businesses like restaurants, artisan shops—all local people. Keeping the wealth in our local area. There is a great deal of remodeling and upgrading of buildings happening by the private sector. A couple of participants expressed the concern that a simplistic focus on profit, or return on investment, could result in some unintended consequences:. A big part of ensuring solvency is to think clearly about investment costs.

Not just startup, but long term operation and maintenance. However, as Chuck pointed out, cities are not like Walmart in every way. The services they provide are important for many reasons and do not necessarily generate revenue directly. We might want to have a senior center, for example, for the well being of our older citizens even if it does not charge fees to its users. The calculus, then, is going to have to be different than some other business investment decisions, e.

Municipal finances need to be looked at on a city-wide basis, with some activities generating revenue directly, some generating revenue indirectly through growing the tax base, and some arguably not generating revenue at all and yet still being desirable. Innovation allows the economic pie of your city to grow, and the distribution of the pie slices may also play a role in the overall growth of that pie.

Of course, each city has different cultural assets, human infrastructure, and networked markets. What follows are 10 insights on the innovation economy at a city level.

The diversity of a city is driven by the diversity of its economic base. In this way, cities that create innovation maintain a great many segments in balance. Of course, balancing all cities is impossible. But, growing metropolises like Boston and surrounding area , New York City, Paris, Vienna, and others do balance many segments.

Cities that rely on just industry or just tourism cultural exchange are weak. In business, Peter Drucker said, what you measure is what matters.

You can do this yourself, partner with analysts, or simply use off-the-shelf data. Bear in mind, though, that data alone is not the answer; metrics must be designed, and innovation means you need to ensure your people have those relatively new metric design and monitoring skills. This includes redundant network capacity. In a networked world, having less bandwidth is a competitive game loser. Your city has potential customers for local businesses.

Help those local businesses go global, or go regional, and bring real money back to your community. Finally, in a fiscally decentralized system, states may delegate a high degree of discretion or authority to local governments over their fiscal structure, service functions, fiscal responsibilities, and other financial decision-making powers which can be used to solve their own problems.

Our results show that cities in more fiscally decentralized states have more flexibility and autonomy to increase property tax and nontax revenues or to cut personnel than cities in less fiscally decentralized states.

Nevertheless, fiscal decentralization is negatively associated with the use of other taxes like sales, income and energy taxes. Municipal governments are creatures of the states to which they belong. Given that municipal policy makers operate within a confined decision-making environment, their fiscal policy-making capacities are largely affected by state-imposed limitations and authorities as well as local context.

Cities may adjust to a new and changing environment by revising some of the prior policies or adopting new ones within the confines of their policy settings. Our findings suggest that the combination of state aid, local tax and expenditure limits, tax authority, and fiscal decentralization can create state-shaped fiscal policy environments that can have important effects on how cities make choices about their own fiscal policies. Please read our comments policy before commenting.

She specializes in state and local government fiscal health, fiscal federalism, municipal fiscal policies, and local government autonomy. Her research focuses on local fiscal policy-making process, information use and decision-making in government, public performance management and science and technology policies.