Financing Capital Projects—Part II: Special Levies

<p>Blight City has fallen on hard times. Its population has declined significantly since the 1990s, due in large part to the shuttering of two large manufacturing plants. Emblematic of the city’s decline is its central downtown area. Once a vibrant community center, it is now comprised mainly of run-down, vacant buildings. Recently, however, a mid-sized micro-brewed root beer company purchased one of the old manufacturing plants (located just outside the city’s downtown) and began operations. It employs 200 people and plans to double its workforce over the next two years. The company wants to capitalize on a recent resurgence in root beer “connoisseurs” by expanding the plant to include a tasting facility. And the company has expressed interest in opening a restaurant and root beer bar in the city’s downtown. City leaders want to support the company’s efforts. They view the company’s investment in the city as a cornerstone for the city’s resurgence.</p> <p>In fact, the root beer company’s recent investment in the city has sparked the interest of at least one developer. She has approached city officials about plans to help revitalize downtown. The developer intends to purchase several of the vacant buildings and refurbish them to attract a mix of small commercial entities, restaurants, bars, and residential tenants. Both the root beer company and the developer have requested (among other incentives) that the city invest in some infrastructure improvements and upgrades in the central downtown area to complement the private development. Specifically, the private entities would like the city to make road [...]</p>