Masters Theses

Date of Award

6-1986

Degree Type

Thesis

Degree Name

Master of Science

Major

Management Science

Major Professor

George E. Bowen

Committee Members

David A. Johnson

Abstract

The purpose of this study was to create a methodology local governments could use in determining the impact of industrial development bonds on the local community. The areas of impact studied were water and sewer infrastructures and the cost of providing the services, highway capacities, property tax generation, and employment generation. Knox County, Tennessee was chosen as a general study area because of the interest local officials had in this topic and because data was readily accessible.

A cost/benefit analysis of the provision of water and sewer services, and impact analyses on infrastructure capacities, the property tax base and the local economy were employed in this study. Data from the companies involved in the study, and data from state and local governments was relied upon heavily. Personal interviews were also used to gather information.

The major findings of this research were, the industrial development bond financed firms had a beneficial impact on the community and Knox County lacks a community and economic development plan that corresponds to a local infrastructure development plan. Basic industries had the greatest impact on the local economy. This is due, in part, to the 1.99 income multiplier of the Knoxville economy. For every 100 dollars of basic industry income created directly, another 99 dollars of income is created indirectly.

With the exception of the apartment complex, none of the developments had a negative impact on the public infrastructure. The apartment complex was located on a street that was not designed to handle the volume of traffic that used it. The water systems generally had more excess capacity in their systems than did the sewer systems. The affected public schools were not over crowded.

The impact on the County's tax base was greater than the impact on the City's tax base. Three of the four developments were located outside the Knoxville City Limits. The County benefited from the project located in the City but the City did not receive any tax revenue from projects located outside the City.

Permitting the development of the apartment complex on a street that could not handle the increased volume of traffic is an example of the lack of coordination between private development and public infrastructure development. Development should be encouraged in the areas where the infrastructure has excess capacity or the developer should be responsible for upgrading the infrastructure.

Future research may involve studying the impact government programs have had on competing businesses. Knowing the impact these programs have on a business will help in determining if these programs are providing an unfair advantage.

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