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I I I i I I I I I I i I I I I I ~_~ensely helpful, ec~nc~ieally, to the 4~iate vicinity where assistance is provided. But city assistance is not the decisive fact~ in determining whether the eo0ncmic activity will occur, irrespective of location. The assistanoe does not create ~ jobs; it helps influence the location of the jobs. It does not create new tax b~se~ it ]~lps influer~e the locati~ of the tax l~se. There are three reasons for this. First, real estate assistance often has been granted to firms cz~petin9 with other firms nearby. ~mployment and tax base gains are partially or wholly offset by employment ar~ tax base losses in the o0mpetir~ firms. Socor~, real estate assistar~e is by nature a subsidy to capital investment, rather than to job creation per se. ~mployment subsidies, such as ttose provided in a new state program begun in 1983, may be a more oost-effective mear~ of stimulatirg job creation than is real estate assistance. Third, the 9rantirg of real estate assistanoe may enooura~ other o_-_;,~.,nities to ':retaliate': with their own assistance, whic~ may negate any favorable impact remainir~ after the above two effects have been considered. To illustrate the exaggerated nature of claimed job 9rowth, the Mir=~__-_~ota State /m~it~ reported that th~ total job growth cla~m~d by industrial revenue issuers from 1970 to 1983 was about 134,000 jobs, about c~e-third of the total increase in Mir~esota employment durir~ that time. Further, a recent statistiml study by the research department of the Ninth District Federal Reserve ~nk of Mir~ea~olis found that ir~ustrial re~_nue bonds have had no effect o~ state employm-nt and property tax base growth. Cities shculd be relieved of havirg to demonstrate--through allec3ed job creation or any other claims of economic iml~ct--that their involvement is h~lpir~ a~leviate macroeo0no~i¢ problems. Bather, cities should be asked to illustrate how the assistance will help make possible the rer~wal of blighted or obsolescent areas or prevent further deterioration where it is emergir~. (brrespor~irgly, when federal ar~ state officials provide authority to city gover~nents fc~ real estate assistar~e, they should not use overall ~i¢ growth as a basis for such assistar~e. Instead they should be explicit about trying to influence the location of develolm~nt in one place rather than anon, for renewal purposes only. A good systen of l~ublic a~istance to real estate deve~nt has the followin~ characteristics: Bescurces should be used to overc~me probl~m~ in the market--~he assistance shoed -~ke it possible for a project to overcome problems in the real estate market, traceable to the current cb~aracter of or use given to real estate in the area to be redevelcped. Such probl~ ir~lude: * The presence of deteriorated or functionally obsolescent buildings that need to be rede~_loped to keep the location c~etitive with other parts of the same urban region. * The avai]a~{lity of tax writeoffs that make it ~ossible for cwners to continue to earn incc~e from such buildir~s rather than rebuild or rehabilitate them.