Development incentives tend to produce two predictable reactions. One side sees them as a practical tool to get difficult projects built. The other side sees them as a subsidy to private developers.
In my experience, neither reaction is enough.
The real issue I see is not whether incentives are good or bad in the abstract. The better question I ask is much more practical: What is the public buying, would it happen anyway, and is the return worth the cost?
That question is becoming more important across South Florida. Cities, counties, community redevelopment agencies (CRAs) and housing agencies are being asked to consider tax rebates, infrastructure grants, CRA assistance, density bonuses, workforce housing incentives and other forms of public support. These decisions can involve real money, long-term obligations and projects that affect a community for decades.
Too often, the debate starts and ends with the size of the incentive. A well-structured incentive should be treated as a public investment.
We know that private investors do not commit capital simply because a project appears attractive. They look at risk, timing, return and whether the numbers work. Local governments should apply the same discipline. If public money, tax increment, land, density or other public tools are being used, the community should be able to identify the public return.
I’ve seen that return may come in different forms: workforce housing, new tax base, infrastructure, jobs, redevelopment of a difficult site, public spaces, or a project that helps implement an adopted community plan. But I believe the benefit should be specific enough to measure.
The First Question: Would the Project Happen Anyway?
The first question I ask in any incentive review is: Would this project happen without public assistance?
If the answer is yes, the case for an incentive is weak. If the project is already financially feasible and likely to move forward on its own, the public may be paying for something it was going to get anyway.
But many projects are not that simple. Higher construction costs, interest rates, structured parking, infrastructure requirements, environmental issues, land costs and affordability requirements can create a real feasibility gap. In those cases, an incentive can help close the gap and produce a public benefit that otherwise may not occur.
The objective should not be to make the developer’s project better than it needs to be. The objective should be to provide only the level of assistance necessary to achieve a public purpose.
Evaluating the Public Return
A useful incentive analysis should look at both sides. Before approving public support, local officials should be asking questions such as:
- How much private investment will be generated?
- How many permanent and construction-period jobs will be created?
- How much additional property tax revenue will result?
- Will the project provide affordable or workforce housing?
- Will the development stimulate nearby investment?
- Does the project advance adopted redevelopment, housing or economic development goals?
- What are the long-term fiscal impacts on local government?
- What public benefits are enforceable, measurable and tied to performance?
Those questions help move the discussion away from political labels and toward measurable outcomes.
My most recent economic and fiscal impacts report for the City of North Miami for a mixed-use development with residential and retail uses proved the public benefit with $4 million in new real estate tax revenue, support for 650 jobs during construction, 100 jobs on-going and $23 million in incremental household spending. It is a win-win for the developer and the City.
A well-known example in South Florida is Miami Worldcenter, one of the largest mixed-use developments in the United States. The Southeast Overtown/Park West CRA has described its role as using tax increment financing to support infrastructure and related improvements around the project, with the intent of leveraging private investment, creating jobs, improving public spaces and stimulating redevelopment in and around Overtown and Park West. The CRA reports that it contributed approximately $23.9 million to Miami Worldcenter-related improvements.
The important question I ask is whether those dollars helped produce public benefits that exceeded the cost. In a project of that scale, the analysis should consider real estate tax revenue, infrastructure, employment, spillover investment, public realm improvements and whether the surrounding community shares in the economic gains. That is where the public return-on-investment test becomes useful.
Not All Incentives Are the Same
A workforce housing project in a high-cost market presents a different public policy question than a market-rate project on an easy site. A mixed-use redevelopment project on underutilized land may create benefits that are broader than the project itself. On the other hand, an incentive for a project that would likely be built without assistance may add very little public value.
Workforce housing in Miami-Dade County provides another example of where incentives can make economic sense. Miami-Dade County’s Workforce Housing Development Program provides density bonuses and other incentives for developments that include housing affordable to households generally earning between 60 and 140 percent of area median income, depending on household size and program requirements.
In Miami-Dade and Broward, many workers earn too much to qualify for traditional affordable housing but not enough to comfortably afford new market-rate housing near their jobs. That includes teachers, healthcare workers, police officers, firefighters, hospitality employees, municipal workers and many others who are essential to the local economy.
In that setting, the incentive is not simply about producing more units. It is about whether the community can retain a stable workforce, reduce long commutes, support employment centers and better coordinate housing supply with local wages. It means the analysis should compare the value of the public benefit with the value of the public support being provided.
Why Performance-Based Incentives Matter
If the project delivers the promised housing units, jobs, investment, infrastructure or public amenities, the incentive is earned. If those commitments are not met, the public should not be left with the full cost and only partial benefits.
This matters because projections are not guarantees. Economic impact estimates, tax revenue forecasts, job creation numbers and absorption assumptions can all change. A sound agreement should include clear benchmarks, reporting requirements, enforceable commitments and clawback provisions where appropriate.
I have seen that incentives work best when they are targeted, transparent and tied to clearly defined community goals.
The Public ROI Test
For a city, county, CRA or housing agency, I would reduce the issue to five basic tests:
- Is there a clearly defined public purpose?
The incentive should address a recognized community objective, such as housing affordability, redevelopment, job creation, infrastructure improvement or economic diversification. - Is there evidence of a feasibility gap or market failure?
Public assistance should generally be reserved for situations where the desired public benefit is unlikely to occur without intervention. - Are the benefits measurable?
The community should be able to quantify or clearly identify the expected benefits, including tax revenue, housing units, jobs, infrastructure or redevelopment impact. - Are the benefits greater than the public cost?
The public sector should evaluate whether the long-term fiscal and economic benefits justify the incentive. - Are the commitments enforceable?
Incentives should be tied to performance, with clear obligations and accountability.
This type of framework does not eliminate judgment. But it gives elected officials, staff, taxpayers and developers a more disciplined way to discuss the request.
The debate over development incentives is not going away. South Florida still faces housing shortages, redevelopment challenges, infrastructure needs, and pressure to grow in ways that are fiscally responsible.
When incentives are carefully structured, supported by sound economic analysis, and tied to measurable results, they can be useful tools. When they are loosely defined or politically driven, taxpayers are right to be skeptical.
Development incentives make economic sense when they create public value that would not otherwise exist — and when that value exceeds the public’s investment.
That is the public ROI test — and it is the test every incentive request should have to pass.
Bill Bailey is president of Bailey Real Estate Consulting, a Miami-based advisory firm.