Millions to be made by doing... what?

January 7, 2009 10:56 AM

How do state and local government and schools generate revenue? (aside from taxes, tolls, etc)

I have a client who's brainstorming for ideas on revenue generation. We're not talking instant income, the earliest expectation of returns is 3-6 months.

What can a state/local governemnt or a school district or other land-holding agencies do to raise revenue? Advertising is an option, but a little tougher in this economy.

For example:
One thing some school districts have done is to lease land use for cellphone towers on school property for a no-cost installation which pays them an annuity for land use.

Another thing is sponsorships of buildings and signage that is what I call "near-advertising" which gets a company name out but no contact details or other info (which works great for bigger brands, but not so well for local businesses)




What we have to work with:
1000's of acres of land and roadside area along interstate and toll roads

Access to the roads gives access to drivers who would see advertising and signage... but what is really gonna get them to spend on something? Billboards? Electronic signs?

Lots of cash if there is some type of implementation needed (they'd prefer to have other companies front the costs though)


The client has time and money.

What other ideas can the hive mind throw out to bring in the bucks?
(please - let's assume they all need to be legal)

posted by anonymous to work & money (10 comments total)

School districts and municipal governments generate the vast majority of their revenue from property taxes. As in the neighborhood of 80%.

Other than leasing government-owned land to business interests or getting corporate sponsorships for buildings/facilities/programs, there isn't all that much to be done. Municipal governments and school districts are generally not permitted to operate for-profit ventures, nor can tax money generally be used as venture capital. Sure, government pension funds are some of the biggest institutional investors in the country, but these deal almost exclusively in securities, not in business activities.

If your question is "What can we do with all of this land to make money?" the answer is to either lease it or sell it.

This is why so many municipal governments are in trouble: they don't have many revenue-raising opportunities other than taxation. Taxpayers expect taxes to be used for the provision of services, not investment, and laws generally require this.
posted by valkyryn at 11:24 AM on January 7

Your district's attorney or legal counsel should be able to tell you at least what you cannot do, and that would be a good place to start. Valkyryn is right on though, public schools (I'm assuming you are talking public k-12) are not businesses. I've heard of companies giving money to school's in exchange for the company to "sponsor" activities and displays in schools, but laws have tightened up around those things ever since districts started cracking down on healthy food choices in schools and things such as "Coca Cola Class Picture Day."
posted by archimago at 11:36 AM on January 7

I just read an article about a local public school that rents its auditorium to a church on Sundays. The church made more than $200,000 in permanent improvements to the space (I'm not sure if they're continuing to pay rent or not, article was unclear).

We had baseball diamonds/soccer fields/football stadiums that had ads. The newspaper and yearbook also sold ads, although those funds were specifically used for those departments, and I assume you're looking for something larger scale.
posted by dpx.mfx at 12:06 PM on January 7

Rental to short term events like circus and carnivals.
A School Farm or nursery that would sell the crops.
posted by Gungho at 12:08 PM on January 7

The suggestions listed above are why property taxes are only 80% of most school districts' budgets. Alternative sources of revenue--corporate sponsorships, fundraisers, selling advertising space, selling tickets to events--are far from insignificant when taken collectively. But nothing is going to hold a candle to the kind of money that taxes do, even in today's economy.

Furthermore, just because the government owns the land doesn't mean it can do whatever it wants. School districts have to obey zoning laws just like everyone else. Granted, school districts can get zoning laws changed more easily than private citizens, but they can't just stick a billboard or cell tower anywhere they damn well please.

If you're looking for a supplement to tax revenues, an extra 5-10% say, these things might do for you. But if you're looking to replace a significant portion of tax revenues with non-tax revenues, I think you'll find that most plans with any hope of success are illegal.
posted by valkyryn at 12:20 PM on January 7

Selling municipal bonds. Applying for federal or state grants. Perhaps the land is environmentally significant?
posted by desjardins at 12:26 PM on January 7

Infraction enforcement is a big source of revenue for city governments, and also happens at schools. I know at my high school they took it very seriously-- if you didn't have a parking tag easily on display in your car, they booted you and made you pay like $20 or $50 to have it removed. EASILY on display should be emphasized, because one of my friends got nailed even though he had the thing sitting in plain sight on his passenger seat (it's supposed to be behind the mirror). I have no idea if this was significant enough to actually be a revenue source or if it just paid for the parking lot attendants.

The year I graduated the school was making plans to have a wind turbine built on the property. They generate power with the turbine, then sell it back to the grid.
posted by baphomet at 12:28 PM on January 7

Many schools enter into sponsorship programs with, of all things, Coca-Cola or Pepsico. A school becomes a "Coke" or "Pepsi" school and must exclusively sell only those products at sporting events and in vending machines. In turn, the schools usually get either a percentage of the take or a financial gift.
posted by Thorzdad at 1:10 PM on January 7

You don't say what sort of agency your client is, or even whether they're not actually an agency but an entity that just shares some features. The "1000s of roadside acres" sounds more like a forest preserve district than anything else.

That said, and ruling out billboards, there isn't a whole lot that you can necessarily to to proactively generate income through that land. Your only real choice, if you mean to generate significant revenue, is to develop the land if you can, selling or leasing as appropriate. That could be as simple as a cell tower, or a pipeline, or as complex as a multi-use high-density transit facility or shopping mall. Those opportunities, though, generally land in your lap instead of coming when called.

It sounds like you're in a place like California that's going through some Prop 13 revenue gyrations. I have more sympathy for your situation than I do optimism.
posted by dhartung at 12:42 AM on January 8

Local governments? In California? Development fees, redevelopment agency Tax Increment Financing bonds or improvement districts, property taxes, transfer taxes on real estate, lodging taxes, sales tax measures, tolls, state and federal grants (e.g., to support brownfield cleanup), and federal transportation money handed out through regional agencies.

I wonder if there's a federal agency that wants to support innovative projects that generate alternative energy and would support solar panels or wind towers near roads.
posted by salvia at 7:44 AM on January 8