ASAP Centerville is a Midwestern town of about 25,000 people, about 50 miles from a large metropolitan area. Its government consists of a mayor and a town council. In recent years, Centerville

has come upon hard times. Its population is dwindling, with many of its young people moving

to the city where the job market is good. When a large shopping mall is built about five miles

outside of town, local shops and businesses in downtown Centerville cannot compete and start

to close.

Investigation 1

As businesses close and people move away,

property values of commercial buildings and of

homes have declined. Many of the buildings in

Centerville are being abandoned.

1. How will this situation affect the tax base of

Centerville?

2. What effects is the situation likely to have on the

operating budget of Centerville?

Investigation 2

The Centerville mayor calls a special meeting of the town council to come up with ways to

raise more revenue.

1. What are some options the town council might

explore for increasing revenue?

2. Which options might they reject for fear of driving more people out of town or forcing more

businesses to close?

Investigation 3

The mayor and town council decide that the

long-term answer to Centerville’s problems is to

attract new businesses to the town. To jump-start

the process, the town council uses some capital

funds remaining from a renovation of police headquarters to buy an abandoned warehouse from a

business that has moved to the city. By selling

municipal bonds, the council hopes to fund a renovation of the warehouse into a town center and

indoor mall with space for town offices and leasing

space for several small businesses.

1. (a) If revenue is already a problem, how can

the town spend money to buy a warehouse?

(b) How would the proposed indoor mall help

attract small businesses?

2. How would new businesses help Centerville’s

revenue problem?

3. What are some tax incentives the mayor and

town council could use to attract new businesses

to Centerville?