Many suburban CEOs, tired of the daily commute, are moving companies closer to home. The trend in company relocations is fueled by increasing competition among suburbs and nearby towns for industrial and commercial tax base. Office and industrial developments are a considerable tax windfall for cities and towns, especially compared to single-family residential development. As a result, cities literally bid for business developments with financial incentives, and in doing so, they steal the urban core's economic foundation. Abandoned investments and lack of redevelopment When businesses leave for suburban sites, many are not replaced.
Old buildings become obsolete and expensive to remodel or demolish.
As a result, lending institutions and businesses become wary of the liability in holding title to these parcels, and decrepit buildings and vacant lots are left as physical reminders of urban blight. Instead of reinvestment, public and private money flows to suburban areas, to build anew where nothing but grass and trees existed before, often because the up-front cost is considerably smaller and the taxes are lower. While urban areas are equipped with the infrastructure necessary to service all industries, smaller communities armed with TIFs can leverage profit-enhancing packets for businesses to relocate. Only in a very narrow, short-term context. From this simple financial perspective, sprawl has become a critical business climate issue.