Your city is expanding. There have been several problems with street flooding, w

Question

Your city is expanding. There have been several problems with street flooding, which is affecting your business. You decide to attend a city council meeting, during which there is a discussion on building storm and sewer lines in advance of home construction. At the meeting, Tom Frank, the city manager, states that the city is prohibited by law from financing these projects through a sales or property tax. He says that after the new homes are built, the city will be able to charge a monthly sewer fee to each homeowner and business. He asks for suggestions on financing the new sewer system.

a. What would you propose the city do to raise this money?

b. Why is this investment vehicle attractive to investors?

Explanation / Answer

a) The city had severe problems with street flooding and it affects the business.The govt proposed to raise the money by charging sewer fee to homeowner and business.The proposal seems to be good to the home owner and the busineess because the government prohibited the sales and property tax.This proposal is adverse to the city development because there is no source of income from the house owner and business.Before implementing the proposal the govt search for options to generate income to develop the city.

b)The proposal is attractive to the vehicle investors because the government was abondoned sales tax.It results in increasing sales of vehicles and correspondingly the business would expand and many investors would come forward to set up new showroom vehicles in the city.

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