Negotiating state & local incentives
Governments award funds through public incentives to lure companies to their localities – funds that can help minimize your taxes and offset future capital and operating costs.
Services are available to identify and negotiate economic incentives. At first, incentives are explored on an anonymous basis on your behalf (your project will be referenced only by a code name, which is a standard procedure in the Site Selection process). Efforts will be customized to your business objectives.
Often unrecognized is the pressure within Economic Development Agencies when competing incentives applications put the agency at risk of exceeding its budgetary or statutory limits. These organizations are run by conscientious people who are accountable to their Board of Directors and often to Governor’s offices, city councils and mayors. Hence, for an application to prevail over competing projects, it must be thoroughly prepared, comply with legal and agency requirements, supported with credible data, and presented in a convincing and timely manner.
Examples of Public Incentives
Incentives are either statutory or negotiable and generally fall into the following categories:
- Cash Grants
- Employee Tax Credits
- Training Grants
- Wage Subsidies
- Property Tax Abatements
- Investment Tax Credits
- Energy Investment Tax Credits
- Sales Tax Exemptions
- Low-Cost Financing
- Utility Rate Reductions
- Green and Renewable Energy Credits
- Fee Waivers
- Infrastructure Grants
- Fast Track Permitting
- Inventory Tax Reductions
- Subsidized Land
How it’s Done
On all projects, researchers determine available incentive opportunities. Next, a business case to qualify for incentives will be provided to Economic Development agencies. It generally is helpful to provide the agency with an Economic Impact Analysis (statutes in some states require such a study). The likelihood of receiving incentives will be included in a competitive location assessment. Once a location is selected, experts will coordinate the application process and facilitate the necessary authorizations and contracts required to receive the incentive awards, often a complicated process.
After incentives are in place, you must remain in compliance. You may assign tasks and deadlines to a management employee (with compliance duties clearly outlined in a job description). Alternatively, a turnkey arrangement with a compliance firm would make sure that you receive the full value of incentive awards as negotiated. Whatever path is taken, remaining in compliance is an absolute must.