While securing the right financial incentives is a major factor in a business’s decision to choose a site, remain, relocate, or expand, most executives are too involved in day-to-day operations to spend the time necessary to identify and pursue the funding that can ultimately lead to making the right move.
Knowing where and how to look for incentives can be complex, and outside experts can help you identify grants, tax credits and other important incentives. They can also conduct the proper research and perform due diligence, not only to help effectively evaluate and secure incentives but to identify and understand their true value.
And just as the value, structure and nature of incentives vary across the country, so, too, do the rules and regulations that guide them. Experts can not only help negotiate agreements but follow up to make sure payments are received and that any follow-up compliance requirements are handled properly.
The process normally begins with the decision that a business needs a new or expanded facility, or that relocating might benefit the bottom line. That’s the time to call in experts who can take you step by step through the process, starting from whether to seek incentives to stay put or identify the most attractive site selection package to determine where and how to relocate.
Most incentive funding comes from state or local sources and, as in most negotiations, there must be benefits for both sides. For the company, it’s the right site, the right dollars and the right timing. For the city or state, it’s the right number of jobs and the right kinds of jobs. Job creation has a much larger impact on a community than is often realized. Most incentives require that the company produce local job creation, but how often do we recognize secondary job creation as an added value of incentives?
Such job creation can happen in several ways, aside from jobs directly created by the company. As a result of the incentive, a company stays, resulting in job retention, or expands, resulting in increased employment. In many cases, a new business is created that would not have existed otherwise, resulting in new jobs. When the result is expansion or new construction, local construction and subcontractor jobs are created to help push the project through.
An experienced consultant knows how to uncover and secure financing tools such as PACE financing, tax abatements, private activity bonds, tax increment financing, new markets tax credits and income tax rebates. There are also opportunity funds, land value capture tax credits, infrastructure and site development grants. They all piece together to build the right capital funding stack.
Once the project commences, however, the vital phase of compliance begins. To receive economic development incentives, a company will have a prescribed set of reporting requirements for the various stakeholders to demonstrate and document project performance. It is critical to develop a strategy and identify resources to lead this phase because missteps may compromise the receipt of the incentives, even if commitments and milestones are met by the company.
Most CEOs and corporate executives are too busy to spend the time necessary to understand the nuances associated with securing the level of incentives that can make a difference and getting the most out of working with government funding sources. But you don’t have to go it alone. The right consultant can help you stay focused on your most important responsibilities while ensuring that you and your company receive maximum incentives. ●
Jennifer Syx is President of inSITE Advisory Group