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How to Play the Incentives Game - SFP Insider

Friday, November 16, 2018  
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How to Play the Incentives Game

Despite claims by some that tax and other financial incentives given to lure companies and jobs to states and cities are analogous to “corporate welfare,” these incentives continue to hold a prominent place in the economic development toolbox. In fact, it’s estimated that tax incentives given to businesses now total $80 billion a year — triple the amount in 1990.

Those helping companies make their location decisions caution that incentives won’t make a bad deal into a good one, while acknowledging that incentives can help a project’s bottom line. A company’s first step in negotiating a beneficial incentives package is drafting an effective RFP. Then the true value of any incentive offerings must be compared against the actual cost of running an operation at a specific location, and tax implications and compliance issues of receiving the incentives must be taken into account.

New federal tax guidance requires governments to report the purpose and value of the corporate tax incentives provided to businesses. Specifically, federal tax reporting could distinguish between incentives such as tax credits that are embedded in a state’s tax code versus discretionary incentives that are only offered through a negotiated agreement. The latter are often used to lure a company to move from one state to another, resulting in a “zero-sum” game when it comes to job creation.
When a company does take up an offer of tax and other financial incentives, it’s advisable for it to get proper legal and other advice to avoid any pitfalls in incentives negotiation, including falling short of project requirements, misusing grant funds, disregarding site history, and breaching confidentiality, among other hurdles.

 

Negotiating Incentives for Your Next Capital Investment

David CooperDavid Cooper, Shareholder, Maynard Cooper Gale P.C.


When selecting a site for your next U.S. capital investment, keep in mind that incentives alone won’t transform a bad location into a good one. However, a good incentive package can improve a project’s bottom line and solve site-related issues.

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A Smarter Way to Incentivize

Jennifer HarrisJennifer Harris, Account Director, Akrete



Governments and corporate site selectors alike should consider whether sometimes overly generous tax incentives are the best way to align their goals.

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Why Do Many Incentives Awarded Remain Unused?

Les CranmerLes Cranmer, Senior Managing Director, Savills Studley


Art M. WegfahrtArt M. Wegfahrt, Corporate Managing Director, Savills Studley

There’s often a mismatch between incentives provided and those an organization — which also needs to be aware of any “strings attached” — can actually use.

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Negotiating Incentives? Avoid These Common Pitfalls.

David CooperDavid Cooper, Shareholder, Maynard Cooper Gale P.C.

Here’s how to deal with some common challenges that often come up during the incentives negotiation process.

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Editor's Picks: HQ2

Lessons from the Amazon HQ2 Tax Break Race - Tax Foundation

States and localities give away billions of dollars annually in tax incentives, so Amazon’s situation is nothing new. But they’re an extremely inefficient way to provide tax relief or grow the economy. When incentivized firms relocate, incumbent businesses and individuals end up footing the bill for the increased demand in public services. More »

New York Is a Genuine Tech Hub (and That Was Before Amazon) - The New York Times

In 2003, Craig Nevill-Manning, a computer scientist at Google, wanted to set up an engineering outpost in New York. Google’s top leaders were skeptical, but they told him that he could go ahead if he could find 15 “Google-worthy” software developers in the city. Mr. Nevill-Manning found his developers and opened the engineering office in New York. Today, Google employs 7,000 people in the city, and more than half are engineers and technical staff. The Google story mirrors the rise and evolution of New York as a genuine tech hub. More »

Cities and States Offered Amazon Billions to Win HQ2. Did It Matter? - GOVERNING

Virginia's offer of $573 million in direct public incentives and New York's package, in excess of $1.5 billion, weren't the richest of the many deals pitched to Amazon for the prospect of 25,000 new, high-paid tech jobs in each place. More »

Nix the Amazon Orange skyline: An exclusive look inside Dallas-Fort Worth's bid for HQ2 - Dallas News

It was the painstakingly orchestrated answer to a question: If you had less than two days to convince one of the world’s biggest and most visible companies —Amazon — to create as many as 50,000 highly paid tech jobs in Dallas-Fort Worth, how would you do it? More »

Amazon Chooses Queens and a Washington Suburb for ‘Second Headquarters’ - The New York Times

After conducting a yearlong search for a second home, Amazon has finalized plans to have about 50,000 employees in two locations, according to a person familiar with the decision-making process. More »

How data drove Amazon towards two new HQs - Financial Times

Tech giant expected to opt for New York and Washington after gathering intelligence ‘gold mine’. More »

Splitting HQ2: Where Amazon Might Build (Or Lease) In Both Cities - Forbes

If rumors are true that Amazon will land its HQ2s (yes, plural) in outlying communities of New York and Arlington, Virginia, then local commercial real estate developers should gear up for serious demand. More »

New York's tech scene ready for its moment with Amazon, Google expansions - CNN

Amazon is said to be planning to split its much-hyped second headquarters into two locations, with one rumored to be in the Long Island City neighborhood of Queens, New York. The company originally promised as many as 50,000 high-paying jobs for the project. Even if that number is halved, it could still mean tens of thousands of jobs in New York. More »

Why Amazon’s future depends on moving from the internet to the physical world - The Verge

Amazon’s cashier-less Go stores give us a glimpse at its vision for the future of retail. More »

Amazon's second headquarters in LIC poses great economic benefits —but also challenges - QNS.com

The fastest-growing neighborhood in the country appears to be a big winner in Amazon’s search for a second headquarters— or at least a large part of it. More »

 

 

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