industrial development usually craft incentive packages. After identifying potential communities and conducting a comprehensive cost-benefit analysis, contact these offices to find out what incentives they may offer. An organization's home state may be the first place to try, especially if an organization is thinking about leaving for a bordering state. Neighboring states often compete aggressively to retain jobs, income taxes and investment dollars. Businesses can increase their competitive advantage by pitting one state against another. Some companies even tap multiple states for incentives simultaneously. Don't overdo it, however. While some give and take is expected, no state or community wants to be pressured into unfair inducements. One caveat: Just because a state or community makes an offer doesn't mean it's legitimate. The landscape is littered with what's commonly known as a "happy letter" one that says officials are happy to provide various incentives with no guarantee that they'll follow through on to be realistic with one another and be held accountable for promises made. Also beware of overly optimistic financial projections. Many incentives are paid out over a period of years and have stringent application and eligibility requirements. When the time comes for businesses to claim the incentives they negotiated, they may find the process more difficult than they had anticipated. A growing number of states and commu- nities have begun exploring how best to provide incentives responsibly so no one loses in the end. Finally, an organization that is mulling a move or expansion needs to be discreet. Economic incentives often attract the ire of critics who maintain they waste scarce public dollars and spur unfair competition by helping some companies and industries but not others. Keeping plans out of the public eye as long as possible to avoid losing bargaining power is critical. It can often take six to nine months to negotiate an optimal package. When owners make their final decisions, they can announce them to shareholders, employees and the media. ing the options, as well as the associated tax implications, requires a great deal of time and effort. One state may offer cash-oriented incentives, including up-front funding for facility construction and equipment purchases, while another dangles corporate income tax credits and employee training reimbursements. A business can get the most favorable offer in the least amount of time by work- ing with an experienced adviser who has analyzed incentives for other companies, structured large and small packages, and worked for a state economic develop- ment organization. An adviser will also conduct a detailed cost-benefit analysis that will help owners make informed decisions. Incentives have skyrocketed in recent years and show no signs of abating. Companies that consider these offers to fuel growth will gain an important competitive advantage. to attract companies and jobs. Specifics and eligibility requirements vary widely. Here are the most common examples: |