Economic Development Agencies make it their mission to attract new businesses to their community. For that reason, they are an incredible resource for identifying which economic development incentives a business may qualify for.
For commercial real estate developers, learning about the various opportunities can be a game-changer when doing site selection within a region. When the right program matches with the right business, economic development incentives can be big wins for all parties involved.
Common types of incentive opportunities
Incentives vary by location, but below are a few common ones offered in most states:
- Job credits – Typically based on the number and type of jobs a prospective business brings to the table, these incentives can be quite lucrative. Job credits depend on the number of skilled, high-paying jobs a prospect brings to the community.
- Tax Increment Financing (TIF) – These programs attempt to drive new development by attracting new businesses through a special property tax valuation and tax-based program.
- Sales Tax Revenue Sharing – Revenue sharing agreements stipulate that a portion of future sales tax revenue generated by retail sales is shared by government agencies. This can be one way to bring new retailers into a community.
- Permit/Impact Fee Waivers and Rent Abatement – Site selectors can use these incentives to reduce business occupancy costs over time. Economic development offices may also award this incentive at the outset to help defray start-up costs. Alternatively, local and regional agencies may distribute waivers and abatements via reduced business taxes or rent.
Applying for incentives
The local and regional economic development offices can offer advice on which program(s) are right for your commercial real estate endeavor. They can also offer guidance on applying for the programs.
Once you’ve identified a program, you need to select the right property for your commercial business. After identifying the perfect property, make a plan for achieving those specific incentive deliverables. Stay in close contact with your various stakeholders throughout the processes in order to set yourself up for the most success.
Economic development incentives may take some legwork to sleuth out and identify. Site selectors and business owners who put forth the effort will reap the rewards of finding the right match.