Incentives are all the rage in economic development. Many communities believe that this only means that you need to hand a company cash to locate in their area.
There are other alternatives. Below is a list of possible incentives that can be included in a proposal to a company. Some of these are obvious, others have been creative ideas that some economic developers have used to attract companies.
- Free land – This is fairly common, but it can be a huge asset. Offering free land that is owned by the city or the county can be a great way to attract companies. One important thing to also do is to abate the local property taxes for a period. That allows the location to be very inexpensive during the critical first few years.
- Property tax abatements – Allowing a period when taxes on the properties are not paid can be a wonderful relief for businesses. These annual expenses on a significantly improved property can be a great deal of money.
- Employment tax abatement – One of the most difficult parts of a new location is finding a great group of employees. Employment tax abatements can allow a company’s employees to avoid payroll taxes for a while. This helps to increase the employees’ income and might entice a high quality of worker to the company.
- Free building financing – The expense of financing construction can be prohibitive. If a community is able to put up the money, a company can save a great deal of money over having to pay interest, etc. on the construction of their building.
- Free airport transportation – This is a very creative way to attract a company. If your community is a significant distance from a major airport, you can offer to transport clients, executives and other visitors from the airport to the factory. This can be done by a local car company in town or through a contracted company near the airport. The cash expense might seem high, but the return on a simple gesture like this can be huge.
- Cash investments – This is a bit different from simply giving a company cash. Investing in a business can be a great way to attract the company without simply giving away the money. Also the community might realize a profit from the investment.
- Sales tax abatement – Many companies pay a sales tax on the items that they purchase. Refunding that amount, applying it as credit toward property taxes or simply not collecting the local portion a sales tax can be a huge benefit. This is another expense that can be reduced from the company’s balance sheet.
- Marketing cooperative – Helping a company market themselves and their products can relieve a significant expense. For many companies, adding cash to the bottom line is as good as a cash investment. This is a creative way to expand the company’s long-term reach while not having a huge expense for the economic developer. It is also a powerful way to promote your region as well.
- Marketing inquiry assistance – Helping a company find potential clients can be a massive help. If they are able to locate to your area with several local customers in hand, this can help defer a lot of expense and convince their board as to which location they should choose. As the local experts, finding those potential clients can be very easy.
- Business fee reductions – Business license fees, occupancy fees and lots of other small fees can represent a lot of cash for a business as they find a new location. These are usually expenses that are received by the local government so they can be very easy to defer or eliminate. Often all it requires is simple change in local codes.
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