For the very first time in my career, I am responsible for administering an incentive. In this particular case, it is an Enterprise Zone, tax abatements for up to ten years for locating within a certain geographic area.
By and large it is hard work, but I believe it is well worth the effort; especially when businesses begin utilizing it for job creation and improving their facilities.
Incentives, of any kind, should be used to close deals, increase competitiveness (for the community and the business), and spur economic activity within a certain geographic area.
Here are a few unexpected matters I encountered while getting the incentive in place. If you are considering adopting an incentive for your area, please consider the following:
- Quantify, Quantify, Quantify. Forecast and/or obtain private investment, taxes abated, number of jobs created, salaries, type of jobs created, number of people hired inside the community vs. employees transferred in.
- Forecast the Payback Period. Have an idea of how soon abatements will be paid back through tax revenues.
- Lay the Groundwork. Talk to your City/County Attorney to understand the legalities of what you can and cannot do. It's a good idea to have a reimbursement policy, in case a business does not honor its end of the deal.
Incentives make our communities more competitive and are a critical economic development tool. Understand the needs of your community and adjust incentive policy accordingly.
One more word of advice: make it easy for business to apply for incentives. Post the application on the web and gladly walk them through the process.