Most incentives come in the form of tax credits, exemptions, abatements, low-interest financing and infrastructure improvements. Cash grants are rare, but look for a refundable or transferrable tax credit that can be monetized through sale of the credit or claimed as a refund.
Below is a comparison of the “premier” incentive programs offered throughout the Midwest. Each has strict qualification requirements, so don’t get too excited. Also remember to properly weight the value of the incentive with long-term operating costs of any given location.
Financial incentives are changing, and predictions as to what will be available in five years is a topic for another day. One trend is that incentives are coming under increasing political scrutiny as taxpayers demand more transparency and clear articulation as to the economic impact of financial incentives. While practitioners of economic development can often clearly demonstrate the financial return provided to economies from these incentives, governments are coming under increasing financial pressure — causing them to decrease services and putting further pressure on these programs.
WHEN CONSIDERING INCENTIVES, KEEP THESE KEY THINGS IN MIND:
- Weigh incentives appropriately in the context of total longterm operating cost. Don’t use incentives to guide the process; use them to help make final decisions between two comparable options.
- Apply early. Almost all of these incentives have an out-of-state competition requirement, meaning that you have to be approved before you can commit to a transaction at any one location. Already signed the lease? Sorry, you are out of luck.
- Eligibility is stringent, and incentives are not easily given. Prepare for an application process and enlist help as needed.