Local and State Economic Development Incentives for Real Estate and Construction

If your business project has attractive job and investment numbers in a desirable industry, local and state incentive programs may add significant value. In this article, we’ll look at several incentive programs that can potentially be leveraged in projects that involve investments in real estate. We’ll also explore a case study to see the process in action.

Strategically designed incentives help communities diversify their economies with high-wage industries, like real estate and construction. Incentives can include reduced price or free land, infrastructure construction or improvement grants, low-interest financing, investment tax credits, expedited permitting, rate discounts, and tax exemptions.

Potential incentives

Cash-equivalent incentive programs – meaning, those that offset operating expenses – are valuable to leaders in the construction and real estate industries, as these can lower costs to purchase land and equipment. Examples of the incentive programs include cash-refundable, job-creation tax credits, property tax abatements or refunds, training grant dollars, infrastructure grant dollars, and deal-closing funds.

Requirements

Incentives make a difference. However, business owners should be aware that with incentives, come accountability. Well-structured incentive programs typically disburse benefits only after a company makes progress towards their goals (job creation, new payroll, capital investment, so on). Most incentive programs require ongoing compliance reporting in order to receive benefits and may mandate repayment if goals aren’t being met. It is important that business owners understand the terms of their agreements before accepting incentives and to develop a plan that ensures these annual reporting requirements are met.

Case study: How real estate and construction projects can benefit from economic development incentives

Our team worked with a property group and their lessee in cooperation with a local city council to negotiate and gain approval for significant financial incentives at the local level. This project was a corporate headquarters facility and 80,000-square-foot showcase building in the city that would add more than 300 new jobs in the community. The property group would maintain ownership of the building with the lessee continuing to rent.

Our team was able to achieve tax abatements valued at $1.8 million, as well as a waiver of $328,000 in impact fees. The city, state and county used an infrastructure development grant from the project to also add a road interchange in the area.

Key takeaways

Communities and states offer incentives to offset deficiencies and level the playing field. Attracting businesses and growing them is a competitive endeavor. In order to attract businesses and employees, incentives should be leveraged to give places a competitive edge. Further, incentives can provide businesses with their own advantage by reducing upfront and ongoing costs of expansion projects.

Sikich’s site selection and incentives team assists businesses in applying for local and state incentives. Each project is unique, and every company has different requirements. Plus, communities have their own plans for growth. Our team is skilled in representing our client’s needs and connecting with the most appropriate groups in order to get a deal together. Contact our team to learn how we can help.

Get in touch:

About our authors