Business Facilities - May 2008 - (Page 7)

COMPLIANCE AND CLAWBACKS AROUND THE COUNTRY While many businesses meet the conditions of their financial incentive packages, some companies struggle with compliance. As a result, state agencies offering monetary benefits outline the repercussions companies face if they fall short of their agreements. The details of these clawbacks vary depending on the type of incentive and the granting state, but here are a few examples of what can result from noncompliance. In Arizona, companies that accept Military Reuse Zone or Environmental Technology Tax Credits must agree to a “memo of understanding” that lays out their employment goals. Each year, they must report their actual employment numbers and, if they fall short of their promised amount, Arizona maintains the right to stop, readjust, or recapture all or part of their subsidy. Illinois’ Community Investment Recovery Act states that a company receiving state or local aid to build, improve, or modify property for projects attracting or retaining jobs must refund the value of the assistance if it terminates operations at the site within two years of receiving the subsidy. Similarly, companies that take advantage of Michigan’s Economic Growth Tax Credit must not move more than 51% of newly created qualified jobs out of Michigan within three years of claiming the credit or else the entire subsidy must be repaid. SNAPSHOTS with Michael P. Hickey, President of Hickey & Associates SECONDS M ichael P. Hickey is the founder and president of Hickey & Associates, a consulting company headquartered in Minneapolis, MN, with four regional offices throughout the United States. Hickey is a site selection and public incentives expert who has spoken at numerous national conferences. BF: You say that about 75% of financial incentives offered to relocating companies aren’t fully realized. What factors contribute to this high rate of incompletion? Hickey: The lack of a centralized incentive management system for key corporate team members diminishes their ability to not only manage the incentives they have, but also limits future opportunities to reduce costs. The majority of incentives are never captured and lost permanently, often as a result of missing reporting requirements or sending in incomplete or incorrect data with their company reports. Another primary reason is lack of planning on the company’s part. Company personnel often don’t understand the process of requesting incentives and the importance of being conservative in promising jobs and capital investments, which drive the value of incentives. As a result, they fall short of their required goals and lose out on the opportunities previously negotiated. However, with proper planning these mistakes can be avoided. BF: Can you briefly describe your firm’s Public Incentive Management System (PIMS) and some of the benefits it offers to a relocating or expanding company? Hickey: PIMS is a state-of-the-art, realtime incentive data management and document storage system developed exclusively for the corporate management team. The Web-based system is designed to ensure that the maximum dollar amount and value of incentives are received on a timely basis, and compliance requirements are continually met at the federal, state, and local levels during the life cycle of incentives. PIMS eliminates 90% of the reporting burden. It offers a notification system that alerts users of impending incentive compliance issues. Important contracts and agreements can be uploaded, so as the corporate team changes, historical documents remain accessible. The corporate management team and field locations can easily access incentive data via real-time reports. TOP FIVE COMMUNITY CONCERNS OF ECONOMIC DEVELOPMENT ORGANIZATIONS Concern 1. Retain existing businesses 2. Create better paying jobs 3. Create more jobs 4. Expand infrastructure 5. Boost entrepreneurship Score 5.5 5.4 5.1 4.9 4.7 SOURCE: 2007 REGIONALISM AND CLUSTERS FOR LOCAL DEVELOPMENT NEEDS ASSESSMENT RESULTS, FUNDED BY THE ECONOMIC DEVELOPMENT ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE RESULTS ARE BASED ON A SURVEY TAKEN OF ECONOMIC DEVELOPMENT ORGANIZATIONS. *ON A SCALE OF ONE TO SIX, RESPONDENTS RATED THE DEGREE TO WHICH THEIR ORGANIZATIONS IDENTIFIED THE ABOVE ISSUES AS COMMUNITY CONCERNS. BUSINESS FACILITIES 7

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Business Facilities - May 2008 Contents First Word Snapshots The UK's Most Lucrative Locations, Pound for Pound Economic Development in a Flash Corporate Moves: Massachusetts Florida: A Ripe Climate for Innovation Innovating Big in Rhode IIsland Retail Set to Ride Out a Recession Corporate Moves: New Jersey South Carolina: A Sweet Spot in the Southeast Endless Opportunities in North Carolina Economic Awakening in the Mohawk Valley Metro Spotlight: Alexandria, LA Where Call Centers Call Home Texas Receives First Business Facilities State of the Year Award Advertiser Index Inside Livexchange

Business Facilities - May 2008

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