Financial incentives for business retention

[michaelskis]

Many communities will do backflips and promise the moon to bring in new companies and developments, but when those expire, the well runs dry. I can find a ton of examples of attraction incentives for new businesses and corporations, but there isn't nearly as much for retention programs.

Locally, we issue a Payment In Lieu of Taxes (PILOT) and while we have several companies that are taking advantage of it, only one of those was to keep the company here. The rest had to meet minimum standards for new jobs, new investment, and minimum wage thresholds.

What does your community do or do you know of any that get it right. Also what alternatives have you seen to help keep companies in a location?

 

[Suburb Repairman]

Honestly, my #1 recommendation on this is to get to know your businesses really, REALLY well. Business retention often isn't necessarily an issue of financial incentives, in fact in my experience that has rarely been the case because relocation carries with it a bunch of costs. It could be a wide variety of things prompting them to look elsewhere. Retention is all about the relationships and listening. For example, the issue may be that they need a new location to support new growth, but there is a lack of available space or developers doing build-to-suit for a new build. So it may not be them that you need to look at incentives, but instead some matchmaker work with the right developer and understanding what is happening in the market that might be preventing creation of a supply of the type of space needed. Another might need some type of capital incentive for retooling manufacturing. Another might be struggling to find the employees they need, or might be losing them due to housing costs or even employee spouses not being able to find appropriate employment. Another might be an owner looking to retire, and thus looking to sell the business which means you might want to think about a business succession program to help keep ownership local.

 

[bureaucrat#3]

We will waive property taxes(except school/hospital) for major capital projects that either include new jobs. In some cases we'll do the same for major investments retooling lines.

Major retail we'll enter tax sharing for a period of time, but that usually involves major additions of new to market or things that would be regional draws. We have worked with a few shopping centers to share revenue to pay for major facade improvements and parking lots.

I agree with Suburb Repairman that its important to see what they need. My former employer had an Economic Development employee who acted as an ombudsman for industry and other businesses. He was their go to if they ran into an issue or needed help with a problem. He also managed the covenants for our industrial parks and helped recruit new business.

One of the things we've been doing lately that always gets a lot of compliments from our industries is that we'll work with manufacturers, the local community college, and the state to create training courses to get people certified or prepped on machines. We also help recruit employees for the industries. This includes having an economic development officer work the municipal judge to get non-violent offenders into diversion programs with training, E.D. recruiting retiring military service members (Career Skills Program), and the high school's non-college track curriculum lining up with specific industry needs. I know a lot of the kids coming out of high school are jumping into jobs making $40-70K before overtime. The cost for most of these programs are the employee salaries to manage them.

We're struggling right now on how to help small businesses and especially those in the downtown area. It's historic so redevelopment is tricky, infrastructure is old, and nothing is straight forward. We've talked about grants to improve electrical or add sprinklers. We already give facade grants but its not enough.