Most states and communities are extremely aggressive in assembling incentive packages that present very attractive savings. But without careful analysis, the estimated value of incentives often appear higher than what can actually be realized. To avoid key incentive analysis errors, selection teams must ask:
• What are the net short- and long-term costs after all incentives are applied? For example, property tax abatements can be worth a lot of money, but one location may offer a larger abatement because its property taxes are significantly higher than a competing location.
• Can the incentives offered be used? The selection team must determine the “usable value” of all incentives offered. Income tax credits can be extremely valuable, but not if a company has little to no income tax liability.
What is required to actually secure the incentives? In some cases, the effort to secure certain incentives may not be worth the value of the incentives. Most incentives have applications and supporting documentation that must be submitted at particular times throughout the search process and upon project implementation. Follow-up is very important to ensure deadlines are met and incentives are secured.