There’s no “I” in team – but there is in “incentive,” and a new survey out shows the increasing importance that financial incentives are playing in the site selection process.
Area Development magazine, in a survey of national site selection professionals, found that nearly two-thirds of respondents saying that a host location’s ability to offer customized incentive packages was “very important” for landing a deal.
Part and parcel with the ability to offer incentives is its own financial position and stability. “States with solid financial reserves and a strong credit rating are gaining in favor with site selectors,” Area Development noted.
Include Wyoming in that group. The state, which has no personal income tax or corporate income tax, ranked ranked fourth on the Pollina Top Pro Business state rankings for 2011 and No. 3 on the Tax Foundation’s State Business Climate Index in 2010 and 2011. Additionally, The Atlantic magazine named Wyoming the Best Performing State Economy for 2010 and the 24/7 Wall St. website ranked it Best Run State in America in 2010.
In fact, industry executives have been saying for some time that a region’s ability and willingness to offer economic incentives for large-scale projects is now often the starting point for consideration, not even for narrowing down the field.
In the survey, site selectors said the Southeast and the Dallas-Fort Worth Metroplex were the two top regions for overall business climate.
In Southeast stalwart Kentucky, an overhaul of the state’s incentive program was a key component of Gov. Steve Beshear’s economic development program. The Incentives for a New Kentucky (INK) legislation retooled business incentives, created new programs and revised other offerings to businesses locating, expanding or reinvesting in the state.
In just a short time after the new plan launched, the state spurred new or expansion projects with potential investment of more than $2 billion and the creation or retention of 17,500 jobs.
In Area Development’s survey, Texas, Alabama and Mississippi ranked as the best states for incentives for business and industry. Texas has also made incentives a pillar of its aggressive business investment and recruitment strategy.
The Texas Emerging Technology Fund, for example, awards grants to promote research, development and commercialization of emerging technologies. Another big weapon is the Texas Enterprise Fund, a deal-closing incentive used when a single Texas site is competing with another viable out-of-state option. The fund through April 2011 had invested more than $434.2 million and closed the deal on projects generating 59,000 new jobs and more than $14.7 billion in capital investment in the state.
The three Ls – labor, location and logistics – are still top considerations for site selection decisions, but with increasing frequency, the Is – incentives – have it. Without the right combination of creativity, flexibility and ability in using them, more communities will find themselves on the outside looking in.