Generally speaking, incentives can be categorized into four main areas: property tax relief; income tax credits; sales tax relief; and cash grants. In many states, as mentioned above, much of this is predicated on employment in excess of 50 full-time employees. In some states, tax relief for personal property tax is related to a gross amount of capital expenditure whether for construction or equipment. In some states, legislation has been enacted to create a discretionary fund that offers cash grants that can be used for the purchase of property, or equipment.
A plan of successful plan of attack is best organized around four steps: tax and analytic assessment to create a strategy; strategic negotiations; contract negotiations; and implementation.
In order to create a tax and analytic assessment so that a strategy can actually be created, one must first understand the tax and business fact patterns in any given region. It is essential to create a 10-year business financial operations picture. Before any strategy can be created, all statutory tax regulations and issues must be fully reviewed. Finally, the information derived is molded into a business-driven strategy.
Before contract negotiations can commence, strategic negotiations must be entered. Meeting with state and local officials to explain the business goals and objectives lays the foundation for future negotiations. Once basic information has been transmitted, proposals are usually prepared and received from the respective government agencies. An analysis of the proposals ensues that identifies key challenges and issues requiring solutions.
Contract negotiations continue this process with several rounds of proposals, revisions, analyses (both financial and subjective) and submittal of approvals.
Implementation of the incentives package relies on the preparation of reports and necessary applications, filing for the benefits that were negotiated, tracking data pertinent and precedent to the incentives, tracking of payments or offsets and further training those who will be responsible for tracking such incentives in the future.
In so many cases, the incentives received can equal the total capital invested. Since the cost of power can, over the term of the investment or lease even exceed the capital invested, the incentives package can go a long way to offset the cost of power.