Coherency and cooperation among political entities can help move a location to the forefront of the selection process.
In a tough economy, some are questioning the use of tax incentives to convince businesses to relocate. Andy Shapiro, Managing Director of Biggins Lacy Shapiro & Co., Princeton, NJ gives us his perspective on whether tax incentives are an effective way to promote development. BF: Are tax incentives often the determining factor in a company’s location decision? AS: Twenty years ago, incentives typically received less weight during the initial site selection process, and became a more key determinant only as the project neared its final stages. Now, as cost control becomes more critical, the search for effective incentives plays a more pronounced role in earlier project stages. Incentives can swing an investment toward an otherwise comparable jurisdiction; or they can make the difference between a decision to move forward and one not to invest at all. BF: Are tax incentives a cost effective tool for job creation? AS: While there has been little research into how effective state job creation tax credits are in promoting job creation, Federal Reserve, researchers have have found that these programs appear to be quite effective at increasing overall business activity within a state. Also, remember that in a growing number of states the tax credit per new job is a percentage of the state income tax withholdings associated with that job. So what you really have is a form of revenue sharing whereby very little public monies are spent on actual job creation. Finally, any calculus of job creation benefits should be sure to take into account the indirect and induced (or “downstream”) jobs created as a result of the multiplier effect from each “direct “ new job. BF: Will states reduce their reliance on tax incentives or will they view them as essential in the site selection competition? AS: We have witnessed budgetary pressures in many states that have threatened existing incentive programs. Incentives targeting emerging industries, including investment tax credits and venture capital funds, appear to have taken the brunt of this impact. However, so-called “pay as you go” incentives such as job creation tax credits will likely endure as they are considered to be revenue neutral. Also, some states have chosen to double-down during the recession and to increase incentives for new jobs and investment. BF: Do you think tax incentives generally are applied too broadly? AS: Incentives are pricing tools: their impact goes right to a project’s bottom line. State agencies and local jurisdictions use incentives to intervene in the market where a marginal, additional public investment is capable of […]
From the Desk of the Editor in Chief
The South Carolina Department of Commerce, Lexington County and the Central SC Alliance have announced that Husqvarna will locate a parts distribution operation in Lexington County. The company anticipates investing more than $2.5 million and will be the principal tenant in a newly constructed building. “We are pleased to move forward with our plans for the new parts distribution center in Lexington County. This facility will be an important part of our future growth. South Carolina has long provided us with an excellent business environment and we look forward to continued growth in the state. We appreciate all the support we have received from state and local officials,” said Lowell Stoelting, Director of Parts Operations for Husqvarna. Husqvarna will lease warehouse space in the Midway Logistics Park and will begin moving into the facility in the first quarter next year. The company also currently operates a manufacturing facility in Orangeburg County that will support this new operation in Lexington County. “Husqvarna has enjoyed doing business in South Carolina for a number of years and their decision to continue to invest in South Carolina is another indication that our business-friendly climate, skilled workforce and unmatched market access are helping existing businesses prosper. We appreciate Husqvarna’s commitment to our state and look forward to their continued success here,” said Joe Taylor, Secretary of Commerce. “Lexington County is pleased to welcome Husqvarna to its business community. Husqvarna, a leader in the global market for many of its products, will fit well here in Lexington County. We look forward to Husqvarna’s presence in Lexington County which should produce positive results for all,” said Debbie Summers, chairwoman of Lexington County Council. Central SC Alliance Chairman Jim Apple said, “We greatly appreciate Husqvarna’s continued commitment to invest in central South Carolina. Husqvarna will now have operations in three central S.C. counties. They recognize the unmatched global logistical advantages that exist here in the region. Our efficient transportation network and access to the Port of Charleston coupled with a trained and skilled workforce creates an environment where companies can thrive in today’s economy.” Husqvarna is the world’s largest producer of lawn mowers, chainsaws and portable gasoline powered garden equipment such as trimmers and blowers. The Husqvarna Group is also a world leader in diamond tools and cutting equipment for the construction and stone industries. The Group’s products are sold in more than 100 countries.
Tennessee has been named the winner of Business Facilities’ third annual State of the Year Award.
Here are some New Year’s resolutions we’d like to see: — The world’s largest wind turbine will be attached to the Washington Monument, facing the U.S. Capitol Building. — Recapitalized banks which used TARP funds to pay back TARP funds so they could resume huge bonus payments to bank executives will request additional TARP funds. — Citigroup bailout funds, stolen by Russian mob, will be used to purchase reduced shares in Citigroup. Price of hot dogs at Citi Field will increase to 10,000 rubles. — Gov. Arnold Schwarzenegger will sell San Quentin prison to Cuba to close California budget gap. San Quentin will be converted into an international distribution center for Cuban cigars. — Sen. Joseph Lieberman will announce he is withholding his cloture vote from any piece of legislation containing the word ”bill” in 2010. — Hank Paulson will claim a tax credit after he purchases Tim Geithner’s house in New York, then sell it back to Geithner so Tim can avoid paying capital gains tax. — Tiger Woods will land an endorsement deal as the official spokesman for the U.S. government’s stimulus program. — Lloyd Blankfein will announce Goldman Sachs is ”seriously considering” donating all of its 2010 earnings to U.N. famine relief programs. — Lloyd Blankfein will announce a new suite of securitized derivatives that will permit Goldman Sachs investors to make hourly trades against fluctuations in global starvation estimates. — In a deficit-reduction gesture, Congress will order the U.S. Census Bureau to count every other state. — Laid-off Census workers will file for unemployment, forcing Congress to extend benefits and increase the deficit. — Dubai will open the world’s tallest building, topping off at 160 stories and 2,684 feet. Elevators will not go beyond 20th floor until first bond payments are made in 2045. — Rupert Murdoch will merge Wall Street Journal and New York Post. Page Six item will spawn Ben Bernanke ”sex tapes” scandal. Las Vegas cocktail waitress will tell Journal-Post ”Bernanke just sort of sat there, staring at me, but I could tell he was thinking bad thoughts.” –Last-minute amendment to health care reform act will require Medicare recipients to pay double tolls on New Jersey Turnpike. — In a deficit-reduction gesture, President Obama will pick two teams for Final Four in NCAA tournament pool, leave the other brackets blank. — China will convert $2 trillion in currency reserves from U.S. dollars to Disney dollars. Frontierland will be renamed Formosa Free Trade Zone. — Donald Trump will file a $1-billion lawsuit against shareholders of his […]
In the wake of golf superstar Tiger Woods’ announcement that he is taking an indefinite leave from the sport, many are wondering if the impact will go beyond the leaderboard of golf scores and depress local economies at venues of major golf tournaments.If you think that is an exaggeration, consider this: the overall economic impact of golf is estimated at $75 billion. A major golf tournament can generate more than $100 million in direct and indirect revenue for a location that hosts it and related interests. A good example is the PGA Championship, which is scheduled to take place at Whistling Straits golf course in Sheboygan County, Wisconsin, in August. The last time the championship was held at Whistling Straits, in 2004, Woods drew huge crowds and brought in approximately $76 million in revenue to the Wisconsin state economy. “Obviously, we want that to happen again and we need a shot in the arm with the economy here,” County Administrator Adam Payne told a local ABC-TV affiliate, WISN. “I know we have people in this community I’m sure that are very concerned about it and what it means for the success of the championship as well as again, what it means for our economy,” Payne said. The head of Sheboygan County’s Tourism Alliance told 12 News, “We’re watching the situation closely, but it’s too early to judge what the economic impact might be.” When Woods sat out several tournaments last year to recover from knee surgery, TV viewership dropped 50 percent. Fewer viewers worldwide would mean fewer people seeing Sheboygan County and its world class golf course, county officials said. With millions in local tourism dollars on the line, Woods’ private scandal could have a very public impact. The golf great is more than an athlete without peer – he’s an industry. We’re tempted to say that a prolonged absence from golf by Woods might necessitate a stimulus package of some sort for the PGA. But since Tiger’s familiarity with same apparently has shot his stellar career into the rough, we won’t go there.
GE wins a $1.4-billion contract to supply 338 of its 2.5 megawatt turbines for Shepherds Flat in north-central Oregon, to be completed by 2012.
The India-based company is investing $32 million in a copper cable manufacturing facility in Morgantown. Gov. Steve Beshear of Kentucky, Cabinet for Economic Development representatives, and officials in Butler County have announced India-based Chandra Proteco Ltd. will start up a manufacturing operation in Morgantown under the name Kentucky Copper Inc. The new company will create 106 new jobs and invest nearly $32 million in the Commonwealth. “The start-up of Kentucky Copper in Morgantown will create more than 100 direct jobs and a tremendous economic boost for not only Butler County, but for all of south central Kentucky,” said Gov. Beshear. “Kentucky is proud to partner with Chandra Proteco on this new investment and will continue to work with the company to establish and grow its operations in the Commonwealth.” Chandra Group has been in the field of copper and copper cable business for more than 40 years, and specializes in transposed cable and railway cables for traction. With more than 500 employees in India, the company’s facilities are spread over India, Europe, Africa and China. “We are delighted to bring the extensive experience of our parent company, Chandra Copper, to Kentucky along with a commitment to be an active part of the community and the Commonwealth of Kentucky,” said Mukul Gupta, president of Kentucky Copper.