Site Selection: Phase 3 - Negotiation

Published on 06/09/2016 10:05 AM and last updated on 01/17/2018 04:22 AM
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Phase 3
Negotiation
In the negotiation phase, due diligence should be near completion on the real estate and respective communities. When the decision is narrowed to at least 2 states, negotiations start to materialize into incentive offer letters. At the end of this phase, your company should have enough information to make an informed site selection decision.

Steps in Phase 3 - Negotiation

  • Narrow your options to at least 2 states & sites
  • Finalize due diligence on real estate/sites
  • Negotiate incentives with State & Local Governments 

Things to remember:

  • States compete against each other for business recruitment daily and offer a variety of incentives. Incentives are typically in the form of tax credits and grants.
  • Local incentives normally are usually in the form of property tax incentives and grants to offset infrastructure costs.
  • Training and recruitment assistance can also be offered at the state and local levels.
  • When reviewing real estate, take into account the infrastructure requirements (utilities, environmental, roads, traffic signals, etc.) and the timing for permitting/zoning approvals.

 Recommended Reading

  • Overview of the Types of Incentives by ADP LLC
  • Let's Make a Deal: Understanding the Opportunities in Discretionary Incentives (tax.thomsonreuters.com/CreditsIncentives), by Ernst & Young LLP
  • Why Location Matters to Manufacturers in Lessening the Tax Bite (www.areadevelopment.com/taxesIncentives/December-2015/Location-Matters-Manufacturers-Lessening-Tax-Bite-890044.shtml), by Hartley Powell, Tax Managing Director and National Practice Leader, and David Padykula, Senior Associate, State and Local Tax Group, KPMG LLP

 Useful Websites

  • Effective State & Local Tax Rates for Manufacturing (www.taxfoundation.org/blog/location-matters-effective-tax-rates-manufacturers-state)
  • CCH Group - Tax Research (www.cch.com)
  • Thomson Reuters - RIA Tax (tax.thomsonreuters.com)
  • State Incentives Chart - Site Selection magazine (www.siteselection.com/issues/2015/nov/images/1511IncentivesChartswNotes.pdf)

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