Uncover the business and community value of investments to take advantage of government incentives
In a successful investment, everyone wins -- a business, the community and its citizens.
For business leaders, investing in local communities can earn a company respect and recognition, help attract and retain talent, and provide financial incentives. If a company is planning to invest in talent, facilities, equipment or other capital investments, it is likely eligible for incentives from local and state governments, such as tax credits, training grants, expedited permitting for construction and more.
In Illinois, governments are particularly focused on encouraging investments within technology, manufacturing and green energy practices. Companies investing in these categories could qualify for common incentive programs offered by the Illinois Department of Commerce and Economic Opportunity. For example, the Reimagining Energy and Vehicles program incentivizes companies that create jobs and invest in training in the electric vehicle and renewable energy industries.
Additionally, the Illinois Enterprise Zones and the Illinois Opportunity Zones programs provide different tax benefits to companies investing in areas of economic need.
For business leaders looking to make a capital investment, preparation is needed to maximize the incentive.
First, it's important that the company properly tell the story of its investment and how it benefits the community. This helps the decision-makers easily understand why an incentive should be granted. Second, the company must maintain compliance with any regulations tied to the incentive. Failing to do so may cause the company to lose out on the full benefits.
Tell the investment story
When an organization is applying for incentives to offset potential investments, it's important that the company properly describes the value the investment adds to the community. Business leaders should weigh the potential for incentives prior to making an investment, and then weave the desired incentives into the investment story and advocate accordingly during negotiations.
For example, Bloomington, Indiana-based Oliver Winery was faced with the choice of outsourcing its manufacturing out of state -- a decision that provided cost savings but would assure jobs would not be created for its hometown.
The winery showed its local government that a seven-year 100% tax abatement would not only offset the extra costs to remain in Indiana but would also allow it to manufacture the wine more sustainably, benefiting both the business and community. By creating a persuasive story describing the community benefits, Oliver Winery was granted the necessary government support to keep manufacturing solely in Indiana.
Working with an expert, companies can create stories that describe the investment value in an engaging way to improve the chance of securing support. With Illinois' focus on technology, manufacturing and green energy practices, companies can weave those topics into investment stories to maximize the incentives offered.
For example, if a company is investing in a new facility utilizing solar power, weaving in the topic of green energy when applying for an incentive will help the company maximize the incentive offered, benefiting the company both financially and reputationally.
Once a company receives an incentive, it must continue to meet agreed-upon requirements, or it will forfeit the benefit. Potential compliance requirements may include tax filings, form filings, policy implementation and more.
For example, if a company qualified for benefits by agreeing to add 15 new jobs over a three-year period, it must complete 15 hires within that time frame.
In addition to meeting the qualifications of the incentive, companies must also file compliance reports for up to 20 years. This requires thoughtful financial controls to make sure forms are filled out properly and on time for the duration. Further, companies must stay on top of any new or updated forms that are part of the compliance requirements, or it may lose the benefit entirely.
Negotiating business incentives should be a part of a company's big picture. A thoughtful approach to both the investment story as well as any compliance requirements will allow a company to maximize its benefit.
Any business leader that plans to make an investment should proactively consider the value of that investment to the community and take advantage of government support to both grow the company and boost the local economy.
• Jenny Massey is the director of site selection and business incentives team at Sikich. Contact her at firstname.lastname@example.org.