Incentives 2010


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Incentives 2010

  1. 1. 1320 West Main Street, Suite 120 Franklin, TN 37064 Matt Largen, Director 615.261.2880
  2. 2. Review of Corporate Business Recruitment Incentives
  3. 3. Year in ReviewBusiness ActivityJanuary 2010 – Present Expansion Number Type of Operation Date of City of or of New Square Activity Company Name Location Relocation Jobs footage 3/16/2010 Renal Advantage Franklin Expansion 0 54,000 HQ Corporate Office Principal Financial 4/12/2010 Group Brentwood Relocation 50 9,000 Jackson National Life Regional HQ 5/25/2010 Insurance Company Franklin Relocation 750 155,000 6/23/2010 Advanced BioHealing Brentwood Expansion 10 5,500 Life Sciences R&D 8/17/2010 Comdata Brentwood Expansion 120 0 HQ 8/27/2010 IRS Franklin Relocation 736 115,885 Government BioMimetic HQ, Health Care, R&D, Manufacturing 10/1/2010 Therapeutics Franklin Expansion 75 90,000 HQ 10/11/2010 MedSolutions Franklin Expansion 100 19,000 HQ 10/14/2010 OHL Brentwood Expansion 250 37,000 TOTAL 2,091 485,385
  4. 4. Who is growing jobs? Net Job Change in the Nashville Area 2004 to 2009 2009 Population Estimates 9% 3% 6% 2% 0% 13% 3% 0% Cheatham 10% Cheatham Davidson Davidson 8% Maury 37% Maury Montgomery Montgomery Robertson9% 2% Rutherford Robertson Rutherford Sumner 39% Williamson Sumner Dickson Williamson Wilson Dickson 15% Wilson 20% 5% 4% 9% 6% TOP 3 1. Williamson +29 2. Rutherford +5 3. Wilson +3
  5. 5. How do people view incentives?Necessary evilCost of entry Investment
  6. 6. How do you relocate a company?“Incentives won’t make a bad deal good.”
  7. 7. Where do incentives fit?
  8. 8. What are the types of incentives? Fast Track/Concierge Permitting Infrastructure Improvements Financing TIFs Tax Abatement Cash Other(Building signage, road renamed, employee discounts) Offset up-front cost of relocation
  9. 9. Where do incentives come from?75-85% State Statutory 1. credits against state franchise and excise taxes 2. training/infrastructure $ 3. 25 new jobs and $500K in investment (new & existing) Discretionary10-20% TVA10-20% Local 1. tax abatement (never school portion) 2. infrastructure matching grants
  10. 10. Williamson County Criteria1. The quality of jobs created.2. The education level of jobs created.3. The salary of jobs created.4. The impact of the industry on the environment.5. The eventual impact of the industry on local tax revenues.6. The capital investment that the industry will bring to the community.7. The effect of the industry on the strategic planning of the community.8. The impact of the industry on existing business.9. The financial strength and stability of the industry.10. The impact of the industry on local property values.11. The impact of the industry on local infrastructure.12. The number of jobs created.13. The impact on the character of the community.14. Whether the industry is new or an expansion of an existing business.Case-by-case basis – allows maximum flexibility
  11. 11. What have we done recently? Sample of 2005-2010 Incentive PackagesJackson National Life Insurance Company Regional Headquarters, 2010Size: 154,000 square feetEstimated Cost: $10 millionJobs: 750 over 3 years; average salary, $40-$50,000 a year• Jackson will receive a 40 percent property tax break for five years up to $492,800 fromWilliamson County• Jackson can receive up to $200,000 from the City of Franklin for an infrastructure grantVerizon Wireless State of Tennessee Headquarters, 2007Size: 180,000 square feetEstimated cost: $54 millionJobs: 600 to 700 over three to five years; average salary, $33,407 a year.State and local incentives:• Verizon will receive a 40 percent property tax break for five years up to $500,000• Value of State package = $5 million
  12. 12. What have we done recently? Sample of 2005-2010 Incentive PackagesNissan North America Corporate Headquarters, 2005Size: 460,000 square feet occupiedEstimated cost: $75 million (capital investment of more than $100 million)Expected jobs: 1,200-plusState and local incentives included:• Nissan got a 47 percent property tax abatement estimated at $32.5 million from WilliamsonCounty• Franklin borrowed $15 million to buy land on which Nissans headquarters is being built.• $400,000 in electrical system improvements• $2.2 million for screening of job applicants and $720,000 for on-the-job training• State Package = $150 millionAlways on new construction, reluctant to take property off tax roles
  13. 13. What are we up against?• Virginia Economic Partnership in TN in March 2010• $500K for Hangar HQ from City of Austin – 120 HQ jobs• CEO expects at least as good a deal as last company Kansas vs. Missouri When states poach each other’s businesses, taxpayers lose Kansas City Star, Nov 29, 2010“Kansas City and Missouri offered an incentive package valued at more than $200 millionlast year to try to get Black & Veatch to jump the line. The firm ultimately decided to keepits 2,300 employees in Overland Park, but Kansas shelled out a $25 million incentivepackage to seal the deal.”
  14. 14. How aggressive are we?Short-term vs. long-term approach- 3rd lowest county tax rate in region- Lowest tax rate of any large city in TN (Franklin)“Williamson County commits to maintaining a prosperous business environment.These commitments will lead to significant long-term costs savings for the client andtheir employees who choose to reside in Williamson County.”Companies you want to attract look for mutual benefit and think long-termIn a race to the bottom, everybody eventually loses We will be aggressive if project is a fit, and could use more tools in toolkit
  15. 15. Incentives“Similarly, incentives have never, in my opinion, occupied soprominent a position in searches for new sites…tax exemptions andrelated state and local incentives that generate “cash” with which toreduce capital expenditures and lower start-up costs are exertingpowerful forces in site selection projects across the globe.”David Brandon | Senior Vice President | SITE SELECTION GROUP