incentives 2010
TRANSCRIPT
1320 West Main Street, Suite 120Franklin, TN 37064
Matt Largen, Director615.261.2880
Review of Corporate Business Recruitment Incentives
Year in Review
485,3852,091TOTAL
HQ37,000250ExpansionBrentwoodOHL10/14/2010
HQ19,000100ExpansionFranklinMedSolutions10/11/2010
HQ, Health Care, R&D, Manufacturing90,00075ExpansionFranklin
BioMimeticTherapeutics10/1/2010
Government115,885736RelocationFranklinIRS8/27/2010
HQ0120ExpansionBrentwoodComdata8/17/2010
Life Sciences R&D5,50010ExpansionBrentwoodAdvanced BioHealing6/23/2010
Regional HQ155,000750RelocationFranklin
Jackson National Life Insurance Company5/25/2010
Corporate Office
9,00050RelocationBrentwoodPrincipal Financial Group 4/12/2010
HQ54,0000ExpansionFranklinRenal Advantage3/16/2010
Type of OperationSquare footage
Number of New Jobs
Expansion or
RelocationCity of
LocationCompany NameDate of Activity
Business ActivityJanuary 2010 – Present
Who is growing jobs?
2009 Population Estimates2%
37%
5%9%4%
15%
9%
10%
3%6%
Cheatham
Davidson
Maury
Montgomery
Robertson
Rutherford
Sumner
Williamson
Dickson
Wilson
Net Job Change in the Nashville Area2004 to 2009
3%
13%
0%
8%
2%
20%
6%
39%
0%9%
Cheatham
Davidson
Maury
Montgomery
Robertson
Rutherford
Sumner
Williamson
Dickson
Wilson
1. Williamson +292. Rutherford +53. Wilson +3
TOP 3
How do people view incentives?
Necessary evil
Cost of entry
Investment
How do you relocate a company?
“Incentives won’t make a bad deal good.”
Where do incentives fit?
What are the types of incentives?
Offset up-front cost of relocation
Fast Track/Concierge Permitting
Infrastructure Improvements
Financing
TIFs
Tax Abatement
Cash
Other(Building signage, road renamed, employee discounts)
Where do incentives come from?
75-85% StateStatutory
1. credits against state franchise and excise taxes2. training/infrastructure $3. 25 new jobs and $500K in investment (new & existing)
Discretionary
10-20% TVA
10-20% Local1. tax abatement (never school portion)2. infrastructure matching grants
Williamson County Criteria
Case-by-case basis – allows maximum flexibility
1. 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.
What have we done recently?Sample of 2005-2010 Incentive Packages
Jackson National Life Insurance Company Regional Headquarters, 2010Size: 154,000 square feetEstimated Cost: $10 million Jobs: 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 from Williamson County• Jackson can receive up to $200,000 from the City of Franklin for an infrastructure grant
Verizon 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
What have we done recently?Sample of 2005-2010 Incentive Packages
Nissan North America Corporate Headquarters, 2005
Size: 460,000 square feet occupiedEstimated cost: $75 million (capital investment of more than $100 million)Expected jobs: 1,200-plus
State and local incentives included:• Nissan got a 47 percent property tax abatement estimated at $32.5 million from Williamson County• Franklin borrowed $15 million to buy land on which Nissan's 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 million
Always on new construction, reluctant to take property off tax roles
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 loseKansas 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 keep its 2,300 employees in Overland Park, but Kansas shelled out a $25 million incentive package to seal the deal.”
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 and their employees who choose to reside in Williamson County.”
Companies you want to attract look for mutual benefit and think long-term
In a race to the bottom, everybody eventually loses
We will be aggressive if project is a fit, and could use more tools in toolkit
Incentives
“Similarly, incentives have never, in my opinion, occupied so prominent a position in searches for new sites…tax exemptions and related state and local incentives that generate “cash” with which to reduce capital expenditures and lower start-up costs are exerting powerful forces in site selection projects across the globe.”
David Brandon | Senior Vice President | SITE SELECTION GROUP