A Fortune 500 food processing company was negotiating and implementing a local tax incentive package. The company was considering developing a $40 million warehouse project in central Illinois. The project wasn’t eligible for state incentives and faced several challenges.
The site under consideration was located on an environmentally contaminated site. The site had previously been used by an industrial business that filed for bankruptcy and vacated its facility. The site had recently been purchased for development by a real estate investment company, and the existing building was demolished. The owner had begun clearing the site to position it for sale, without any assistance from government resources. At the outset of the project, the community offered the food processing company enterprise zone incentives valued at less than $800,000 over 10 years. The community repeatedly said this was the best it could offer because of a lack of applicable incentive programs.
What Grant Thornton did
Grant Thornton’s Credits and Incentives practice helped the client receive a $3.7 million tax increment financing (TIF) subsidy, which will be paid over a seven-year period. Although the city had used a TIF in the past, it did not believe the site or the project would qualify for a TIF. In addition, the city had historically never constructed a TIF project to assist a single business.
As part of the negotiation process with the city, we worked with our client to assemble a team of stakeholders: company representatives, city economic development officials and representatives of the affected taxing districts. We believed that to be successful, the project had to be a team effort, with all affected parties participating. Over several months, our Credits and Incentives team worked with the parties mentioned above to inform them about eligibility and qualification for the TIF. In addition, we developed an economic argument to persuade the city and the taxing districts that the subsidy was warranted. Our team helped complete the negotiation process by:
- Developing a communication strategy and protocols
- Developing project plan and timelines
- Preparing an economic and fiscal impact analysis
- Completing TIF designation reports
- Representing the client at public meetings and forums
In February 2014, the city council passed legislation creating a new TIF district to support our client’s project. In addition, we also just completed the negotiation of the redevelopment agreement providing a $3.7 million subsidy for our client. A critical component of the agreement is that the taxing districts will also share in the benefit, because they’ll be able to recoup taxes dollars that were available before the industrial facility was demolished. To help the city further its goals, we worked with its representatives to draw TIF district boundaries so that the city will be able to support other businesses and infrastructure projects down the road. Furthermore, our client agreed to support a training partnership with the community college. This partnership involved designing a program to provide local community residents with the skills to compete for employment opportunities with our client and other manufacturing businesses in the region.
Why is this important?
Our Credits and Incentives professionals collaborated with economic development officials. Our objective was not only to increase government incentives to our client, but also to manage the process in a way that created a public-private partnership.
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