Business expansion planning ideas.

• Author: Uminski, Dean J.

As more companies try to remain competitive in today's global marketplace, executive management must continually look at ways to expand, modernize, combine and relocate operations to ensure their viability and provide an acceptable rate of return for shareholders. When contemplating new or additional growth decisions, a well laid-out strategy is essential, especially when multiple sites are being considered. The optimum strategy for any expansion is one that is both efficient and cost-effective. Traditional strategies placed more emphasis on efficiency and often overlooked the financial assistance offered by state and local governments when developing and implementing the cost-effectiveness issues. In today's booming economy, the cost effectiveness of any expansion strategy can be greatly enhanced with a thorough understanding of the tax and nontax incentives available from state and local governments.

In recent years, state and local governments have developed programs that provide numerous incentives to encourage economic growth in their communities. Most states now have programs to encourage job creation, attraction and retention, capital investment, research and development, accessibility to foreign markets, reuse of existing brownfield sites and the retraining of existing work forces. The majority of the more lucrative incentives offered are directly linked to the number of new jobs created and to the dollar amount of the capital investment associated with an expansion. More progressive programs have recently been established by which state and local officials have begun working with rail service carriers and utility companies to ensure access to quality transportation and favorable utility prices and services throughout an entire state.

States are very aware that business incentives are an attractive way to lure and spur new economic growth. As a result, they are continually updating and expanding their business development programs as they compete for new economic growth. This new economic growth can be partially financed with the following incentives:

1. Jobs credits; 2. Machinery and equipment investment tax credits; 3. Property tax abatements; 4. Sales/use tax credits; 5. Export tax credits; 6. Industrial development revenue bonds; 7. Tax incremental financing; 8. Site development/public infrastructure grants; 9. Work force training and recruitment assistance; and 10. Rail and brownfield tax credits.

Some states have also created...