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Incentives Resource Center

Incentives, primarily in the form of tax abatements, are one of the most popular, prominent and efficient forms of direct development assistance.


Incentives are generally not categorized as “financing” but rather a tool to reduce financial barriers facing businesses, investors or industry. As such, CDFA focuses exclusively on tax abatements when discussing incentives.


A tax abatement is the relief of tax liability by a tax-payer. For example, if a company locates a plant in a community, it may ask for and receive a tax abatement for relief of all or a portion of its property tax liability. Tax abatements are provided at both the state and local level and can be applied to property, sales, income or other tax liabilities.


Nearly every state authorizes the use of tax abatements. However, many communities do not employ this tool a part of their incentive policy. Conversely, many communities are very aggressive in their use of tax abatements. State agencies are particularly active in the use of tax abatements as incentives to attract and retain businesses.


Tax abatements also come with a considerable amount of accountability. In recent years, tax abatements have spiked controversy throughout the country. Greater due diligence measures and performance based awarding of tax abatements are becoming common place in development industry. In addition, tools such as smart analytics and abatement reduction have also emerged to ensure accountability on the part of government and business when employing tax abatements.


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-Understanding Incentives

Interested in learning more about Incentives? This section contains resources on understanding the basics of Incentives.

Effective Use of Property Tax Incentives - Lincoln InstituteMembers only Login
This study was published by the Lincoln Institute. The authors examine how to make property-tax incentives for business more effective. They find that governments should not approve every incentive request, target use of incentives, avoid incentive wars, cooperate with surrounding localities, and conduct regular evaluations.
Examining the Local Value of Economic Development IncentivesMembers only Login
Every year local and state governments in the United States expend tens of billions of dollars on economic development incentives. Under intense pressure to deliver economic opportunity, policymakers utilize incentives to encourage private sector firms to create jobs, invest in communities, and strengthen local industries. Drawing on a detailed literature review and a unique analysis of economic development transactions in four U.S. cities (Cincinnati, Indianapolis, Salt Lake County, and San Diego), this report advances a framework for inclusive economic development to help leaders analyze and evolve their incentive policies.
Best Practices for the Design and Evaluation of State Tax Incentive ProgramsMembers only Login
This report, produced for the Alabama Department of Revenue, analyzes how states use a range of tax and non-tax incentives, both of which have proliferated in the high-stakes bidding war over increasingly-mobile jobs and capital investment.
Striking a Balance: A National Assessment of Economic Development IncentivesMembers only Login
This paper, produced by the Upjohn Institute, analyzes the intensified use of incentives as local governments compete for new plants and corporate relocations, and as private firms increasingly demand a deal. While incentives promise jobs and tax revenue, scholars and practitioners criticize their high cost and limited accountability. Through a comparison of matched establishments, this paper explores how governmental incentive-granting strategy impacts incentive performance.
Leveraging Tax Incentives Use in Development ProjectsMembers only Login
Ellen Harpel from Smart Incentives & Business Development Advisors presents on leveraging tax incentive use in development projects.

-Resources

View all Incentives Resources

-Analysis

Making Sense of Incentives: Taming Business Incentives to Promote ProsperityMembers only Login
In evaluating incentives, everything depends on the details: how much in incentives it takes to truly cause a firm to locate or expand, the multiplier effects, the effects of jobs on employment rates, how jobs affect tax revenue versus public spending needs. Do benefits of incentives exceed costs? This depends on the details. This book by the Upjohn Institute is about those details.
Effective Use of Property Tax Incentives - Lincoln InstituteMembers only Login
This study was published by the Lincoln Institute. The authors examine how to make property-tax incentives for business more effective. They find that governments should not approve every incentive request, target use of incentives, avoid incentive wars, cooperate with surrounding localities, and conduct regular evaluations.
Examining the Local Value of Economic Development IncentivesMembers only Login
Every year local and state governments in the United States expend tens of billions of dollars on economic development incentives. Under intense pressure to deliver economic opportunity, policymakers utilize incentives to encourage private sector firms to create jobs, invest in communities, and strengthen local industries. Drawing on a detailed literature review and a unique analysis of economic development transactions in four U.S. cities (Cincinnati, Indianapolis, Salt Lake County, and San Diego), this report advances a framework for inclusive economic development to help leaders analyze and evolve their incentive policies.
How States Are Improving Tax Incentives for Jobs and GrowthMembers only Login
Building on earlier research by The Pew Charitable Trusts, this report identifies best practices for effectively evaluating tax incentives. Specifically, Pew recommends that states take three steps: make a plan, measure the impact, and inform policy choices.
View more Analysis Resources

-Policies and Procedures

Effective Use of Property Tax Incentives - Lincoln InstituteMembers only Login
This study was published by the Lincoln Institute. The authors examine how to make property-tax incentives for business more effective. They find that governments should not approve every incentive request, target use of incentives, avoid incentive wars, cooperate with surrounding localities, and conduct regular evaluations.
How States Are Improving Tax Incentives for Jobs and GrowthMembers only Login
Building on earlier research by The Pew Charitable Trusts, this report identifies best practices for effectively evaluating tax incentives. Specifically, Pew recommends that states take three steps: make a plan, measure the impact, and inform policy choices.
Best Practices for the Design and Evaluation of State Tax Incentive ProgramsMembers only Login
This report, produced for the Alabama Department of Revenue, analyzes how states use a range of tax and non-tax incentives, both of which have proliferated in the high-stakes bidding war over increasingly-mobile jobs and capital investment.
Striking a Balance: A National Assessment of Economic Development IncentivesMembers only Login
This paper, produced by the Upjohn Institute, analyzes the intensified use of incentives as local governments compete for new plants and corporate relocations, and as private firms increasingly demand a deal. While incentives promise jobs and tax revenue, scholars and practitioners criticize their high cost and limited accountability. Through a comparison of matched establishments, this paper explores how governmental incentive-granting strategy impacts incentive performance.
View more Policies and Procedures Resources

-Programs Map

Search the map below to find incentives programs by state. This specialized search is part of CDFA's State Financing Program Directory, the only online resource cataloging the development finance programs offered by state governments. Click on a state to see a sample of incentives programs available. Login with a CDFA Member account at the top of the page to view full results.

-Case Studies

California Rural Infrastructure Finance Guidebook
CALED knows from its work supporting economic development throughout California that infrastructure financing is a challenge for many rural communities. CALED collaborated with CDFA to develop this guidebook to meet the need for a resource to help build capacity in those areas, as well as move economic development projects forward.
CDFA Food Finance White Paper Series: Food Systems & Targeted Tools
This white paper is part of a series examining the potential creation of a food systems asset class which supports the market growth of local and regional food systems. This paper focuses specifically on targeted financing tools that can be used to geographically target local and regional food system developments.
Growing Food Connections: Aggregation, Processing, and DistributionMembers only Login
This brief highlights the many ways and scales at which local governments can invest in aggregation, processing, and distribution infrastructure to support local and regional food systems, from commissioning assessment studies and food hub business plans to supporting the development of facilities and infrastructure or amending policies and codes. Whether driven by the grassroots efforts of farmers, community organizations, or entrepreneurs, or by planning processes and policies, local governments have important roles to play in supporting these efforts by providing technical or policy support, funding, or land and other resources.
USDA Report on Agriculture and Rural Prosperity 2019Members only Login
On April 25, 2017, the President of the United States established the Interagency Task Force on Agriculture and Rural Prosperity through Executive Order 13790. The purpose and function of the Task Force was to identify legislative, regulatory, and policy changes to promote agriculture, economic development, job growth, infrastructure improvements, technological innovation, energy security, and quality of life in rural America.
Examining the Local Value of Economic Development IncentivesMembers only Login
Every year local and state governments in the United States expend tens of billions of dollars on economic development incentives. Under intense pressure to deliver economic opportunity, policymakers utilize incentives to encourage private sector firms to create jobs, invest in communities, and strengthen local industries. Drawing on a detailed literature review and a unique analysis of economic development transactions in four U.S. cities (Cincinnati, Indianapolis, Salt Lake County, and San Diego), this report advances a framework for inclusive economic development to help leaders analyze and evolve their incentive policies.
View more Case Studies

-Headlines

-Publications

Practitioner's Guide to Economic Development Finance
The Practitioner's Guide to Economic Development Finance 2nd Edition is the only comprehensive resource dedicated to building and utilizing the development finance toolbox. The Practitioner's Guide provides the insight and practical information needed to critically understand how economic development is financed and the tools, strategies and techniques used to build strong communities. From bonds, tax increment finance and special districts to tax credits, seed & venture capital, revolving loan funds and much more, this Guide outlines the financing tools required for succeeding in today's competitive economic development climate.
Unlocking Capital: A Handbook for Becoming a High Performing Development Finance Agency
Unlocking Capital: A Handbook for Becoming a High Performing Development Finance Agency (Handbook) serves as a companion to the Practitioner’s Guide to help illuminate the structures of development finance agencies (DFAs), essential conduits to access development finance tools. The Handbook provides an overview of DFAs and their myriad roles in various development efforts. Included in this discussion is a comprehensive look at over a dozen high-performing DFAs throughout the country. The Handbook is designed to be a starting point for local leaders to engage in the creation or acceleration of a DFA to build and utilize the development finance toolbox.
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-Training Courses

The Intro Incentives course considers how incentives are used in today’s economic environment and outlines steps that are being taken to reduce risk and achieve better outcomes. In particular, this course addresses the characteristics of well-designed incentive programs and processes to ensure meaningful impact, value, and accountability.

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-Upcoming Events

Weekly Development Finance COVID-19 Briefing
Every Friday through May 29, 2020
1:00 PM Eastern
CDFA will be hosting a weekly briefing about development finance COVID-19 news and resources. These one-hour phone calls will feature legislative updates, news from our members, state and local financing strategies, and lessons learned from previous development finance responses to disasters.
Register
CDFA Federal Policy Conference (cancelled)
April 14-15, 2020
Washington, DC
The federal government plays a critical role in driving private and public investment in innovation, job creation, infrastructure, and community development. With the 2020 presidential election quickly approaching, development finance will be a key policy issue across the nation. The 116th Congress will also play a major role in shaping our country’s economic development policy going forward. It's up to the development finance community to focus the national discussion on smart federal policy, and CDFA is the voice of the economic development finance community on Capitol Hill. For these reasons, CDFA will host its CDFA Federal Policy Conference on April 14-15 in Washington DC.
CDFA Federal Financing Webinar Series: Federal Financing for Community Facilities
June 18, 2020
2:00 PM Eastern
During this webinar, several federal agencies will discuss their programs for supporting local community facilities and how to coordinate financing with multiple partners.
Register
View more Upcoming Events

-Webcasts

CDFA // BNY Mellon Webcast Series: The Landscape of Mega Project InitiativesMembers only Login
During this installment of the CDFA // BNY Mellon Webcast Series, expert speakers from CAI Global, Baltimore Development Corporation, Arlington Economic Development, and VEDP provided an in-depth overview of the approaches being used by cities, counties, and states to attract mega projects like Amazon HQ2 and Under Armour.
CDFA // BNY Mellon Webcast Series: Financing Broadband InfrastructureMembers only Login
During this installment of the CDFA // BNY Mellon Webcast Series, Nathan Rosenberg with The Broadband Group and Gregory Dunn with Ice Miller LLP presented some of the various financing options & ownership structures available to communities to provide and increase the quality of broadband infrastructure in the U.S.
CDFA // BNY Mellon Webcast Series: Exploring the Impact of GASB 77Members only Login
During this installment of the CDFA // BNY Mellon Development Finance Webcast Series, our expert speakers provide an in depth look into the implications of this new accounting standard.
CDFA // BNY Mellon Webcast Series: Retail as Economy: The Math Behind Financing Retail DevelopmentMembers only Login
This month’s CDFA // BNY Mellon Development Finance Webcast Series discussed strategies for financing retail development.
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CDFA National Sponsors

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