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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

State Tax Incentive Evaluations Database - National Conference of State Legislatures (NCSL)Members only Login
States across the country are starting to gather data and use evidence to systematically evaluate tax incentives. To illustrate what sort of evaluations states are conducting, NCSL created a database of state tax incentive evaluations. Evaluations published since the start of 2008 are included and more reports will be added over time.
How Tulsa Remote is Harnessing the Remote Work Revolution to Spur Local Economic GrowthMembers only Login
Tulsa Remote, one of the nation’s first and largest remote worker relocation initiatives, has brought more than 1,200 remote workers to the city since 2018 by offering a $10,000 grant and additional support services to eligible workers who move to Tulsa to live and work remotely from there for at least one year.
Incentives for Entrepreneurial FirmsMembers only Login
Many economic development organizations (EDOs) have embraced the mission to support entrepreneurial firms in their communities. EDOs engage in their entrepreneurial ecosystems, in part, by providing resources, sometimes in the form of business incentives. The purpose of this report is to provide practitioners and policymakers with insights regarding the use of these incentives and guidance for offering incentives to entrepreneurial firms.
A Strategic Plan for Economic Recovery and Resiliency in the Albuquerque Metropolitan RegionMembers only Login
Albuquerque Economic Development has embraced the critical need for developing a strategy not only to drive recovery in the region, but to ensure that it does not again find itself left behind as it was following the Great Recession. The 2021 Strategic Plan outlines AED's vision for a unified and inclusive regional future that allows all members of the community to realize potential benefits.
Repositioning Economic Development Incentives Post-Pandemic
The Center for Regional Economic Competitiveness and Smart Incentives have produced a series of reports for the State Economic Development Executives network over the past year providing guidance on critical issues and trade-offs to help state leaders make sound decisions on incentive policies. The report on "Repositioning Economic Development Incentives Post-Pandemic" provides guidance that draws on lessons learned from past recessions, the authors' work on incentive best practices, recent research examining incentive effectiveness, and responses to economic priorities that have come to the forefront over the last year.
View more Analysis Resources

-Policies and Procedures

Repositioning Economic Development Incentives Post-Pandemic
The Center for Regional Economic Competitiveness and Smart Incentives have produced a series of reports for the State Economic Development Executives network over the past year providing guidance on critical issues and trade-offs to help state leaders make sound decisions on incentive policies. The report on "Repositioning Economic Development Incentives Post-Pandemic" provides guidance that draws on lessons learned from past recessions, the authors' work on incentive best practices, recent research examining incentive effectiveness, and responses to economic priorities that have come to the forefront over the last year.
Private Capital Public Good - Leveraging Impact Investing to Support a Just & Equitable Recovery
This policy paper from the U.S. Impact Investing Alliance outlines 12 specific policy recommendations and ideas with the potential to catalyze more impact investments to help address urgent social, economic, and environmental challenges.
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.
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

How Tulsa Remote is Harnessing the Remote Work Revolution to Spur Local Economic GrowthMembers only Login
Tulsa Remote, one of the nation’s first and largest remote worker relocation initiatives, has brought more than 1,200 remote workers to the city since 2018 by offering a $10,000 grant and additional support services to eligible workers who move to Tulsa to live and work remotely from there for at least one year.
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.
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-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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-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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