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Feb 15, 2019

Benton Blaine Reviews Four Key Concepts to Maximize Incentives

McGuireWoods Consulting Infrastructure and Economic Development vice president, Benton Blaine, detailed four key concepts to maximize return on investment and project success in a Feb. 15 article for Area Development.

While each project is different, with a multitude of decision points, Blaine’s analysis focuses on actions that can be taken in every project to maximize the chance of success. First, ensure the project is competitive by starting the incentives negotiating early.

“By incorporating incentives earlier in the process, the incentives team can work with the state or local economic developer for cost-effective locations and collaboration opportunities,” Blaine said. “This early start helps avoid the situation of frantically trying to negotiate incentives on a site on which a contract is days away from being signed by the real estate team.”

Second, own the incentives process by thinking holistically. The incentives leader can maximize the incentives for the project by working with decision-makers in each department, including real estate, finance, tax, human resources and operations.

“Collaboration between different internal verticals helps to determine where incentives can be used to benefit the project,” he said.

The third concept revolves around targeting incentives, focusing on those that will have the greatest effect on the project’s net present value.

Blaine noted, “This requires an in-depth knowledge of the project’s situation, the offering party’s situation, and the incentive. A common mistake of companies — and commission-based consultants — is ignoring the risks and costs.”

Finally, maximizing the return on investment requires knowing and understanding all of the players. From sponsors, to advocates, to gatekeepers and decision-makers – all play an important role in a project’s success.