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Public Partnerships — Community Support for FDI

With a full toolbox, economic development organizations can help the foreign investor decide where to locate in the United States and help clear a path for a successful endeavor.

Location USA 2016
The decision to invest in the United States can be monumental for foreign businesses. As the marketplace becomes increasingly global every day, investing in the United States can deliver numerous opportunities for companies today, and well into the future. With a diverse and expansive consumer base, productive workforce, modern infrastructure, and robust trade policies, America is a very attractive place to invest.

Once the critical decision has been made to enter the United States, the next step may be even more challenging — where to locate. America presents a vast array of opportunities for companies from coast to coast, and border to border. While not every part of the country may prove to be best for your business, most of the nation is prime to support foreign investments.

Key partners in the effort to discover where best to locate your investment in America are the economic development organizations. These organizations represent state and local governments, regional agencies, educational institutions, chambers of commerce, and utility companies, and are often set up in a public-private manner. In all, there are 1,000s of these organizations established to drive economic development for a particular region through the creation of jobs and expansion of the tax base. These organizations deliver a list of support opportunities for foreign businesses, including financial incentives, site identification, infrastructure improvement, business development, and employee training and recruitment, among many other tools and mechanisms.
Community Support for FDI
Community Support for FDI
The following are highlights of the support opportunities from America’s economic development organizations for foreign investors:

Site Identification
A growing trend of support from economic development organizations is to directly assist in the identification of effective sites and facilities for investors. When determining which location may work best for your business, it is vital to make certain there are sites that will meet the project’s specific demands and requirements. These sites could be anything from a greenfield location in a rural community to office space in the heart of a city.

Investors seeking to understand which sites may be available can begin the search online through many economic development organizations. These organizations have developed and maintain extensive lists of sites within their regions, which often include properties that can be sorted by key data points, such as zoning. Additionally, Area Development’s is an open and free-access website available to any site-seeker searching for a building or new site in the United States.

Financial Incentives
To drive investment in their communities, economic development organizations have a number of financial tools to support businesses. These tools are often referred to as public incentives. Public incentives continue to evolve in the United States, as they are a significant driver for economic development efforts. By leveraging public dollars to encourage investment from foreign businesses, communities share in the commitment with the company to create jobs and expand the local tax base.

Public incentives come in a number of different forms and are established to support targeted investments for the respective communities. Financial tools and resources for communities are diversified across America. Traditional public incentives include reduced tax liabilities at the state and local levels, cash grants, property tax abatements, exemptions from fees, land cost discounting, loan financing, and employee training funding, along with other mechanisms.

Modern and sound infrastructure is one of the single most important drivers for economic development around the world. To capture these public incentives, your business will work directly with the economic development organization. There are many steps along the way before securing these opportunities, and it is critical to work closely with the organizations, or a trusted consultant, as certain actions could compromise public incentives. Additionally, these public incentives may require an ultimate approval from a government agency before any official location decisions are made by the company.

Investors must also understand an often-overlooked dynamic of public incentives. As the popular adage goes, “there is no such thing as a free lunch.” Greater attention has been placed on public incentives throughout the United States over recent years as governments have struggled to meet budgetary requirements. While many critics don’t wholly rule out the positive impacts of financial mechanisms for economic development, an increased focus on the return on investment for taxpayers has reached most state legislative bodies and local councils. By working with the economic development organizations, your business can learn more about the risks that can come along with these public incentives, which may include financial penalties for not meeting certain commitments, often referred to as “clawbacks.”

Infrastructure Improvement
Modern and sound infrastructure is one of the single most important drivers for economic development around the world. Whether it is a logistics operation distributing products regionally, or a heavy industrial site requiring reliable and affordable electricity, businesses must be ensured the infrastructure at and around the site meets the project’s needs. Economic development organizations are leaders in the community in working with political leaders, government officials, utility companies, and other key stakeholders in improving the infrastructure.

Many utilities now have teams that offer infrastructure support. When identifying potential sites for investment, businesses should partner with the local economic development organizations to understand if the required infrastructure is effectively available. If not, the economic development organizations, in accordance with the other stakeholders, will work to ensure the infrastructure is in place. Not only does the community strive to have your business in the region, the infrastructure will also make the region more competitive in the longer term. Infrastructure support isn’t just left to the traditional economic development organizations as many utility companies now have internal teams focused on this effort as well.

Business Development
Economic development organizations are also focused on growing their own existing businesses, not just driving new investment to the community. By working with these organizations, foreign investors can find support in a number of business development facets, including references to potential customers, vendors, distribution networks, chambers of commerce, and other pertinent individuals and organizations in the community. Assisting with capital discovery can be another role of these organizations. When making an initial entry in a community, this support network can prove to be priceless in discovering success into the future.

Employee Training and Recruitment
An improved and educated workforce is beneficial for the entire community, not just for new investors to the region. Economic development organizations have a number of tools to directly support businesses with training of new and incumbent employees. These come in the form of everything from direct funding for training activities, wage reimbursements for on-the-job training, and partnerships with local educational institutions.

Another challenge for investors entering a new community is finding the workforce necessary to get a project up and running. Economic development organizations work with other local stakeholders to support these new investors in recruiting employees. As a part of these efforts, the economic development organizations can lead a number of efforts, including job fairs and application screening. All these services are typically provided at no cost to the investor.

In Sum
Once the exciting decision is made to invest in the United States, businesses next need to determine where best to locate in America. Economic development organizations can be a trusted partner in what can be considered a daunting task. With a full toolbox, these organizations can support in a number of ways to ease the initial U.S. entry and help lead the business on a path to long-term success.
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