Bridging the Gap between Economic Development Incentives and Compliance
t is no secret that the process of negotiating economic development incentives for any new or expansion project can be extremely burdensome. The expectant company must first decide on a location and submit applications for the incentives and permits. There is the back and forth negotiations with state and local governments while managing media and legislator relationships. Subsequently, key personnel may be working with zoning and appeals. These steps often occur simultaneously before the company can even break ground or expand their facility. Finally, there is a big announcement, the press releases, an appearance by the mayor or governor, the congratulations, and it seems every detail has been covered.
However, then comes the annual – and in some cases semi-annual or quarterly – process of incentives compliance management. With that, a completely new set of questions arise. What is required to maintain compliance? Who understands the 40-page agreement signed by the company? Who do we turn to at the state or local level for help? How time-consuming is this process? What if there is more than one agreement in place? How long does this process last?
A Crack Appears
Often, a communication disconnect develops between the conclusion of the excitement around negotiations and the handoff for implementation of the incentive agreements. The C-level leadership drives the front end of the project and then the compliance responsibility shifts to the HR team, governmental affairs, finance, and others. Most of those receiving the compliance responsibility are unaware of the daunting task that lies ahead.
Next, the company’s compliance team fully vets and outline the agreement along with getting educated on the many steps within the legalese of the agreement. A list of compliance requirements needs to be created and continually updated with respect to due dates. Typically, this process stretches out over several years.
Upon review of the agreements, the team will find the documents refer to various sections, definitions or attachments that can cause even a well-experienced navigator to feel disoriented. This is where an experienced and trusted partner can become very important in the process of compliance management. The internal compliance team needs to feel confident that all the details are accounted for every step of the way.
Managing Compliance Reporting or Team Changes
Another often-unknown variable is how to effectively maneuver compliance-reporting changes that are put in place by the issuing agency, either through statutory changes, amendments, or governmental administration changes. Recipients are regularly required to add or modify the reporting mechanisms to which they are accustomed. This requires someone within the compliance team to stay current on changes initiated by the state or local incentives teams.
Conversely, when a compliance team member leaves the department or the company entirely, who will then resume the reporting requirements? Ginovus has been called upon numerous times to meet with, train or explain the incentives that the company has in place. As our firm has the continuity/history of the project, it is often a simple, streamlined process to onboard the new team member on requirements for the next compliance reporting season. Likewise, Ginovus also ensures company contact records are current with the appropriate agencies as the new team member engages in the process.
Because the national economy has experienced tremendous growth over the past few years, state and local governments have been quite selective in the projects that they choose to incentivize. Likewise, it has also allowed the compliance review teams of many agencies to be more exacting of requirements and reporting. No matter how involved, Ginovus is there through the entire process.
Like it or not, an audit can and does happen. Ginovus maintains yearly data records and works alongside the company as well as the local or government body to provide the necessary information. Our audit assistance has ranged anywhere from a one-hour meeting with the agency and client up to an extensive three day, 19-hour conference call.
As Painless As Possible
Even the best partner cannot alleviate every step for a client since there are data points that a company must provide directly to complete the annual process. However, the Ginovus team has a tried and true methodology and system in place to make the process from negotiations to administration seamless and manageable. Our compliance team is backed by over 17 years of firsthand experience working with compliance – from both the state government side and the consultant side. Our clients are confident that their reporting is accurate and thorough from beginning to end.
Gerald Frazier serves as Principal, Compliance Management with Ginovus.