Economic Development Incentives Reporting Getting Tougher
certainly seems as if the last few years of incentives compliance reporting has started to get a bit more intense. As we work with states and communities all throughout the United States, there seems to be a transference from easy, user-friendly compliance reporting to much more stringent requirements. Is this a bait-and-switch tactic – to lure investments and job growth with lucrative incentive options, only to make it nearly impossible to receive? Not likely. But with ever increasing scrutiny towards taxpayer resources and shrinking government budgets, the requirements to receive such incentive benefits has certainly undergone an overhaul.
Economic incentive compliance requirements are tightening partly due to states that had light oversight. Many of these states have had to tighten their own belt-straps and have been held more accountable by their state legislatures. The buzz word in recent history is “transparency” and transparency portals and other visible mechanisms are popping up where the average taxpayer or any watch dog group has access to what a company has received in corporate incentives. While these incentives are awarded to companies in exchange for capital investment and job creation, the recipient companies are being held to tighter and tighter requirements with little wiggle room. Ginovus has seen first-hand many companies on the verge of large repayments of awarded grants or credits due to changes in the scope of the project, modifications to the agreements, overall downturns in the economy, and other reasons.
When corporate incentives are negotiated at the C-suite level and grand announcements are made, what really happens when the rubber meets the road? Sometimes there is a gap of information between those that negotiate and sign the agreements and those who will actually be responsible for the management of those incentives. And many times, due to changes in personnel, the replacement person may not even be aware of the responsibilities required to maintain the incentive or even required due dates. In addition to these ongoing challenges, reporting requirements often can change mid-stream and the company will need to keep abreast of those changes.
One of the three primary functions of Ginovus is to help navigate the compliance management process with the personnel that are responsible to provide the required reports to the state and/or local authorities. Our team reviews compliance documents and requirements on a regular basis and works hard to keep that information as up-to-date as possible. Any changes to needed information can be communicated by the Ginovus team in a timely manner and thus eliminate or alleviate many headaches as the due date approaches. We also work hard to advocate for client matters where changes to incentives management seems to negatively affect what was originally agreed to between the company and the awarding entity. Our team has been successful at working with state or local governments to mitigate any potential claw-backs due to compliance matters and have often been able to negotiate minimal, if any, repayments of grants or credits.
As you consider the many facets of compliance management, allow the team at Ginovus to assist in your efforts. Because experience matters.
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