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Economic Development Incentives

Economic Development Incentives are provided by local, state and federal governments and in some cases quasi-government agencies, to induce and assist companies, developers and other private sector entities to undertake projects or activities sought by the public sector.  Typically, Incentives are provided to (i) companies, for retention, expansion and for relocation of operations; (ii) developers, for projects that enhance economic or community development goals; and (iii) institutions for expansion or new development of facilities.

Incentives can be either as-of-right or discretionary.  An as-of-right Incentive is one provided pursuant to specific statutory authority and the type and amount of the Incentive is objectively defined.  Discretionary Incentives are determined on a case-by-case basis, and the granting of the Incentive, as well as the type and amount, is subject to a dsicretionary decisions.  In most instances, a finding of "inducement" is required, i.e., the project would not be feasible without the Incentive. 

Incentives can provide significant levels of assistance, in some cases providing as much as 50% of project costs.  There are a very broad range of incentives available but such programs vary substantially between various jurisdictions.  Considering all jurisdictions, the types of Incentives that could be available include:

  • Below-Market Land or Facility Disposition
  • Corporate Income or Employment Tax Rebate
  • Empowerment, Enterprise or Other Special Zones
  • Energy Cost Reductions
  • Environmental Remediation Grants
  • Infrastructure Grants or Loans
  • Local, State and Federal Tax Credits
  • Low Interest and Subordinated Loans
  • Interest Rate Subsidy
  • Mortage Recording Tax Abatements
  • Capital Financing Guarantees
  • Public Sector Equity Investment
  • Real Estate Tax Abatement
  • Sales Tax Abatements
  • Subordinated Loans
  • Subsidized Housing Programs
  • Tax Increment Financing (TIF)
  • Training Grants
  • Triple Tax Exempt Financing
  • New Market Tax Credits

SB-EDGe has expertise and extensive experience in all types of incentives, ranging from simple, programatic "entitlements" to complex "custom" packages that in some cases require new programs or legislation.

SB-EDGe provides a full range of Incentives services, from initial conceptualization to legal documentation and compliance monitoring.  The critical part of obtaining Incentives is to structure the best package for the particular needs of a client in terms of amount, usability and compliance conditions.  Generally, the process includes the following steps:

  • Initial analysis (of the project, the company involved, and the project area);
  • Evaluation of potential Incentives and an initial projection of the likely amount and type of Incentives to be obtained and the likely compliance conditions;
  • Conceptualization of the optimum package of Incentives;
  • Preparation and submission of all applications and support materials;
  • Negotiations with all relevant agencies leading to an agreement in principle;
  • Preparation of a Term Sheet and presentation at all hearings or other public approval processes, including community review;
  • Preparation and/or review of all legal documents relating to the transaction; and
  • Post closing compliance and monitoring.

SB-EDGe's approach to its Incentives practice is based on the following principles:

  • Focus on adding significant value mainly through creative application or modifications to existing programs;
  • Substantial due diligence at early stages to identify opportunities and problems and to develop credible strategies to maximize benefits and avoid problems;
  • Interdisciplinary effort, usually utilizing the firm's own resources and often participating in a broader analytic/implementation team.

 

Zoning/Land Use

Almost every jurisdiction in the U.S regulates the development of land through zoning and related controls.   These land use controls determine the use, density and other conditions on any site, and thereby greatly affect its value.  These values can be greatly enhanced by modifying the land use controls, either to upgrade use or density, or to remove or modify restrictions such as Landmarks or environmental.

A major factor in any land use action is determining the most cost-effective means to achieve the results needed.  Some goals can be attained by only one means; for example, increasing the buildable development rights on a site normally can be achieved only by changing the zoning designation affecting the property.  In many cases, however, alternate, more cost-effective mechanisms may be available.  For example, obtaining approval to change a use in an otherwise conforming building might be achieved by rezoning, a special permit, or a variance; each with varying levels of time and cost requirements.  In some cases, solutions may be achieved at the Building Department level, through an interpretation of the Zoning Resolution.

SB-EDGe has extensive experience and expertise in all forms of land use actions in many jurisdictions of the U.S.  It has been particularly active in using land use enhancements to improve project feasibility and profitability, both as a tool by itself and in conjunction with Economic Development Incentives. These actions include

  • Subdivisions
  • Building Code Interpretations or Modifications
  • Special Permits
  • Variances
  • Zoning Code Text Changes (Rezoning)
  • Large Scale Rezonings
  • Historical Landmarks Approvals
  • Street Closings
  • Environmental Permits

In its national practice, SB-EDGe specializes in large scale "strategic" rezonings.  Normally working collaboratively with Master Planners, SB-EDGE focuses on creating the framework for new communities that fulfill the policy goals of the public sector while enhancing profitabilty for the developers and investor.   

SB-EDGe provides the full range of services needed for any land use transaction, from initial analysis through compliance.  Often, the firm acts as owner's representative, both providing the primary land use services directly, as well as managing consultants for the supporting services, particularly environmental.  Generally, the process includes the following steps:

  • Initial Evaluation, which generally involves clarifying the client's goals and evaluating the best means of achieving them.  The firm also provides analytic evaluations of the financial impact of the different approaches and identifies which land use action, or group of actions, is most appropriate.
  • Preliminary determination of strategy for obtaining the desired land use actions and initial discussions with relevant agencies to test the approach.
  • Preparation of Supporting Documentation, usually including a Project Data Statement and all supporting project, financial and other materials.  Included at this stage is the initial preparation of environmental review materials.
  • Agency Review, which involves the review by all affected public agencies and response to that review by the firm. 
  • Formal Approval Process, which can range from a short process review or a full multi-agency review procedure process.  The firm manages the entire process including lobbying with Community Boards, City Planning officials, local governing bodies, agencies or stakeholders that could affect the outcome.
  • Post approval, including any contracts or documents related to the approvals and all post approval monitoring and filings.  If litigation arises from the project approval process, the firm's network of specialized land use litigators are able to handle all court proceedings, inclduing appeals.

SB-EDGe's approach to Zoning/Land Use matters is distinguished by three critical factors:

  • Focus on Value-Added Services.  SB-EDGe views land use in the same manner as Incentives (which are often obtained in conjunction with land use actions), which is to significantly enhance the feasibilty or profitability of a project.
  • Analysis.  The firm emphasizes intensive analysis at the early stages to identify and evaluate all value-creation opportunities as well as potential problem areas.  Early analysis also enables the most cost effective processing.
  • Technical Solutions.  SB-EDGe generally attempts to resolve a land use issue at the lowest or most technical level.  For example, the firm would first attempt to realize a client's objectives through a Building Department interpretation before it proceeded to a more extensive and formalized land use action.