by Kelley Rendziperis, on Nov 16, 2021 12:52:05 PM
To help understand economic incentive trends, this report evaluates economic incentive deals announced during the third quarter of 2021.
$871 million in economic incentives
As of the date of publication, Site Selection Group identified 318 economic incentive packages offered to companies across the United States during the third quarter of 2021. These economic incentive packages represent an estimated total incentive value of approximately $871 million. To garner these economic incentives, companies are expected to spend roughly $15.4 billion of capital investment and generate over 54,201 new jobs, resulting in:
- A total return on investment of approximately 5.7%;
- An average economic incentive award of $16,069 per new job;
- An average incentive award of approximately $2.7 million per project; and
- A median economic incentive award of approximately $480,000.
When compared to the third quarter of 2020, Q3 2021 had an increase in the number of projects by roughly 5.3%, from 302 to 318 projects; however, there was a 20.5% decline in the total value of announced economic incentive awards and a 39% decrease in the average award per job. Other major metrics saw increases, with capital investment increasing by 56.4% and the number of jobs to be created showing a total growth of 30.2%.
The largest announced economic incentive package this quarter was offered by New Jersey to Fiserv, a financial technology and financial services company. Fiserv will lease more than 420,000 square feet for a new financial technology hub in Berkeley Heights. This followed the state’s approval of a job creation tax credit award of $109.2 million over a seven-year period under the Emerge Program. The company will invest $105 million and create more than 1,900 jobs and retain approximately 1,000 jobs in the state. Notably, the New Jersey Emerge Program was created under the Economic Recovery Act (ERA) of 2020, and this project represents one of the first high-profile projects announced under New Jersey’s new economic incentive regime.
The 318 announced projects during the third quarter represented 31 states, led by Massachusetts with 37 announced projects and Kentucky with 36. New Jersey and New York offered the largest amount of announced economic incentive awards with $119.23 million for two projects and $114.82 million for 11 projects, respectively. The most notable project from New Jersey is Fiserv (detailed above). The most notable project from New York is Regeneron Pharmaceuticals, which was awarded $100 million in tax credits through the New York Excelsior Jobs Program. Regeneron, which engages in the discovery, invention, development, manufacture, and commercialization of medicines, will expand its research, preclinical manufacturing, and support facilities by approximately 900,000 square feet in two phases over six years, investing $1.8 billion and creating 1,000 new jobs.
Top 10 States for Number of Announced Incentive Packages
The following chart depicts the number of projects announced during the third quarter broken out by estimated economic incentive value:
Number of Projects by Incentive Value
Data Source: IncentivesFlow, a service from WAVTEQ Limited
Approximately 69%, or 219 of the 318 announced projects, were awarded economic incentive packages valued at $1 million or less, and 92.7% were awarded economic incentive packages valued at $5 million or less. While the average economic incentive package was valued at approximately $2.74 million for all 318 announced projects, the average package for the top 25 deals was approximately $25.66 million.
Economic incentives and industry trends
The following chart depicts the breakdown of the 318 announced projects during the third quarter of 2021 by industry function:
Number of Projects by Industry Function in Q3 2021
Data Source: IncentivesFlow, a service from WAVTEQ Limited
Manufacturing continues to be the top incentivized industry function this quarter. The sector was led by Regeneron Pharmaceuticals (detailed above).
The chart below illustrates the level of capital investment committed by the industry sector this quarter:
CapEx Value by Industry Sector in Q3 2021 (USD m)
Data Source: IncentivesFlow, a service from WAVTEQ Limited
The top industry sectors in terms of projected capital investment were the Life Sciences and Food & Drink sectors, which together account for nearly 36.09% of all the investment announced during this period.
Notable economic incentive packages in the third quarter
The top 25 economic incentive packages announced in the third quarter represent approximately $641.6 million of the total $871 million of estimated incentives for all projects, or approximately 73.7%. These projects in isolation will account for:
- $7.28 billion of capital investment
- 22,692 new jobs
- A return on investment of approximately 5.7%
- $28,274.72 average award per new job
The following table identifies some of the largest economic incentive deals (removing real estate development and film incentives) offered in Q3 2021. These projects provide a great way to benchmark the potential range of economic incentives for a variety of project types. However, it is important to understand these values are estimated and typically only reflect state-level incentives.
| Company | Location | Industry function | Incentives Value (USD m) | Capex (USD m) | Jobs Created |
| Fiserv | Berkeley Heights (NJ) | Business Services | $109.20 | $105.00 | 1,927 |
| Regeneron Pharmaceuticals | Tarrytown (NY) | Manufacturing | $100.00 | $1,800.00 | 1,000 |
| Oracle Corporation | Nashville (TN) | Business Services | $65.00 | $1,350.00 | 5,989 |
| Malouf | Logan (UT) | Headquarters | $56.00 | $450.00 | 4,200 |
| Alphabet | Columbus (OH) | Data Center | $54.30 | $300.00 | 20 |
| Lumio | Salt Lake City (UT) | Headquarters | $40.30 | $120.00 | 3,697 |
| Horse Soldiers Bourbon | Somerset (KY) | Manufacturing | $29.90 | $200.00 | 50 |
| Steel Dynamics | Terre Haute (IN) | Manufacturing | $25.40 | $231.00 | 84 |
| Ball Corporation | North Las Vegas (NV) | Manufacturing | $17.50 | $176.00 | 222 |
| Pratt Industries | Henderson (KY) | Manufacturing | $17.50 | $400.00 | 320 |
| Ho-Chunk | Omaha (NE) | Const. & Infra. | $17.00 | $220.00 | 0 |
| Colgate-Palmolive | Tonganoxie | Manufacturing | $12.00 | $250.00 | 80 |
| Amgen | Holly Springs (NC) | Manufacturing | $11.60 | $550.00 | 355 |
| PC Intermediate Holdings | Rockaway (NJ) | Const. & Infra. | $10.00 | $32.00 | 357 |
| Smith & Wesson | Maryville (TN) | Headquarters | $9.00 | $125.00 | 750 |
| Oshkosh Corporation | Spartanburg (SC) | Manufacturing | $9.00 | $155.00 | 100 |
| Crown Holdings | Mesquite (NV) | Manufacturing | $8.40 | $84.60 | 126 |
| Tyson Foods | Danville (VA) | Manufacturing | $8.10 | $300.00 | 376 |
| Coca-Cola Bottling Co | Baton Rouge (LA) | Manufacturing | $8.00 | $42.00 | 15 |
| Cangshan Cutlery Company | Leander (TX) | Headquarters | $7.10 | $40.00 | 300 |
Data Source: IncentivesFlow, a service from WAVTEQ Limited
Notable awards in the business services industry during the third quarter
Most projects are not nearly as sizable in terms of incentives offered as the top 20 highlighted above. Thus, we like to share notable Q3 projects garnering economic incentives in the business services and call center industries:
| Company | Location | Industry function | Incentives Value (USD m) |
Capex (USD m) |
Jobs Created |
| Noble People | Kansas City (MO) | Business Services | 5.83 | 8 | 450 |
| CAE | Unspecified (NV) | Business Services | 5.3 | 61.5 | 87 |
| TaxBit | Draper (UT) | Business Services | 4.42 | 70 | 1,700 |
| Flutter Entertainment | Atlanta (GA) | Business Services | 2.25 | 15 | 900 |
| Community Wellness | Danville (KY) | Business Services | 2 | 15 | 445 |
| MTX Group | Albuquerque (NM) | Business Services | 2 | 2 | 250 |
| Founders Holding | Buffalo (NY) | Business Services | 1.5 | 28 | 148 |
| Leaf Software Solutions | Carmel (IN) | Business Services | 1.5 | 2.7 | 60 |
| EarthLink | Norfolk (VA) | Call Center | 0.75 | 5.4 | 285 |
| Deutsche Telekom | Las Vegas (NV) | Call Center | 0.49 | 5 | 69 |
Data Source: IncentivesFlow, a service from WAVTEQ Limited
Conclusion
As noted above, the metrics of Q3 2021 are mixed but the 54,201 new jobs to be created is the highest amount since Q2 2019. The increase is a hopeful sign and as the year progresses, we will continue to analyze these changes.
Please note that the analysis above is based on publicly available data at the time of this blog. In addition, the current quarter’s data is compared to the information available at the time of prior quarterly blogs.
For additional information about these projects and others, please contact me at krendziperis@siteselectiongroup.com with any questions.
Contributions by Nancy O’Brien Ellis and Matthew Kahn.
