Top 25 Economic Incentive Deals of 2016

Kelley Rendziperis

Kelley Rendziperis | January 23, 2017

Site Selection Group estimates more than $6.7 billion in economic incentives were offered in 2016 to attract various projects in the United States ranging from office projects, such as headquarters and data centers, to industrial facilities, including manufacturing plants and distribution centers. While economic incentives continue to be scrutinized and heavily debated,there is no doubt they continued to be utilized by states to attract and retain business. 

 To help understand economic incentive trends, Site Selection Group has evaluated the economic incentive deals announced during calendar year 2016.

 Site Selection Group identified 2,487 economic incentive packages offered to companies across the United States in 2016, valued at $6.7 billion in incentives. This is comparable to the number and value of projects in 2015, which had 2,395 projects valued at $6.6 billion. 

 Companies offered economic incentive packages expect to cumulatively create 328,965 new jobs and invest $77.1 billion of capital, which represents an overall return on investment of approximately 8.7%..  The average economic incentive award was approximately $2.7 million, and the median value was approximately $380,000.

 Tax credits were the most common economic incentive offered during 2016 followed by grants/subsidies and loans/credits.

 Manufacturing continued to be the most awarded industry function as shown in the chart below:

Number Incentive Awards by Industry Function

Economic Incentives- Number of Incentive Awards by Industry Function-v2.jpg

The following chart depicts the 2,487 projects broken out by estimated economic incentive value:

 Number of Projects by Economic Incentive Value

Economic Incentives-Number of Projects by Economic Incentive Value-v2.jpg

As reflected in the chart above, the average incentive value of $2.7 million for all 2,487 projects is heavily skewed by the top 25 announced projects, which had an average of $103 million. For instance, approximately 70% of the 2,487 announced projects were actually awarded economic incentive packages less than $1 million and 90% were awarded economic incentive packages valued at $5 million or less.

 Top 25 economic incentive packages during the year

The top 25 announced economic incentive packages totaled approximately $2.5 billion, or 39%, of the total economic incentives offered during 2016. They added up to more than $9.2 billion of capital investment, 26,000 new jobs created, and 3,700 jobs retained.  These 25 projects represent a total return on investment of approximately 28%, with an award per net new job of $98,744. The following table identifies the top 25 economic incentive awards offered in 2016:

 

Company Location Incentive
Value ($M)
Capex
($M)
Jobs
Created
Continental Tire the Americas Clinton, MS 595.50 1,450.0 2,500
The Walt Disney Co. Anaheim, CA 267.00 411.0 1,150
Water Valley Land Co. Loveland, CO 258.00 572.0 7,000
Athenex Multiple locations, NY 225.00 1,620.0 1,400
Sun Paper Arkadelphia, AR 167.50 1,000.0 250
General Electric (GE) Boston, MA 146.00 0.0 800
ResinTech Camden, NJ 138.00 0.0 55
Centene Corp. Clayton, MO 75.00 0.0 2,000
Gateway Sports Complex Grandview, MO 61.00 300.0 0
Allergan Madison, NJ 58.28 0.0 300
Caterpillar Tucson, AZ 56.00 0.0 600
Raytheon Missile Systems Tucson, AZ 54.00 400.0 2,000
Lucid Motors Casa Grande, AZ 46.00 700.0 2,000
Marriott International Bethesda, MD 44.00 600.0 0
ACTEGA North America Camden, NJ 40.00 0.0 21
Fabuwood Cabinetry Corp. Newark, NJ 39.90 0.0 276
Ernst & Young Hoboken, NJ 39.78 54.1 430
iCIMS Holmdel, NJ 38.30 41.1 390
Louisiana Pacific Corp. Hoyt Lakes, MN 36.00 440.0 250
TopShip Gulfport, MS 36.00 68.0 1,000
AQR Capital Management Multiple locations, CT 35.00 72.0 600
Fiat Chrysler Automobiles Sterling Heights, MI 34.60 1,480.0 1,751
Paycor Unmapped, OH 34.50 8.0 1,064
The Hibbert Company Trenton, NJ 33.67 10.1 0
Omnicom Group Jersey City, NJ 33.20 17.0 415

 As shown above, the largest incentive package of $595.5 million was offered to Continental Tire the Americas for the construction of a commercial vehicle tire plant in Hinds County, Mississippi.  The company will create 2,500 new jobs and invest $1.45 billion.

 The next largest economic incentive package of $267 million was provided to The Walt Disney Co. to build a new luxury hotel in Anaheim, California, where it will create 1,150 new jobs and invest $411 million.

 The third largest project of $258 million was awarded to Water Valley Land Co. to construct a mixed-use development in Loveland, Colorado. The company will create 7,000 new jobs, 4,600 construction jobs, and invest $572 million. 

 These three projects in isolation were awarded approximately 16% of the total incentives awarded and represent approximately 3% of the overall jobs created and capital invested for projects reported in 2016.

 Please note that the analysis above is based on publically available data at the time of this article and typically only reflective of state-level incentives.

 For additional information about these projects and others, please contact Site Selection Group.

 

Top 25 Economic Incentive Deals of 2015

Source-ICIncentives.jpg

 

Let us know what you think!