Top Economic Incentive Deals of 2018

Kelley Rendziperis

Kelley Rendziperis | January 22, 2019


Site Selection Group estimates that in 2018 more than $9.8 billion in economic incentives were offered to attract various projects in the United States ranging from office deals, such as headquarters and data centers, to industrial facilities, including manufacturing plants and distribution centers. Incentives are a vital tool for state and local jurisdictions looking for an extra edge to make their communities more attractive and cost effective for competitive projects. 

To help understand economic incentive trends, Site Selection Group has evaluated the economic incentive deals announced during calendar year 2018. 

As of the date of publication, Site Selection Group identified 2,772 economic incentive packages offered to companies across the United States during calendar year 2018. This is a modest increase of 6 percent compared to 2,613 announced projects in 2017.

The total value of economic incentives offered in 2018 was slightly lower — 3 percent less than 2017’s $10.12 billion. Not surprisingly, the combined awards of $2.2 billion for Amazon’s projects in New York, Virginia and Tennessee accounted for three of the top 25 deals in 2018. 

The companies that were offered economic incentive packages are expected to cumulatively create 460,526 new jobs and invest $81 billion of capital, which represents an overall return on investment of approximately 12.1 percent.  The average economic incentive award was approximately $3.5 million, and the median value was approximately $350,000.

The most utilized type of economic incentives offered during 2018 continue to be tax credits followed by grant and subsidies.

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

Number of Incentive Awards by Industry Function

Picture3Data Source: IncentivesMonitor, a service from WAVTEQ Limited. 

The following chart depicts the 2,772 projects broken out by estimated economic incentive values:

Number of Projects by Economic Incentive Value

Picture2-1

Data Source: IncentivesMonitor, a service from WAVTEQ Limited. 

As reflected in the chart above, approximately 71 percent of the 2,772 announced projects were awarded economic incentive packages of less than $1 million and 91 percent were awarded economic incentive packages valued at $5 million or less. The average incentive value of all 2,772 economic incentives packages is $3.54 million, far less than the average of $209 million for only the top 25 announced projects.

The chart below shows the top 10 states for the number of announced economic incentive packages offered during 2018 with a total of 1,934 projects, or 70 percent of the total number of announced projects, but the awards in these states only represent 57 percent or approximately $5.6 billion of the total economic incentives value of $9.8 billion. Note that it is more difficult to track and report on local jurisdictions; thus, the number of awards in each state is only based on data made available publicly.

Top 10 States for Number of Economic Incentive Packages Offered

Picture1-4Data Source: IncentivesMonitor, a service from WAVTEQ Limited. 

The largest economic incentive packages of 2018

The top 25 announced economic incentive packages totaled approximately $5.2 billion, or 53 percent, of the total economic incentives offered during 2018 with more than $31 billion of capital investment, creation of over 82,775 new jobs, and retention of approximately 13,600 jobs. These 25 projects represent a total return on investment of approximately 16.7 percent, with an award per net new job of $63,200. The following table identifies 20 of the largest economic incentive deals offered during 2018 in various industry functions, excluding real estate development projects:

Company Location Industry Function Incentive Value ($M) Capex ($M) Jobs Created
Amazon NY Headquarters 1,525.00 2,300 25,000
Toyota-Mazda AL Manufacturing 700 1,600 4,000
Amazon VA Headquarters 573 2,500 25,000
Ford Motor Co. MI Manufacturing 235.8 740 2,500
Bigelow Aerospace NV Research, Design & Develop. 158.72 6,566 5
Facebook UT Data Center 150 850 50
Regeneron Pharmaceuticals NY Manufacturing 140 800 1,500
Amazon TN Business Services 101.72 623 5,000
Texas Instruments TX Manufacturing 100 3,200 650
Komatsu WI Headquarters 84.5 285 443
General Dynamics CT Construction & Infrastructure 83 850 1,881
McKesson OH Headquarters 83 225 1,032
Micron Technology VA Research, Design & Develop. 70 3,000 1,100
General Dynamics ME Construction & Infrastructure 60 200 0
Hyundai Motor CompanyCo. AL Manufacturing 59.15 388 50
Covestro TX Manufacturing 59 1,720 25
Honeywell NC Headquarters 58 248 750
Jinko Solar FL Headquarters 54 410 800
Benjamin Foods NJ Warehousing & Distribution 52.47 74 251
Publix Super Markets NC Warehousing & Distribution 51.62 300 1,000

Data Source: IncentivesMonitor, a service from WAVTEQ Limited.   

As shown above, three of the largest incentive packages totaling $2.2 billion were offered to Amazon for HQ2 projects in Crystal City, Virginia, the Long Island City neighborhood in Queens, New York, and an Operations Center of Excellence in Nashville. In total, the company committed to create 55,000 new jobs and invest $5.423 billion. For comparison purposes, these packages are approximately half of the package Foxconn received in 2017 for creating 13,000 jobs in Wisconsin.  

The second largest economic incentive package of $700 million was offered by Huntsville, Alabama, to Toyota-Mazda for a joint venture between Toyota Motors Corp. and Mazda Motor Corp. to manufacture and supply automobile and automobile components. The project estimates investing $1.6 billion and creating 4,000 new jobs while launching production in 2021. 

The Amazon and Toyota-Mazda projects in isolation represent approximately 30 percent of the total incentives awarded, approximately 13 percent of the overall jobs created, and 9 percent of the capital invested for projects reported in 2018. Please note that the analysis above is based on publicly available data at the time of this article and typically only reflective of state-level incentives.

One noteworthy item is that New Jersey only represented one project in the top 20 largest awards; meanwhile, in 2017, New Jersey had eight out of the top 20 awards for the year. This is a clear indication that the state and newly appointed leaders are reducing the number of large Grow NJ incentives. Site Selection Group will be tracking how the state alters or replaces the Grow NJ program after it expires in June 2019.

Significant business services and call center incentives

Notable 2018 projects garnering economic incentives in the business services and call center industry functions were as follows:

Company Location Industry Function Incentive Value ($M) Capex ($M) Jobs Created
Amazon TN Business Services 101.72 623 5,000
Cerner Corp. MO Business Services 28.92 423.7 1,000
E-Trade Financial Corp. NJ Business Services 20.08 20.98 251
Berkshire Hathaway IN Business Services 16.5 16- 1,474
Kering NJ Call Center 14.7 6.66 210
Essence Group Holdings MO Business Services 12.64 12 368
IBOD Co. OH Business Services 11.1 1 463
CRB Group NJ Business Services 10.93 4.45 255
Deutsche Bank NY Business Services 8 0 500
Progressive Corp. OH Business Services 8 100 15
Sonic Automotive NC Call Center 7.56 11.2 500

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