Site Selection Case Study
Scenario
Outcome
The following is a composite presentation of a half dozen recent site selection projects.
A growing manufacturing operation needed to identify a greenfield site for a new manufacturing facility. Adequate acreage, rail access, sufficient power and labor were identified as RFI factors within the company’s defined geographic target area. Other discriminating factors included county air emissions attainment, land price, proximity to other large employers, and presence of wetlands. The goal was to identify and evaluate dozens of sites out of which 5-6 viable options would warrant in-depth due diligence.
Across the spectrum of projects, four major parameters eliminated the bulk of options. Those factors were documented rail access, proximity to adequate power, air emissions attainment, and price. The presence of excessive wetlands, the risk of flooding and building height limitations eliminated a second sub-group of candidates. Only a handful of sites visited were subjected to next-level due diligence. What has become apparent is the attainment of the broadest possible number of options is necessary to effect the optimal choice.
Process partners should include traditional real estate teams and state and local government. The additional benefit of including government is the development of an appreciation for the community’s temperament and enthusiasm to address site limitations. Government engagement also broadens the community’s economic development role and ability to creatively impact overall project costs.
Aerospace
Company Expansion
Scenario
Outcome
A leading global aerospace warehousing, distribution, and logistics services company evaluated a multi-state consolidation of warehouses. The unique requirements of this client included a need to house both short-term and long-term inventory and the availability of a skilled workforce that could understand the technical requirements of the positions.
The project profile included a cumulative investment of approximately $15 million in tenant improvements and personal property and the creation of 80 FTEs.
Emphasis on understanding the need for aerospace freeport drove the negotiation for a 730-day freeport incentive from all four taxing jurisdictions. Rubin Advisors was also instrumental in securing a Chapter 380 grant and local personal property tax abatement for the client. Post-negotiation services included support in the realization of grant funds, property tax compliance filings, and assistance in realization of the freeport benefits.
East Coast Distribution Center
Scenario
Outcome
A large retailer needed to expand its east coast distribution operation. Given the project timeline, only existing facilities were given consideration. Four states were included in the site search: New York, New Jersey, West Virginia, and Pennsylvania. A windshield tour was conducted to review 37 potential candidates. Three sites (two in Pennsylvania and one in West Virginia) were selected for an in-depth evaluation and incentive negotiations. Several factors were important in the company’s analysis. These included; a large workforce to draw upon, a favorable tax structure, interstate and airport access, a modern and secure site. The project was projected to result in the creation of 151 full-time employees and an investment exceeding $12 million.
Site finalist incentive offers ranged from $626,100 to $2,675,448. The finalist site selected for the project was a newly constructed facility in Pennsylvania.
Expansion in Kansas
Scenario
Outcome
A manufacturing company was looking to expand its operations and found a location in a rural community in Kansas. A $16M projected investment included modifications to the existing building as well as adding a new production line.
Rubin Advisors secured a total package value pf over $4.5 million from a variety of sources for the expansion project, including:
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Promoting Employment Across Kansas (PEAK) Program
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HPIP tax credit
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PEC sales tax exemption
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Kansas Industrial Training (KIT) and Kansas Industrial Retraining (KIR) training grants
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Tax abatement
Furthermore, 72 full-time positions were retained and 14 were created, for a total payroll impact of over $5 million.
Inland Port Infrastructure Improvements
Scenario
Outcome
Management of a regulated inland port on 600 acres of land determined that physical infrastructure improvements were needed. Engineering working closely with management identified, prioritized and developed detailed project costs.
The improved infrastructure was viewed as a means to attract additional tenant business and to enhance security measures.
Through the Port Security Grant Program, the Department of Homeland Security provided $2.8 million in funds.
Life Science Headquarters
Scenario
Outcome
A rapidly growing life sciences company needed to identify a new site for its headquarters and operations. Two locations in adjoining counties were evaluated. Incentive offers were obtained from both sites and the state.
The total proposed company investment was $3.3 million. A commitment was made for the retention of 34 jobs and the creation of 298 new full-time positions with a total payroll of $12.9 million over 4 full calendar years.
Managing the politics of the two competing sites and the interface with state required experience, skill and sensitivity to achieve a successful outcome. Rubin Advisors Inc. was able to obtain attractive incentive packages from all process participants, to include personal property tax abatement from a community that does not routinely award this type of benefit.
The company was also the recipient of two different state level tax credit programs, one of which had a refund component and the other a roll-forward provision. The total incentive package value exceeded $2 million. The ratio of combined incentive value relative to the proposed investment was 60%.
Logistics Expansion
Scenario
Outcome
An Indiana location of a nationwide 3PL logistics company was in competition for the addition of a new customer that would lead to expansion of their operation. The expansion would involve the addition of 143 jobs, 306,000 sq. ft., and projected capital investment in the building and equipment of $7.1 million.
The Indiana based operation hired our team to manage the incentive procurement and compliance. Logistics is a target industry in Indiana, so there was a clear desire for the expansion and job creation. The local community provided a real property tax abatement with a value estimated at $624,525 and a personal property tax abatement value estimated at $80,000.
The state contributed with refundable tax credits in the amount of $1,047,000 and a $200,000 training grant for new and existing employees, with the flexibility to file for a second grant once the first is closed out.
Manufacturer Expands
Scenario
Outcome
A leading North American manufacturing company evaluated the potential expansion of several facilities across the United States. The Erie County, Pennsylvania site option required the acquisition of additional land, rezoning of the acquired site, and infrastructure upgrades including rail service, natural gas, and access to the state highway in order to become a competitive option.
The project profile included an investment of approximately $37 million in real and personal property, retention of 196 jobs and the creation of 10 additional full-time positions.
Emphasis on defraying the multimillion dollar investment in rail and natural gas became the focus of negotiation services provided by Rubin Advisors. Concessions were provided by the utility. In addition, the state obligated a $350,000 infrastructure grant, which was matched by a $100,000 grant for rail and a grant in excess of $700,000 from the public utility commission. In support of the project, the local community provided a 15-year real property tax abatement.
New Concrete Plant Site
Scenario
Outcome
An autoclaved aerated concrete manufacturer needed to identify a site for its plant. Two locations in Indiana, one in West Virginia, and a closed autoclaved aerated concrete plant in Central Florida were evaluated. Infrastructure requirements included rail service, access to interstate highways, and a local supply of coal ash. Incentive offers from all three states were assessed. The total company investment was projected to be $20 million. A total employment of 64 with a payroll of $2.7 million was expected by completion of the project.
All three States provided incentive packages. The largest incentive offer provided by West Virginia exceeded $12 million, followed by Florida at $4.5 million and Indiana at $2.5 million.
Due diligence on the Central Florida site identified a lack of rail and other deficiencies. The Florida site however, had the advantage of an existing facility and an available skilled workforce. The benefits associated with the facility acquisition coupled with the local and state incentive offers, made the Florida opportunity the best choice. The State and City as part of the agreement covered the cost of a 2.5-mile rail spur (costing nearly $5.0 million by completion).
New Life for a Dormant Plant
Scenario
Outcome
Before beginning an initiative to increase production capacity, a leading manufacturer held an interstate competition to identify the best location. After considering Michigan and Mississippi, the firm decided to make a $24 million investment into a dormant plant in Mississippi.
These production expansion efforts had a total payroll impact of over $3.8 million. The manufacturing firm created 83 full-time positions while retaining 16. Rubin Advisors facilitated a $6 million total package with:
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Onsite and offsite infrastructure improvements
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Job tax credits
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An equipment grant
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Real and personal property tax abatement
New Logging Operation Facility
Scenario
Outcome
A Midwest logging operation needed to identify an existing 150,000 sq. ft. facility with rail, highway and water access. Three states, including Ohio, West Virginia and Indiana, competed for the operation. The total company investment was projected to be $11,000,000. An employment of 100 with a total payroll of $1.9 million was expected by completion of the project.
The logging operation partners hired our team to pursue economic assistance from local and state agencies. The preferred site in Southern Ohio was selected in part due to an incentive commitment in excess of $2.7 million that was comprised of a combination of tax credits, tax exemptions, grants and low interest loan.
New Manufacturing Facility
Scenario
Outcome
The operation of an excavation equipment and parts manufacturer, in Wisconsin, was inefficient due to the layout of their existing facility. The options available to the company were to connect two of the existing buildings, build a new facility or relocate to Illinois. It was determined that the new facility or relocation were the only financially feasible options.
Our team was hired to assist in the site selection, to negotiate the economic incentives and to determine what the best options were for the company. The local community and state both supported the project. The project, the construction of a 100,000 sq. ft building with a total project investment of $9.0 million. The incentives offered included 15 acres of undeveloped land valued at $445,000, $1.0 million TIF reimbursement for improvements external to the building and equipment purchased, $1.0 million 2% fixed loan 8 year with a balloon on a 20 year amortization schedule of which $250,000 was forgivable with job creation, and public infrastructure and site improvements valued at $787,000.
New Multi-Modal Port Development
Scenario
Outcome
An existing 84 acre river terminal operator in Illinois had purchased an additional 200 acres of land adjoining the current operation for future development. The strategic plan for the sight is to leverage the multi-modal capabilities the area offers including several railroad options. The terminal operator has formed an alliance with the local community to pursue funding sources.
Various local, state and federal agencies have infrastructure funding request applications under review. The following obligations have been secured:
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State of IL DOT - Up to $2.0 million for road turn out improvements
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State of IL DCEO (for 45 jobs retained) - Tax credits of $626,400 and River Edge Redevelopment Grant of $2.0 million for road & rail infrastructure
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Local Municipality - River Edge Redevelopment Grant of $5.0 million for road and rail infrastructure and up to 25-year in real property tax abatement
New Production Line Investment
Scenario
Outcome
In an interstate and international competition, a leading manufacturer expected to make a $25 million investment in equipment. Three locations were considered: Kansas, Pennsylvania, and the Canadian province of Ontario.
Rubin Advisors assisted the firm as it made a significant, positive impact on employment in the chosen location in Kansas. 71 full-time jobs were created, and 181 full-time jobs were retained. The project’s total payroll impact exceeded $20 million.
Rubin Advisors obtained a total package valuing approximately $5 million, with funding components including:
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Economic Development Rider (EDR)
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Promoting Employment Across Kansas (PEAK) Program
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HPIP tax credit
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PEC sales tax exemption
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Kansas Industrial Training (KIT) and Kansas Industrial Retraining (KIR) training grants
Top Fuel Racing Team
Scenario
Outcome
A motorsports racing team had outgrown its existing space and wanted to build a 96,800 sq. ft. facility. The team was considering site options in Indiana and Illinois because of the travel advantages with respect to their racing schedule. The company’s total projected investment in the building and equipment was $8.7 million.
The team engaged Rubin Advisors to examine what incentive options would be available to them. Racing is a target industry for several Midwestern states. The opportunity for a locally based team to remain within the state and expand was readily supported by both the state and local community. The state of Indiana received the project upon offering the following; $307,000 in refundable income tax credits, $2.1 million in investment tax credits with a roll forward provision, and $717,000 real property tax abatement.
Trade Management Company Headquarters
Scenario
Outcome
A global trade management company wanted to build a corporate headquarters in one of three states: Michigan, Indiana or Kentucky. Access to interstate highways and an airport were of particular importance. The total projected investment was $13 million. An existing employment of 38 and the creation of 268 jobs with a combined payroll of $18 million was expected by completion of the project.
Corporate hired our team to negotiate and manage the incentive procurement process. Each state provided an offer of incentives including grant dollars, income tax credits, research tax credits and infrastructure assistance. The site selected also offered food and beverage tax dollars to offset interest payments on debt incurred for the project. The cumulative value of incentives awarded and accepted exceeded $8.5 million.
Transportation Company
Scenario
Outcome
A transportation company needed to identify a new site for its expanding business. Choices included expanding the existing operation or relocating across state lines. Infrastructure needs included access to an interstate highway system, roads with high tonnage rating and proximity to water ports. The total investment was in excess of $5.1 million. A total employment of 220 with a payroll of $10 million was expected by completion of the project.
Our team was hired by the company’s Corporate HQ to negotiate incentive packages from the states of Kentucky and Indiana. The interstate competition resulted in incentive offers that would not have typically been awarded to a transportation company. Incentive commitments included infrastructure assistance real property tax abatement and a training grant creating a combined value of $1 million. The company collected all incentives awarded over several years through our compliance efforts. Corporate subsequently assigned an additional 4 projects.
Technology Processing Facility
Scenario
Outcome
A global company providing support to entities operating within the Circular Cloud from data security to value recovery, from decommissioning of data center technology to design, modeling, and analysis of asset life cycle.
This client had requirements for a well-trained and highly skilled workforce, a large facility that could be adequately secured and transit time proximity to the company’s large customer base. The project profile projected a cumulative capex investment of $5.4M initially and the creation of up to 100 new full time jobs.
An interstate evaluation was conducted based on the center of gravity and a 1-day client transit study conducted in the lead up to the current project. Benefits secured for the ultimate site included: a power economic development rider for a five year period beginning once the company was fully operational; a commitment for up to $400K of refundable tax credits, MHE sales tax exemptions as a perpetual benefit, and nine years of real property tax abatement valued at $2.5M.