Let a Small Town Subsidize Your Relocation and Development Costs

With our increasing reliance on email, the internet, overnight couriers, and improved highway systems, many service and manufacturing companies are able to establish their base of business outside of the expensive “big city” and still serve the “big city” market. Oftentimes, an important incentive for such a move is the Chapter 380 Economic Development Agreement (Chapter 380 Agreement). A Chapter 380 Agreement is an agreement pursuant to which a small to medium size municipality (and sometimes even large cities) offers incentives to businesses to locate locally (often with the cooperation of counties and utility providers). The town benefits from the future jobs for its residents, the increased sales tax revenue on purchases made within the town by the business’s employees, and the increased future real and personal property tax revenue on what would otherwise be an undeveloped parcel of land.

The types of incentives typically offered vary widely, but some examples are:

· Abatements of real and/or personal property taxes.

· Highway infrastructure improvements.

· Utility infrastructure improvements.

The incentives offered are often contingent, to a varying degree, on certain actions by or achievements of the business. Some examples of contingencies are:

· The business must spend a minimum amount on the development.

· The business must maintain a certain minimum number of employees.

· The business must agree to purchase a percentage of its building supplies from local businesses.

Obviously, the incentives offered and the contingencies required are highly negotiated terms. If your company anticipates relocating, consider the Chapter 380 Agreement, and retain competent legal counsel early in the negotiation process.