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support these facilities and that, in some cases, allow for round-the- clock operation. As an aside, development of regulations that are amenable for desired development and that also support community goals and values can be a particular challenge when freight facilities are established at the edges of towns and the neighboring communities have differing views on which uses ought to be provided for and what standards to impose. The availability of public utilities, such as water and sewer, can be a critical element in site selection. The amount of lead time to develop this infrastructure may end up being prohibitive if they are not already available. Public utility availability and costs are usually investigated through conversations with local economic development Public sector assistance in the agencies and utility providers. Municipalities need to be aware forms of tax credits, grants, of freight facilities' utility needs and of the capacity that exists to low-cost loans, training accommodate those utilities. programs, utility discounts, and infrastructure development can address specific location shortcomings and is often used to close the gap between a location Public sector assistance and incentives and its competition. Public sector assistance in the forms of tax credits, grants, low- Many... view incentives as a cost loans, training programs, utility discounts, and infrastructure means for building a critical development can address specific location shortcomings and is partnership between company often used to close the gap between a location and its competition. and community... Broadly speaking, incentives do not drive location decisions in the early stages of facility planning. Incentives do not substantially impact the overall feasibility of a site, nor can they ameliorate serious shortcomings. In short, they cannot make a "bad" location into a "good" one. Therefore, incentives are not an early decision factor, but may be a significant factor once the list is reduced to several candidate sites. Companies and location consultants have a wide range of perspectives regarding the role and use of public incentives. Some companies view the incentives process as asking the community for handouts and 22 Freight Facility Location Selection: A Guide for Public Officials
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are not willing to ask for any assistance beyond that available as-of- right (e.g., benefits defined by legislation if companies achieve pre- set hiring or investment targets). Some may even forego incentive offers due to concerns over public perception or future "claw-back" provisions that require the company to return any benefits if agreed- upon benchmarks are not met. However, many others view incentives as a means for building a critical partnership between company and community to reduce the one-time and operating costs of freight facilities to the point where success may be gained for both sides. Specific incentive programs can include: · Tax concessions or exemptions. · Loans and loan guarantees. · Employee tax credits. · Wage subsidies. · Land subsidies or grants. · Cash grants. · Property tax abatements. · Utility rate reductions. · Infrastructure grants. · Access improvements. · Enterprise Zones. · Foreign Trade Zones (FTZ). · Tax Increment Financing (TIF). · Inventory tax reduction. · Expedited permitting and approvals. · Customized training programs. The public sector may also be able to offer information to freight facility developers by, for example, acting as a clearinghouse for information on back-haul and other freight-leveling opportunities. Some companies would find it helpful to obtain information on local freight movement the same way they can for electric, utilities, workforce, and soils. By coordinating this information, the community can ensure that local carriers and freight users run closer to capacity on a more regular basis, providing a strategic advantage. This type Freight Facility Location Selection: A Guide for Public Officials 23
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of informed partnership, which the public sector can provide, may make a difference in the ultimate site selection. Communities can also provide tangible incentives without subsidy by shortening or expediting the permitting time frame. Communities that understand the company's process and drivers can smooth the permitting process and provide clarity of expectations for the company and the regulatory agencies, thus resulting in a better Freight location decisions defined process and a shorter time to implementation. Through this rarely respond to a "build it approach, communities can provide a strategic advantage for their and they will come" approach location. on the part of the public sector unless the public sector has Income, sales, real estate, and property taxes can all significantly been diligent in doing its affect the cost environment for freight facilities. Chief among these homework. But having needed are property taxes. Real estate taxes can be high on urban facilities infrastructure in place can be a on land that might otherwise be used for high-density development. strong incentive. Over time, higher real estate property taxes may drive these parcels into non-freight development and freight facilities will relocate to the urban fringe. While incentives are often very useful tools, it should be noted that local strategies of building speculative infrastructure, public terminals, and warehouses are unlikely to be successful without a thorough understanding of how these directly address operating economics and forecasted market demand. Freight location decisions rarely respond to a "build it and they will come" approach on the part of the public sector unless the public sector has been diligent in doing its homework. But having needed infrastructure in place can be a strong incentive. 24 Freight Facility Location Selection: A Guide for Public Officials