Wish you were here with us! Cities, states and other government entities are busily promoting themselves as providers of top-notch infrastructure, labor, tax and job incentives and more. Companies interested in saving money are in a great position to reap some of the rewards.

In the late 1990s, local authorities decided that land along Interstate 94 in Charleston Township, near Kalamazoo, Mich., would become a landfill, a notion that proved troublesome to neighboring Eaton Corp. As a direct result, Eaton's Heavy Truck Component Research and Engineering Headquarters, which employed 600 highly skilled workers, threatened to relocate.

[ILLUSTRATION OMITTED]

In stepped Southwest Michigan First, a local economic development agency. To keep Eaton from leaving, it acquired the land and forestalled the landfill plan. Then the agency earmarked the property for a new commercial facility, and entered into a contest with three other states for Target Corp.'s proposed 1.35 million-square-foot regional distribution center.

Collaborating with public and private entities in Kalamazoo County and the State of Michigan, Southwest Michigan First "developed an aggressive incentive package and provided comprehensive development services, including road improvements, sewer extension, the creation of a new municipal water system for Charleston Township and the remediation of 10 acres of wetlands," the agency notes on its Web site. Not long afterward, in the fall of 2000, Target awarded the $100 million project to Charleston Township; by early 2004 the project had created more than 650 jobs, with the eventual expectation of nearly 1,000 new jobs.

Not many local agencies can kill two birds with one stone: keep an existing employer and add a new one, both prime tenants. But cities, regional authorities and states are engaged in pitched battles to decide the future of their individual areas, and see economic growth as vital as oxygen. So, they are hawking their wares like merchants in a crowded souk--tax abatements, job training credits, property tax credits and more. They're also touting everything from quality of life and cost of living issues to the education level of the local workforce and infrastructure issues like highways and airports.

For companies looking to expand or relocate, the time may never be riper than it is now. Corporate expansion slowed markedly in the recent downturn, and localities are hungry to snag some of the growth that economists now say is building. Local governments are also working hard to keep the companies they have, doing expansion and retention surveys to assess employer satisfaction, and will react quickly to appeals to match incentives offered from outside the area.

"The overall trend is for more and more programs, and more sophistication. In states where you have a statewide statute allowing counties or towns to offer incentives, there has been a steady increase in the number that do so," says Michael Press, national director of the Business Incentives Practice for Ernst & Young and a partner in its State and Local Taxes (SALT) Group.

But Press notes that large-scale relocations of headquarters or major plant operations are rarely driven by incentive decisions. "Most deals are not about uprooting existing operations and wholesale relocation. What we see much more of is a multi-location organization making decisions for the next incremental investment--a company with 10 operating facilities, let's say, will decide about closing one or two of those and upgrading."

He adds, "Once a product exists, the profits have been made and the patents have expired, at that phase of a company's life cycle, costs become more important. If a decision is driven from the cost side, a relocation is [often] the result."

In recent years, counties, states and other authorities have ramped up their marketing and outreach programs in a big way; attendance at trade shows catering to executives is becoming common, and direct-mail brochures and fact sheets, coupled with Web sites that trumpet local successes, have become standard.

"Although every project is unique, it is not unusual for a financially strong company, creating 100 or more jobs, to realize a state and local incentive package of tax savings and direct assistance valued in excess of several million dollars," proclaims a brochure for the State of Kansas (see sidebar, "The Kansas Come-on").

Albuquerque, N.M., has a slick one-page handout that touts such things as its place on a list of top cities for new and expanding companies, its wireless Internet accessibility and its third-place ranking in a list of hotspots for such emerging technologies as nanotechnology, micro-systems and micro-electromechanical systems, or MEMS.

The New Mexico metropolis also has materials showing the impacts of its high-wage jobs tax credit, which is equal to 10 percent of the wages and benefits paid of new job created that pays at least $28,000 a year in a community with a population of less than 40,000, or that pays at least $40,000 a year in a community with a population over 40,000. Qualified employers can take the credit for four years; it can be applied to the state portion of the gross receipts tax, compensating tax and withholding tax, with any excess refunded to the taxpayer. The credit cannot exceed $12,000 per year, per job.

Projects don't have to be large. The City of Emporia, Kan., last year approved tax breaks for Interstate Bakeries/Dolly Madison and for pet-food company Menu Foods Midwest, both of which had multimillion-dollar projects in the works, though the combined net new job number was relatively small, 32. The new Menu building was made exempt from property taxes for 10 years, and the new equipment for five years. Dolly Madison was given a five-year tax exemption on its new equipment.

Kent Heermann, president of the Regional Development Association of East Central Kansas, notes that Dolly Madison parent Interstate Bakeries had recently closed plants in Michigan and California. Meanwhile, he says, Toronto-based Menu has made a series of four expansions in Emporia since 1994 after first narrowing down its region of choice to eastern Kansas, northeastern Oklahoma and southwestern Missouri.

In Heerman's view, companies are primarily interested in geographic factors like proximity to raw materials and customers, and usually settle on a region before looking at specific communities and cities. "Typically, business-related decisions outweigh incentive decisions up front," Heerman says, but incentives do come into play early in the process--everything from tax abatements and job training credits to performance-based cash incentives. When a city or area is on a "short list" for consideration, Heerman says, incentives become "tie-breakers, not deal-makers."

Ernst & Young's Press agrees that "incentives are not the drivers in location decisions. They tend to be weighted on the availability of labor and cost of labor, access to transportation, and the extent of unionization. The Southern tier of states is very business-friendly, and job growth has been much faster there."

He adds that "the government folks really don't know how incentives will be valued by the company. Income and franchise tax credits may seem attractive, but a large tax credit may have no value to company." Moreover, what government giveth, it may take away: Many localities have implemented "clawback" provisions in contracts in which they may take back incentives if targets (for job creation, say) are not met. In such cases, Press says, "they're not just stopping future incentives, but actually requesting money back."

Experts in the relocation area say the title or specialty that works from the company side in site selection varies widely. In smaller, private companies, the CFO or president, or someone in operations, may be the key player, Heerman says. At large corporations, people with engineering backgrounds are more likely to be involved, as are selection committees involving various disciplines.

"Most larger companies have a disciplined and rigorous approach, and bring in an outside consultant," says Press. "They don't want bias, and they want the numbers to speak for themselves."

At EasyLink Services Corp. in Piscataway, N.J., which moved into its current 50,000-square-foot space in 2002, Vice President for Corporate Quality Bill Robinson says the technology company didn't use a site consultant but "put together a team which consisted of a combination of subject matter experts--telecom was represented, as were key managers across the functions. The guy who was then the head of the finance department was on the committee--he held all the budgets, and he verified expenses against budget," Robinson says. "That was absolutely important."

EasyLink, which consolidated several offices within a 50-mile radius of the current building under one roof, didn't deal with any local incentives or consider a geographic relocation. "Initially, we did an analysis of where employees lived, and thought about what would be the sweet spot," Robinson says. The current location, which EasyLink rebuilt in its entirety--a process that took a full year--is only 10 miles from its previous principal site in Edison, N.J.

The treasurer of a private aviation services company in the Midwest, who asked that neither he nor the company be named, recalls going through a different site selection process for a new facility several years ago. The company hired a site selection firm, and the treasurer was on a company committee analyzing the decision.

"The financial incentives were important. Equally important was the climate for business--how union-oriented it was. We basically narrowed down the potential sites to five that met our criteria," in several different states. A key criteria, he says, was that the facility be located on the grounds of an airport so the company could use the runway.

The company chose a facility in Alabama, which he says "was the best in terms of community. The incentives were better than anything we had seen, and the location and grounds were perfect." Unfortunately, the turndown in the aviation sector squelched the expansion, though he says the Alabama offer is still on the table.

Meanwhile, he adds that the company has another facility in the West where it was able to get property tax rebates, tied to job creation, on its operation there.

When it comes to getting finance involved, regulation may even enter into the equation. According to Cushman & Wakefield, the giant real estate services firm, the Sarbanes-Oxley internal control demands that are forcing companies to provide more transparency about their financial decision-making extend to items such as real estate costs and relocation. That, in turn, has increased the role for the finance department and the CFO in site selection processes.

Whether or not finance is directly involved in site decisions, it helps tote up the bottom line. There's no question these days that future costs can be lowered by finding a location willing to make concessions to get business--and those places aren't hard to find. They may be as accessible as today's mail.

RELATED ARTICLE: The Kansas Come-on

What are states and localities doing to market themselves to business? Consider Kansas, which touts these attributes in a brochure:

* It is within "next-day" freight delivery of 70 percent of the U.S.

* Its cost of living data put it 16th lowest among the states, over 6 percent below the national average.

* It is above the national average in the number of adults 25 and over with high school and college degrees.

* It has low electrical and gas rates and excess transmission capacity.

* It offers extensive rail and regional airport service.

* It is a constitutionally guaranteed right-to-work state.

* There are no city or county income taxes.

* The entire state is designated as an enterprise zone, conferring corporate income tax credits for new job creation and qualified capital investment in the state.