Archive for category: Incentives

The Biggest Mistakes Companies Make in Incentives Negotiations

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When companies pursue economic development incentives, the negotiations often determine whether a project captures meaningful value or leaves money on the table. Too often, businesses fall into predictable traps that weaken their position.

Mistake 1: Engaging Too Late

Many leadership teams wait until a site has been chosen before discussing incentives. By then, the leverage is gone. Incentive packages are strongest when communities are still competing for the project.

Mistake 2: Focusing Only on Taxes

Property tax abatements are important, but they are not the whole story. Workforce training, infrastructure improvements, and permitting support can be just as valuable.

Mistake 3: Underestimating the Timeframe

Communities require due diligence, public hearings, and formal approvals. Companies that assume a quick turnaround risk delaying their projects.

Mistake 4: Overlooking Compliance Requirements

Incentives come with commitments. Job creation numbers, capital investment thresholds, and reporting obligations must be carefully managed. Failure to deliver can lead to clawbacks.

How to Avoid These Pitfalls

Successful negotiations require preparation, timing, and a clear understanding of the community’s goals. At Five Points, we guide companies through the process so they can capture the full range of benefits without unintended surprises.

NMTC 101: What Companies Need to Know for 2026 Allocations

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The New Markets Tax Credit (NMTC) program remains one of the most powerful financing tools available for projects in underserved areas. With permanency now established, companies that want to benefit from the program in 2026 should begin preparing today.

What Is NMTC?

The NMTC program provides federal tax credits to investors who make qualified equity investments in low-income communities. For companies, this translates into below-market financing that can cover up to 20 percent of project costs at closing.

Who Qualifies?

To be eligible, a project must be located in a qualified census tract and typically involve job creation, community services, or other significant impacts. Manufacturing, healthcare, education, and community facilities are often among the strongest candidates.

Why Plan Now for 2026?

Securing NMTC allocation is competitive. Community Development Entities (CDEs) that distribute credits review projects months in advance. Companies that delay preparation until 2026 may find themselves behind others in line.

Steps to Take Now

  1. Identify Eligible Sites

    Confirm whether your project location qualifies.

  2. Develop a Financing Strategy

    Understand how NMTC would integrate with other funding sources.

  3. Engage with CDEs Early

    Build relationships that strengthen your application.

  4. Work with Experienced Advisors

    The complexity of NMTC transactions requires expertise.

The Takeaway

If your company is planning a project of $10 million or more in an eligible area, the time to begin the NMTC process is now. At Five Points, we guide clients through every stage, from confirming eligibility to closing transactions.

Incentives Beyond Taxes: Hidden Benefits Companies Overlook

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When companies think about economic development incentives, property tax abatements or state tax credits usually come to mind. Those tools are important, but they represent only part of the picture. Some of the most impactful benefits are not tied to taxes at all.

The Overlooked Incentives

Here are three categories of benefits that companies often miss:

  1. Workforce Training Programs
    States and local governments often fund customized training for new or expanding employers. This can include both classroom instruction and on-the-job training, dramatically lowering onboarding costs.
  2. Infrastructure Improvements
    Communities may invest in road upgrades, utility extensions, or broadband expansion to support a new project. These improvements can save millions in capital expenses.
  3. Site Preparation and Permitting Support
    Many jurisdictions fund site grading, environmental remediation, or expedited permitting. These efforts remove barriers that would otherwise delay progress.

Why It Matters

These “hidden” incentives often provide immediate, tangible value. A $1 million road improvement, for example, may not appear on a tax form, but it directly reduces the cost of capital outlay.

A Case Example

One manufacturer we supported received a modest property tax abatement but also $2.5 million in state-funded workforce training and infrastructure support. The latter proved to be the true difference-maker for the project’s return on investment.

The Bottom Line

If a company negotiates only for tax abatements, it is almost certainly leaving value on the table. At Five Points, we help uncover and secure the full spectrum of incentives that communities are willing to provide.

U.S. Tariffs and Canadian Manufacturers: Site Selection Opportunities

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Canadian manufacturers are facing a new reality. U.S. tariffs on certain imports, along with global supply chain pressures, have reshaped the economics of cross-border trade. For many mid-sized Canadian companies, expanding into the United States is no longer optional. It has become a strategic necessity.

The Tariff Pressure
Recent tariff adjustments have increased costs on materials and finished goods, particularly in metals, automotive parts, and machinery. For Canadian firms that export heavily to the U.S., these added costs reduce margins and competitiveness.

The Case for a U.S. Location
By establishing a U.S. footprint, Canadian manufacturers can:

  • Remove tariff exposure on products sold domestically in the U.S.
  • Shorten supply chains and reduce transportation costs.
  • Access U.S. workforce and training incentives not available abroad.
  • Tap into federal programs such as the New Markets Tax Credit (NMTC).

Where the Opportunities Are
The most competitive locations right now for Canadian companies include border states like Michigan, Ohio, and New York, as well as Sunbelt states offering aggressive incentive packages. Locating in NMTC-qualified census tracts can open the door to financing worth up to 20 percent of project costs.

A Realistic Approach
Expansion requires careful planning. Canadian companies must consider labor availability, state regulatory environments, and long-term operating costs. A data-driven analysis and thoughtful negotiations with state and local partners can help ensure success.

Our Role
At Five Points, we have guided Canadian companies in reducing tariff exposure while securing significant incentives for new U.S. facilities. In many cases, the move has turned a business challenge into a growth opportunity.

Why Your Company Should Think Twice Before Accepting an Incentive Offer

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Incentives can often seem like a golden opportunity for businesses. Whether it’s a tax break, grant, or subsidy, these offers are designed to drive growth and encourage participation in projects. However, not all incentives are created equal, and in some cases, it may be wise to decline an offer. Here are several reasons why your company might be better off walking away from an incentive deal:

1. The Value of the Incentive is Not Significant

The primary purpose of accepting an incentive is to enhance your company’s bottom line. If the value of the offer is negligible compared to the effort and costs required to secure it, it may not justify the investment. For example, a small tax credit or grant that covers only a fraction of the project’s costs may not be worth the time spent navigating the application and approval processes. Always assess whether the benefit aligns with your financial goals and resources.

2. The Compliance Requirements Are Too Burdensome

Many incentives come with strings attached, including strict compliance requirements, extensive documentation, and ongoing reporting obligations. These administrative burdens can divert valuable resources from your core business operations. If the cost of meeting these requirements outweighs the value of the incentive, your company might end up spending more than it gains.

3. The Company’s Forecast is Unclear

Accepting an incentive often ties your company to a specific course of action or project timeline. If your business forecast is uncertain, committing to these terms could create financial strain or limit flexibility. For instance, market conditions might shift, or unforeseen challenges could arise, making it difficult to meet the obligations tied to the incentive. It’s crucial to weigh the potential risks and ensure that your company’s current and future outlook supports the decision.

4. Another Project May Be Coming Soon

Timing is everything when it comes to incentives. If your company anticipates a larger or more strategic project in the near future, it might make sense to hold off on accepting a smaller offer. Many incentive programs have caps or limits on the total benefits a company can receive within a given timeframe. Opting for a more substantial incentive later could yield greater rewards and align better with your long-term objectives.

Conclusion

While incentives can provide valuable support, they are not always the right choice for every company or situation. Before accepting any offer, it’s essential to evaluate the significance of the incentive, the associated compliance requirements, your company’s forecast, and potential future opportunities. By carefully considering these factors, you can ensure that your decision supports your business’s long-term success and sustainability.

In the end, the key is not to chase incentives blindly, but to strategically align them with your company’s goals and capabilities. Sometimes, saying “no” to a seemingly attractive offer is the smarter move.

Five Points Strategic Advisors

info@fivepointsstrategies.com

711 Navarro St. | Ste 300-103
San Antonio, TX 78205

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