Grants and incentives offer wonderful benefits when used appropriately. They can move a deal forward that has a financial gap or improve a project to provide important benefits, such as increased sustainability measures. They are most often offered by public or economic development entities at the local, regional, state and federal levels. But sometimes they are offered by foundations or other organizations that desire to see increased public benefits in real estate projects, such as public art, green initiatives, innovation and projects that support equity.
What types of projects or project needs might spur the request for incentive or grant monies? Here are just a few examples:
Affordable housing or mixed-income housing projects
Corporate moves from one city to another or one state to another bringing new jobs or tax base
Projects that can create public space or that showcase public art
Projects that might include public green space or other space the public can take advantage of
Projects with extraordinary costs that ultimately bring a benefit to the community
Projects that spur economic growth and/or support new public transit
Sustainability or green energy projects
Infrastructure projects
Environmental clean-up needs
Typically, incentives offered by government entities require a “but for” test. It must be shown that the project cannot move forward without the incentive and often this is due to extraordinary constraints that put the project at a disadvantage against other projects. Economic development grants often have goals of job creation or an increase in tax base to name a couple. Some pools of incentive and grant monies are limited and therefore are competitive.
It important to make sure your project truly matches up with the requirements and goals of the incentive being offered. Almost all funding organizations carefully track the requirements for eligibility and the last thing you want to do is to formulate a funding request just to get dollars. Be honest with your ask and make sure you are applying for the funding that is right for your project.
Some important incentive and grant requirements to be aware of are:
Some grants are only offered at certain times – your project needs to be at the right stage for the application and you need to be ready with all of the required information.
There are a wide variety of economic development incentives – ranging from tax increment financing to tax-exempt financing to direct grants and incentives, pick the right one for your project need.
Many grants will have requirements that may, in fact, increase cost such as certain hiring provisions – you will need to be able to assess the pros and cons of the requirements to determine if the grant makes sense for your project.
Most incentives have post-funding record-keeping requirements. Make sure you are aware of the amount of work this will take and have staff allocated to do this.
Some opportunities may fund “bricks and mortar” while others fund workforce training or other operational programs.
Many incentives have “claw-backs”; clauses that require repayment of the monies received if you do not ultimately meet the requirements or the goals agreed to.
The list of grant and incentive making organizations could fill pages – here are just a few ideas to get you started – we have used examples in the community in which KimbleCo’s headquarters reside – if you are in a different state you will likely have similar organizations:
Government and quasi-government organizations
Cities including their special programs, example, Great Streets program
Counties
Port Authorities
Environmental agencies at all levels
States and state programs, see DEED
Regional organizations such as the Metropolitan Council
Federal programs – too numerous and varied to count! – USDA, HUD, DOT, EDA, EPA
Utility companies
Example: Xcel Energy
Foundations
Some communities like Minneapolis-St. Paul are blessed with philanthropic organizations, many of which are stand alone and some of which are connected to corporations. For example see McKnight Foundation, Minneapolis Foundation, and Target’s Corporate Foundation.
Special Interest Organizations (such as arts organizations)
KimbleCo has successfully helped numerous of its clients obtain various incentive and grant requests totaling in the millions of dollars. Please call us if we can help you!