by Jennifer Syx
Economic development relies on grants and incentives, as without this type of assistance, many corporate and municipal projects are unable to move forward.
Putting together the best package when trying to move development forward requires a lot of work and research. But when the money is finally in the bank, the work isn’t done. Staying compliant with the terms of a loan, grant or tax exemption award is as important as the work that went into securing the funds. Noncompliance can stop a railway expansion in its tracks, shovel the dirt back over a new construction site, or force you to take down the welcome sign for that relocating business.
Most grants require annual reporting until the grant or incentive period expires. Every year, a city or company that has received an incentive from a public body must submit a report. But compliance reporting is an often overlooked aspect of economic development projects. And although inSITE is best known for ensuring projects succeed, we work just as hard to make sure that, once they do, they don’t fail on the back end.
It’s vital for cities, communities and companies to get the proper assistance to secure state and/or federal funding for important economic development, expansion and relocation projects to ensure they follow all the right steps. If a project’s compliance terms are not met, there is a chance that the agreement can be terminated and the award reduced or eliminated. It has been estimated that, due to noncompliance, more than half of the organizations that secure financial incentives don’t receive the full award, and an adviser can help ensure you receive the full award by closely adhering to the policies, procedures and reporting necessary to keep those dollars.
Each grant or incentive is structured differently, but almost all have a job creation or retention requirement. Employing an expert in this area can help you track jobs created or retained, and the associated payroll, as well as the number of employees who were trained in particular categories. It can also document the purchases of machinery and equipment, as well as measures taken to improve energy efficiency.
Sometimes when new incentives are created by legislation, the details of the programs aren’t always defined before awards are granted. The recent federal CARES Act is an example of this. Municipalities and corporations were granted dollars to provide relief, but the final rules and regulations surrounding those dollars weren’t finalized until late 2020. Communities and corporations that used these dollars needed to stay in compliance with the moving target of regulations. This is an instance in which hiring an outside firm to monitor changes in the law, while at the same time making sure the dollars are being spent correctly, was vital to avoiding any claw back.
Understanding the terms and definitions of a grant or incentive agreement, recognizing and meeting deadlines, having timely documentation of progress and properly completing necessary reports are just a few of the essential parts of a compliance program. Make sure you are taking the proper steps to ensure that your funding isn’t at risk.
Originally published in Smart Business News