State of Nevada Economic Development Benchmarking and ...

Benchmarking and Incentive Analysis| 0 State of Nevada

State of Nevada

Economic Development Benchmarking and Incentive Analysis October 23, 2012


Table of

Contents

Observations & Recommendations…………………………………. 2

SWOT Analysis…………………….....……….………….................... 15

State-Level Economic Development Incentives……………............. 19

Cluster Development and Industry Location Scorecards…...……... 28

25 Innovative Incentives That May Be Adapted to Nevada............. 59

Appendices…………………………………………………………….. 65

About AngelouEconomics……………………………………………. 76

Photo Credit: Nevada Governor's Office of Economic Development

Benchmarking and Incentive Analysis| 2 State of Nevada State of Nevada Benchmarking and Incentive Analysis| 2


Observations & Recommendations State of Nevada

Economic Development Benchmarking and Incentive Analysis

Executive Summary | 3

OVERVIEW OF FINDINGS

The first half of the previous decade marked a period of robust, in fact, unbelievable growth in the State of Nevada. Fueling

much of this growth was a boom in housing construction that would eventually topple as the housing crisis came to pass. The great

recession hit Nevada and Nevadans particularly hard and the state continues to be pressed by an unemployment rate that is well

above the national level and by a nation-leading housing foreclosure rate.

Beyond the impact that the U.S. economy has had on the ability for businesses in the state to grow and operate and on the ability for

Nevadans to achieve stability in their employment situations and personal finances, the continued economic weakness in the state

places Nevada at a slight disadvantage with respect to other states in attracting relocating businesses and new residents, and in

supporting business expansions. Nevertheless, Nevada offers numerous assets that will help lead it back to economic growth

and stability. Some assets are a direct result of the recession, including the availability of real estate at low prices. The State of

Nevada, with leadership provided by the Governor’s Office of Economic Development, has already launched a strong effort to redirect

the state’s economic development strategy by focusing on the support and development of target industry clusters. The State’s new

economic development strategy will require Nevada to adapt the various policy tools that are needed to support it.

In the face of challenging macro conditions, it will be even more necessary that the State of Nevada find new and creative ways to

support economic development and that it sufficiently leverages the tools and advantages that are at its disposal to become more

competitive in a way that leads to sustainable economic growth. This is likely to include the use of existing economic

development incentives, the creation of new incentives, and a more aggressive presentation of the advantages that do

currently exist within the state. Faced with the challenge of having to dig deeper than its competitors to find the tools with which it

may compete, Nevada may find itself better equipped to compete over the long haul.

An important initial step in increasing the competitiveness of the State of Nevada with respect to economic development lies

in better understanding how it compares to peer and competitor states in terms of economic performance and the availability of

economic development tools. Likewise, when evaluating the appropriateness and effectiveness of a state’s existing slate of incentives,

it is helpful to review approaches that have been successful in other states. This study is designed to be a resource for doing precisely

that in the State of Nevada.

State of Nevada

Benchmarking and Incentive Analysis

OBSERVATIONS & RECOMMENDATIONS

Photo Credit: Nevada Governor's

Office of Economic Development


OVERVIEW OF FINDINGS (continued)

Among the results of the analysis, which is included in the full report, are the following findings.

• Nevada’s recent institution of a cluster-oriented strategy for economic development is an opportunity and a challenge to ensure that

its incentive offerings correspond to the objectives of this strategy.

• Recent years have seen states throughout America take differing stances on the use of cash incentives oriented to the near-

term versus delayed cash incentives. While many states have become more enthusiastic in their use of closing funds and similar

incentive tools, other states have focused on less cash-intensive incentives due to tightening fiscal conditions. Irrespective of the policy

trends found within a given state, it is very common for a mix of incentives to be utilized in support of a particular project.

• Incentives are used to cover any difference in costs between the various states a company is considering for

relocation/expansion. Incentives cannot serve as a substitute for an economic environment that is supportive of growth nor for the

specific assets required for a particular business to be competitive in its industry. Incentives can, however, lead a particular state to

position itself more competitively relative to other similar markets in order to attract businesses.

• The absence of a corporate or personal income tax in Nevada is an important and underleveraged asset for the state’s

economic development efforts. The absence of income taxes (often turned to by competitor states as a framework for incentives)

should itself be marketed as an incentive to prospects. Nevada has the best corporate tax rate environment among the benchmark

states. And those benchmarks that rated as having the most favorable corporate tax environment have outperformed on the basis of

employment growth and business establishment growth.

• Nevada is presented with numerous opportunities associated with international markets that it may tap in order to support

economic growth domestically. This will require, however, a deliberate effort on the part of state and regional economic development

leaders to develop these opportunities and assist industries in developing stronger international linkages. One component of this strategy

may include the development of economic development incentives designed specifically to support these efforts as well as aggressively

leveraging foreign trade zone policy and existing industry linkages with emerging markets abroad.

State of Nevada






OVERVIEW OF FINDINGS (continued)

• An incentive program should incorporate the following principles to ensure a successful and effective incentive policy:

Clearly defined goals, objectives and limitations, appropriate policy duration, optimal incentive amount, performance and compliance

monitoring, evaluation process, viable incentive policy, understanding the interactions of a policy with other incentives, simplified

application process, consumer education and awareness, and the reduction or elimination of institutional barriers.

• To develop thriving industry clusters, incentive programs ought to encompass the ensuing guidelines: Establish clear and

meaningful cluster specifications, secure data analysis to identify and support cluster opportunities, institute cluster specific evaluation

processes, leverage the presence of industry leaders for further cluster development, incentivize comprehensive cluster infrastructure

development, recognize synergies, support existing businesses within a cluster, and foster collaboration between relevant programs.

• Nevada has been successful in integrating some general best practices into its incentive programs, such as a somewhat

simplified application procedure, a staggered monitoring process, reliable duration of programs, and the overcoming of institutional

barriers.

• Nevada currently lacks industry-specific programs that can support cluster development of the state’s proposed seven

target industries. Nevada’s location quotient ranking reveals a strong clustering of several existing industries: hotels and

entertainment, specialty manufacturing*, business support services, and natural resources. The four existing industries provide a solid

base for further cluster development within those sectors.

• Nevada’s present assortment and application of economic development incentives are deficient with respect to the following

important considerations: maintaining goals and objectives for existing programs while continuing to update them, choosing the

optimal set of incentive programs and the amount of resources applied to them, building a productive and resilient evaluation process,

leveraging and understanding interactions between incentive programs, and equipping economic development leadership with a

marketing budget that can facilitate awareness of incentive programs and other advantages of doing business in Nevada.

State of Nevada





* Although initial industry analysis indicated strength in the Consumer Manufacturing industry, subsequent analysis revealed that this strength is

primarily situated in the category of miscellaneous manufacturing, indicating that manufacturing in Nevada is primarily directed toward a wide array

of specialty markets.


SELECT FINDINGS OF COMPARATIVE ANALYSIS

• Nevada has experienced weaker economic growth than the benchmark states. This is coupled with having the smallest

economic development budget and the least amount of incentive money being allocated among the core benchmark states. To

that end, Nevada has recorded the least amount of jobs created from incentive money among these core benchmarks.

• A multitude of factors contribute to the character and overall performance of a given economy. These include such

matters as business tax climate, infrastructure, workforce skill level, demographics, and industry mix. While incentive programs or

other economic development initiatives may directly generate notable gains for the economy, these gains are easily outweighed

by broader forces in the economy.

• Generally speaking, having the highest economic development budget does not guarantee the eventual success that

may be expected by an economic development agency. This is an indication that it is not enough to have the largest

incentive war chest, but that states and regions must also be strategic in its use. However, when a state’s economic situation is

already in dire straits, it is even more imperative to be strategic in the application of its funds/incentives.

• The availability of incentives is an important priority for site selectors, though not the top priority. Nevertheless, incentives

(and similar tools for business attraction) are well within the mix of issues evaluated by site selectors when choosing where to

relocate a business.

• Nevada’s benchmark states are mostly equipped with delayed-cash incentives along with the ability to utilize grants

that can be applied to support business attraction and expansion, with a current trend toward the use of clawback

provisions. Utah is pioneering the post-performance incentive approach which requires no money to be spent in advance by the

state in the form of business incentives. Rather, the state awards funding/incentives to a company after the business meets

certain requirements agreed upon in advance (i.e. time, capital investment, jobs created).

• One of the largest incentive tools currently not being fully leveraged by the State of Nevada is its low-tax environment.

In its recruitment efforts, the State needs to quantitatively illustrate the cost savings that a relocating company could accrue when

moving to Nevada.

State of Nevada






GENERAL POLICY RECOMMENDATIONS

1. Consider lowering job requirements in metropolitan areas for existing incentives which may be unrealistic;

include a specified period at the end of which, such requirements may come up for reevaluation. The

stakeholder engagement process exposed a growing concern among Nevada economic development

professionals (public and private) that current requirements were set at levels not often obtainable.

2. Develop a private/public relationship to conduct state-level marketing for economic development; Be more

proactive with marketing efforts and highlight the unique assets of each individual region as well as the

diverse set of offerings that hold appeal to a wide range of demographics (e.g. Young Professionals as

well as families) and industries. The stakeholder engagement process revealed the success behind prior state-

level marketing strategies in Nevada and concerns surrounding decreased emphasis on marketing.

3. Eliminate or restructure the Intellectual Property Abatement program and any other programs that are not

performing as initially intended. Reevaluate the Tourism Improvement District and its adequacy in meeting

the needs of Nevada’s new economic development strategy. Qualitative analysis suggests that business

response to the abatement program has been minimal and that District usage should have tighter oversight in its

application in addition to expanding the types of projects receiving benefits.

POLICY RECOMMENDATIONS

The following recommendations aim to support the State of Nevada’s efforts to improve its level of competitiveness with

peer organizations in other states, to support a cluster-oriented strategy for economic development, and to strengthen

other efforts to improve Nevada’s economy.


State of Nevada





GENERAL POLICY RECOMMENDATIONS continued…

4. Formalize the state’s current two and five year performance measures for incentives and incentive policies

that specifically reflect the effectiveness of incentive policies on job creation and their direct impact on the

overall economic growth for the State of Nevada. The formalized process and its results should promote

transparency and provide a more robust method to determine which programs may or may not be

promoting industry growth. Where possible, segment metrics by target industry. An outside survey pinned

the State of Nevada as ranking among the top of states in auditing its incentive performance. A new, cluster-

oriented economic development strategy will require more robust metrics that track performance of target

industries and impact of incentives on the growth and advancement of these clusters.

5. Consider the adoption of the “25 Innovative Incentives” programs highlighted within this report which may

be adapted to fit the needs and objectives of the State of Nevada. As part of the study’s analysis of case

studies and best practices, many were identified as having strong potential for near-term application by the State of

Nevada. Twenty-five of these have been highlighted as particularly strong programs which may be considered by

Nevada.

6. Consider leveraging the state’s competitive tax structure to encourage businesses to incorporate in the

State of Nevada (as accomplished by the State of Delaware under its “General Corporation Law”). Both the

qualitative and quantitative data suggest Nevada’s low-tax environment would support such an endeavor.


State of Nevada





INDUSTRY-SPECIFIC POLICY RECOMMENDATIONS

1. Seek opportunities within the Governor’s Office of Economic Development to provide additional support

and resources to the existing role of the aerospace/defense industry specialist to enable the Office to work

more directly with federal officials, identify and pursue federal funding and grant opportunities, while

continuing activities already underway aimed at the development of the industry within the state.

Stakeholder engagement identified a need to better leverage and/or expand the resources available to the industry

specialist to increase existing efforts to advocate for the aerospace/defense/aviation industry at the federal, state

and regional levels.

2. Consider opportunities to support and attract emerging sectors within the aerospace/defense industry,

including private space exploration as well as drone technology development for both military and

commercial use. A general trend analysis strongly suggests future space flights/exploration will predominantly

occur within the private sector. Stakeholder engagement also uncovered the need and opportunity to utilize

national airspace for commercial drone use. Nevada is well positioned to capitalize upon these and other emerging

trends within the aerospace and defense industry in a manner that can facilitate employment growth and industry

diversification.

3. Address challenges associated with the lack of medical-license reciprocity between Nevada and other

states as it affects the attraction and growth of medical industries. Industry specialists revealed during

stakeholder engagement that reciprocity was a major barrier to physician recruitment.


State of Nevada





INDUSTRY-SPECIFIC POLICY RECOMMENDATIONS continued…

4. Identify ways to leverage areas of competitive advantage associated with Las Vegas/Reno and the state’s

gaming industry to capitalize upon the growing gaming industry in Macau and other locations in emerging

markets. Industry trend analysis for the gaming industry points to continued growth in investment and activity in

emerging markets, particularly those in East Asia. This represents an opportunity for Nevada to leverage its existing

industry strengths to support stronger international linkages with emerging markets. Doing so will not only provide

opportunities for growth within the state’s Hospitality/Gaming/Entertainment industry, but will also allow Nevada to tap

into more diverse markets and industry segments, some of which may not be directly related to hospitality or gaming.

5. Consider adopting a similar strategy as that taken by the Republic of Malta for the attraction of the online

gaming industry which allows companies to be subject to a highly favorable tax treatment as long as certain

requirements are met, including the placement of those companies’ data centers within Malta. Qualitative and

quantitative analysis indicated wide ranging opportunities to leverage Nevada’s existing industry strengths in

conventional (i.e. brick-and-mortar) gaming as well as its growing strength in internet gaming to support the growth and

development of other industries within the state, such as data centers, and to place it in a stronger position to become

an American and global center for internet gaming. The model presented by Malta offers lessons in both of these

areas.

6. Identify ways to better leverage the state’s core optic interchange fiber hub and work with representatives of

the private sector to promote this asset. Qualitative research uncovered the expansive network in Las Vegas and

Reno and how it is currently underutilized.


State of Nevada





INDUSTRY-SPECIFIC INCENTIVE RECOMMENDATIONS

1. The Catalyst Fund is in its early stages, however, Nevada should consider using it partially as a relocation

fund to help offset high moving costs associated with the relocation of a business, similar to the Louisiana

Rapid Response Fund. Consider structuring this portion of the fund as a revolving loan fund which may

allow the forgiveness of certain loans provided that specific criteria are met. Both the qualitative analysis

(stakeholder engagement and best practices) and quantitative data (benchmarking) collectively suggest that a

relocation fund would be particularly beneficial to the recruitment of small-to-mid sized businesses.

2. Consider opportunities to implement a program similar to Indiana’s Technology Parks and Ohio’s

Innovation Hub program. Both programs could be combined to encourage cluster development while

serving both as an incentive and marketing tool. More specifically, technology parks could be established

by leveraging existing assets in metropolitan areas to establish hubs aligning with the state’s targeted

industries. Qualitative analysis suggested there is a link between combining multiple incentive programs together

and an increase in cluster development.

3. Support the establishment of a venture capital fund that is funded through private sources and tied to

target industries (similar to InvestMaryland). The program should be marketed and administered at the

regional level while operating off a centralized funding and review structure. In 2012, the State of Maryland

raised $84M to invest in early stage technologies in software, communications, cyber-security, and life

sciences. Case-study research revealed how several states have set up such a fund to expand and diversify

statewide economies.

4. Consider offering training and infrastructure incentives that would help offset large, up-front capital costs

for distribution and freight centers. A logistics site selection specialist disclosed that infrastructure and training

costs are among the top concerns for logistics operations.


State of Nevada





INDUSTRY-SPECIFIC INCENTIVE RECOMMENDATIONS continued…

5. Leverage Nevada’s large volume of empty industrial and commercial space that is currently available; where

appropriate, offer free land/building and/or loans/grants for building improvements as an opportunity to recruit federal

agency operations. The qualitative and comparative analyses suggest that land deals are often attractive incentives for large-

scale operations.

6. Work with state universities to develop a web-based platform (similar to California’s Connectory) for supporting

instate sourcing of goods, supplies, and services by businesses in Nevada’s target industries. Encourage the use of

this platform by state universities for the research of target industry supply chains. California’s Connectory has

produced 19 distinct case studies on the successful use of this platform. A logistics site selection specialist suggested

freight modeling as a means to understand the freight and labor costs for such a platform. Separate research supports the use

of such platforms in the facilitation of growth and exchange within and between industry clusters targeted at the state level.

7. Leverage highly flexible foreign trade zones and other available resources to incentivize growing exporters/importers

to locate and expand in Nevada while contributing to employment growth. Consider adapting the model found in

Georgia’s “Port Bonus” incentive programs which address various areas of economic need for the state by

incentivizing exporters that demonstrate consistent growth. The “Port Bonus” program has increased the number of

distribution centers within its boundaries in the past five to 10 years. Both qualitative and quantitative analysis indicates

significant opportunity for Nevada to better leverage its foreign trade zones and to support increased export activity.

8. In order to support stronger gains in the increase of state exports, consider offering a standard 20-30% premium on

certain incentives to qualified exporters. The comparative analysis suggested there is a link between offering export

incentives and increased net exports.


State of Nevada






9. Identify opportunities to incentivize foreign trade and investment, potentially through a program similar to

Arizona’s foreign trade zones, and more aggressively promote the state’s highly flexible foreign trade zones.

Eight multinational corporations have taken advantage of the tax savings in Arizona’s FTZ#75, spurring local

economic development activity. Qualitative analysis revealed that Nevada’s foreign trade zones are not marketed

extensively enough to fully capitalize on their unique traits.

10. Consider providing property tax/sales tax credits to companies that use renewable energy and eliminate

barriers that might otherwise discourage the use of renewable energy for industrial purposes. Stakeholder

engagement disclosed the NVRE revolving loan program as being successful, however, other funding avenues could

be explored either within the Governor's Office of Economic Development or Office of Energy.

11. Work with electricity providers to offer discount energy rates for large industrial users for 5-years and identify

opportunities to increase the demand for renewable energy throughout the state. Stakeholder engagement and

state-level benchmarking suggested that the state may need to provide incentives that encourage energy consumption

in order to create a stronger and more competitive renewable energy market.

12. Create a market to support the trading of RECS similar to Connecticut's RECS program to allow for flexibility

in applying renewable attributes to the electricity use at a facility of choice. Qualitative analysis revealed there is

a weak demand for a renewable energy market in Nevada although the price of energy is an overall concern.


State of Nevada






State of Nevada





13. Provide incentives for the establishment of doctor-owned clinics or surgery centers to encourage physician and

healthcare recruitment to the State of Nevada. Stakeholder engagement disclosed that patients are seeking

healthcare treatment outside the state of Nevada in addition to the struggle to recruit physicians. Doctor-owned clinics or

surgery centers afford the opportunity to engage the issues of both populations under the same umbrella.

14. Consider the adoption of a film incentive program similar to Louisiana or New Mexico.

As suggested in the stakeholder engagement process, Nevada’s current brand and proximity to California could be

leveraged with a state film incentive program to diversify and expand Nevada’s entertainment industry.



SWOT Analysis


STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATS

This section of the report highlights the strengths, weaknesses, opportunities, and threats for

the State of Nevada, as collected through client discussions, stakeholder engagement and

the use of quantitative analysis. This analysis of issues is not intended to be all-inclusive.

Rather, the focus is on those areas that will have the most direct impact on specific

components of future economic development efforts in the State of Nevada.

We define the four aspects of “SWOT” in these terms:

•Strengths: Issues or characteristics that can be built upon to advance current and future

economic growth opportunities in the State of Nevada.

•Weaknesses: Issues or characteristics that, if not addressed effectively, could limit current

or future growth opportunities.

•Opportunities: Assets, events, or trends that offer the State of Nevada the potential for

economic growth and attraction of new industry.

•Threats: Obstacles, events, or trends that, if not addressed effectively, could threaten the

state’s economic potential and its ability to attract, expand, and startup new employers.

SWOT Analysis Photo Credit: Nevada Governor's Office of Economic Development


SWOT Analysis – Overall Competitiveness

State of Nevada

Economic

Development

Incentives

Strengths Weaknesses Opportunities Threats

• Recently-instituted cluster-

oriented economic

development strategy

• Existing industry base

• Large volume of commercial

and industrial space available

• Highway accessibility

• Existing supply chains

• Favorable tax climate (no

corporate income tax,

personal income tax,

franchise income tax,

inheritance or gift tax, unitary,

or estate tax)

• Tahoe Regional Industrial

Center

• Major national research

universities that attract

multimillion dollar R&D

spending

• Large tech industry presence

in southern Nevada

• TEN program successful in

training skilled labor

• Distinguished air service at

Las Vegas McCarran and air

cargo service at Reno-Tahoe

• Low housing costs

• Low construction costs

• Very low natural disaster risk

profile

• Proximity to California

• Continued economic

weakness due to recession

and housing crisis

• Incentive program gaps

• Limited resources

dedicated to economic

development

• Negative economic image

due to recent economic

decline and high number of

foreclosures

• High unemployment rate

• Slow employment growth

• Lack of state marketing

budget

• Underfunded deal-closing

fund

• Low foreign exports

relative to neighboring

states

• State laws associated with

reciprocity for physicians

and nurses

• Real and/or perceived poor

K-12 school system

• Lack of highly-skilled

workforce

• Highest bankruptcy and

foreclosure rate in U.S.

• Regional coordination for

economic development

• Establish workforce

recruitment opportunities

through local universities

• Provide more access to

small business resources

• Establish an angel/seed

capital fund for industry-

specific startups

• Continued growth in the

advanced manufacturing

industry, including wind

energy component

• Internationally-oriented


and trade promotion

• Large potential for

localized investment capital

• Potential for Nevada to

write the rules and

regulations for online

gaming

• Growing energy efficiency

market

• Business interest in NV

• Stronger promotion of tax

advantages

• Potential overdependence

on gaming and

entertainment industries

• Real and/or perceived

barriers to development

• Threat of past budgetary

constraints, $1.8 billion

shortfall in 2011

• Small technical workforce

• Aerospace/Aviation grant

programs lack

commercialization

mechanism

• Perception that the Strip is

Nevada

• Shortage of healthcare

providers

• Aging population

• Less competitive than

neighboring states in

business attraction

• Difficulty highlighting and

fully leveraging assets

outside of the Strip



SWOT Analysis – Overall Competitiveness (continued)

State of Nevada

Economic

Development

Incentives


• Strong, developed Gaming

and Mining industry

• Worldwide recognition

• Strong aviation infrastructure

• Largest, most developed

fiber optic infrastructure in

U.S.

• High quality of life outside

the Strip

• HQ for several well-known

companies

• Home of three major U.S.

military bases

• Every major industry

association visits Nevada

• Ten electric providers that

are energy sources and

existing utility policies that

are supportive of economic

development

• High energy costs

compared to Arizona and

Idaho

• Tax benefits are under-

promoted

• Incentive qualifications not

always practical or

achievable

• Broad incentive programs

• Broad target industries

• Lack of integrated

marketing for both tourism

and economic

development

• Lack of a formalized

venture-capital

infrastructure

• Lack of outside knowledge

on state’s available assets

• Lower University Research

& Development

investment when

compared to other states

• Growing tech industry

• Leverage Foreign Trade

Zones’ designation as

Alternative Site

Framework (ASF)

• Commitment of business

community to economic

development

• Largest, developed fiber

optic network in U.S.

• World renowned Gaming

industry

• Low real-estate costs

• High commercial real-

estate vacancy rate

• Low land costs compared

to California

• Well-developed family

oriented communities

• Appeal to younger

demographic companies

• Cross-cluster

collaboration, support and

development

• Lack of economic

diversification

• No reciprocity of medical

licenses with other states

• Threat of future shortage of

healthcare providers


State-Level Economic

Development Incentives



SWOT Analysis – Structure and Application of Incentives in Nevada

State of Nevada

Economic

Development

Incentives


• Catalyst Fund effective for

small businesses seeking

money up front; also possible

relocation fund

• Unique tax structure, low-tax

environment

• Top-rated tax abatement

program in the country

• Unique flexibility of Foreign

Trade Zones

• Sales/Use tax deferrals more

often utilized by new

companies

• Personal/Real property tax

abatements more often

utilized by expanding

companies

• Modified Business Tax

Abatement utilized by both

new and expanding

companies

• Stability of incentive programs

• Both training programs

(TEN/Silver State) can be

leveraged at the same time

• Current incentives do not

resonate with the

Aerospace/Defense

industry

• Current incentives are not

specialized and sector-

specific

• Intellectual Property

Abatement viewed as

ineffective

• Current incentives lacking

sufficient performance

measures

• Incentive strategy has not

been adapted to fit current


strategy

• Existing programs do not

address unique challenges

within each target industry

• Existing programs do not

encourage cluster

development within the

seven target industries

• Quantify, frame and

market highly valuable tax

advantages resulting from

lack of state corporate

income tax as an

incentive which all

businesses are

automatically qualified to

receive

• Market soft incentives

such as quality-of-life

• There is a need for

incentives to be easily

implemented and not

required to be legislatively

enacted

• TIF districts for

manufacturing

• Incentivize foreign trade

and investment

• Fund the Knowledge

Fund

• Educate business

community on current

incentives

• Cookie-cutter approach to

incentives

• Restrictive incentive

qualifications

• Conflicting views of

incentive formation and

use

The State of Nevada currently has four general incentive categories: tax deferral, tax abatement, workforce development, and a low-tax environment.

• Nevada’s incentives have been stable and relatively reliable for interested business applicants, however, they are not specialized nor sector-specific.

• The tax abatement programs are among the top in the country as rated by a recent outside survey.

• The state offers a successful workforce development program that allows a business to utilize more than one program simultaneously.

• Nevada’s incentive-evaluation process ranks among the lowest of states in a recent outside study.

• Existing incentive programs do not encourage cluster development within the seven target industries.

NEVADA SCORECARD: INCENTIVES BEST PRACTICES

Incentive Use Best Practices Leading Strong Weak Lacking Comments

Define Specific Goals, Objectives,

and Limitations

Existing incentive policies do not appear to have a clear objective or desired goal. A specific strategy for individual programs other

than manufacturing do not seem to exist. Perhaps more importantly, existing incentive policy is poorly integrated into the state’s

broader economic development strategy, particularly with respect to the support and development of certain industry clusters.

Ensure an Appropriate Incentive

Policy Duration

Nevada is generally successful in addressing the issue of duration in its incentives, particularly with respect to the design and

issuance of property and sales tax abatements. Certain other of Nevada’s more specific economic development incentive

programs, however, are not well defined nor are they clearly articulated. The complete lack of a corporate or personal income tax

provides a strong degree of assurance and predictability to businesses that are considering relocation or expansion.

Determine the Optimal Amount for the

Incentive

The Catalyst Fund is in a pilot stage and its full use is to be determined. It may be used as a relocation fund, however, it will not

compete against other states in the capacity of a deal-closing fund. In other instances, resources continue to be allocated to incentive

programs that have generated little interest or activity and that would be appropriate for reorganization or termination. Developing a

clearer strategy for the design and use of incentives as part of (and fully integrated with) the state’s broader economic development

strategic plan will assist in addressing this concern.

Monitor Performance Standards and

Compliance

Nevada audits every company during the second and fifth year of receiving incentives. Broader metrics on the success of Nevada’s

economic development incentives and their contribution to a broader economic development strategy, however, are underdeveloped.

Implement an Evaluation Process

Although Nevada has in place a process for auditing its specific incentive agreements, a recent Pew Study scored Nevada among

the weakest in the U.S. in evaluating incentive programs. This can be a significant barrier to ensuring that Nevada’s incentives are

both competitive with other states and are contributing to the state’s broader economic development strategy. The call for and

completion of this study, however, is an effective step for improving on this issue.

Choose the Correct Incentive

The state has been relying on its tax structure as an incentive policy, but has not been focused on specific incentives that are

competitive with other states. Nevada’s Catalyst Fund is an attempt to compete with other states’ incentives, but how the fund will be

utilized is yet to be determined. Other incentive programs exist, including the Intellectual Property Abatement, which have generated

limited interest or which may be unsuccessful in achieving their original intent.

Understand the Interactions between

Incentive Programs

Little consideration appears to have been given to the degree to which incentive programs within Nevada at the local, state, and

federal levels are complementary of one another and which provide an accelerated impact through mutual support. Inefficiencies are

often caused by ad hoc or independent programs that are designed to address a single aim (e.g. Tourism Improvement District), and

such programs should be evaluated to identify ways to mitigate such issues. A particularly strong consideration with respect to this

best practice in the State of Nevada is the design of cluster-oriented incentives that encourage the interaction and mutual support

and growth of Nevada’s target industries.

Simplify the Application Process

While the present focus on the use of tax abatements and deferral programs allows many businesses to develop a clear

understanding of the application process of these particular programs, a lack of marketing of alternative incentives that are available

can create confusion among qualified applicants as to the steps required of them to obtain them. The establishment of the State’s

regional economic development offices is an important asset in better communicating and in finding ways to simplify the application

process for incentives.

Approve a Marketing Budget to

Facilitate Consumer Education and

Awareness

The marketing of incentives to existing and out of state parties does not seem to exist with the awareness campaign for Nevada

heavily focused on its gaming and hospitality industry. A much stronger effort needs to occur with respect to the marketing of

advantages found in the State of Nevada for a wide range of demographic groups and industries.

Overcome Institutional Barriers

Nevada recently instituted a plan to make economic development regional by working with local and regional economic development

agencies within the state. Such efforts are important to the design and application of appropriate incentive programs, however it will

take time to fully assess the effectiveness of these regional agencies in overcoming existing barriers.



BEST PRACTICES: DESIGN AND USE OF INCENTIVES

The following “best practices” are basic principles that should be incorporated into the use of incentives at state, regional

and local levels.

1. Define Specific Goals, Objectives, and Limitations: Economic development incentives should be guided by the use of specific

goals and quantifiable objectives. This includes determining who the policy will be targeting, how the targeted sectors will be

subsidized, the length of received benefits, the desired impact the incentive policy will achieve, and any funding limitations of a

particular policy. Market research should be conducted to support and determine the optimal tax incentive that will achieve each

policy’s defined goals.

2. Ensure an Appropriate Incentive Policy Duration: In order for an incentive to be effective, it must create certainty in the

marketplace. Stable and reliable incentives will encourage sustained growth. The appropriate term of an incentive policy will vary

by project.

3. Determine the Optimal Amount for the Incentive: Equilibrium must be found with regard to incentive amounts. The benefit of

the subsidy must be high enough to attract the targeted projects but low enough to avoid market distortions. Incentive benefits

should diminish over time allowing for a consistent, sustainable transition once incentivized markets become established and

demand strengthens.

4. Monitor Performance Standards and Compliance: All economic development policies should be held accountable to

performance standards and monitored regularly. By doing so, the efficacy of the economic development program can be

monitored and maintained. Economic development programs should routinely meet or exceed performance standards defined by

the policy.

5. Implement an Evaluation Process: The evaluation process should measure the performance and effectiveness of an economic

development incentive based on the proposal, cost/benefit analysis, impact on tax base and businesses, and the overall success

of the program. Key performance measures should be quantifiable in nature. Clear and concise evaluation procedures will ensure

a high level of consistency and transparency in a economic development policy.

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BEST PRACTICES: DESIGN AND USE OF INCENTIVES

The following “best practices” are basic principles that could be incorporated into Nevada’s Incentive Strategy.

6. Choose the Correct Incentive: Every industry is different and must be incentivized as such. Choosing the correct incentive

program by understanding the needs and major obstacles within the targeted industry will increase the chances of success.

7. Understand the Interactions between Incentive Programs: Policies are not independent and therefore rely on each other in

either a positive or negative capacity. Ideally, incentives should be designed to complement or enhance existing incentive policies

at the local, regional, state and federal level. Therefore, as policymakers consider policies, they should determine whether a

proposed policy will supplement or compete against existing policies.

8. Simplify the Application Process: The application process for an incentive program should be clear, succinct, and have all

information easily accessible. However, the application process should not compromise the integrity of the determination process

for a project’s feasibility. Assistance should be readily available for those who are interested in applying for the incentive program

and for those already engaged in the application process.

9. Approve a Marketing Budget to Facilitate Consumer Education and Awareness: Creating consumer awareness about the

available incentive options is crucial to the success of any given incentive program. Campaigns should aim to inform the targeted

markets about benefits, program applications, application process, and the general availability of existing programs.

10. Overcome Institutional Barriers: Address institutional and structural issues by collaborating with local and regional firms,

governments, or agencies. Work to establish strong, mutually beneficial relationships with these different entities to facilitate

robust economic growth.

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The above table reflects the results from the “Good Jobs First” 2010 State Incentive Survey, which provide Best

Practices for specific, state-level economic development incentive programs. Good Jobs First is a national policy

resource center in economic development.

• Nevada is the only state (in this study) that had tax abatement policies, therefore, the study ranked their tax abatement polices among the best in the nation.

• Utah was rated as having one of the top Entrepreneurship incentive programs in the nation, an incentive area whereby Nevada is well-positioned to explore.

2010 Top States By Incentive Programs

Job Creation Rhode Island (Corporate Income Tax Rate Reduction)

Iowa (High Quality Jobs Creation Program)

Entrepreneurship Vermont (Vermont Employment Growth Incentive)

Utah (Utah Fund of Funds)

New/Emerging Market Tax Credits Tennessee (Sales and Use Tax for Qualified Facilities)

Minnesota (Minnesota Investment Fund)

Economic Development Grants Minnesota (Business Development Infrastructure Grant)

Virginia (Economic Development Incentive Grant)

Enterprise Zones Rhode Island (Enterprise Zone Tax Credits)

Wisconsin (Economic Development Tax Credit Program)

Tax Abatements Nevada (Modified Business Tax Abatement)

Nevada (Sales and Use Tax Abatement)

Investment/Rebate Louisiana (Quality Jobs Program)

West Virginia (Economic Opportunity Credit)

Research & Development Texas (Emerging Technology Fund)

Massachusetts (New Investigator Grant)

State-Matching Funds for Entrepreneurs Maryland (Maryland Venture Fund)

Virginia (Commonwealth Commercialization Fund)


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CASE STUDIES: DESIGN AND USE OF INCENTIVES

1. Define Specific Goals, Objectives and Limitations

UTAH- Economic Development Tax Increment Financing Credit (EDTIF)

The state of Utah implemented the EDTIF tax credit as a means to incentivize new renewable energy resource projects. This incentive

policy is available to firms who relocate or expand their operations to the state of Utah with clear requirements on who qualifies for the

subsidies, how they will be subsidized, the length of the subsidy along with a clear outline of policy limitations and quantifiable objectives

for easy evaluation of the policy. A partial list of credit requirements include:

2. Ensure an Appropriate Incentive Policy Duration

FLORIDA- Photovoltaic Rebate Program

The cost of self financing a solar energy project has proven to be too high for the vast majority of Floridians. The Photovoltaic (PV)

Rebate Program in Florida has created the model for PV infrastructure with more than 70% of installations in the last three years

attributed to the state’s tax credit program. Despite major success, the program’s quickly depleting funds created uncertainty within the

market. In response, the state began a waiting list to elicit anticipation in the PV program. The previous success of the program created

high public awareness, which generated some interest in the waiting list. However, this action only stifled the market because consumers

were simply stalling their purchases in hopes of a reliable incentive. Progress in the Florida solar energy market has since been retained

with the security of funding.

3. Determine the Optimal Amount for the Incentive

OREGON- Residential Energy Tax Credit

Oregon’s large environmentally conscience population has proven that enhanced awareness is not enough to ensure the successful

adoption of renewable energy. More specifically the state’s Residential Energy Tax Credit maximum credit amount of $1500 has

discouraged some residents from adopting clean energy alternatives given that the credit does not provide an incentive amount large

enough to cover the high costs associated with installing technologies within the renewable energy sector.

4. Understand the Interactions between Incentive Programs

OREGON- State Renewable Tax Credits and Rebate Program

Oregon’s existing tax credits can be combined with renewable rebate programs to enhance the overall impact of the tax incentive

program. As a result, a resident or company does not have to minus the amount of the rebate from any pursued tax credit ‘s el igibility

requirements . This allows for a complementary relationship between tax credits and rebates within the state


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5. Monitor Performance Standards and Compliance

ARIZONA- Incentive Performance Standards

Arizona has created a focused strategy that sets specific performance standards and ensures compliance on a regularly scheduled

basis. Arizona’s Joint Legislative Income Tax Credit Review Committee meets annually to consider personal and corporate income tax

credits. Also, per state law, all new and existing tax credits must come under review every five years. When a tax credit policy comes

under review it must prove that it is meeting its defined performance criteria. The legislative staff must also be prepared to answer certain

questions regarding the tax credit policy. Those questions may include general information regarding the policy, its purpose, financial

impact, and results, which will determine the program’s overall viability. Once the analysis is complete, it is presented to a public panel

that can make formal recommendations.

6. Implement an Evaluation Process

WASHINGTON - Incentive Evaluation Procedure

The state of Washington has had a comprehensive evaluation process in place since 2006. The evaluation process is headed by the

nonpartisan Joint Legislative Audit and Review Committee (JLARC), which combines input from citizens, analyses from the legislative

auditor, and annual hearings from legislative leaders. The evaluation process reviews incentive program at least once every 10 years

with JLARC responsible for determining the efficiency and appropriate recommendations to continue, amend, or cancel any incentive

programs. The nonpartisan structure of JLARC, staffed by an equal amount of Republican and Democratic congressional leaders, allows

for unbiased review and audit of the state’s incentive programs.

7. Choose the Correct Incentive

VIRGINIA- Space Liability and Immunity Act

The Virginia legislature passed the Virginia Space Liability and Immunity Act in an effort to combat certain challenges related to

companies participating in human commercial spaceflight industry. The state recognized that in order to grow the commercial aerospace

industry protecting companies from certain risks would encourage growth within Virginia. By understanding and addressing the major

obstacles and development needs of commercial aerospace companies, the legislature passed a law that limited liabilities in an event of

an accident. The policy has since enjoyed enormous success, encouraging companies to expand or relocate to the state. The success of

the act has also led the Virginia legislature to pass the Zero G Zero Tax Act, another policy incentivizing with tax exemptions on certain

services within the industry. The success of the both programs has led other states to mirror Virginia’s aerospace incentive programs.


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8. Simplify the Application Process

OREGON -Business Energy Tax Credit (BETC)

The BETC has been a highly successful program for Oregon, creating a level of awareness that has encouraged a large influx of

applications for the Oregon’s Office of Energy (OOE). The number of applications spread the departmental staff thin, making it difficult for

an efficient and timely processing of applications. To overcome this problem, the department has streamlined and simplified the

procedure by incorporating contractors into the application process through biannual workshops. Contractors who attend these

workshops become certified to hand out and assist in completing tax-credit paperwork. The benefits to this are two-fold; contractors

distributing the necessary tax credit form, save the OOE approximately $18,000/year in postage; wait time to receive the certified

paperwork has decreased from 4-6 weeks to customers receiving all necessary paperwork at the time of installation. The paperwork can

then be certified by the contractor the same day. The changes in application process has enjoyed a positive response for program

participants and shareholders.

9. Approve a Marketing Budget to Facilitate Consumer Education and Awareness

NEW YORK -Renewable Energy Resources: Solar Electric-Generating Equipment Tax Credit

New York has several key polices in place that incentivize residential solar-electric systems. The success of solar electric producers and

other incentive policy programs relied on a collaborative marketing effort. Marketing materials were created that detailed the products

available and all the incentives available. Installers became part of the process by distributing the marketing materials to end users. This

high degree of collaboration has resulted in a strong list of subsidies that consumers are not only aware of but feel comfortable in

obtaining. The marketing materials that were created as a result of the partnerships and alliances established have been mutually

beneficial of all involved parties.

10. Overcome Institutional Barriers

OREGON- Business Energy Tax Credit (BETC)

Close to 6,000 firms have received subsidies from the BETC in the past twenty years. The majority of the beneficiaries are renewable

energy projects. Due to the program’s long life and coordination with other energy initiatives, public awareness for available incentive

programs is very high. The state energy administration has created a core competency of organizing and leveraging different energy

programs. They are able to establish and maintain strategic partnerships for the mutual benefit of the state and key industries. By limiting

the bureaucratic barriers in place, Oregon has been able to experience heightened efficiency in other best practices areas. Those areas

include better marketing, sharply focused goals and objectives, increased compliance standards, comprehensive evaluation methods,

industry specialized incentives, and more complementary incentive programs.

Benchmarking and Incentive Analysis| 27



Cluster Development & Industry

Location Scorecards



SITE SELECTOR’S INDUSTRY LOCATION CRITERIA SCORECARD

In order to assess and compare the strengths and challenges of various communities with

regard to their ability to support a particular industry or sector of the economy,

AngelouEconomics utilizes scorecards for numerous industries. These scorecards assess a

community, relative to similar communities throughout the U.S., across key location criteria

that site selectors will generally consider when evaluating a potential location.

Drawing from its extensive experience as site selection consultants, AngelouEconomics

presents the following industry scorecards for each of the target industries for the State of

Nevada. As would be done by site selectors in their evaluation of alternative locations for a

project in a particular industry, these scorecards are used to highlight certain strengths and

challenges that shape Nevada’s ability to offer a competitive environment for these

industries. The scorecards presented illustrate the performance of Nevada across each of

the primary site location criteria focused on by site selectors throughout the site selection

process.

Nevada Target Industries

Mining/Manufacturing

Hospitality/Gaming/Entertainment

Renewable Energy

Aerospace/Defense

Information Technology/Business Services

Health/Medicine

Logistics and Operations

As recommended by SRI/Brookings Institute study

Nevada has a large amount of undeveloped land, assets, and industrial space

available for lease specifically designed for Natural Resources & Mining spin-off

businesses. However, there are land constraints to contend with due to federal

government ownership.

Nevada has existing rail spurs via the Reno Transportation Rail Access Corridor

(ReTRAC) and Southern Nevada's rail service is provided by Union Pacific

Railroad.

Nevada’s natural resources (mining) location quotient is ranked 16th nationally.

This represents strong industry presence. Nevada also shows strength in

certain segments of manufacturing, primarily in the manufacturing of

miscellaneous products.

Nevada has an affordable, blue-collar workforce, which is an asset for the

mining and manufacturing industries. A key challenge is the small professional

workforce necessary to support growth in services tied to both industries, as

well as those with technical skills that are increasing in demand, particularly as

the industry becomes more technology-driven.

Nevada’s location in the western U.S. provides access to an abundance of

natural resources key to the mining industry. Nevada’s proximity to California

could also be conducive to its manufacturing base. Emerging markets in East

Asia are likely to continue to be an increasing force in the industry.

UNLV and the University of Nevada are strong research universities with existing

wet lab space. The latter has a strong program in mining engineering which

includes a Mine Systems Optimization and Simulation Laboratory (M.S.O.S.).

However, overall university R&D spending is low relative to other states.

The location of mines in northern Nevada provide for an abundance of gold and

copper deposits, sustaining the longevity of the mining industry. Manufacturing

has a presence within the state, however, the opportunity for growth exists.

Nevada has a strong entrepreneurial environment. Many small business

owners within the state are involved in multiple business ventures, a sign of

strong entrepreneurial spirit within the state. Opportunities may exist to cultivate

an even stronger entrepreneurial environment within rural areas.

Mining/Manufacturing: Location Criteria

Industry Requirements Leading Strong Lacking Weak Assessment Rationale

NEVADA SCORECARD: MINING/MANUFACTURING

Conducive Climate &

Natural Resources

Entrepreneurial

Environment

Available Land / Facilities

Research & Development

Assets

Proximity to Market

Rail Access

Existing Industry Presence

Available Workforce


Hospitality/Gaming/Entertainment: Location Criteria


NEVADA SCORECARD: HOSPITALITY/GAMING/ENTERTAINMENT

Nevada has a rich historical and cultural heritage that connects it to the

Old West via Ward Charcoal Ovens Historic Park, Fort Churchill State

Historic Park , and other historic sites.

Nevada has several highly attractive tourist destinations throughout the

State (Las Vegas, Reno, Tahoe, Hoover Dam, etc.), providing for a

concentrated cluster of inter-related destinations.

Affordable Workforce

Natural Assets

Historic & Cultural Assets

Tourism Infrastructure

Entrepreneurial Environment

Proximity/Convenience to

Population Centers

Brand

Destinations

Cost Factors

Nevada offers scenic areas full of natural assets including the Colorado

River, Lake Meade, Cathedral Gorge, Red Rock Canyon, Lake Tahoe,

Lunar Crater, and the Great Basin National Park to name a few.

With borders on five states, Nevada provides links to major western

markets. Las Vegas is at the hub of an extensive transportation network

on three major highway corridors: Interstate 15, U.S. Highway 95, and

U.S. Highway 93.

Nevada has adequate roadway, water, and utility infrastructure for

tourism-related businesses alongside a robust hotel and high-quality

restaurant infrastructure in southern Nevada.

Nevada’s strongest cost advantages specific to the tourism and recreation

industry are its affordable labor force and low land and construction costs.

Nevada’s workforce is affordable and has a diverse skill set reaching

across the equally diverse hospitality, gaming, and entertainment sectors.

Nevada has a strong heritage of supporting entrepreneurs and local

businesspeople are highly entrepreneurial and resourceful. Organizations

such as Entrepreneur Nevada fill the gaps where traditional programs may

falter.

Nevada’s brand within the Hospitality/Gaming Industry is generally very

strong and may be particularly beneficial to efforts to strengthen ties with

international markets. A weakness for the state, however, is inadequately

communicating the diversity of the state and that Nevada is more than just

the Strip.


Renewable Energy Industry: Location Criteria


NEVADA SCORECARD: RENEWABLE ENERGY INDUSTRY

Nevada has a large amount of undeveloped land, assets, and industrial

space available for the growth of the Renewable Energy sector. However,

the consumer demand has not spurred a production demand.

The instability of the global economic climate has made banks and investors

less willing to lend capital, making it less readily available for expanding

businesses in the RE sector. However, solar bonds have been made available

for such financing.

Federal funding is available for green energy projects, however, there are

Nevada-based potential investors as well as venture and angel investor

firms to support local entrepreneurs.

State and federal tax credits, along with utility buy-back programs for

renewable energy production are helping to foster an amicable

environment between green policy and implementation.

Nevada has several major national research universities that attract

multimillion dollar R&D funding that it can leverage. Each provides a

critical support resource to the Renewable Energy industry.

Nevada’s location in the western U.S. provides access to an abundance of

natural resources key to the RE industry. Nevada’s proximity to California

could also be conducive to the RE manufacturing base.

Nevada has relatively inexpensive land rental rates and also has low

property taxes in comparison to California, however, it has relatively high

electricity rates in comparison to Arizona and Idaho.

.

Nevada has an affordable workforce, however, it currently lacks

renewable-energy specialists for the positions requiring deep expertise.

Some could be recruited from the local universities’ field of experts.

Public Policy Support for the

Industry

Access to Available Natural

Resources

Skilled Workforce Available

Capital & Funding Sources

Access to Venture Capital

Research & Development

Assets

Structural Assets &

Infrastructure

Proximity to Market

Cost Factors

Nevada is a national leader in solar, wind, and geothermal energy

potential, giving the State plenty of resources for extracting renewable.


Nevada has several major national research universities that attract

multimillion dollar R&D funding that it can leverage.

There is a presence of multiple federal agencies affiliated with the

military bases, however, there have been reductions in area federal

offices in recent years.

Select sites are currently available that may be appropriate to

aerospace needs, however, there is a need for more flexible land uses.

There are land constraints due to the federal government.

There is a highly capable engineering workforce with strong access to

research professionals. However, the state lacks a dependable supply

of professionals with experience in aerospace.

There is a strong fiber-optics network in Las Vegas, however, there

is limited communications infrastructure in many rural / mountain

locations.

The Las Vegas International McCarran Airport is the 6th busiest

airport in the U.S. and offers direct flights across the globe. The

northern half of Nevada is serviced by the Reno-Tahoe International

Airport and provides ample cargo services. The state has competitive land and building prices along with a

favorable tax structure. The State is also experiencing low housing

costs alongside high vacancy rates for commercial and industry

properties.

The state has many developable sites (including “shovel-ready”)

available, however, 86 percent of the land is federally owned. Las

Vegas contains a highly-developed fiber optic/broadband infrastructure.

The presence of multiple military bases within the state are

advantageous, however, Nevada is less competitive with regard to

international market access than other state competitors

Aerospace/Defense Industry: Location Criteria


NEVADA SCORECARD: AEROSPACE & DEFENSE INDUSTRY

Skilled Workforce

Infrastructure

Proximity to Market

Access to Government

Agencies

Available Land

Strong Communications

Capacity

Research Presence

Airport Access

Cost Factors


Information Technology/Business Services: Location Criteria


NEVADA SCORECARD: INFORMATION TECHNOLOGY/BUSINESS SERVICES

Nevada has an informal network of potential investors in its backyard, but

the state does lack a formal venture capital and angel network. Several

business leaders are considering starting a fund. Further, the state’s NCIC

initiative is a step in the right direction.

UNLV and UN provide a critical support resource to the IT/Business

services sectors.

Southern Nevada has a large existing presence in Information Technology

and a significant existing presence in Business services.

Skilled Workforce

Creative / Entrepreneurial

Environment

Capital and Funding

Sources

Access to Universities

Technology Infrastructure

Support for Start-ups

Airport Access

Existing Industry Presence

Cost Factors




Airport and provides ample cargo services.

Las Vegas’ existing large technology presence, and its robust

telecommunications connectivity are all indicators of a strong technology

infrastructure.

There are strong resources within Nevada for small business and start-

ups including the Small Business Development Center (SBDC) and

Entrepreneur Nevada.

Nevada has a large existing customer service workforce. The strong

technology presence in Las Vegas provides an opportunity for growth in

the technology field.

Nevada has a strong entrepreneurial environment and a culture of

supporting small businesses. Las Vegas and Reno are creative

communities that have an established arts and entertainment sector.

Nevada has an affordable labor force, but also has relatively high

electricity costs compared to states such as Arizona and Idaho, which is a

significant barrier to the IT industry.


Health/Medicine: Location Criteria


NEVADA SCORECARD: HEALTH/MEDICINE

The state has a robust healthcare infrastructure with 65 hospitals located

throughout the state, including several research/teaching hospitals.

Available Land /

Developments

Aging Population (Healthcare)

Trade Area

Existing Healthcare

Providers

Population Growth

Skilled and Affordable

Workforce

Nevada has an aging population, which will help drive the demand for

healthcare.

Nevada contains large amounts of undeveloped land that is easily

accessible.

Nevada borders five states, making it an important hub for healthcare. The

State also has experienced strong growth in business establishments over

the past decade.

Nevada currently has an adequate number of healthcare providers,

however, recruiting and retaining physicians and nurses has become an

increasing problem.

Nevada’s workforce is affordable, but does not include a large number of

highly-trained professionals. However, the existing workforce has a

diverse skill set reaching across the healthcare industry.

Nevada has a strong heritage of supporting small businesses and

entrepreneurs and the local businesspeople are highly entrepreneurial and

resourceful.

Infrastructure

Entrepreneurial

Environment

Nevada’s population grew by 130% from 1990 to 2010 before

experiencing a decline in 2011. However, its population base is expected

to resume growth in the coming years.


Logistics & Operations: Location Criteria


NEVADA SCORECARD: LOGISTICS & OPERATIONS

Nevada has seed capital available through angel networks venture capital

firms. Informal networks exist in Las Vegas as investors are looking for a

place to invest money. Due to the state of the economy in Nevada,

however, many traditional lending sources are limited.

Nevada does not have a large existing volume of international trade.

However, Clark County and NW Nevada offer innovative and flexible

Foreign Trade Zones that could be leveraged to support growth in this area.

Nevada provides next-day freight service to 80 percent of the 11 state

western region. Nearly every western city is within 2nd-day delivery time,

which translates into a market totaling more than 50 million people.

Skilled Workforce

Entrepreneurial

Environment

Capital and Funding

Sources

Available Land / Facilities

Presence of Importers and

Exporters

Infrastructure / Access to

Highways

Airport Access

Strategic Geographic

Location-Proximity and/or

Access to Large Markets

Low Labor Costs




Airport and provides ample cargo services.

Nevada has a large amount of undeveloped land, assets, and industrial

space available for lease available for logistical operations. However,

there are land constraints to contend with due to federal government

ownership.

With borders on five states, Nevada provides links to major western

markets. Las Vegas is at the hub of an extensive transportation network

on three major highway corridors: Interstate 15, U.S. Highway 95, and

U.S. Highway 93.

Nevada has a large, skilled advanced manufacturing workforce in the

fabricated metal products niche, but does not have a large pool of workers

in other advanced manufacturing sectors or in logistics/distribution.

Nevada has a strong heritage of supporting small businesses and

entrepreneurs and the local businesspeople are highly entrepreneurial

and resourceful.

The state has competitive land and building prices and a favorable tax

structure. The State is also experiencing low housing costs alongside high

vacancy rates for commercial and industry properties.



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Target Industries Nevada Best Practices

Aerospace

Sales & Use Tax Deferral

Sales & Use Tax Abatement

Modified Business Tax Abatement

Property Tax Abatement

Intellectual Property Tax Abatement

MS – Aerospace Initiative Incentive Program

FL – Qualified Defense & Space Contractor Tax Refund

AZ – Military Reuse Zone Program

Logistics/Operations






MI – Aerotropolis Development Corporation

IL – Rivers Edge Redevelopment Zone

Healthcare/Medicine






IL - Healthcare Initiatives – Private Placement Program

IL – healthcare 501(c)(3) Bond Program

TX – Rural health Facility Capital Improvement Loan fund

Mining/Manufacturing None Listed

CA – Manufacturing Enhancement Area

IL – Manufacturing Modernization Loan Program

AL – Expansion of Statutory Incentives to Coal Mining Industry

Hospitality/Gaming/ Entertainment None Listed

Casino Developments

AR – Arkansas Tourism Development Act

IL – Tourism Private Sector Grant Program

Information Technology/

Business Services






ME – Maine Technology Institute

IN – Indiana Certified Technology Parks

TX – Texas Emerging Technology fund

Renewable Energy






NM – Alternative Energy Product manufacturers Tax Credit

NC – Renewable Energy Tax Credits

OR – Business energy Tax Credits

¹ Industry-specific incentives are presented. Other incentives may be applicable to certain industries that are not specifically designed for that industry (e.g. property tax abatements).

2Manufacturing is a component of each of the above target industries excluding Hospitality/Gaming/Entertainment. 3Manufacturing is a component of each of the above case studies excluding Information Technology/Business Services

Hospitality/Gaming/Entertainment.


Industry Specific Case Studies and Best Practices

In order to become more competitive in the design and use of economic development incentives, it

is often very useful to turn to those who have been highly successful in doing precisely that. The

following pages present several cluster-specific case studies that have been identified by

AngelouEconomics through an analysis of state, regional and local economic development

agencies throughout the United States that apply industry specific incentives to support economic

development.

These case studies should be used by economic developers in Nevada as a guide in the review,

design, and application of the economic development incentives within the state. Many of the

programs examined in this section are in states with very different tax structures compared to

Nevada’s competitive tax environment. Given the state’s unique tax structure, completing an apples

to apples comparison is difficult. Therefore, the intent of the case studies is to provide strong

examples of what other states are doing in terms of designing and applying innovative incentive

programs around a specific target industry or addressing other topics of interest to Nevada. More

specifically, many of the programs listed can be adjusted to incentivize industries based on

Nevada’s existing tax structure and other cost factors found in the state.

The case studies presented within this section are organized by industry and are currently being

applied (or have very recently been applied) to foster target-industry development across states.

Further, a list of several best practices that apply generally to the design and use of economic

development incentives are provided to exhibit the basic principles that should be included in any

incentive policy.



AEROSPACE AND DEFENSE (A&D) SPECIFIC INCENTIVES; CASE STUDIES

MISSISSIPPI

Aerospace Initiative Incentives Program (Tax Credit)

The Mississippi Aerospace Initiative offers industry specific incentives for companies within the clean energy, data center, and aerospace industry.

Specifically to A&D, the program provides incentives to companies expanding operations, that provide one or more of the following services for the

industry: R&D, training services and manufacturing or assembly of components. Awarded companies receive a 10-year income and franchise tax

exemption along with sales and use tax exemptions for the construction or startup of the facility. The incentive applies to those companies who

create 100 full-time jobs and invest at least $30 million.

http://mississippi.org/index.php?id=926#programs

Nevada Advantage: Adapt a similar program to retain local industry and combat concerns regarding high startup costs associated with expanding

within A&D, specifically for smaller companies wanting to expand or relocate operations.

FLORIDA

Qualified Defense and Space Contractor Tax Refund (QDSC) (Tax Credit)

Florida is committed to preserving and growing its high technology employment base by giving Florida defense, homeland security, and space

business contractors a competitive edge. This competitive edge comes in the form of consolidating contracts or subcontracts, acquiring new

contracts, or converting contracts to commercial production. Pre-approved applicants creating or retaining jobs in Florida may receive tax refunds

of $3,000 for each new Florida full-time equivalent job created or retained. The incentive would boost up to $6,000 in an Enterprise Zone or rural

county. Also, businesses paying 150 percent of the average annual wage can add $1,000 per job and businesses paying 200 percent of the

average annual salary can add $2,000 per job.

http://www.spacecoastedc.org/RelocateandExpand/FloridaStateandLocalIncentives/QualifiedDefenseandSpaceContractorTaxRefund.aspx

Nevada Advantage: The state should consider a similar program to retain and encourage growth among its existing A&D industry and assist firms

in competing with out-of-state competitors for contracts. The program can also be used as a tool for business attraction.


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AEROSPACE AND DEFENSE (A&D) SPECIFIC INCENTIVES; CASE STUDIES

FLORIDA

Space Florida (Space Authority and Spaceport)

As the primary agent for aerospace growth and development, Space Florida offers opportunities both domestic and international by developing

and promoting partnerships between the state’s most valuable assets to bolster existing businesses and assist prospective businesses. The

uniqueness of the Space Florida entity is that it consolidates three previous industry organizations, creating an all inclusive program that supports

R&D and workforce development, business development, and spaceport operations. More specifically, as Florida’s premier advocate for the A&D

industry, some of the Space Florida’s responsibilities include arranging financial incentives, providing site selection services, and establishing

relationships with the federal, state and local authorities in order to assist A&D companies with contracting, grant, and funding opportunities. The

organization also has the authority to issue revenue and assessment bonds and other debt instruments and can connect interested parties to

powerful state connections such as Workforce Florida, the University of Florida’s ASTREC small satellite project, private corporations, and other

state agencies.

http://www.spaceflorida.gov/

Nevada Advantage: The state should consider forming a similar entity to address existing industry concerns about competing with larger defense

companies for contracts while also addressing issues related to the retention of companies.


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http://www.spaceflorida.gov/


LOGISTICS/OPERATIONS-SPECIFIC INCENTIVES; CASE STUDIES

Currently, very few states offer logistics specific incentives although the three examples listed below provide interesting zoning programs to

incentivize logistics cluster development. In order to provide more specific logistics incentives, communities should examine how competitive their

existing freight costs are with competitors. Communities that offer low freight costs or subsidize existing freight costs through incentives are

considered highly attractive to the logistics industry. Furthermore, given the highly intensive labor and capital costs associated with the industry,

incentives targeting labor force training costs coupled with low freight costs are considered a highly attractive package to logistics companies.

MICHIGAN

Aerotropolis Development Corporation (Development Zone)

The Aerotropolis Development Corporation (ADC) was formed to incentivize logistics companies locate within the 60,000 underutilized acres

surrounding the Detroit Metropolitan Airport and the Willow Run Airport. The area between the two airports provides several advantages to

logistics companies given its proximity to the Canadian border and access to major highway and aviation infrastructure. The ADC was created to

promote growth within the development zones through a partnership with local communities that have the authority to permit up to 10 renaissance

zones to attract new businesses specific to the logistics industry. The ADC, through Michigan’s Next Michigan incentives, can provide certain

abatements within the zones to encourage development. Further, as an inter-governmental operating body, the ADC can quickly respond to

expedite permits and support talent recruitment and training efforts based on the companies needs.

http://www.detroitregionaerotropolis.com/

Nevada Advantage: Adapting a similar model (potentially with reduced freight zones) that could be coupled with existing FTZs to open the state to

more global logistics companies while leveraging its proximity to California to attract internationally-based companies interested in the west coast

or other markets.

ROCKFORD, IL

Rivers Edge Redevelopment Zone (Development Zone)

To keep Rockford’s logistics industry competitive, the city has implemented the Rivers Edge Redevelopment Zone, which is purposed with

encouraging growth in environmentally-challenged areas. Land located within enterprise zones are ineligible for the redevelopment zones.

Businesses within these redevelopment zones are rewarded for job creation, job retention, public/private partnerships, and additional investment in

industry growth. The program allows local authorities to provide property and sales tax abatements. Locating within the zone also allows

companies to be eligible for certain tax incentives or credits, including investment tax credits, dividend income deductions, interest income

deductions, and an exemption from the 8.25% sales tax when buying construction materials used for new construction or renovations.

http://www.ci.rockford.il.us/community-economic-development/economic-development-division/riveredge-zone.aspx.

Nevada Advantage: The state should consider a similar model for economically distressed or underdeveloped areas of the state, specifically for

smaller, rural communities located off major highways or near larger cities.

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http://www.ci.rockford.il.us/community-economic-development/economic-development-division/riveredge-zone.aspx












LOGISTICS/OPERATIONS-SPECIFIC INCENTIVES; CASE STUDIES

ARIZONA

Foreign Trade Zone (FTZ) (Development Zone)

Arizona’s FTZ program is considered the most progressive in the United States because along with offering all the benefits of a foreign trade zone

it provides between 75-80% reduction in state property taxes. The reduction in property taxes applies for the entire length of time the company

remains within the FTZ.

http://pinalcountyaz.gov/ed/incentivesprograms/Pages/ForeignTradeZone.aspx

Nevada Advantage: Incorporating reduced property taxes within Nevada’s flexible FTZs could further encourage growth within the zones and

promote Nevada as a global business destination, specifically for those looking to enter west coast or other markets.

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http://pinalcountyaz.gov/ed/incentivesprograms/Pages/ForeignTradeZone.aspx


HEALTHCARE/MEDICINE-SPECIFIC INCENTIVES; CASE STUDIES

ILLINOIS

Healthcare Initiative – Private Placement Program (PPP) (Tax-Exempt Capital)

The Healthcare Initiative/PPP creates access to tax-exempt capital for small to mid-size healthcare institutions, critical access hospitals, and

community providers of behavioral healthcare. The program will finance up to 100% of project costs and reduce transaction costs, which may

range from $2 to $25 million for up to 35 years. Federally qualified healthcare centers in Illinois that are 501(c)(3) qualified are also eligible. The

funds awarded will finance capital projects pertaining to construction, renovation, equipment procurement, acquisition of land or buildings, and

refinancing existing debt.

http://www.il-fa.com/products/healthcare/hea_privplacement.html

Nevada Advantage: A similar program within the state could address some of state’s more pressing needs within the healthcare services sector

related to access of services in rural areas and overall development of the state’s healthcare services market.

TEXAS

Rural Health Facility Capital Improvement Loan Fund (Loan fund)

The Rural Health Facility Capital Improvement Loan Fund is designed for rural, public, and non-profit hospitals to make capital improvements to

existing facilities, construct new health facilities, and to purchase capital equipment. The purchase of capital equipment might include information

systems, hardware, or software. The funds provide up to $50,000 for each available project. Funds are awarded for a specifically defined purpose

and may not be used for any other purpose. Allowable expenses are the acquisition, construction, or improvement of capital. Capital refers to

facilities, equipment, or real property used to provide health services. Financing may also cover the designing, engineering, supervising, or

surveying expenses which are incidental to the acquisition, construction, or improvement of capital for a health facility.

http://www.raconline.org/funding/details.php?funding_id=1356

Nevada Advantage: A rural healthcare program similar to Texas’ may assist in the delivery of higher quality healthcare services to rural residents.

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http://www.raconline.org/funding/details.php?funding_id=1356


MINING/MANUFACTURING-SPECIFIC INCENTIVES; CASE STUDIES

NEW YORK

Industrial and Process Efficiency Program (Performance-Based)

The NYERDA offers manufacturing incentives across a cross section of manufacturers, including mining and mineral processors, who implement

green technologies in their manufacturing activities to increase overall productivity, ultimately leading to decrease costs for the company. The

$100 million dollar fund provides a company with performance based incentives for implementing green solutions within their operations that

improve productivity, efficiency, or both. A maximum incentive of $1 to $5 million can be awarded depending on the amount a manufacturer

reduces its energy usage per unit of production or workload.

http://www.nyserda.ny.gov/Page-Sections/Commercial-and-Industrial/Programs/Industrial-and-Process-Efficiency.aspx

Nevada Advantage: Adapting a similar program in the state could increase renewable energy adoption and also encourage collaboration

between mining and manufacturing industries, potentially leading to new industry opportunities for Nevada

ILLINOIS

Manufacturing Modernization Loan Program (Loan program)

The Manufacturing Modernization Loan Program is designed to provide manufacturers with access to adequate and affordable financing for

upgrading and modernizing their manufacturing equipment and operations. The Department of Commerce and Economic Development (DCEO)

will participate with local lending institutions in loan amounts between $10,000 to $750,000, or 25% of the total project, which ever is less. The

participation amount will be at sub-prime rates. The term of the loan is a maximum of 10 years and a fee of 1-2% of loan amount may be

required. Existing Illinois manufacturing companies that employ less than 500 full-time workers and are retooling, upgrading, or expanding their

business are eligible for this program. Examples of eligible projects, include acquisition and development of land, building costs, fixtures,

machinery, and the purchase of new or used equipment.

http://www.rockfordil.com/incentives/p/dir/25/item/40

Nevada Advantage: A similar program within the state can assist smaller, existing manufacturing companies that want to expand their

company’s operations within the state. The program can also be applied to smaller manufacturing companies looking to relocate or expand

operations in Nevada, but have been unable to do so given high relocation and startup costs associated with the capital intensive industry.


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http://www.rockfordil.com/incentives/p/dir/25/item/40


HOSPITALITY/GAMING/ENTERTAINMENT-SPECIFIC INCENTIVES; CASE STUDIES

Casino developments typically do not receive any economic development incentives. With respect to new projects, policymakers should consider

the adoption of a multifaceted policy approach. Low tax rates on gross gaming revenue, in addition to property tax incentives, would be a good

starting point.

THE REPUBLIC OF MALTA

Online Gaming

In anticipation of the possibility that online gaming may soon be legalized in the United States, Nevada is likely to be the single best-positioned

state in the U.S. to serve as a hub for the online gaming industry. However, it is important to distinguish the unique commercial and regulatory

environment of the global online gaming industry from that of the more conventional (i.e. “brick-and-mortar”) gaming industry. While Nevada

already has a very competitive set of institutions and regulatory frameworks in place that support the gaming industry, it will need to be adaptive

to the unique challenges presented by the online gaming industry. In consideration of this opportunity, many valuable lessons may be found in the

experience of the Republic of Malta as it made a strategic push into the online gaming industry with the aim of becoming a global hub for the

industry.

Malta has had enormous success owing in large part to an already business-friendly environment with low corporate taxes, however the nation

decided to go further in appealing directly to the online gaming industry by offering some of the lowest online gaming licensing fees in the world.

Licensing fees within Malta vary across four classes based on the operations pursued, which are priced accordingly. A Malta issued gaming

license does not discriminate against technology mediums or types of online gambling with the ability to provide online gambling games across

any electronic device without having to apply for multiple licenses. Online gaming operators are expected to renew their license every five years.

The simplified licensing process is regulated by the Malta’s Licensing and Gaming Authority (LGA). Furthermore, through the LGA’s efforts,

Malta is the only EU Member country that has a legalized online gaming industry that is regulated, allowing for industry stability and growth.

Importantly, however, the Republic of Malta has looked beyond the immediate benefits of the online gaming industry in order to seek economic

development opportunities that may be leveraged by its presence. A large focus has therefore been on attraction of the datacenters that support

online gaming, thereby allowing the small island nation to diversity into a fast-growing high-technology industry. This is achieved by requiring, as

part of the criteria for incentives, that any online gaming company receiving incentives host their sites on servers located in Malta. for the

attraction of the online gaming industry which allows companies to be subject to a highly favorable tax treatment as long as certain requirements

are met, including the placement of those companies’ data centers within Malta. In this manner, Malta is able to build in an economic multiplier

within the structure of its incentives that would otherwise not be achieved.

Nevada Advantage: Malta serves as a model for Nevada in leveraging its existing assets to become a global hub for the online gaming industry

while also supporting growth in related high-technology industries such as data centers.

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HOSPITALITY/GAMING/ENTERTAINMENT-SPECIFIC INCENTIVES; CASE STUDIES

LOUISIANA

Investor and Labor Tax Credit

Louisiana is considered the most aggressive in the U.S. when it comes to film tax incentives. The state currently is only third to California and New

York as a U.S. film destination. The state’s incentive program is open to all motion picture companies that produce nationally or internationally

distributed films. The tax credit also applies to television, commercial, and music videos filmed in the state. The program consists of two components,

a transferrable tax credit equal to 30% of investments over $300,000 for any production expenses within the state and an additional 5% tax credit on

total payroll for resident employees associated with the production of the project. Tax credits can be applied to the company ’s Louisiana income tax

liability. Production companies with no Louisiana income tax liability can exchange their awarded credits for 85% of its face value or sell the credit in

the market. Currently, the state does not have any annual cap on its incentive program.

http://louisianaentertainment.gov/index.php/film/why-shoot-here/incentives/

Nevada Advantage: Leverage program and state’s proximity to California to create an all inclusive entertainment hub.

NEW MEXICO

Film Incentive Program

New Mexico offers a full film tax incentive package, which consists of three programs, the Refundable Tax Credit, Film Investment Loan Program, and

the Film Crew Advancement Program. Programs can be combined with the others to offer production companies competitive packages for film,

television, commercials, music videos, game development, animation, webisodes and other eligible projects. The Refundable Tax Credit offers a 25%

for all eligible production or post-production expenditures that are subject to New Mexico taxes. Awarded companies are required to acknowledge

within the project that it was filmed in New Mexico. There are no minimum budget, spending, film day, or resident hiring requirements for awarded

projects. The Film Investment Loan program offers 100% loans from $500,000- $15 million, which must be paid within two years and cannot be used

towards marketing and distribution costs. The Film Advancement Program is a job training program, which offers a 50% reimbursement on wages

paid for a qualifying crew member within a specialized craft. The reimbursement applies for wages paid for up to 1040 hours. In addition to the three

film programs, New Mexico offers Nontaxable Transaction Certificates (NTTCs) for expenditures associated with the production. The NTTCs operate

as coupons and are applied during the point of sale, prohibiting sales taxes to be charged at purchase.

http://www.nmfilm.com/filming/incentives/

GEORGIA

Film, Television, and Digital Entertainment Tax Credit

Georgia offers a similar incentive program to Louisiana with its program awarding transferable tax credits of up to 30% of Georgia production

expenses for film, television, commercials, music videos, animation and game development. More specifically, the state offers a 20% transferable flat

tax credit for any production or post-production expenses of at least $500,000 with an additional 10% credit offered if the production company

includes a logo promoting Georgia within the eligible project. Awarded tax credits are not based on whether Georgia residents are hired in association

with the project and no cap currently exists on the program. Additionally, companies producing multiple commercials or music videos can combine

projects to meet the $500,000 minimum for eligible expenses.

http://www.georgia.org/industries/entertainment-industry/Pages/production-incentives.aspx

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http://www.nmfilm.com/filming/incentives/







INFORMATION TECHNOLOGY/BUSINESS SERVICES-SPECIFIC INCENTIVES; CASE STUDIES

TEXAS

Texas Emerging Technology Fund (ETF) (Venture Capital, Commercialization, and R&D)

In 2005, the Texas ETF was created by the Texas Legislature to give the state an undeniable advantage in the research, production, and marketing of

new technologies. This program operates by awarding cash grants to firms that create jobs and support long-term growth of the technology industry.

ETF grants are awarded in three separate areas, commercialization awards, matching awards, and research superiority acquisition.

Commercialization awards assist the firm in getting their ideas from the drawing boards to production. Matching awards leverage many different types

of institutions to create partnerships that promote growth in the technology industry. Research superiority acquisition is the recruitment of the best

research staff available. Through 2011, TETF grants have assisted over 130 high tech companies to invest more than $190 million and $177 million in

research operations through matching grants and research superiority acquisition. Participants have been able to leverage more than $4 in public and

private supplemental funding for every $1 invested by the state.

http://governor.state.tx.us/ecodev/etf/etf_about/

Nevada Advantage: A funding program similar to ETF could partially address Nevada’s limited venture funding resources while also providing local

universities with the opportunity to attract the best and brightest researchers.

MARYLAND

Invest Maryland (Venture Capital)

The State of Maryland has implemented a comprehensive funding strategy to fuel entrepreneurship within the state. Invest Maryland is the state’s

initiative to raise venture capital funding for companies with under 250 employees in the IT, software, cybersecurity, communications, life sciences,

and clean energy industries. The goal of the program is to create jobs, replenish the state’s venture funds, attract additional capital investment,

encourage entrepreneurship, and protect high growth companies. Funding for Invest Maryland is raised through a premium insurance tax credit

auction sale for insurance companies located within the state. The online auction, the first of its kind by a state, surpassed its goal of $70 million,

raising $84 million in investment funding for Maryland entrepreneurs. Funds will be divvied among three programs, the Maryland Venture Fund

(receiving 24.75%), Equity Participation and Investment Fund (receiving 8.25%), and venture capital firms (receiving 67%), which the state awards

through a competitive selection process. Each program is under the jurisdiction of the Maryland Department of Business and Economic Development

with certain programs receiving additional support from other private and public entities within the state.

http://www.choosemaryland.org/businessresources/Pages/InvestMaryland.aspx

Nevada Advantage: An innovative funding program similar to Maryland has the potential to offer greater funding resources to Nevada entrepreneurs.

The state should consider offering a similar premium tax credit auction for the casinos or other applicable companies to raise venture capital funding.

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http://governor.state.tx.us/ecodev/etf/etf_about/

http://www.choosemaryland.org/businessresources/Pages/InvestMaryland.aspx



VIRGINIA

Data Centers (Combination Credits)

The State of Virginia offers four incentives targeting the formation of data center clusters depending on where the company locates within the state.

One of these programs includes a 5% exemption, which applies to servers and any data center related equipment. Companies receiving the

incentive must create 50 or more jobs with wages of 1.5 times the average wage and invest $150 million dollars in capital. Other incentives include

the Virginia Jobs Investment Assistance program, a cash reimbursement fund of up to $700 per job in addition to training and recruiting assistance for

companies, and the Governor’s Opportunity Fund and the Tobacco Region Opportunity Fund, both of which provide cash grants for site development

or other economic development projects. Incentive requirements are lessened for data centers locating within enterprise zones.

http://www.yesvirginia.org/whyvirginia/financial_advantages/business_incentives.aspx

Nevada Advantage: Leverage program and the state’s existing fiber optic assets and position as a natural disaster free area to secure its status as

the ideal location for data centers.

INDIANA

Indiana Certified Technology Parks (Combination Credits)

Four certified technology parks were designated in Indianapolis for the purpose of growing high tech businesses and creating synergies within

technology zones. Benefits for locating within parks include tax breaks, up to $5 million in tax reinvestment, a $2 million infrastructure development

fund, access to universities, and other research institutions, a cutting edge telecommunications infrastructure, and availability of business incubators

or early business accelerators. The goal for each of the four certified technology parks is to facilitate collaborations between communities,

businesses, and research institutions to encourage new technologies, industry growth, and business clustering.

http://iedc.in.gov/programs-initiatives/indiana-certified-technology-parks

Nevada Advantage: A similar approach to Indiana’s technology parks strategy could encourage development within Nevada’s existing industry

hotspots. The technology parks could be coupled with a program similar to the Ohio’s Hubs of Innovation and Opportunity program, which locates

clusters based on existing metro assets located throughout the state.

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http://www.yesvirginia.org/whyvirginia/financial_advantages/business_incentives.aspx












MAINE

Maine Technology Institute (Venture Capital and Commercialization)

The state of Maine’s economic development authority established the Maine Technology Institute (MTI) as a way to grow and develop their

technology industry. Founded in 1999, MTI is a non-profit, privately owned, and publically funded organization. The purpose of the MTI is to offer

capital and commercialization assistance to innovative, technology based firms. To be eligible for funding, companies must create new products,

processes, and services which will facilitate high quality job growth. MTI awards eligible companies up to $50,000 for feasibility and planning and up

to $500,000 for collaborative initiatives that benefit the broader technology cluster. Aside from the grants and loans offered by MTI, the program also

awards companies through the Maine Technology Asset Fund. The MTAF is the state’s bond program specifically designed for economic

development and is worth $53 million.

http://www.mainetechnology.org/

Nevada Advantage: The state’s current technology industry could benefit from a similar initiative given that the local industry’s startup scene is in its

early stages of development. A program similar to MTI could provide Nevada’s tech industry with the resources to graduate to the next level through

partnerships with existing companies, universities, and local accelerators.

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RENEWABLE ENERGY-SPECIFIC INCENTIVES; CASE STUDIES

CONNECTICUT

Renewable Energy Certificates (RECs)

Commercial , public and residential users in Connecticut can purchase or buy RECs, which are used to subsidize the cost of renewable energies

within the state. Utility companies in Connecticut are required to purchase RECs under a 15-year contract for either low emission(LRECs) or zero

emission (ZRECs) projects. The REC program is used to encourage the adoption of renewable by allowing RECs that can be traded as

commodities with utility companies or others for cash payments. Certain basic requirements must be met in order to participate in the REC

program, including funding restrictions received for development of renewable infrastructure and the location in relation to the contracting

distribution meter. Other requirements apply depending on whether a project is a LREC or ZREC.

http://www.ctcleanenergy.com/BasicsofCleanEnergy/RenewableEnergyCertificates/tabid/74/Default.aspx

Nevada Advantage: A similar program to RECs within the state may be a partial solution for encouraging the adoption of renewable among

residents and businesses and assist in the growth and development of the industry.

NEW MEXICO

Alternative Energy Product Manufacturer’s Tax Credit (Tax Credit)

Manufacturers of certain alternative products may qualify for a 5% tax credit of 5% on qualified taxpayer expenditures for producing equipment

used in a clean energy manufacturing operation. Alternative products may include energy vehicles, fuel cell systems, and renewable energy

systems among others. The credit may be taken against the taxpayer’s modified combined tax liability. Unused portions of the credit may be

carried forward for up to five years. To be eligible to claim a credit, the taxpayer must employ at least one new full-time employee for every

$500,000 of expenditures up to $30 million, and at least one new full-time employee for every $1 million of expenditures over $20 million. If a

taxpayer ceases operations at a facility for at least 180 days within a two-year period after claiming credits, no additional credits will be granted

with regard to that facility. Furthermore, certain recapture provisions may apply.

http://www.gonm.biz/businessassistance/Advanced_Energy_Incentives_.aspx

Nevada Advantage: The New Mexico program is an interesting option for Nevada because it can potentially lead to collaboration between

renewable energy and manufacturing and encourage the further development of a niche market in renewable manufacturing.


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http://www.gonm.biz/businessassistance/Advanced_Energy_Incentives_.aspx


RENEWABLE ENERGY-SPECIFIC INCENTIVES; CASE STUDIES

VIRGINIA

Solar Manufacturing Incentive Grant (SMIG) Program (Grant Program)

Virginia’s SMIG program provides companies that manufacture photovoltaic (PV) panels within the state a maximum of $4.5 million grant. The

program is administered by the Virginia Department of Mines, Minerals and Energy, and the Virginia Economic Development Partnership and is

open to both commercial and industrial manufacturers. The grant amount is calculated on a per watt basis, maximum rate of .75/watt, for panels

sold within a year. Companies can receive a grant for up to 6MW/year. New manufacturers who meet certain production and other requirements

may potentially received the SMIG for up to six years.

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=VA08F&re=1&ee=1

Nevada Advantage: Adapting a similar program within the state may encourage greater development of the it’s solar manufacturing, particular

amongst existing firms.

ENVIRONMENTAL PROTECTION AGENCY (EPA) Repowering America’s Lands- Renewable Energy on Mine Sites (Grant Program) The EPA Office of Solid Waste and Emergency Response (OSWER) Center for Program Analysis is currently working to identify opportunities to

develop previously used or abandoned mine sites into new renewable energy sites as part of its Repowering America’s Lands initiative.

Abandoned or used mine sites serve as great development sites for renewable energy projects because the land has been previously prepped

with the infrastructure needed to facilitate renewable energy generation. Abandoned or used mine sites are equipped with everything from roads

and on-site water, electric and transmission lines, and have received the necessary zoning for renewable energy development. The EPA program

is open to a host of applicants, including states and developers. The program partners with the EPA’s OSWER to identify sites and assist in the

redevelopment and clean up of land. Several communities have taken advantage of the program, including Colorado who converted a former

uranium processing site into a wastewater reclamation site powered solar energy. The site will also serve as a Energy Innovation Center to

encourage research and entrepreneurship in solar, biomass, and geothermal energy.

http://www.epa.gov/oswercpa/

Nevada Advantage: The state should consider pursuing projects funded by the EPA’s grant program as a means to keep its mine lands working

even after they have been mined for resources. Coupling its renewable initiatives with mining may allow the state to leverage its well developed

mining industry to potentially encourage solar or other renewable energy projects, thereby bypassing other obstacles for pursuing renewable

energies within the state. Further, pursuing projects that encourage the collaboration of two industries could potentially lead to new opportunities

for Nevada.


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http://www.epa.gov/oswercpa/


GENERAL CLUSTER INCENTIVES; CASE STUDIES

The following incentive programs listed below can be adopted to foster the development of any or all cluster-specific industries.

ALABAMA

New Markets Tax Credit (Tax Credit)

Alabama’s New Markets Tax Credit program offers individuals who invest in community development entities (CDE), which provide funding for

businesses who locate in eligible low-income or poverty-stricken communities, state income, financial institution excise, and insurance premium tax

credits. The annual amount the Department of Commerce can award investors is limited to $20 million with the maximum awarded credit for a

specific project at $10 million. Louisiana offers a similar program, but provides individual and corporate taxpayers with the opportunity to apply

credits against federal income taxes for up to a seven year period. A credit of five percent of the investment is offered the first three years followed

by six percent for the remaining four years.

http://www.novoco.com/new_markets/nmtc/state_nmtc_programs.php#al

Nevada Advantage: A similar program in Nevada could be used to assist in the development of areas within the state particularly those still

struggling from the great recession.

LOUISIANA

Rapid Response Fund (Emergency Fund)

Louisiana’s Rapid Response Fund is innovative way for the state to react immediately to unexpected economic development projects. Annually,

the state allocates $10 million to the fund, which can be used to close small or large economic development projects that will lead to the expansion

or retention of jobs within the state. The Governor and Secretary of Economic Development have access to the fund, which can be used at their

discretion. The program can also be accessed to secure smaller projects, especially in rural areas, which may not be eligible for larger incentive

credits offered by the state.

http://www.brac.org/ecocomp/smallbus_guide_gyb_incentives_state.asp

Nevada Advantage: A similar program in Nevada would assist the state in quickly responding to those companies not eligible for incentives for

larger projects, including those that need relocation cost assistance.

PENNSYLVANIA

Keystone Opportunity Zones (KOZ) (Development Zone)

The Pennsylvania KOZs program, which was created in 1999, offers 46,000 acres of developable, state and local tax free land within its borders.

The program strives to encourage job creation and land development in the state’s most underutilized or undeveloped areas. There are a total of

12 KOZ designated areas each consisting of up to 5,000 acres with up to 20 subzones located within each KOZ. Subzones are of various sizes

with a specific amount of acres available to developers depending on whether the subzone is within a rural or urban area. The program is

administered by the state’s Department of Community and Economic Development. The tax liability expires based on when the KOZ was

designated. The program has been responsible for approximately 40,000 jobs and two billion in capital investment between 2008-2010.

http://www.newpa.com/build-your-business/locate/keystone-opportunity-zones/


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http://www.novoco.com/new_markets/nmtc/state_nmtc_programs.php

http://www.brac.org/ecocomp/smallbus_guide_gyb_incentives_state.asp











GENERAL CLUSTER INCENTIVES; CASE STUDIES

The following incentive programs listed below can be adopted to foster the development of any or all cluster-specific industries.

OREGON

Long-term Rural Enterprise Zone Facilities

In conjunction with Oregon’s existing enterprise zones, the Long-term Rural program extends the exemption of local property taxes on new

investments from three to five years to 15 years. The tax abatement is offered to companies within any industry, but incentives must be approved

by local officials. Further, depending on where the project is located, applicants must meet minimum job creation, wage, and investment

requirements.

http://www.oregon4biz.com/The-Oregon-Advantage/Incentives/Enterprise-Zones/long-term-zone/

Nevada Advantage: A similar program within the state could potentially provide great opportunities for rural communities and distressed areas.

The program could also be coupled with state’s foreign trade zones with a similar framework to Arizona.


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BEST PRACTICES: CLUSTER DEVELOPMENT

1. Devise Clear and Meaningful Cluster Specifications: Economic development policies should devise a list of specific and meaningful

cluster programs. Overly generic clusters should be avoided because they do not contribute to the understanding or construction of specific

goals. For example, many states have chosen to pursue such poorly defined cluster strategies as “high technology” or “manufacturing.”

Without a more specific framework, regional advantages will be difficult to construct due to overly vague specifications

2. Utilize Strong Data Analysis: Economic development policies should rely on quality data analysis. High quality data, both quantitative and

qualitative, enables decision makers to make objective assessments regarding the viability of the targeted industry clusters. Policies that

possess a strong empirical framework deliver results that are credible and consistently reliable. The data that is collected should be

maintained for the purpose of creating a portfolio of state cluster initiatives. This catalog of information can equip state leaders with the

tools they need to promote economic growth within the state by helping industries and businesses make sound strategic decisions.

3. Create a Cluster Specific Evaluation Process: The efficiency of clusters can be evaluated in terms of job creation, wage increases,

company start-ups, company expansions, production increases, increased investment, job training programs initiated, and market share

growth.

4. Leverage Industry Leaders for Cluster Development: Policymakers should look to industry experts for advice when developing and

considering policies targeting a specific sector. Contributions from these experts can prove invaluable because of their intimate knowledge

of the industry, their resources, and their connections. Collaborating with outside industry professionals can bolster regional buy-in and

improve business retention. Likewise, clusters that are constructed with the help of industry professionals have more strength of purpose

and better staying power, i.e. they are less likely to fluctuate in their objectives due to changes in the political environment.

5. Incentivize Comprehensive Infrastructure Development Programs: Many times, the growth of an industry depends upon the existing

infrastructure in a particular region or on the large initial investment of projects with significant capital requirements. If the fundamental

infrastructure does not already exist, then incentives should be used to attract and establish the necessary level of investment for that

industry.


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BEST PRACTICES: CLUSTER DEVELOPMENT

6. Recognize Synergy Opportunities: The cluster paradigm doesn’t have to be constricted to the industries specifically listed. In fact, the

methodology is most effective when used in conjunction with industries that are horizontally or vertically related to the listed clusters.

Empowered by the information in the cluster analysis, additional industries can be targeted, which will create agglomeration economies and

strengthen the impact of an economic development program.

7. Support Existing Cluster Economies: Attracting new companies to an area is a component of cluster development, but should not be the

focus of developing a strong cluster economy. More specifically, it is equally important to develop the existing facilities present within a

community. Supporting established companies and their supply chains will develop an industry more deeply than bringing in new firms. To

reap the benefits of economic growth, states should not only incentivize new and potential businesses but continue to support the existing

companies already in their state through equally supportive programs.

8. Collaborate with other State Programs: Cluster development in a particular industry is not a strategy independent of other programs. A

cluster strategy is part of a larger overarching economic development strategy. Success for a particular cluster depends on the state’s

ability to coordinate and leverage existing programs for a unified purpose. Collaborative development strategies will enable the state to

leverage all resources available to stimulate robust economic growth in all targeted clusters.


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CASE STUDIES: CLUSTER DEVELOPMENT

1. Devise Clear and Meaningful Cluster Specifications

NEW YORK - Nanotechnology Cluster

The State of New York recognized the assets available within its borders by focusing on a clearly defined market segment based on the

assets in Albany, NY, the cluster has naturally expanded to include fabrication facilities, corporate headquarters, and other tangential

operations. The Nanotechnology cluster in New York now benefits from more than 2,500 industry employees ranging from students to

engineers to scientists. Over 250 corporate partners are represented at the university and the region benefits from massive spillover

effects. Partnerships are being formed with the Army National Lab and other federal agencies along with interactions with cluster

companies, including IBM, AMD, SONY, Toshiba, Honeywell, Applied Materials, and Tokyo Electron.

2. Utilize Strong Data Analysis

OHIO - Northeast Ohio Polymer Cluster

The polymer cluster located in Northeast Ohio is one of the leading polymer clusters in the U.S. By partnering with Ohio universities,

including Kent State, University of Akron and Case Western, to collect and analyze data the Northeast Ohio polymer cluster has been

able to identify strategic growth opportunities and implement relevant development policies. Their use of quality data analysis has

allowed them to outperform similar clusters nationwide. The cluster has expanded to include advanced materials manufacturing, industry

specific academic institutions, a rich supply chain, and an augmented end user base while identifying flexible electronics as a new niche

market.

3. Create a Cluster Specific Evaluation Process:

MAINE - Technology Institute (MTI) Cluster

The MTI is a non-profit, publically funded organization that works in favor of developing the state’s technology cluster. The University of

Southern Maine (USM) works in conjunction with MTI every two years to conduct an evaluation that oversees the analysis, learning, and

accountability of Maine’s technology cluster. Criteria that conclude the impact and effectiveness of programs include the number of grants

involved, the value of grants awarded, total funds leveraged, job growth, revenue growth, export growth, intellectual property rights, and

equity investment. The purpose of the evaluations is to employ a continuous improvement attitude to programs while demonstrating to

policy makers the real value of the programs and actual rates of return on taxpayer dollars. For example, one efficiency analysis

determined that for every dollar awarded by MTI, more than $14 were able to be leveraged in public and private investment. The results

led state decision makers to incorporate MTI’s work into the state’s overall economic development program. The success of the MTI’s

program has led the state to propose grants for additional feasibility studies to evaluate the viability of any cluster currently existing within

state borders.


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4. Leverage Industry Leaders for Cluster Development

INDIANA - Life Sciences Cluster

In an effort to develop the life sciences cluster in Indiana, policymakers have decided to leverage its high concentration of industry

leaders and professionals across 50 large specialized firms for insight on creating a sustainable Biosciences cluster. With so many

industry professionals, the responsibility of the life sciences cluster initiatives has been given to Biocrossroads, which serves as a catalyst

for prospective industry ideas. The collaboration between policymakers and industry specialists has enabled the cluster to achieve job

growth rates that have exceeded national averages since 2001. In one particular initiative, Biocrossroads and their partners have created

a project called Exhibit Indiana. Exhibit Indiana encourages state and local agencies to support Indiana’s existing leadership advantages

in health information technology.

5. Incentivize Comprehensive Infrastructure Development Programs

NORTH CAROLINA - Renewable Energy Cluster

North Carolina has implemented a variety of tax incentives for nearly all types of renewable energy sources including hydroelectric, solar,

biomass, geothermal, wind, and waste gas/heat recovery. Renewable Energy Development Incentive (REDI) has put in to place a series

of incentives that attract renewable energy producers to North Carolina. The major incentives involved in this policy are related to

infrastructure because initial investment costs are so high.

6. Recognize Synergy Opportunities

OHIO - Hubs of Innovation and Opportunity

The Ohio Hub of Innovation and Opportunity program was designed to give greater focus to economic development programs by

guiding state and local policy with a greater strategic purpose. Part of this increased strategic purpose relies on optimal asset allocation

to clusters that have a proven performance record. The goal is to leverage the cluster assets that dominate each of the state ’s seven

MSA’s to achieve a higher level of growth and designated each region as a different proven hub for each cluster. In each of the seven

clusters, the state is committed to supporting sustained growth and focusing on company retention. To obtain these goals, the state

aligns broad efforts to facilitate cluster dynamics. For example, Cleveland was chosen as the hub of health and technology because the

health and technology industry was already thriving in that particular area. Since the infrastructure and other related assets were already

in place, it was relatively easy to unite these resources to elicit enhanced economic development. A significant portion of the economic

development effort is related to the attraction of peripheral market sectors. These related sectors cause knowledge spillover effects and

also agglomeration economies that benefit all involved parties.


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7. Support Existing Cluster Economies

MICHIGAN - Economic Development Program

The state of Michigan realized that the majority of jobs are created through existing businesses rather than relying heavily on attracting

companies. As a result, the state appointed account managers whose duties include visiting each company at least once per year to

determine real or potential problems that a company may be facing. This allows the Michigan Economic Development Corporation

(MEDC) to be proactive instead of reactive when it comes to the needs of the region. The state also has the Michigan Small Business

and Technology Development Center (MI-SBTDC), which provides small businesses with local resources to strengthen a company’s ties

in the community. For instance, the MI-SBTDC may be able to point small businesses to funding programs or support services with which

they were previously unaware. Other existing business support programs include the Michigan PeerSpectives Network, which brings

non-competing entrepreneurs together to exchange ideas, experiences, challenges and opportunities in a confidential setting, enabling

companies to strengthen their decision making and leadership skills.

8. Collaborate with other State Programs

CALIFORNIA - Fuel Cell Partnership (CaFCP)

The CaFCP is a partnership between auto manufacturers, utility companies, fuel cell companies and government agencies to develop

sustainable energy consumption, increase energy efficiency, and reduce greenhouse gas emissions. The CaFCP is a partnership

between auto manufacturers, utility companies, fuel cell companies, and government agencies. This is the first collaborative endeavor to

design, build, and test fuel cell vehicles. Partners include Daimler Chrysler, Ford, GM, Honda, BP, Chevron, ExxonMobil, Shell Hydrogen,

Ballard Power Systems, UTC Fuel Cells, California Air Resources Board, California Energy Commission, US Department of Energy, US

Department of Transportation, and the EPA along with the Institute of Transportation Studies at UC Davis.



25 Innovative Incentives That Could Be Adapted for Nevada

ADDITIONAL PROGRAM INFORMATION: For more information about any of the

programs listed in the following section, consult the Case Studies and Best Practices

section of this report.



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1 Aerospace - Aerospace Initiative Incentive

Where It's Found: Mississippi

What It Does: Offers incentives for startup and construction costs for companies that provide specific services to the aerospace industry and are

considering expanding their operations.

Program Results: Credited with helping to spur internal growth among renewable energy manufacturing, data center, and aerospace-related businesses.

Advantage to Nevada: Adapt program to retain local industry and combat concerns regarding high startup costs associated with A&D.

2 Aerospace - Qualified Defense and Space Contractor Tax Refund

Where It's Found: Florida

What It Does: Offers aerospace companies a competitive advantage in the form of consolidating, acquiring, or converting contracts. Pre-approved

companies receive incentives for retaining or creating jobs.

Program Results: A mechanism recognized as supporting the retention of the A&D job base for companies already operating within Florida.

Advantage to Nevada: Adapt similar program to retain and encourage growth among its existing A&D industry and compete with out-of-state firms.

3 Aerospace - Space Florida

Where It's Found: Florida

What It Does: Advocates on behalf of the A&D industry by arranging financial incentives, providing site selection services, and forming relationships with

government authorities to assist A&D companies with contracting, grant, and funding opportunities.

Program Results: Provided $200 million in funding for four large-scale A&D projects within the State of Florida.

Advantage to Nevada: Similar program may be leveraged to address concerns relating to Nevada’s ability to compete with larger defense companies for

contracts and to the retention of A&D companies.

4 Logistics/ Distribution - Aerotropolis Development Corporation

Where It's Found: Michigan

What It Does: Promotes growth within the development zones through a partnership with local communities that have the authority to permit up to 10

renaissance zones to attract new businesses specific to the logistics industry.

Program Results: Provided supply-chain infrastructure capable of supporting economic development through the leveraging of partner resources.

Advantage to Nevada: Program may be leveraged along with existing FTZs and proximity to California to attract internationally based logistic companies

interested in the west coast or other markets.

5 Logistics/ Distribution - Rivers Edge Redevelopment Zone

Where It's Found: Illinois

What It Does: Encourages growth in environmentally challenged areas by awarding companies for job creation and retention, engaging in public/private

partnerships, and investing in industry growth.

Program Results: In a two-year span, the zones have attracted over $30 million in investments and created/retained over 200 jobs.

Advantage to Nevada: Program may be adapted for underdeveloped or distressed areas within state, specifically smaller, rural communities located near major

transit routes. State of Nevada

Benchmarking and Incentive Analysis| 61 State of Nevada State of Nevada


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6 Logistics/ Distribution - Foreign Trade Zone

Where It's Found: Arizona

What It Does: Offers all the benefits of a foreign trade zone, but also provides between 75-80% reduction in state property taxes..

Program Results: Eight multinational corporations have taken advantage of the tax savings in FTZ#75, spurring local economic development activity.

Advantage to Nevada: Incorporate reduced property taxes within Nevada’s flexible FTZs to encourage growth and promote state as a global business

destination, specifically for those looking to enter west coast or other markets.

7 Healthcare - Private Placement Program


What It Does: Provides tax-exempt capital for small to mid-size healthcare institutions, critical access hospitals, and community providers of behavioral

healthcare.

Program Results: Provided as a catalyst to help maintain existing healthcare infrastructure for niche markets in Illinois.

Advantage to Nevada: Similar program may be adapted to address access of healthcare services for rural areas and overall development of the state’s

healthcare services market.

8 Healthcare - Rural Health Facility Capital Improvement Loan Fund

Where It's Found: Texas

What It Does: Offers financing for rural, public, and non-profit hospitals to make capital improvements to existing facilities, construct new health facilities,

and purchase capital equipment.

Program Results: A central funding source for rural healthcare centers, with increased demand creating more applicants than available funding.

Advantage to Nevada: Leverage program to assist in the delivery of higher quality healthcare services to rural residents.

9 Manufacturing - Industrial and Process Efficiency Program

Where It's Found: New York

What It Does: Offers incentives for manufacturers, including mining and manufacturing, who implement green technologies in their manufacturing

activities to increase overall productivity and decrease costs.

Program Results: Credited for providing a reduction in on-site energy consumption of target industries participating in the program.

Advantage to Nevada: Utilize program to encourage further renewable energy adoption and encourage collaboration between mining and manufacturing

industries, increasing demand for the renewable energy market.

10 Manufacturing - Manufacturing Modernization Loan Program


What It Does: Provides manufacturers with access to adequate and affordable financing for upgrading and modernizing manufacturing equipment and

operations.

Program Results: Allowed small- and mid-sized companies participating in the program to improve production efficiency via equipment upgrades.

Advantage to Nevada: Adapt program to assist smaller, existing manufacturing companies that want to expand operations within the state.



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11 Hospitality/Entertainment - Malta’s Strategic Incentives for the Online Gaming Industry

Where It's Found: The Republic of Malta

What It Does: Utilizes strategic assets and applies incentives in a manner that positions Malta as a center for the online gaming industry, while also

encouraging growth and development in technology industries, such as data centers.

Program Results: Passed legislation to grow online gaming, which has been responsible for attracting over 330 online gaming firms to Malta.

Advantage to Nevada: Similar strategy may be adapted to leverage state’s existing position and assets in the gaming industry in order to become an international

hub (and central hub for American market) for online gaming, while taking advantage of opportunities to diversify into other emerging

industries.

12 Hospitality/Entertainment - Film Incentive Program

Where It's Found: Louisiana, New Mexico, and Georgia

What It Does: Offers production cost incentives for film, television, commercials, and other entertainment projects produced within state.

Program Results: Established state as top film destination location, third only to California and New York. Since 2006, the industry has grown by 250 percent

and produced over 300 film and television productions due to state’s long established incentive program.

Advantage to Nevada: Leverage similar program and state’s proximity to California to create an all inclusive entertainment hub.

13 IT/ Business Services - Texas Emerging Technology Fund

Where It's Found: Texas

What It Does: Offers cash grants to firms and research institutions for commercialization, recruitment of research talent along with funding matches for

the promotion of partnerships within the technology field.

Program Results: Started to attract top researchers and scientists to Texas with the added goal of encouraging growth of high-tech jobs and start-up activity.

Since 2005, the program has funded 133 high-tech companies valued at $174 million and attracted $593 million in funding.

Advantage to Nevada: Adapt program to address state’s limited venture funding resources while also providing local universities with the opportunity to attract the

best and brightest researchers.

14 IT/ Business Services - Invest Maryland

Where It's Found: Maryland

What It Does: Raises venture capital funding through a tax credit auction for companies with under 250 employees in the IT, software, cyber security,

communications, life sciences, and clean energy industries.

Program Results: Created to fulfill severe gap within state’s capital and entrepreneurial infrastructure, raising over $84 million in venture capital funding to

support and create jobs within the state’s “Innovation Economy” sectors.

Advantage to Nevada: Adapt program to address limited venture capital funding within state.

IT/ Business Services - Data Centers

15 Where It's Found: Virginia

What It Does: Offers four incentives targeting the formation of data center clusters depending on where the company locates.

Program Result: Credited with creating over 700 data center projects since its inception.

Advantage to Nevada: Leverage program and the state’s existing fiber optic assets and very low natural disaster risk profile to secure its status as a competitive

location for data centers.



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16 IT/ Business Services - Indiana Certified Technology Parks

Where It's Found: Indiana

What It Does: Facilitates collaboration between communities, businesses, and research institutions to encourage new technologies, industry growth, and

business clustering by awarding those that locate within designated technology parks.

Program Results: Responsible for developing the Purdue Research Parks, a network of four technology-based incubators created to promote an

entrepreneurial environment throughout the state. The parks are one of the state’s top 20 employers and home to over 200 businesses

representing over 4,100 individuals. Estimated annual economic impact of parks is $1.3 billion.

Advantage to Nevada: Leverage program to encourage development within state’s existing industry hotspots.

17 IT/ Business Services - Maine Technology Institute

Where It's Found: Maine

What It Does: Offers capital and commercialization assistance to innovative, technology based firms. It was created to generate commercialized success

in across state’s seven industries.

Program Results: The program is responsible for funding $126 million across 1,500 projects related to research and development activates.

Advantage to Nevada: Similar program may be established to provide existing technology firms with additional resources to graduate to the next level of industry

development.

18 Clean Energy - Renewable Energy Certificates

Where It's Found: Connecticut

What It Does: Encourages the adoption of renewable energy by allowing RECs that can be traded as commodities with utility companies or others for

cash payments.

Program Results: Implemented to comply with state law by both providing assistance to developers and promoting energy efficiency to reduce costs for

customers. 23 projects have been selected out of 72 proposals.

Advantage to Nevada: Leverage program to encourage the adoption of renewable among residents and businesses and assist with the development of the

industry.

19 Clean Energy - Alternative Energy Product Manufacturer’s Tax Credit

Where It's Found: New Mexico

What It Does: Manufacturers of certain alternative energy products may qualify for a tax credit of 5% for qualified expenditures producing equipment

used in a clean energy manufacturing operations.

Program Results: Endorsed as helping to lower production costs of renewable energy parts and components for businesses utilizing the program.

Advantage to Nevada: Adapt program to encourage collaboration between renewable energy and manufacturing and the development of a niche market in

renewable manufacturing.

20 Clean Energy - Solar Manufacturing Incentive Grant Program (SMIG)

Where It's Found: Virginia

What It Does: Provides cash grants to companies that manufacture photovoltaic (PV) panels within the state.

Program Results: Created in response to solar manufacturing trend, but has resulted in several large companies, such as BP Solar, moving to VA. The

program has since been changed to a technology neutral incentive in an attempt to diversify clean energy industry.

Advantage to Nevada: Similar program may encourage greater development of the state’s solar manufacturing, particular amongst existing firms.



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21 Mining - Environmental Protection Agency

Where It's Found: United States

What It Does: Develops previously used or abandoned mine sites into new renewable energy sites as part of the United States’ Repowering America’s

Lands initiative.

Program Results: Chevron coordinated with the EPA and state agencies to construct a 1 MW concentrated photovoltaic solar facility with the electricity sold

to a local energy cooperative through a 20-year purchase agreement

Advantage to Nevada: Utilize program to keep state’s mine sites working after they have been mined for resources and encourage growth of renewable energy

through related projects.

22 General - New Markets Tax Credit

Where It's Found: New York

What It Does: Generates new capital investment to improve economic conditions in underperforming regions of the state.

Program Results: Created a 10,000 square foot building to provide food, showers, medical assistance, and legal advice to Bronx residents.

Advantage to Nevada: Similar program tailored to Nevada’s tax structure may be established to assist in the development of targeted areas within the state,

particularly those still struggling from the great recession.

23 General - Rapid Response Fund

Where It's Found: Louisiana

What It Does: Provides emergency funding to secure smaller projects, especially in rural areas, which may not be eligible for larger incentive credits

offered by the state.

Program Results: Provided over $33 million in funding, retained 3,255 jobs, and created 4,265 new jobs since its inception in 2005.

Advantage to Nevada: Adapt program to quickly respond to those companies not eligible for incentives for larger projects, including those that need relocation

cost assistance.

24 General - Keystone Opportunity Zones

Where It's Found: Pennsylvania

What It Does: Offers 46,000 acres of developable, state and local tax free land to encourage job creation and land development in the state’s most

underutilized or undeveloped areas.

Program Results: Thirty- three active KOZ’s in Lackawanna County, which has created1,000 jobs in the county since zones were established in 1999.

Advantage to Nevada: Adapt program to develop underutilized areas, specifically retired mine, economically distressed, or rural areas.

25 General - Long-term Rural Enterprise Zone Facilities

Where It's Found: Oregon

What It Does: Extends state’s local property tax exemption on new investments from three to five years to 15 years for those located within zone.

Program Results: Created more than 500 jobs which offer an average annual salary of $45,000.

Advantage to Nevada: A similar program within the state could potentially provide great opportunities for rural communities and distressed areas.



Appendix


Appendix A

Incentivizing Economic Development in the State of Nevada

As demonstrated in the benchmarking portion of this report, the State of Nevada is faced with

significant competition with respect to business attraction and expansion efforts and is

challenged by numerous economic headwinds. Nevada has been hit hard by the great

R=recession, however, it is taking practical steps to address the gaps in its competitiveness and

to stabilize the state economy. This analysis stands as one of the first steps in completing the

mission at hand.

In order for the State of Nevada to become more competitive, it will need to adapt to a changing

environment for economic development – one that is simultaneously characterized by higher

levels of competition and few resources with which to compete. In order to meet this challenge

and to rise to a higher level of success, those who lead economic development efforts within the

state will have to “play harder” and “play smarter,” and state, regional, and local policy will need

to be supportive of these efforts.

The study present items of specific strategic importance to the State of Nevada as it utilizes the

information generated through the benchmarking and best practices analysis completed as part

of this study. These sections address concerns relating to the use of economic development

incentives, budgeting in order to remain competitive, and the support of a cluster-oriented

economic development strategy through the design, use, and management of suitable incentive

tools. Also presented are several recommendations offered in order to assist the Governor’s

Office of Economic Development in leading Nevada to become more competitive with other

states in the attraction and support of relocating and expanding businesses.




TRENDS IN THE USE OF INCENTIVES

The continued difficulties facing the American (and the global) economy – a reality known all too well

by the State of Nevada, has only heightened the urgency with which states, regions, and cities feel

they must compete for anything that might support sustained economic growth. The increased

competition that has occurred in recent years among American communities of all sizes in order to

attract or support relocating and expanding businesses has lead to greater willingness on the part of

many states be more aggressive in the use of incentives. Other states, on the other hand, have

restructured or cut back significantly on the use of economic development incentives as a result of

tightening state and local budgets. The most important incentive, however, and the one that affects

investment decisions the most, is long-term economic stability and a favorable business tax climate,

regardless of a company’s short-term or longer-term orientation to incentives. With this in mind,

several states (such as Indiana, Wisconsin, and Michigan) have focused on developing a more

business-friendly tax environment in order to make themselves more competitive, reducing the need

to devote resources toward incentives which may be less effective as a means of attracting growth.

The State of Nevada enjoys numerous assets that will allow it to compete nationally and

internationally for new business even in the face of the significant economic headwinds that are

stifling the state’s efforts to support economic growth. Nevada’s newly instituted economic

development strategy that focuses on the support, development, and attraction of key industry

clusters is an important step forward as are recent structural reforms that allow for increased

economic development representation at the regional level. In order to compete, it will be necessary

for the State of Nevada to consider the full picture of what is likely to contribute to and detract from

its economic development efforts. Economic development incentives are one important part of that

picture.


NO STATE CORPORATE TAX REQUIREMENTS – A BROAD FORM OF INCENTIVE

Throughout the United States, a highly popular and commonly utilized incentive tool is the extension of tax credits or tax reductions relating to state or local corporate and/or personal income taxes. These are so common, in fact, that many businesses seek them out directly when developing their plans for growth or relocation. This is often the among the first types of incentives brought up in discussion between communities and prospective employers. This does not, however, minimize the competitive advantage enjoyed by states that do not have such taxes in place or, as in the case of Texas’s Franchise Tax, have designed them in such a way that they may support efforts to sell businesses on the favorable tax environment found within that state. Nevada’s business-friendly tax environment is a strong and underleveraged asset for the State’s economic development efforts. Ranked third by the Tax Foundation for overall corporate tax climate behind only Wyoming and South Dakota, the State of Nevada offers businesses a highly favorable tax environment for doing business. A weakness, however, for the State of Nevada, is that it does not adequately market this advantage. Equally important, it has not been communicating the benefits in a way that resonates with businesses and site selectors whose priority is in identifying locations that will offer the most generous and fiscally beneficial incentives. To address this, Nevada should pursue a two-pronged approach. First, it should better market the highly competitive tax climate that it offers to businesses and should quantify in dollar terms how it could be expected to impact a given business’s bottom line. As part of this effort, the state should hire an impartial outside research firm to prepare a Cost of Operations Analysis that benchmarks the annual operating costs of hypothetical businesses within target industries in the State of Nevada against the annual operating costs in competitor states. The second approach that should be utilized in the State’s effort to better communicate the advantages of its favorable tax environment, is to market the lack of corporate or personal income taxes as incentives in and of themselves – incentives for which businesses and individuals qualify automatically, simply by breathing.



A MORE STRATEGIC APPROACH TO ECONOMIC DEVELOPMENT BUILDS VALUE AND PRESERVES LIMITED PUBLIC RESOURCES

In the past, state, and local governments may have been able to more freely extend economic development incentives. However, recent budgetary constraints have weakened the ability for governments at all levels to commit resources as freely as in the past. It is important to note that both the effects of the recession and recent calls for heightened fiscal discipline (at times taken to the point of disinvestment) have not been spread evenly across the United States. While some states have chosen to reassess its approach to economic development and the use of incentives, others have charged ahead in the economic development “arms race.” This matter is particularly acute for the State of Nevada which was among the hardest hit by the great recession and which continues to be harmed by its fallout. Armed with fewer resources with which to incentivize relocating businesses, it is imperative for states to be increasingly strategic in the use of the resources available to them to remain competitive with other states and in order to become even more aggressive in their economic development efforts. This need is particularly clear for the State of Nevada in light of the analysis presented throughout this report. This challenge requires a highly strategic approach to the use of incentives to ensure that they produce the desired effect of job creation, and that economic development initiatives found within the State of Nevada are supportive of one another and do not undermine each other. It also will require the State of Nevada to better leverage federal resources and economic development programs. For Nevada, this may mean a full reevaluation of its existing incentive “toolbox” and a more deliberate effort to identify ways of tying existing (and perhaps new) incentives into the State’s newly instituted economic development strategy which focuses on the development of key industry clusters and pays stronger consideration to economic development at the regional level.



INTERNATIONAL CONSIDERATIONS

An increasingly competitive international environment requires states to adapt and prepare

themselves to compete on a global stage. This requires a strong relationship with federal

agencies and representatives and a thorough understanding of their aims and capabilities. It

also requires economic development agencies, such as the Governor’s Office of Economic

Development, to consider factors that are not always typical of projects oriented to domestic

markets. With an already well-established global brand as an entertainment, gaming, and

convention destination, the State of Nevada is well positioned to attract additional international

business.

Many of the opportunities available to Nevada internationally may be found in markets to which

it is already exporting its goods, including markets in East Asia, Central and Western Europe,

Israel, South Africa, and Latin America. Others may be related to more specific assets such as

the state’s leadership in the gaming industry – a feature that may, for instance, allow Nevada to

establish stronger international linkages with emerging markets and high growth international

locations for this industry such as Macau.

Nevada’s strength in the mining and aerospace and defense industries also present strong

opportunities for the state to seek growth domestically through the support of trade

internationally.



Appendix B

METRICS

AngelouEconomics has identified several data sets that we recommend for continued monitoring by State of Nevada in support of economic development goals that may be associated with the use of economic development incentives. These metrics should, where possible, be measured at both the state and regional levels and should segment the state’s performance in each of its target industries. In addition to the ongoing collection and review of these metrics, the Governor’s Office of Economic Development should maintain a centralized database by which the metrics may be easily analyzed and distributed when requested. Performance metrics are listed below:

Attraction and Retention

• Number of new primary jobs associated with incentivized projects

• Number of new primary jobs within targeted clusters associated with incentivized projects

• Total investment associated with incentivized projects

• Average salaries of new primary jobs associated with incentivized projects

• Prospect activity (with particular emphasis on incentive requirements)

• Conversion rates of prospects to new businesses (with evaluation of the adequacy of any proposed incentive offering associated with the project)

Entrepreneurship

• Number of business startups resulting from incentive programs (including, when possible, spinoffs from previously incentivized projects)

Collaboration & Leadership

• Number of MOUs signed by participating organizations in support of economic development incentive programs

• Average time required to develop and process incentive proposals



Marketing

• Advertising equivalency/number of impressions of incentivized project announcements

• Advantages featured and focused upon (e.g. certain regions, gaming/hospitality industries,

tourism, target industries, tax advantages, etc.)

Sites & Infrastructure

• Value of infrastructure included as part of incentive packages

• Square feet of real estate produced (categorized by type, i.e. industrial, office, mixed-use,

flex space, etc.)

• Land available in industrial parks and cluster/innovation zones

• Number of businesses that graduate from state incubators

• Net absorption rate of commercial and industrial rental markets

Taxes

• Corporate Tax Climate rating and comparison to benchmark states

• Impact on annual operating costs for businesses in target industries benchmarked to

competitor states

Workforce and Education

• Median age of workforce

• Change in 25-44 age group over time

• Percentage of college educated workers



Appendix C

APPROACH AND METHODOLOGY

This report examines the present availability and application of economic development incentives within the

State of Nevada in comparison to that of eighteen benchmark states (including five “core” benchmarks).

The primary purpose of this report is to provide an assessment of the current environment within which

economic development incentives are being used at the state level in order to provide the State of Nevada

with a more thorough understanding of how it compares to competitor agencies in this regard. Utilizing a

mix of data obtained from public sources (including but not limited to the U.S. Census, the Bureau of Labor

Statistics and the various state agencies responsible for economic development within the benchmark

states) and analyzed by AngelouEconomics, this report aims to categorize and compare the various

incentive tools provided by certain state governments (or their primary economic development agencies), to

review the recent economic performance of these states in order to provide the necessary context within

which these incentives are being used, and to identify possible steps that may be taken by State of Nevada

in order to remain competitive with other states in terms of the availability and application of economic

development incentives and in order for State of Nevada to better support its employment growth

objectives.

AngelouEconomics emphasizes that this report is bound by several limitations – the most significant of

which being that of scope. It is not the intent of the present study to evaluate the effectiveness of economic

development incentives from either a fiscal, economic, social or political standpoint. Such an analysis,

though important, is beyond the purview of the present study. Instead, this report seeks to fulfill the

objectives outlined above in order to address very specific concerns currently under consideration by State

of Nevada relating to the use of economic development incentives by the State of Nevada and the

individual regions within it. A vast array of academic literature has been produced on the subject of

economic development incentives which may be consulted for a deeper understanding of the topic.

Additional research may be considered by State of Nevada and/or other interested parties that address

other matters relating to the use of economic development incentives by the State of Nevada.




METHODOLOGY

AngelouEconomics drew from a broad set of public and private sources in support of its analysis,

including state economic development budgets and incentive policies, and received direct input from

representatives of benchmark states’ economic development agencies. As one component of this analysis,

the project team completed a thorough inventory and categorization of the incentive tools used by

benchmark states.

The authors sought to determine the impact that incentives, entrepreneurship, business climate,

and demographics have on economic development and specifically on job creation. For certain analysis,

states were categorized into three groups (highest, medium, and lowest) based on data related to various

measures. For each variable and group the impact on job creation was evaluated based on historical data.

A more detailed explanation of the methodology used in this study has been provided in the appendix of this

report.

LIMITS IN SCOPE OF ANALYSIS It is not the intent of the present study to provide a categorical determination as to the degree to which economic development incentives produce the desired effects of job creation or similar objectives. Such analyses, though important, are beyond the purview of the present study. A broad amount of literature has been produced respecting this particular topic, and the reader is encouraged to review related research in order to better understand the context within which this study is cast.



Appendix D

NATURE OF ANALYSIS AND NARRATIVE CONTENT

As described in Appendix A of this report, “Approach and Methodology,” the project team completed an in-

depth analysis specific to the present needs and challenges facing the State of Nevada which reviewed a

wide range of topics relevant to the use of state-level incentives in a highly competitive economic

environment. The results of this analysis formed the basis for all conclusions presented in this report. The

research completed has been directed specifically to meet the economic development needs and

objectives of the State of Nevada in an effort to deliver an impartial perspective that may inform future

policy and strategic decisions.

Certain portions of this report draw upon previously completed research conducted by AngelouEconomics

for internal use or for separate projects, and were selected for inclusion in this report for their specific

relevance to the challenges and opportunities currently affecting the State of Nevada. In certain cases,

specifically those relating to research processes, definitions, national and global trends, industry-wide

conditions and dynamics, and national economic data, narrative remarks may be included in other

documents prepared by AngelouEconomics. Reasonable efforts have been made to ensure that all data

and information that was completed by other organizations and government agencies have been properly

sourced throughout this report. Further information relating to the methods, research or recommendations

featured in this report can be made available upon request by the client.



AngelouEconomics

AngelouEconomics partners with client communities and regions across the United States

and abroad to candidly assess current economic development realities and identify

opportunities. Our goal is to leverage the unique strengths of each region to provide new,

strategic direction for economic development. As a result, AngelouEconomics’ clients are

able to diversify their economies, expand job opportunities and investment, foster

entrepreneurial growth, better prepare their workforce, and attract “new economy”

companies.

For more information about AngelouEconomics, please visit:

www.angeloueconomics.com

Project Team

Angelos Angelou

Principal Executive Officer

Michael Hennig

Project Manager

Levi Jackson

Associate Project Manager

Aisha Javed

Associate Project Manager

William Mellor

Research Analyst

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