Company Relocation Plans on the Rise
Many revenue starved cities are eager to pull out the stops, dangling tax breaks and a slew of other incentives to bring in new businesses and jobs.
Competition among cities trying to keep businesses or lure new ones is heating up as more and more companies look to relocate to pare their costs of doing business. An improving economy will spur moves as firms feel more confident about their futures.
Los Angeles, for example, recently implemented a three-year holiday on business taxes for companies that are new to the city. The tax holiday helps bump L.A. off a list of the top 10 most expensive cities to do business in, though it still falls within the top 20, according to the Kosmont-Rose Institute’s Cost of Doing Business Survey.
The Kosmont Companies and the Rose Institute of State and Local Government at Claremont-McKenna College in Claremont, Calif., survey over 400 cities annually based on tax rates that affect businesses. Property taxes and business license fees carry the most weight in the survey. Business license fees represent the average for each city. The survey also looks at sales taxes, various utility taxes, parking taxes, economic incentives, transportation options and zoning restrictions.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
See Kiplinger's slide shows of:
•10 High-Tax Cities for Business
•10 Low-Tax Cities for Business
To order the full report or excerpts, visit the Kosmont-Rose website.
The push by cities to keep and lure companies is nothing new, of course. But as Larry Kosmont, president and CEO of Kosmont Companies, says: “Cities are really struggling right now…they have become much more in tune with economic development and trying to find a way to attract investment and jobs."
Setting up technology research centers is proving to be another effective way for many cities to lure large firms as well as to attract life services, information technology and other entrepreneurs who can go on to build lucrative businesses that in turn spawn other enterprises.
New York City, for example, recently subsidized the building of the Alexandria Center for Life Science at East River Science Park -- a biotechnology research facility located along the East River. Eli Lilly and Co., a pharmaceutical company with headquarters in Indianapolis became the anchor tenant, signing a 15-year lease to use the space to conduct cancer research.
Many states and cities are also doing a good job of persuading companies to stay. Navistar International Corp., for example, was in talks to move its headquarters from Illinois to any number of states where operational costs would be less expensive. The state put together a $65-million incentive package to keep Navistar from leaving, saving nearly 3,000 jobs.
Economic incentives aren’t the only draws. Companies also seek an educated workforce and good schools as well as cultural and other amenities. “They don’t want to be in a sterile environment,” says Jay Biggins, a partner at Biggins Lacy Shapiro & Co., a business location consulting firm.
And while incentives and amenities are important, companies looking for a specific skill set in its workforce may often have to be willing to do business in a more expensive city.
“There are a lot of ways to cut a deal, but in the end the company has to be where it wants to be. If you are in a place where the talent you need doesn’t exist or would be difficult to import it to, the low cost of doing business would be almost irrelevant,” says Rob DeRocker, a Tarrytown, N.Y.-based economic development consultant.
-
Should You Renew Your CD?With rate cuts impacting earnings, we examine if now is a wise time to renew CDs.
-
7 Ways to Plan Now to Save on Medicare IRMAA Surcharges LaterUnderstand the critical two-year lookback period and why aggressive planning before you enroll in Medicare is the most effective way to minimize IRMAA.
-
Law Reversal Looming? Trump Eyes 2026 Gambling Winnings Tax ChangeTax Deductions It's no secret that the IRS is coming after your gambling winnings in 2026. But how long will that last?
-
AI Appliances Aren’t Exciting Buyers…YetThe Kiplinger Letter Artificial intelligence is being embedded into all sorts of appliances. Now sellers need to get customers to care about AI-powered laundry.
-
What to Expect from the Global Economy in 2026The Kiplinger Letter Economic growth across the globe will be highly uneven, with some major economies accelerating while others hit the brakes.
-
The AI Boom Will Lift IT Spending Next YearThe Kiplinger Letter 2026 will be one of strongest years for the IT industry since the PC boom and early days of the Web in the mid-1990s.
-
Amid Mounting Uncertainty: Five Forecasts About AIThe Kiplinger Letter With the risk of overspending on AI data centers hotly debated, here are some forecasts about AI that we can make with some confidence.
-
Worried About an AI Bubble? Here’s What You Need to KnowThe Kiplinger Letter Though AI is a transformative technology, it’s worth paying attention to the rising economic and financial risks. Here’s some guidance to navigate AI’s future.
-
Will AI Videos Disrupt Social Media?The Kiplinger Letter With the introduction of OpenAI’s new AI social media app, Sora, the internet is about to be flooded with startling AI-generated videos.
-
What Services Are Open During the Government Shutdown?The Kiplinger Letter As the shutdown drags on, many basic federal services will increasingly be affected.
-
The Economy on a Knife's EdgeThe Letter GDP is growing, but employers have all but stopped hiring as they watch how the trade war plays out.
