Incentives

The federal government and most states and many municipalities offer incentives to attract new businesses or help existing ones to expand. The type of incentives can vary widely. Often they are structured to help offset costs related to land, construction, or business operations and may include abatements on sales taxes for equipment purchases, discounted land, expedited permitting, zoning variances, or credit on state and/or local corporate income taxes. The amount and type of incentives, the criteria for qualification, and the regulatory conditions will vary depending on the program's goals. By themselves, incentives do not make a healthy food project viable, but they can reduce the costs and financial risks of the project. 

For examples of incentive programs designed to spur the development of supermarkets and other healthy food retail enterprises, see Healthy Food Financing Funds.

Looking for incentive programs for your project?  Check out Available Funding.

Federal Government

One of the most important federal tax incentive programs is New Markets Tax Credit, which provides a credit against federal income taxes to attract private investment to economically distressed rural and urban communities. Using a competitive process, the CDFI Fund awards certified Community Development Entities (CDEs) an allocation of NMTC authority annually. Since FY 2011, priority has been given to CDEs who commit to use a portion of their award to invest in healthy food projects. A store operator, developer, or other qualified business can apply to a certified CDE for financial support. In FY 2013, 61 of the 87 CDEs (or 70 percent) indicated that they intend to devote some portion of their NMTC allocation to healthy food financing activities.
 

 

State and Local Governments

Many states and local governments have created special districts, often called enterprise zones, to stimulate business investment in depressed areas.   Enterprise zones may offer property tax abatements, reduction in corporate income taxes, tax credits for capital investment, funding for research and development, or assistance with hiring and training local workers. 


The exact rules and details of incentive packages vary from place to place. The City of Oakland Enterprise Zone offers businesses that reside within a 27 square mile area the opportunity to reduce their California business income taxes in a variety of ways.  A business can receive tax credits every time it hires an eligible new employee or purchases qualified new machinery or pollution control devices. Tax credits also are available to lenders who make loans to businesses in the zone and to low-income employees who work in the zone.


Business and special improvement districts collect fees from business owners to fund improvements in targeted areas for which healthy food retail may qualify.  The Jersey City Historic Downtown Special Improvement District (HDSID) Special Improvement District - Downtown Jersey City is a public-private partnership that works with local businesses, property owners, and neighborhood associations in conjunction with the city government to promote the area.   A farmers market is central feature of the Jersey City’s special improvement district.


By issuing bonds guaranteed by future increases in property tax revenue, Tax Increment Financing (TIF) may offer another method for local governments to raise funds for development projects. Typically, a local government establishes a TIF district where there will be a mandatory freeze in property values for up to 30 years, during which time taxes continue to be collected by local authorities. The government can choose to commit the taxes collected on the difference between the baseline property value and the rising property value generated by the new development to pay for development and infrastructure costs.