Economic Development Incentives 2024: Spending and Performance, JLARC (November 7, 2024)
Summary
This is JLARC Report 597, Economic Development Incentives 2024 Spending and Performance, a report dated November 7, 2024 to the Governor and the General Assembly of Virginia from the Joint Legislative Audit and Review Commission (JLARC). It states that total incentive spending was $1.1 billion in FY23 and that the sales and use tax exemption for data centers accounted for 42 percent of all incentive spending over the decade ($1.7 billion). It states that annual estimates for the data center exemption now range from $412 million to $685 million, where previous estimates ranged from $80 million to $100 million per year. It also states that nearly three-fourths of incentive spending between FY14 and FY23 was for tax incentives.
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“Economic Development Incentives 2024: Spending and Performance, JLARC (November 7, 2024).”
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Commonwealth of Virginia
November 7, 2024
Report to the Governor and the General Assembly of Virginia
Economic Development Incentives 2024
Spending and Performance
JOINT LEGISLATIVE AUDIT
AND REVIEW COMMISSION
Joint Legislative Audit and Review Commission
Chair
Delegate Mark D. Sickles
Vice-Chair
Senator Mamie E. Locke
Delegate Betsy B. Carr
Senator R. Creigh Deeds
Senator Adam P. Ebbin
Delegate Charniele L. Herring
Senator Ryan T. McDougle
Senator Jeremy S. McPike
Delegate Sam Rasoul
Delegate Marcus B. Simon
Delegate Anne Ferrell Tata
Delegate Luke E. Torian
Delegate R. Lee Ware
Delegate Tony O. Wilt
Staci Henshaw, Auditor of Public Accounts
JLARC staff
Hal E. Greer, Director
Kimberly Sarte, Associate Director for Ongoing Oversight and Fiscal Analysis
Ellen Miller, Chief Economic Development and Quantitative Analyst
Information graphics: Nathan Skreslet
Managing Editor: Jessica Sabbath
Economic analysis
Terance J. Rephann, Regional Economist
Weldon Cooper Center for Public Service
JLARC Report 597
©2024 Joint Legislative Audit and Review Commission
jlarc.virginia.gov
Contents
Summary i
Economic Development Incentives 2024 1
State spent $3 billion on incentives FY14–FY23 1
Incentives have increased in number and spending 3
Approximately 5,000 projects were awarded $2 billion in grants FY14–FY23 5
Through tax incentives, businesses saved $3 billion FY14–FY23 20
Businesses obtained $143 million in loans and gap funding through 24
financing programs FY14–FY23
Grants have higher economic benefits than tax incentives 26
Appendixes
A: Study mandate 29
B: Research methods and activities 31
C: Incentive program descriptions 38
D: Spending or tax expenditure by incentive 57
E: Regional distribution of grant awards 63
F: Average employment size of grant recipients by program 65
G: Project-specific goals used by grant programs 66
H. Economic and revenue impact analysis 68
I: Agency responses 83
Economic Development Incentives 2024 – Summary
WHAT WE FOUND
• Virginia spent $4.1 billion on 96 economic development incentive programs
from FY14 to FY23. This amounts to 1.9 percent of total general fund spend-
ing during this time. Total spending on incentives was $1.1 billion in FY23.
• Total incentive spending increased between
WHY WE DID THIS STUDY
FY14 and FY23, with significant increases
starting in FY19 because of improved re- Through language in the Appropriation Act, the General As-
sembly directed the Joint Legislative Audit and Review Com-
porting requirements for the data center ex- mission (JLARC) to review and evaluate economic develop-
emption. Previous estimates for the value ment initiatives. Topics include spending on incentives and
of the data center exemption ranged from activity generated by businesses receiving incentives; the
$80 million to $100 million per year. How- economic benefits of incentives; and the effectiveness of in-
centives.
ever, with the improved reporting, annual
JLARC releases two reports each year: a high-level summary
estimates for the exemption now range
report on overall spending and business activity and an in-
from $412 million to $685 million. depth report on the effectiveness of selected individual
incentives. (See Appendix A: Study mandate.) JLARC
• Data centers were by far the largest benefi- contracted with the Weldon Cooper Center for Public Service
ciary of incentive spending, which reflects to perform the analysis for both reports.
the sizable capital investment by the indus- This report is the seventh in the series of overall spending
try. The sales and use tax exemption for and business activity and focuses on incentives that were
data centers accounted for 42 percent of all provided between FY14 and FY23.
incentive spending over the decade ($1.7
billion).
• Spending on incentives other than the data center exemption also increased
significantly in FY23, including the Virginia Business Ready Sites Program and
the Tourism Development Financing Program.
• A majority of the incentive programs that have been adopted since 2017 have
been custom grants. Although custom grants constitute a fairly large share of
incentive program funding, payouts are generally contingent on meeting per-
formance milestones and therefore vary from year to year. Custom grant
spending decreased slightly from $21 million in FY22 to $16 million the fol-
lowing year.
• Nearly three-fourths of incentive spending between FY14 and FY23 was for
tax incentives, primarily sales and use tax exemptions, with the remainder split
between tax credits and single sales apportionment for manufacturers and data
centers. Grants made up nearly all the remaining one-fourth of incentive
spending.
i
Economic Development Incentives 2024 – Summary
• Collectively, grant programs awarded $2 billion to 5,000 projects between
FY14 and FY23. There was a substantial one-year increase in grant awards in
FY19, primarily because of the $750 million custom grant award for Amazon
HQ2.
• Completed projects receiving grant funds created approximately 61,000 jobs
and $15 billion in capital investment or other spending. The majority of these
projects met their capital investment goals, but just over one-quarter met their
job creation goals.
• Business savings from tax incentives increased in FY23, even when removing
the data center exemption, primarily because of increased usage of the Major
Research and Development Tax Credit and the Coalfield Employment En-
hancement Tax Credit. Even though the Coalfield Employment Enhancement
Tax Credit expired in 2022, businesses can still claim credits they were awarded
in future years.
• Grants have higher economic benefits than tax incentives. A higher proportion
of grant funding is directed to projects in traded industry sectors, which tend
to have high economic multipliers and pay higher wages. In addition, unlike
many tax incentives (with exception of the data center exemption), businesses
that receive awards from most grant programs also must commit to creating
jobs and making capital investments.
ii
Economic Development Incentives 2024
Virginia provides economic development incentives to encourage businesses to locate
or expand their operations in the state as part of its economic development strategy.
To better understand the effectiveness of these incentives in stimulating business ac- For purposes of this re-
tivity, the General Assembly directed the Joint Legislative Audit and Review Commis- port, incentive spending
refers to (1) actual state
sion (JLARC) to review spending on and performance of economic development in- expenditures in the form
centives such as grants, tax preferences, and other assistance. (See Appendix A.) of grant awards or other
JLARC contracted with the University of Virginia’s Weldon Cooper Center for Public financing and (2) esti-
Service to perform the evaluation. mated tax expenditures,
in the form of forgone
This report is the seventh in a series of annual reports about Virginia’s economic de- revenue, through tax
velopment incentives, trends in state spending on incentives, and performance of in- credits, sales and use tax
exemptions, or other in-
centive programs. Every other year the reports in this series include information about
centives.
the economic benefits of total spending on economic development incentives, and
For most grants, spend-
information on economic benefits is included in this year’s report. ing is allocated to the
This report provides summary information on 96 economic development incentive fiscal year in which
awards were approved.
programs, including grants, tax preferences, business loans, and gap financing. The For custom grants,
incentive programs covered in this report are funded by the state, provided funding spending is allocated to
for businesses between FY14 and FY23, and have a primary purpose of promoting the fiscal year in which
economic activity through location or expansion of businesses. Businesses may also grant payments are
made to the company.
benefit from a variety of other state grants, tax credits, and exemptions for purposes
For refundable tax cred-
other than economic development; these programs are not included in this report.
its, such as the film
credit, spending may re-
State spent $4 billion on incentives FY14–FY23 flect actual expenditures
rather than forgone rev-
Virginia spent $4.1 billion on 96 economic development incentive programs over the enue.
past 10 fiscal years (Figure 1), for an average of $410 million per year (not adjusted See Appendix B for more
for inflation). Nearly all incentives are funded by the state general fund, except for information on methods
incentives provided by the Tobacco Region Revitalization Commission and several used to estimate spend-
ing for each program.
transportation infrastructure incentives. Spending on incentives represented approxi-
mately 1.9 percent of total general fund spending between FY14 and FY23. As in past
reports in this series, the majority of spending on incentives was forgone revenue
from tax incentives. Sales and use tax exemptions made up 58 percent of spending,
and tax credits and single sales apportionment for manufacturers together made up
16 percent of spending (Figure 1). Almost all the remaining spending was for grants.
Spending is concentrated in a small number of incentives. Ten incentives accounted
for 74 percent of the incentive spending between FY14 and FY23 (Table 1). The
largest incentive during the 10-year period—the data center exemption—accounts for
almost 42 percent of spending on incentives and is almost eight times larger than the
next-largest incentive, the manufacturing single sales factor apportionment tax incen-
tive. Two programs, the Virginia Business Ready Sites Program and Tourism Devel-
opment Financing Program, ranked among the 10 largest state incentives in this year’s
1
Economic Development Incentives 2024
report because of historically high awards during FY23. (See Appendix D for more
information on spending on each incentive by year.)
FIGURE 1
Nearly three-fourths of spending on incentives was for tax incentives (FY14–
FY23)
SOURCE: Weldon Cooper Center analysis of economic development incentive programs.
NOTE: Estimates may not sum because of rounding. Adjusted for canceled projects, recaptures, and award
reductions. Exemptions exclude the 1 percent sales tax for localities and the additional amounts collected
in localities with higher rates, such as Northern Virginia and the Historic Triangle. For custom grants, actual
payments are allocated to the fiscal year when they were paid. Estimate for single sales apportionment
includes both manufacturer and data center estimates.
2
Economic Development Incentives 2024
TABLE 1
Ten incentives are responsible for over 70% of spending (FY14–FY23)
10-year period (FY14–FY23) This report includes
more precise estimates
Incentive Spending % of spending
of the tax revenue im-
Data center exemption a $1,710M 42% pact of the data center
Manufacturing single sales factor apportionment 218 5 exemption than prior re-
ports. Data centers using
Railroad Common Carriers Exemption 200 5
the exemption are now
Coalfield Employment Enhancement Tax Credit 150 4 required to report to the
Commonwealth’s Development Opportunity Fund 148 4 Virginia Economic Devel-
Airline Common Carriers Exemption 110 3 opment Partnership their
annual eligible exemp-
Real Property Improvement Grant (Enterprise zone) 107 3
tion expenditures. Be-
Virginia Business Ready Sites Program 96 2 cause VEDP estimates of
Tourism Development Financing Program 88 2 eligible expenditures are
available only for FY21–
Major Research and Development Tax Credit 71 2
FY23, only these figures
Subtotal $2,897.0M 71% are reported here.
All others $1,203.5M 29%
TOTAL $4,100.5M 100%
SOURCE: Weldon Cooper Center analysis of economic development incentives.
NOTE: Excludes several tax preferences for which data was not available. Adjusted for canceled projects,
recaptures, and award reductions. Exemptions exclude the 1 percent sales tax for localities and the addi- Custom grants are of-
tional amounts collected in some localities, such as Northern Virginia and the Historic Triangle. (See Ap-
fered to attract unique
pendix C for a description and Appendix D for spending for all incentives.)
business location or ex-
a
Amount reflects spending for only a three-year period (FY21–FY23) because the method for collecting and reporting
information on the exemption changed. pansion project oppor-
tunities to the state. The
state’s typical package of
Seven of these incentives were also among the top incentives for spending in FY23, incentives (grants, tax
with the data center exemption being the largest incentive that year ($683 million in credits, exemptions, etc.)
spending or 62 percent of spending). Other incentives that were among the top in- is relatively modest com-
pared with a custom
centives for spending in FY23 and the entire 10-year period include the railroad and grant. For example,
airline common carrier exemptions, manufacturers single sales factor apportionment, grant awards for non-
Commonwealth’s Development Opportunity Fund, Real Property Improvement custom projects were an
Grant, Virginia Business Ready Sites Program, and Tourism Development Financing average of $193,000 per
project between FY14
Program. and FY23, compared
with custom grants,
Incentives have increased in number and spending which were an average
of $87M per project (or
The state has increased its economic development incentive programs over time. The $27M per project ex-
oldest is the Economic Development Access Program—a grant program designed to cluding the outsized
custom grant for Ama-
improve transportation access for industrial sites—which was adopted in 1956. In the zon HQ2).
33 years between 1956 and 1989, the state adopted only 14 incentives that are still
active. Since 1989, the state has adopted an additional 83 incentives, and half of the
currently active incentives were adopted since 2010.
The state has also started adopting more customized performance grants, which are
designed to attract specific companies to locate or expand in the state. Fourteen of
3
Economic Development Incentives 2024
the 19 incentive programs that have been adopted since 2018 have been customized
performance grants (Figure 2).
FIGURE 2
Majority of new economic development incentives since 2017 have been
custom grants
SOURCE: Weldon Cooper analysis of economic development incentive programs.
NOTE: Incentives are grouped by calendar year they were adopted by the General Assembly. Siemens Gamesa is part
of a bond authorization for onsite improvements at the Port of Virginia.
Total economic development incentive spending increased after FY19 (Figure 3), even
without the improved estimates of the data center exemption’s tax revenue impact.
Spending incentives other than the data center exemption greatly increased in FY23
because of large amounts of spending for the Virginia Business Ready Sites Program,
the Tourism Development Financing Program, and the Major Research and Develop-
ment Tax Credit that year.
Although custom grant programs constitute a relatively large share of incentive pro-
gram funding, payouts are generally contingent on meeting performance milestones
and can vary from year to year. Custom grant spending decreased slightly from $21
million in FY22 to $16 million in FY23. The largest custom grant spending was in
FY20 due to a $50 million payment for a Micron custom grant.
4
Economic Development Incentives 2024
FIGURE 3
Spending on incentives (even without the data center exemption) increased
after FY19, particularly in FY23
Economic development
SOURCE: Weldon Cooper Center analysis of economic development incentive programs. grants are financial in-
NOTE: Adjusted for canceled projects, recaptures, and award reductions. Amounts differ from earlier economic de- centives provided to
velopment incentives reports because of project cancelations, recaptures for nonperforming projects, and adjusted businesses in return for
reporting on completed projects. For custom grants, payments are allocated to the fiscal year when they were paid. locating in the state or
Not adjusted for inflation. The trend is similar if adjusted for inflation.
expanding business ac-
a
Data center exemption amounts are reported only for FY21–FY23 because the method for collecting and reporting
tivity and increasing
information on the exemption changed. Exemption excludes the 1 percent sales tax for localities and the additional
amounts collected in some localities, such as Northern Virginia and the Historic Triangle. general fund revenue to
the state. Some grants
are discretionary, which
Approximately 5,000 projects were awarded $2 means that the state can
negotiate the terms of
billion in grants FY14–FY23 the grant with the busi-
ness. Other grants are
Even though sales and use tax incentives—particularly exemptions—have historically automatically awarded if
had a larger overall impact on the state budget, Virginia’s grant programs are the most the business meets the
minimum requirements.
widely recognized economic development incentive. Custom grants in particular re-
Grants are not repaid if
ceive considerable media attention because they are provided to business location or businesses meet pro-
expansion projects promising to create a substantial number of jobs and make sub- gram requirements.
stantial capital investments. For example, Virginia’s $750 million custom grant award Several programs that
for Amazon to locate its East Coast headquarters in Virginia received national atten- are not commonly iden-
tion in fall 2018 and early 2019. Grant payments are scheduled to begin in FY27 and tified as grant programs
are included in this cate-
end in FY43. To receive the full award, Amazon must create at least 37,850 jobs with gory because they pro-
average salaries of at least $150,000 and make a capital investment of at least $2 billion. vide financial assistance
to businesses (or to a
Collectively, Virginia’s economic development incentive grant programs—which are
third party for their ben-
typically funded with general funds with some exceptions—awarded more than $2 efit). These programs in-
billion to 5,021 projects between FY14 and FY23 (Table 2). Thirteen of the 36 grant clude the Common-
programs each provided more than $30 million in awards during the time period. wealth Research Com-
mercialization Fund and
For most grant programs, awards were also paid out during the 10-year period. Virginia Leaders in Ex-
However, only about half of the $2 billion in grant awards was paid out or “spent” port Trade (VALET) Pro-
gram.
5
Economic Development Incentives 2024
between FY14 and FY23, because over $1 billion in custom awards for 12 compa-
nies (including Amazon HQ2, Huntington Ingalls Shipbuilding, and Morgan Olson)
are not scheduled to be paid out until after FY23. Spending on grants, and thus total
incentives, will increase substantially in the future as these custom grant awards are
paid.
TABLE 2
Grant programs made approximately 5,000 awards totaling $2 billion (FY14–FY23)
Total FY14–FY23 Annual average
Program Award Award
# of awards # of awards
amount amount
Major Headquarters Workforce Grant (Amazon HQ2) a $750.0M 1 n.a. n.a.
Commonwealth’s Opportunity Fund 200.5 313 $20.0M 31
Tobacco Region Opportunity Fund 116.7 228 11.7 23
Real Property Investment Grant (Enterprise Zone) 106.5 1,514 10.7 151
Virginia Business Ready Sites Program 96.6 43 13.8 6
Precision Plastic Manufacturing Grant Program 75.0 1 n.a. n.a.
(LEGO Group) a b
Virginia Jobs Investment Program 73.0 708 7.3 71
Semiconductor Manufacturing Grant (Micron 2019) a c 70.0 1 n.a. n.a.
Virginia Investment Performance Grant 57.5 71 5.8 7
Governor's Motion Picture Opportunity Fund 52.6 44 5.3 4
Advanced Shipbuilding Production Facility Grant
46.0 1 6.6 0
(Huntington Ingalls) a
Virginia Economic Development Incentive Grant 40.3 11 4.0 1
Tobacco Commission Megasite Grant 35.8 14 3.6 1
Transportation Partnership Opportunity Fund 29.5 12 3.0 1
Job Creation Grant (Enterprise Zone) 24.5 537 2.5 54
Technology Development Grant Fund (Microsoft) a 22.5 1 n.a. n.a.
Commonwealth Commercialization Fund d 21.5 345 2.1 35
Economic Development Access Program 19.8 33 2.0 3
GO Virginia 18.6 23 3.1 4
Virginia Talent Accelerator Program f 17.3 41 4.3 10
Offshore Wind Component Grant Program 17.1 1 n.a. n.a.
(Siemens Gamesa) a c e
Truck Manufacturing Grant Fund (Volvo) a c 16.5 1 n.a. n.a.
Rail Industrial Access Program 13.7 33 1.4 3
Nitrile Glove Manufacturing Training Program 13.1 1 6.6 1
(Blue Star) a
6
Economic Development Incentives 2024
Total FY14–FY23 Annual average
Program Award Award
# of awards # of awards
amount amount
Agriculture and Forestry Industries Devel. Grant 13.0 125 1.3 13
Special Workforce Grant Fund (Amazon Web Services) a 10.5 1 n.a. n.a.
Shipping and Logistics Headquarters Grant Program 9.0 1 n.a. n.a.
(CMA CGM) a
Pharmaceutical Manufacturing Grant Program (Merck) a 7.5 1 n.a. n.a.
Advanced Production Grant Program and Fund 7.0 1 n.a. n.a.
(Morgan Olson) a
Port of Virginia Economic and Infrastructure Grant 7.0 23 n.a. n.a.
VALET Program 6.2 244 0.6 24
Small Business Investment Grant Fund 6.1 143 0.6 14
Small Business Jobs Grant Fund Program 4.0 63 0.7 11
Trade Show Assistance Program 3.9 437 0.6 62
New Company Incentive Program 1.3 2 0.4 1
Governor's New Airline Service Incentive Fund 0.3 2 0 1
All programs $2,010.4M 5,021 $351.6M 534
SOURCE: Weldon Cooper Center analysis of economic development incentive grants.
NOTE: Includes all awards and amounts prior to recaptures, cancelations, or reductions. For this reason, amounts for the Tobacco Region
Opportunity Fund, Commonwealth’s Development Opportunity Fund, and Virginia Jobs Investment Program are higher than amounts
shown in Table 1. Total award amounts for custom grants are shown. The Small Business Jobs Grant Fund Program was eliminated by
the 2020 General Assembly.
a
These grants provide custom one-time awards that are or will be paid out over several years based on performance. The $10.5 million
Special Workforce Grant (Amazon Web Services) and $70.0 million Semiconductor Manufacturing Grant (Micron) have been fully paid.
b
Nineteen million of the $75 million in grant funding for the Precision Plastic Manufacturing Grant (LEGO Group) is from Virginia
Business Ready Sites Program funding. c. Program has been canceled. d In 2020, the Commonwealth Research Commercialization Fund
was combined with other programs to become the Commonwealth Commercialization Fund. e The Offshore Wind Component Grant
(Siemens Gamesa) is not a custom grant because it is financed through a bond authorization, but it is included here as a grant because
it is more like a grant than a tax incentive or loan program, and it also is a custom incentive. Siemens Gamesa announced in November
2023 that it was canceling the project because of market conditions and company outlook; the incentive was canceled in FY24, and it
will be reflected in next year’s report. f The Virginia Talent Accelerator Program was created in 2019 and began making awards in FY20.
The program provides recruitment and training services and is not a cash grant to a company. Its value is estimated and represents the
internal cost of the accelerator services at the time of announcement.
Grant awards targeted corporate headquarters and manufacturing
sectors and urban localities
Three-quarters of grant award amounts were directed to corporate headquarters or
manufacturers between FY14 and FY23 (Figure 4). Thirty-nine percent of grant
awards were directed to businesses in the corporate headquarters sector, almost all of
which was the sizable custom grant award for Amazon HQ2. Another 36 percent was
directed to businesses in the manufacturing sector. The manufacturing sector is com-
monly represented because grant programs generally target companies in traded in-
dustry sectors, which export at least half their goods or services outside the state.
7
Economic Development Incentives 2024
Targeting these businesses is desirable because they bring new revenue into the state.
Corporate headquarters is also a traded industry sector, but until FY20, the state gen-
erally provided fewer and smaller grants for headquarters locations or expansions.
FIGURE 4
Three-quarters of grant award amounts were directed to corporate
headquarters and manufacturers (FY14–FY23)
SOURCE: Weldon Cooper Center analysis of economic development incentive grants.
NOTE: The “other industries” category includes businesses in a variety of sectors such as agriculture and forestry,
construction, utilities, finance and insurance, wholesale or retail trade, transportation and warehousing, and other
service sectors. Estimates may not sum because of rounding.
Geographically, the largest amount of grant awards went to urban localities, such as
Arlington County, Fairfax County, and the City of Newport News. Several less popu-
lated counties—such as Henry County and Pittsylvania County—also received large
amounts. Ten localities received approximately 68 percent of the total amount
awarded for the period (Table 3).
8
Economic Development Incentives 2024
TABLE 3
Businesses in 10 localities received 68 percent of total grant award amount
(FY14–FY23)
% of total # % of total
Locality Amount awarded amount awards awards
Arlington County $791M 39.3% 99 2.0
Chesterfield County 124 6.2 79 1.6
Fairfax County 78 3.9 291 5.8
Newport News city 77 3.8 235 4.7
Manassas city 71 3.5 14 0.3
Richmond city 70 3.5 470 9.4
Henry County 55 2.7 128 2.5
Henrico County 39 1.9 243 4.8
Norfolk city 36 1.8 191 3.8
Pittsylvania County 33 1.8 88 0.2
Subtotal $1,373M 68.3% 1,838 36.6%
All others $637M 31.7% 3,183 63.4%
TOTAL $2,010M 100.0% 5,021 100.0%
SOURCE: Weldon Cooper Center analysis of economic development incentive grants.
NOTE: Localities were not assigned to 10 Governor’s Motion Picture Opportunity Fund (GMPOF), eight GO Virginia,
and one Governor's New Airline Incentive Fund projects because the grants benefited more than one locality.
Businesses in urban localities in Northern Virginia and rural localities in the southern
part of the state received a large proportion of grant funding, relative to population
size (Figure 5). Businesses in the Northern Virginia Regional Commission service area
(the counties of Arlington, Fairfax, Loudoun, and Prince William and the cities of
Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park) received approxi-
mately 48 percent of all economic development incentive grant awards. Businesses in
Tobacco Region localities received approximately 16 percent of all economic devel-
opment grant awards, largely because of the contributions of the Tobacco Commis-
sion’s Tobacco Region Opportunity Fund and Megasite Grant programs and, in Henry
County, the Business Ready Sites Program. The highest per capita award amounts
were in:
• Arlington County ($3,294) primarily for the location of Amazon HQ2;
• Greensville County ($1,847) primarily for development of the Mid-Atlantic
Advanced Manufacturing Center;
• Manassas City ($1,745) primarily for the Micron expansion;
• Brunswick County ($1,513) primarily for the location of a Dominion Power
gas power plant that received $30 million in financial assistance; and
• Henry County ($1,087) primarily for the development of Commonwealth
Crossing Business Centre.
(See Appendix E for maps of the regional distribution of grant awards, overall and
per capita.)
9
Economic Development Incentives 2024
FIGURE 5
Awards per capita are concentrated in Arlington, Manassas, and rural
localities in Southern Virginia (FY14–FY23)
SOURCE: Weldon Cooper Center analysis of economic development incentive grants.
The award amounts per capita have slightly positive correlations with the local unem-
ployment rate, poverty rate (which increases when the uniquely large Amazon HQ2
custom grant in Arlington is excluded), and percentage of population that is Black,
indicating that more funds are generally provided to businesses in localities that are
economically disadvantaged. The number of awards per capita has a much higher
positive correlation with these variables.
Majority of grant projects were for business locations that had fewer
than 100 employees at the time of the award
Two-thirds of the grant awards between FY14 and FY23 went to business locations
that had fewer than 100 employees at the time the awards were made (Figure 6). Of
this group, 56 percent were for business locations with fewer than 25 employees.
These businesses received grant awards from programs, such as the Small Business
Investment Grant or Commonwealth Commercialization Fund, which typically make
awards to start-up businesses with 10 or fewer employees, on average. These projects,
however, represented only 16 percent of grant award amounts.
In contrast, 17 percent of grant awards were for large businesses with 250 or more
employees, and these projects accounted for more than three-quarters of grant award
amounts. Custom grants and six other grant programs—the Transportation Partner-
ship Opportunity Fund, Virginia Talent Accelerator Program, Virginia Investment
Performance Grant, Virginia Economic Development Incentive Grant, Common-
10
Economic Development Incentives 2024
wealth’s Development Opportunity Fund, and Port of Virginia Economic and Infra-
structure Grant—tend to make awards to business locations with 250 employees or
more. (See Appendix F for the average employment size of grant recipients by pro-
gram.)
FIGURE 6
Majority of grant recipients were for business locations with fewer than 100
employees (FY14–FY23) Many businesses have
operations in multiple
locations. Grants and
other incentives are of-
ten provided to projects
that occur at a specific
business location.
SOURCE: Weldon Cooper Center analysis of economic incentive grant awards.
NOTE: Employment records were matched with 2,930 of the 5,021 awards (58 percent) and $1.3 billion of $2.0 billion
(65 percent) in total awards. The numbers and percentages shown in the figure reflect a weighted distribution of
awards and amounts using information from the matched records.
Grant awards trended upwards recently because of large custom
grant awards
Grant awards had generally been stable over time, until a substantial increase in FY19
because of large custom grant awards for Amazon HQ2, Amazon Web Services, and
Micron that totaled $830.5 million (92 percent of total grant awards) (Figure 7).
Awards increased in FY21 because of custom grants for Microsoft and Volvo totaling
$39.0 million. They increased again in FY22 because of custom grants or other incen-
tives for Blue Star Manufacturing, CMA CGM, LEGO Group, and Siemens Gamesa,
totaling $114.2 million. (See Appendix D for grant awards by program.)
11
Economic Development Incentives 2024
FIGURE 7
Grant awards spiked in FY19 and have trended upward since FY20 because of
large custom grant awards
SOURCE: Weldon Cooper Center analysis of economic incentive grant awards.
NOTE: Adjusted for canceled projects, recaptures, and award reductions. Amounts differ from earlier economic de-
velopment incentives reports because of project cancelations, recaptures for nonperforming projects, and adjusted
reporting on completed projects. Sizable custom grants were awarded to Amazon HQ2 ($750 million), Micron ($70
million), and Amazon Web Services ($10.5 million) in FY19. Not adjusted for inflation. (The trend is the same if ad-
justed for inflation.) The Offshore Wind Component Grant is included here with other grants to keep it with other
custom incentives, which are grants, and because it is more like a grant program than a tax incentive or loan. This
grant was canceled in FY24, and this will be reflected in next year’s report.
Programs vary in amount awarded per job created and level of
business investment
The size of grant awards varied widely by program (Table 4). Awards ranged from an
average high of $3.7 million to a low of $8,977 per project, excluding the custom
grant awards. Custom grant awards—which tend to be much larger—ranged from
$7.0 million to $750 million.
The size of grant awards also varied when compared with the number of jobs created
or investment made (Table 4). Grant programs require projects to meet certain mini-
mum requirements to be eligible for grant funding. These minimum requirements vary
based on program goals, but the most common are the creation of jobs paying wages
over a minimum threshold and some form of business investment or spending in
Virginia. The average grant award per expected job for Virginia projects was $7,612
between FY14 and FY23, but it ranged from a high of $63,291 per job (custom grant
for Micron) to a low of less than $1,000 (Virginia Jobs Investment Program and Small
Business Jobs Grant Fund). The average grant award for capital investment or addi-
tional spending was $38 per $1,000 spent and ranged from a high of $3,516 (custom
12
Economic Development Incentives 2024
grant for Microsoft) to a low of $4 (Agriculture and Forestry Industries Development
Grant).
TABLE 4
Average grant awards by program varied widely (FY14–FY23)
Average award amount per
$1,000 in spend-
Job created in
ing or investment
Project Virginia
in Virginia
(expected)
(expected)
Custom grants
Semiconductor Manufacturing Grant Fund (Micron) $70,000,000 $23 $63,291
Offshore Wind Component Grant (Siemens Gamesa) 17,100,000 204 55,161
a
Pharmaceutical Manufacturing Grant (Merck) 7,500,000 8 49,342
Advanced Shipbuilding Production Facility Grant
46,000,000 61 46,000
(Huntington Ingalls)
Precision Plastic Manufacturing Grant (LEGO Group) 75,000,000 72 42,589
Shipping and Logistics Headquarters Grant (CMA CGM) 9,500,000 264 22,892
Truck Manufacturing Grant Fund (Volvo) 16,500,000 42 21,236
Major Headquarters Workforce Grant Fund (Amazon HQ2) 750,000,000 375 19,815
Technology Development Grant Fund (Microsoft) 22,500,000 352 15,000
Advanced Production Grant (Morgan Olson) 7,000,000 121 9,957
Special Workforce (Amazon Web Services) 10,500,000 125 7,000
Nitrile Glove Manufacturing Training Program (Blue Star) 13,101,000 18 5,317
Average custom grants $87,020,323 $114 $21,080
All other grants
Transportation Partnership Opportunity Fund $2,460,196 39 $14,622
Economic Development Access Program 599,049 210 9,700
Small Business Investment Grant Fund 42,594 215 8,652
Virginia Investment Performance Grant 809,859 12 8,483
GO Virginia (site development) 810,751 186 6,360
Virginia Economic Development Incentive Grant 3,663,636 67 6,012
Tobacco Region Opportunity Fund 512,026 18 4,206
Commonwealth Opportunity Fund 640,524 15 3,937
Rail Industrial Access Program 413,687 11 3,481
Agriculture and Forestry Industries Devel. Grant 103,799 4 3,429
New Company Incentive Program 656,500 254 2,951
Port of Virginia Economic and Infrastructure Grant 303,957 n.a. 2,142
13
Economic Development Incentives 2024
Average award amount per
$1,000 in spend-
Job created in
ing or investment
Project Virginia
in Virginia
(expected)
(expected)
Job Creation Grant (Enterprise Zone) $45,673 n.a. $2,012
Small Business Jobs Grant Fund Program 63,133 42 847
Virginia Jobs Investment Program 103,038 7 844
Commonwealth Research Commercialization Fund 62,317 302 n.a.
Real Property Investment Grant (Enterprise Zone) 70,373 37 n.a.
Governor's Motion Picture Opportunity Fund 1,195,116 n.a. n.a.
Governor's New Airline Service Incentive Fund 145,000 n.a. n.a.
Tobacco Commission Megasite Grant 2,559,305 n.a. n.a.
Trade Show Assistance Program 8,977 n.a. n.a.
VALET Program 25,389 n.a. n.a.
Virginia Business Ready Site Program 2,246,609 n.a. n.a.
Virginia Talent Accelerator Program 421,067 n.a. n.a.
Average, non-custom projects $192,888 $22 $4,503
Average, all projects $400,402 $38 $7,612
SOURCE: Weldon Cooper Center analysis of economic development incentive grants.
NOTE: Expected jobs and spending or investment were used for programs that awarded grants prior to when project performance began.
Actual jobs and spending or investment were used for programs for which performance already occurred prior to projects receiving a grant
award. Average award amounts are calculated using total spending across programs divided by the total number of projects, amount of ex-
pected capital investment, and expected jobs across programs. The Small Business Jobs Grant Fund Program was eliminated by the 2020 General
Assembly.
n.a. indicates that job creation or investment is not among the criteria considered for obtaining the grant.
a
The Offshore Wind Component Grant (Siemens Gamesa) is included here with other grants to keep it with other custom incentives, which are
grants, and because it is more like a grant program than a tax incentive or loan.
From FY14 to FY23, only 7 percent of awards were more than $500,000. However,
these larger awards accounted for 83 percent of grant funding (Figure 8). In fact, the
12 custom grant awards alone accounted for 52 percent of grant funding.
14
Economic Development Incentives 2024
FIGURE 8
Seven percent of grant awards accounted for over 80 percent of total grant
funding (FY14–FY23)
The 61,000 jobs and $15
billion in capital invest-
ment or other spending
SOURCE: Weldon Cooper Center analysis of economic development incentive grants.
NOTE: Number of grants awarded is 5,021. Total amount awarded is $2.0 billion (not adjusted for cancelations, are unduplicated
recaptures, and refunds). amounts, because many
projects receive more
than one grant. For ex-
Completed projects created over 61,000 jobs and $15 billion in ample, Navy Federal
business investment and spending Credit Union received a
Commonwealth’s Devel-
Projects that received grant awards between FY14 and FY23 and completed their lo- opment Opportunity
cation or expansion project (including those that did not perform), collectively created Fund grant, Transporta-
tion Partnership Oppor-
an estimated 61,000 jobs and $14.7 billion in capital investment or other spending
tunity Fund grant, and
(Table 5). Completed projects that received Virginia Jobs Investment Program grants Virginia Jobs Investment
accounted for the largest share of jobs (39,304) and capital investment and other Program grant to create
spending ($6.1 billion). Projects funded through the Job Creation Grant ranked sec- 1,400 jobs and make a
ond in job creation (12,188 jobs). These programs are also among the least expensive $100 million capital in-
vestment in Frederick
in terms of the incentive amount per job created. County.
TABLE 5
Completed projects created over 61,000 jobs and $15 billion in business
spending or investment (FY14–FY23)
# of Spending or Jobs
Program projects investment ($M) created
Virginia Jobs Investment Program 571 6,080 39,304
Job Creation Grant (Enterprise Zone) 537 n.a. 12,188
Commonwealth’s Development Opportunity Fund 181 4,532 11,806
Tobacco Region Opportunity Fund 144 2,263 4,624
Port of Virginia Economic and Infrastructure Grant 23 n.a. 3,264
15
Economic Development Incentives 2024
Completed projects in- # of Spending or Jobs
clude those whose grant
Program projects investment ($M) created
performance period
ended during the time Special Workforce Grant Fund (Amazon Web Services) 1 113 1,682
period analyzed, includ- Small Business Jobs Grant Fund Program 57 1 1,442
ing projects that did not Transportation Partnership Opportunity Fund 6 172 1,093
perform. Not all projects
Agriculture and Forestry Industries Devel. Grant 46 513 829
that received a grant
award between FY14 Rail Industrial Access Program 20 324 658
and FY23 had completed Virginia Investment Performance Grant 21 261 379
their performance at the
end of FY23. Completed Commonwealth Commercialization Fund 251 60 n.a.
projects represent $430 Economic Development Access Program 24 248 n.a.
million in awards.
Governor's Motion Picture Opportunity Fund 39 493 n.a.
It is likely that the ma-
Real Property Investment Grant (Enterprise Zone) 1,514 2,899 n.a.
jority of the jobs and
business investment or Small Business Investment Grant 2 0 0
spending by completed Virginia Economic Development Incentive Grant 2 0 0
projects would have oc-
curred without incen- Total (duplicated): 3,439 17,957 77,268
tives. Trying to deter- Total (unduplicated): 14,747 60,975
mine the effect of incen-
tives with precision is SOURCE: Weldon Cooper Center analysis of economic development incentive grants.
difficult because site se- NOTE: Completed projects represented about $430 million in total awards across programs. Some grant programs,
lection decisions are such as the Major Eligible Employer Grant and some custom grants, had no completed projects during this time
period. Jobs are not counted for the Governor's Motion Picture Opportunity Fund program because they are not
based on a variety of
permanent full-time jobs. Many projects receive grants from more than one program. No unique identifiers exist to
factors. The success in
easily identify projects that received grants from multiple programs. The unduplicated number of jobs and invest-
swaying business deci- ment or spending is an estimate based on a review of projects with similar business names, locations, time periods,
sions varies by program. and other factors. VALET and Trade Show Assistance programs (193 and 437 completed projects, respectively) are
Research on incentives not included in the table because their goals are to increase a company's international sales, and job creation and
nationally suggests that capital investment are not reported by program participants. The Tobacco Commission Megasite Grant, Virginia
between 75 percent and Business Ready Sites Program, and Virginia Talent Accelerator Program (13, 7, and 9 completed projects respectively)
98 percent of projects did not report job creation or investment completion attainment.
n.a. indicates that job creation or investment is not one of the criteria for receiving the grant.
would have occurred an-
yway without incentives
(Bartik 2018). Some pro-
Majority of completed projects met capital investment goals, and
grams, however, have
been found to have only one-quarter met their job creation goals
higher rates of success in Some grant programs establish an “upfront” award agreement with project-specific
swaying business deci-
sions.
goals. The most common project-specific goals are job creation, capital investment,
and average wages paid. Several programs use alternative goals that are more relevant
to their program. For example, transportation-related programs, such as the Rail In-
dustrial Access Program and Port of Virginia Economic and Infrastructure Grant,
establish project-specific goals for rail car volume and Virginia port usage, respectively.
(See Appendix G for goals across programs.)
Sixty-four percent of completed projects met or exceeded their project-specific goals
for capital investment or other spending (Figure 9). Forty-four percent met their av-
erage wage goals, and 26 percent met their job creation goals.
16
Economic Development Incentives 2024
FIGURE 9
Majority of completed projects met their capital investment goals (FY14–FY23)
SOURCE: Weldon Cooper Center analysis of economic development incentive grants.
NOTE: N=1,358 duplicated projects. Only includes projects from programs that establish project-specific goals.
Attainment rates for project-specific goals varied widely by program (Table 6). The
Port of Virginia Economic and Infrastructure Development Grant Program is the
only program with multiple projects where all projects attained specific goals. Goal
achievement was especially low for some programs.
TABLE 6
Attainment of project-specific goals varied by program (FY14–FY23)
# of Job Capital Average All
Program
projects creation investment wage goals
Special Workforce Grant Fund
1 100% 100% n.a. 100%
(Amazon Web Services)
Port of Virginia Economic and
23 100 n.a. n.a. 100
Infrastructure Grant
Commonwealth Commercialization Fund 251 n.a. n.a. n.a. 86
Rail Industrial Access Program 20 n.a. 70 n.a. 70
Economic Development Access Program 24 n.a. 67 n.a. 67
Virginia Talent Accelerator Program 9 n.a. n.a. n.a. 44
Virginia Jobs Investment Program
82 n.a. 93 40% 26
Retraining
Commonwealth’s Development
181 23 41 51 20
Opportunity Fund
17
Economic Development Incentives 2024
# of Job Capital Average All
Program
projects creation investment wage goals
Tobacco Region Opportunity Fund 144 34 40 40 19
Virginia Investment Performance Grant 21 24 19 24 19
Virginia Jobs Investment Program-
489 25 79 41 13
Job Creation
Agriculture and Forestry Industries Devel.
46 43 54 61 20
Grant
Small Business Jobs Grant Fund 57 9 ** 56 0
Transportation Partnership Opportunity
6 0 33 n.a. 0
Fund
Virginia Economic Development
2 0 0 0 0
Incentive Grant
Small Business Investment Grant Fund 2 0 0 ** 0
Total 1,358 27% 64% 44% 32%
SOURCE: Weldon Cooper Center analysis of economic development incentive grants.
NOTE: Some programs have other goals, which are reflected in the “All goals” column. Some programs do not collect
information on average wage levels upon completion of the project. The goal of the VALET program is to increase
international sales, and 62 percent of the participants met or exceeded their goal for increased international sales.
The goal of the Virginia Talent Accelerator Program is job training, and the percentage in all goals is based on the
proportion of jobs that completed training.
n.a. indicates that job creation or investment is not one of the criteria for receiving the grant.
** indicates that data was not provided for the program.
Some grant programs were more successful overall in achieving goals for job creation
and capital investment, even though some of the projects did not achieve their pro-
ject-specific goals. For example, only 41 percent of completed projects that received
a Commonwealth’s Development Opportunity Fund grant fully achieved their capital
investment goals (Table 6). However, because some projects far exceeded their capital
investment goals, collectively all projects created 66 percent of the total capital invest-
ment that was expected (Table 7). The Commonwealth’s Development Opportunity
Fund also achieved 44 percent of its job creation and 132 percent of average wage
goals collectively. Most grant programs overall had success in achieving average wage
goals, even if they did not have overall success in achieving other goals.
TABLE 7
Projects for most grant programs collectively met or almost met their average
wage goals (FY14–FY23)
Job Spending or Average
Program
creation investment wage
Special Workforce Grant Fund (Amazon Web Services) 112% 135% 173%
Port of Virginia Economic and Infrastructure Grant 100 n.a. n.a.
Rail Industrial Access Program 75 107 n.a.
18
Economic Development Incentives 2024
Job Spending or Average
Program
creation investment wage
Agriculture and Forestry Industries Devel. Grant 65 67 119
Transportation Partnership Opportunity Fund 60 44 n.a.
Virginia Jobs Investment Program 57 89 95
Commonwealth’s Development Opportunity Fund 44 66 132
Small Business Jobs Grant Fund Program 33 1 103
Tobacco Region Opportunity Fund 23 46 95
Virginia Investment Performance Grant 13 22 73
Economic Development Access Program n.a. 364 n.a.
Small Business Investment Grant Fund 0 0 **
Virginia Economic Development Incentive Grant 0 0 0
Commonwealth Commercialization Fund n.a 106 n.a.
SOURCE: Weldon Cooper Center analysis of economic incentive grants.
NOTE: Not all projects collect average wage levels upon completion of the project to calculate the percentage of
projects that attained wage goals. The VALET program is excluded from the table because its goal is to increase inter-
national sales. Collectively, program participants increased international sales by 109 percent of the expected goal.
n.a. indicates that job creation or investment is not one of the criteria for receiving the grant.
** indicates that data was not provided for the program.
Grant awards totaling $194 million were canceled, reduced, or
recaptured because projects did not achieve goals
When projects do not go forward or do not meet their goals, the grant awards may be
canceled, reduced, or recaptured. Grant awards totaling $194 million (or 10 percent
of the total paid or committed between FY14 and FY23) were canceled, reduced, or
recaptured because the projects did not go forward or meet their goals (Figure 10).
Nearly 58 percent of the $194 million was never paid because projects did not go
forward and were canceled. Another 19 percent was not paid to projects for which
awards were reduced because the projects did not meet their goals.
19
Economic Development Incentives 2024
Agencies administering
grants reported recap- FIGURE 10
turing $45 million in Grant awards totaling $194 million were canceled, reduced, or recaptured
grant awards. In some (FY14–FY232)
cases, this may be less
than the full amount that
should have been recap-
tured according to grant
guidelines. The upcom-
ing in-depth reports on
these incentives will pro-
vide more information
about agency efforts to
recapture funding when
projects do not achieve
their goals.
Exemptions to Virginia’s
retail sales and use tax
can be claimed by busi-
nesses for qualifying
SOURCE: Weldon Cooper Center analysis of economic development incentive grant awards or award commitments
purchases.
and program information of recaptures, reductions, and cancelations. Numbers may not sum because of rounding.
Virginia’s retail sales and
use tax rate varies by lo-
cality: Williamsburg, Approximately $45 million was recaptured between FY14 and FY23 from 158 projects
James City, and York (7 that failed to meet their performance goals. Grant programs that make upfront award
percent); Northern Vir- payments include recaptures. Each of these programs recaptured the following per-
ginia, Hampton Roads,
centages of the funds they awarded:
and Central Virginia (6
percent); Danville, Char- • Commonwealth’s Development Opportunity Fund: 20 percent;
lotte, Gloucester, Halifax,
Henry, Northampton, • Agriculture and Forestry Industries Development grant: 14 percent;
Patrick, and Pittsylvania • Tobacco Region Opportunity Fund: 2 percent; and
(6.3 percent); rest of
state (5.3 percent). One • Small Business Investment Grant: 1 percent.
percent is retained by
the locality where the
purchase is made.
Through tax incentives, businesses saved $3 billion
The sales tax applies to FY14–FY23
the sale of certain goods
and services purchased
Virginia’s economic development tax incentives, which include exemptions, credits,
in the state and is gener- and single sales apportionment, resulted in $3 billion in tax savings to businesses be-
ally collected by the tween FY14 and FY23. Most ($1.7 billion or 57 percent) of this amount was from the
merchant at the point of data center sales and use tax exemption. To use this exemption, data centers must
sale.
meet minimum job creation and capital investment thresholds. Data centers using the
The use tax is levied on
exemption reported creating 2,150 new jobs collectively in FY22 and FY23 and mak-
out-of-state purchases
that are used in Virginia ing more than $38.5 million in capital investments. Ten other sales and use tax exemp-
and is self-assessed and tions each provided more than $20 million in incentives to businesses between FY14
remitted to the state by and FY23 (Table 8). Many of these exemptions are provided to capital-intensive in-
the consumer. dustries, such as data centers, railroads, and airlines, which make substantial equipment
purchases to start or upgrade their operations.
20
Economic Development Incentives 2024
TABLE 8
Sales and use tax exemptions provided an estimated $2.4 billion in tax savings
to businesses (FY14–FY23)
Total Average savings
Exemption savings ($M) per year ($M)
Information on job crea-
Data Centers Exemption a $1,710.2 $570.1
tion, spending, and
Railroad Common Carriers Exemption 199.6 20.0 other business require-
Airline Common Carriers Exemption 110.0 11.0 ments in return for re-
ceiving tax incentives is
Ships and Vessels Exemption 69.4 6.9
not readily available as it
Research & Development Exemption 51.1 5.1 is for grants.
Media Provider Equipment Exemption 48.3 4.8 Unlike for grants, many
Pollution Control Equipment & Facilities Exemption 34.7 3.5 tax incentives do not
Certain Printed Materials for Out-of-State Distribution Exemption 33.2 3.3 have specific job crea-
tion and capital invest-
Aircraft Parts, Engines, and Supplies Exemption 28.5 5.7 ment requirements. The
Film, Television, & Audio Production Inputs Exemption 26.6 2.7 one exception for which
Railroad Rolling Stock Exemption 24.7 2.5 information is readily
available is the data cen-
Virginia Spaceport Users Exemption 8.8 0.9
ter exemption because
Uniform Rental & Laundry Businesses Exemption 8.2 0.8 of new reporting re-
Semiconductor Manufacturers Exemption 6.5 0.6 quirements adopted in
2021.
Out-of-state Nuclear Facility Repair Exemption 6.2 0.6
Taxi Parts & Radios Exemption 3.5 0.4
Contractor Temporary Storage Exemption 1.1 0.1
Semiconductor Wafers Exemption 1.0 0.1
Electrostatic Duplicators Exemption 0.1 0.0
Apportionment formu-
Total $2,371.7M $639.1M las are used to ensure
SOURCE: Weldon Cooper Center analysis of economic development incentives. that states do not tax
NOTE: Exempted amounts are estimates and exclude the 1 percent sales tax for localities and, in most cases, the more than their fair
additional amounts collected in localities with higher rates, such as Northern Virginia and the Historic Triangle. (See share of income from
Appendix B for methodology used to estimate the sales and use tax exemptions.) multistate companies.
a
Amount reflects spending for only a three-year period (FY21–FY23) because the method for collecting and reporting Virginia’s standard for-
information on the exemption changed. mula uses three factors
(property, payroll, and
Economic development tax credits provided $441 million in savings to businesses be- sales) and double
weights the sales factor.
tween FY14 and FY23 (Table 9), accounting for about 15 percent of spending on tax
Manufacturers and data
incentives. Two coal tax credits account for 41 percent of total economic development
centers can use single
tax credits. The largest credit—the Coalfield Employment Enhancement Tax Credit— sales apportionment to
was available to coal mining companies to help slow the decline of coal mining activity calculate their taxable in-
in Virginia. Both coal tax credits will account for lower amounts of business tax sav- come in Virginia based
solely on their propor-
ings in future years because both credits expired effective January 1, 2022. Five other
tion of total sales that
credits provided more than $20 million in tax savings during this period. While many are in Virginia.
of the older tax credits are designed to encourage manufacturers to locate or expand
in Virginia, the credits adopted more recently are designed to incentivize businesses
in other industries (film, wineries, and transportation or distribution companies).
21
Economic Development Incentives 2024
Since 2014, Virginia has allowed manufacturers to use single sales apportionment—a
method that could reduce their income tax liability—to help stem the decline of man-
ufacturing jobs in the state. Tax savings for manufacturers using single sales appor-
tionment are estimated to be $218 million between FY14 and FY23, or about $22
million per year. Since 2017, Virginia has allowed data centers meeting certain eligibil-
Tax credits allow busi- ity requirements to also use single sales apportionment. Tax savings for data centers
nesses or their owners to
using single sales apportionment are estimated to be $0.2 million in FY23.
reduce their income tax
liability, dollar for dollar,
according to the amount TABLE 9
allowed under the credit.
Tax credits provided nearly $441 million in tax savings to businesses (FY14–FY23)
Tax credit Total savings ($M)
Coalfield Employment Enhancement Tax Credit $149.9M
Major Research and Development Tax Credit 71.3
Motion Picture Production Tax Credit 52.3
Research and Development Expenses Tax Credit 37.7
Virginia Coal Production and Employment Incentive Tax Credit 31.7
Qualified Equity and Subordinated Debt Investment Tax Credit 31.2
Major Business Facility Job Tax Credit 29.5
Recyclable Materials Processing Equipment Tax Credit 16.1
Virginia Port Volume Increase Tax Credit 13.5
International Trade Facility Tax Credit 2.4
Farm Wineries and Vineyards Tax Credit 1.7
Worker Retraining Tax Credit/Worker Training Tax Credit 1.5
Barge and Rail Usage Tax Credit 1.2
Telework Expenses Tax Credit 0.4
Green Job Creation Tax Credit 0.2
Biodiesel and Green Diesel Fuels Producers Tax Credit 0.0
Total, all tax credits $440.6M
SOURCE: Weldon Cooper Center analysis of tax credit information from Virginia Tax.
NOTE: The average tax credit award per year is not reported for tax credits because several new programs were
adopted during this time period, and several other programs provided too few awards for disclosure purposes. The
Telework Expenses Tax Credit expired January 1, 2019.
Business savings from tax incentives increased in FY23 even when
excluding the data center exemption
Savings from tax incentives increased dramatically with improved information on the
data center exemption value and are estimated to be $851 million in FY23. When tax
savings from the data center exemption are removed, tax savings for other tax incen-
tives fluctuated over the 10-year period but increased by $35 million between FY22
and FY23. The increase is primarily because of increased usage of the Major Research
and Development Tax Credit (tax savings increased $11 million) and Coalfield Em-
ployment Enhancement Tax Credit (tax savings increased $8.6 million). Even though
22
Economic Development Incentives 2024
the Coalfield Employment Enhancement Tax Credit expired in 2022, businesses can
still claim credits they were awarded in future years.
Tax savings changes between years can partially be explained by the introduction of
new or expanded tax incentive programs and expiration or repeal of other programs.
Increased business savings resulted from the introduction of manufacturer single sales
apportionment in 2014 and the Major Research and Development Tax Credit in 2018.
The tax expenditures for the two programs increased to $49.4 million in FY23. On
the other hand, the Virginia coal tax credits were repealed in 2021. Thus, coal tax
credit usage decreased from $81.3 million in FY14 to $8.9 million in FY23 because
companies can no longer earn new credits.
Tax incentive spending is related to general economic conditions. Gradual improve-
ments in the economy through FY20 led to a recovery in business spending and in-
vestment. This recovery likely resulted in overall increases in spending on sales and
use tax exemptions that target capital-intensive industries, such as rail, air, and water
transportation companies. Likewise, the negative impact of the COVID-19 pandemic
on businesses and the economy is one possible reason why businesses’ tax savings
declined in FY21 and FY22 and rebounded in FY23.
Industry-specific changes also affect tax incentive usage over time. Before its termi-
nation, usage of the Virginia Coal Employment and Production Incentive Tax Credit,
which was targeted at thermal coal production, had been declining. Demand for ther-
mal coal had been decreasing because of competition from gas-fired and alternative
energy power generation.
FIGURE 11
Business savings from tax incentives (excluding the data center exemption)
fluctuated some over the 10-year period and increased in FY23
SOURCE: Weldon Cooper Center analysis of economic development incentives.
NOTE: Exempted amounts are estimates and exclude the 1 percent sales tax for localities and the additional
amounts collected in some localities, such as Northern Virginia and the Historic Triangle. Not adjusted for inflation.
The trend is nearly identical if adjusted for inflation.
23
Economic Development Incentives 2024
Businesses obtained $143 million in loans and gap
funding through financing programs FY14–FY23
Virginia offers six incentive programs that are designed to assist firms in securing
additional debt and equity financing. The Virginia Small Business Financing Authority
(VSBFA) administers four of these programs, which provide loan assistance to eligible
Venture capital is fi-
nancing that investors businesses:
provide to startup com-
panies and small busi-
• Economic Development Loan Fund provides loan financing for eligible
nesses that are believed small businesses that create permanent full-time jobs;
to have long-term • Loan Guaranty Program helps small businesses obtain loans by reducing
growth potential. bank credit risk;
• State Cash Collateral Program assists small businesses that lack the necessary
collateral to obtain a loan, and
• SWaM Loan Fund provides small loans to small businesses to use for work-
ing capital, financing accounts receivable and inventory, and other short-
term financing needs.
Virginia also offers two gap financing programs. The Virginia Innovation Partnership
Corporation offers gap funding through its Virginia Venture Partners Growth Accel-
eration Program (GAP) Funds, which enable technology firms with high growth po-
tential to obtain additional venture capital investment. The Virginia Tourism Corpo-
ration administers the Tourism Development Financing Program to large-scale tour-
ism projects.
These financing programs incentivize different types of business activity than the
state’s grant programs. Over 64 percent of VSBFA assistance was provided to small
businesses in services and trade industries between FY14 and FY23. Seventy-three
percent of Virginia Venture Partner GAP Funds went to businesses in professional,
scientific, and technical services and information industries, which include businesses
in high-tech fields such as biotechnology and software development. In contrast, 75
percent of grant funding was for corporate headquarters and manufacturers.
Awards from financing programs have typically been more concentrated in metropol-
itan areas of the state than grant programs, although more recently grant programs
have also been more concentrated in urban localities. Sixty-nine percent of VSBFA
loans and 99 percent of GAP Fund awards went to projects in metropolitan areas
between FY14 and FY23. Over sixty-one percent of GAP Fund assistance went to
firms in Northern Virginia, with 37 percent to Fairfax County companies alone. A
large portion (25 percent) of the remaining award amounts were made to firms in
three localities that are home to the state’s major research universities. In contrast, the
percentage of grant funding that went to projects in metropolitan areas has historically
been lower (around 65 percent), but climbed to 84 percent in FY23, because custom
grant awards have been significantly higher for metro areas (98 percent of all custom
grants awarded during the period).
24
Economic Development Incentives 2024
Higher amounts of total loan assistance and GAP Fund awards were provided to areas
with lower levels of disadvantage or economic distress. Loans and loan assistance were
negatively associated with the poverty rate (-.06), the unemployment rate (-0.08) and
the percentage of the locality’s population that is Black (-.05) and positively associated
with median household income (0.26). GAP Fund awards were also negatively asso-
ciated with the poverty rate (-.15), the unemployment rate (-0.22) and the percentage
of the locality’s population that is Black (-.13) and positively associated with median
household income (0.39).
VSBFA programs helped businesses obtain nearly $24 million in loans
and loan enhancements
Small businesses aided by the four VSBFA programs obtained nearly $24 million in
loan and loan enhancement financing between FY14 and FY23 (Table 10). In most
cases, state appropriations were not directly used to finance the loans or provide the
obligation to secure the loans. While programs may have received appropriations in
the past, the programs use revolving loan funds, which means they utilize interest and
principal payments on old loans to issue new ones or receive funding from other self-
financing programs offered by VSBFA.
The average loan or loan enhancement was $98,648, but the average varied among the
four programs. The Economic Development Loan Fund provided the greatest
amount of average loan assistance per project at $885,144. The SWaM Loan Fund
provided the least, at $21,040 per project.
TABLE 10
VSBFA programs helped businesses secure nearly $25 million in loans or equity
financing (FY14–FY23)
Loan/loan
Amount # of Average # of enhancement per
Program awarded projects award jobs job
Economic Development Loan Fund $5,310,862 6 $885,144 233 $22,793
Loan Guaranty Program 12,914,155 61 211,707 386 33,456
State Cash Collateral Program 2,000,000 9 222,222 37 54,054
SWaM Loan Fund 3,450,482 164 21,040 524 6,585
Total $23,675,499 240 $98,648 1,180 $20,064
SOURCE: Weldon Cooper Center analysis of economic development incentives.
NOTE: VSBFA programs use only a small portion of state funding to secure loan financing. Jobs reported are expected jobs.
The four programs collectively were expected to add 1,180 jobs. The average loan or
loan enhancement assistance per job was $20,064. This figure is not directly compa-
rable to the average grant award per job ($7,612), because state funding for these pro-
grams represents only a small portion of the total loan and loan enhancement amount.
For example, the Loan Guaranty Program provides a financial guarantee for an eligible
business to secure a loan provided by a private bank. The program would be required
25
Economic Development Incentives 2024
to obligate funds only if an eligible business were to default on its loan. The SWaM
loan is a direct loan provided by VSBFA, but funding for the loan is derived from fees
from other bond financing provided by VSBFA and not state appropriations.
Virginia Venture Partner GAP Funds provided businesses a total of
$33 million in financing
Recipients of GAP Fund financing received $32.8 million between FY14 and FY23
to attract venture capital investment. This program made awards to 390 projects, for
an average award of $84,144 per project. Program investments were $12.6 million in
FY21 through FY23, which were considerably higher than an average of $2.5 million
over the period FY14–FY21. Most (84) of the 97 completed projects in the GAP
Funds program met their financing objectives for the period, according to the Virginia
Innovation Partnership Corporation.
Economic impact analy-
sis of incentive spending Tourism Development Financing Program provided tourism projects
between FY14 and FY23
was conducted using
$86.6 million in financing
economic modeling The Tourism Development Financing Program was created in 2011 and provides gap
software developed by
financing for tourism development projects otherwise unable to access capital. The
REMI, Inc.
program allows eligible projects to keep a portion of state sales and use taxes that are
(See Appendix H for the
economic impact analy-
generated by the project. Nine projects have been funded by the program through
sis used in this study.) FY23 with the largest being the Kalahari Resort in Spotsylvania County ($73.4 mil-
lion).
Grants have higher economic benefits than tax
incentives
Virginia’s economic development incentives are estimated to generate additional eco-
nomic activity for the state. Economic impact analysis estimates that private sector
employment increased by about 14,000 jobs per year, Virginia GDP increased by $2.1
billion per year, and statewide personal income increased by $1.2 billion per year, on
average, because of all incentives between FY14 and FY23 (Table 11). For every $1
million in spending on all incentives, it is estimated that an additional 58 jobs, $9 mil-
lion in Virginia GDP, and $5 million in personal income per year, on average, were
added to the Virginia economy. These estimates assume that only a portion of the
projects’ economic activity can be attributed to incentives. Research on incentives na-
tionally suggests that, in most cases, between 75 percent and 98 percent of projects
would have occurred anyway without incentives (Bartik 2018). (See Appendix H for
more information about the assumptions used by type of incentive.)
26
Economic Development Incentives 2024
TABLE 11
Virginia’s economic development incentives are estimated to generate
additional economic activity for the state (annual average, FY14–FY23)
Tax
Tax exemptions Data center Other All
Grants
credits (except data exemption incentives incentives
center)
Net impact to Virginia economy
Private employment 4,970 jobs 6 jobs 806 jobs 40,947 jobs 101 jobs 14,072 jobs
Virginia GDP (Millions) $1,055.2 M -$19.5 M $103.6 M $4.9 B $9.7 M $2,132.9 M
Personal income (Millions) $546.7 M -$2.3 M $80.5 M $2.9 B $9.6 M $1,222.6 M
Impact to Virginia economy per $1 million of spending
Private employment 137 jobs 8 jobs 20 jobs 84 jobs 12 jobs 58 jobs
Virginia GDP (Millions) $28.7 M $0.7 M $2.7 M $10.0 M $1.5 M $8.7 M
Personal income (Millions) $15.1 M $0.8 M $2.1 M $6.1 M $1.3 M $5.1 M
Impact on state revenue
Total revenue (Millions) $48.2 M 2.3 M $11.0 M $264.8 M $1.4 M $116 M
Spending on credit (Millions) $38.4 M $44.0 M $66.2 M $548.4 M $24.1 M $282.4 M
Net revenue (Millions) $9.9 M -$41.7M -$55.2 M -$283.5 M -$22.7 M -$166.5 M
Return in revenue $1.26 5¢ 17¢ 48¢ 6¢ 41¢
SOURCE: Weldon Cooper Center economic impact analysis of business activity induced by Virginia’s economic development incentive
programs between FY14 and FY23. Assumes that only a small portion of the economic activity (i.e., jobs, capital investment, sales) can
be attributed to grant. Only FY22–FY23 data center exemption economic and tax revenue impacts are included.
NOTE: Includes only direct, indirect, and induced impacts of completed projects. Assumes that only a portion of employment creation,
capital investment, sales, or other activity is attributable to the programs. The gross impact on Virginia’s economy is used to calculate
the impact per $1 million per incentive awards and the impact to state revenue. This is consistent with how the economic development
research literature typically calculates these impacts. Estimates of the grants’ economic benefits are adjusted to account for projects
that receive grants from more than one program as indicated in Table 5. Some additional duplication may still exist for projects that
receive a grant and a tax credit, for example, but it is expected to be slight. (See Appendix H for more information about the economic
impact estimates and the detailed results on total impact of the incentives, impact of raising income taxes by the amount of the incen-
tives [opportunity cost], and revenue generated by source.) Data center exemption estimates are only for the two-year period for which
data is available. “Other incentives” includes loan, gap financing, manufacturers’ single sales factor apportionment, and income tax
subtractions. Estimated impacts per $1 million in spending and estimated return in revenue per $1 spent for “other incentives” is low
even though, as noted in prior reports, the estimated benefits and returns in revenue for Virginia’s loan programs are high. This is
because of a change in methodology for estimating the economic impacts for single sales manufacturing, for which spending is sub-
stantially higher and estimated economic impacts are low.
The additional economic activity generated varies by incentive type. The data center
exemption is estimated to account for more than half of the net additional jobs and
almost half of Virginia GDP and personal income from incentives (Table 11). The
relatively large portion of the economic activity attributable to the data center exemp-
tion is because the exemption is so large relative to other incentives. Tax credits, in
contrast, are estimated to generate a small portion of additional jobs and personal
income and are estimated to generate a net loss in Virginia GDP. This loss occurs
because of the reduction in Virginia GDP that results from increasing taxes to pay for
27
Economic Development Incentives 2024
the credits, particularly the Coalfield Employment Enhancement Tax Credit, which is
greater than the total additional GDP generated.
Grants have higher economic benefits than tax incentives when benefits are assessed
per $1 million spent (Table 11). For every $1 million spent on grants between FY14
and FY23, it is estimated that an additional 137 jobs, $29 million in Virginia GDP, and
$15 million in personal income were added to the Virginia economy. Tax credits gen-
erate the lowest amounts of economic benefits, generating less than $1 million in Vir-
ginia GDP and less than $1 million in personal income per every $1 million in spend-
ing.
The return in revenue to the state for every $1 spent on incentives also varies widely
by type of incentive (Table 11), with grants generating higher returns in revenue than
tax incentives. For every $1 spent on grants between FY14 and FY23, it is estimated
that the state receives $1.26 in revenue in return.
Grant programs have higher economic benefits and returns in state revenue than tax
incentives for several reasons. Economic benefits per $1 million spent and returns in
revenue are higher when awards are made to projects in traded industry sectors, which
tend to have high economic multipliers and pay higher wages. Thirty-six percent of
grant funding was directed to businesses in the manufacturing industry, which is a
traded industry sector. In contrast, only 8 percent of non-data center sales and use tax
expenditures, 8 percent of loan and gap financing, and 18 percent of tax credit ex-
penditures are directed to manufacturing businesses. Though not targeted to manu-
facturing businesses, the data center exemption is targeted to a traded industry sector.
Businesses that receive grants must also agree to create jobs and make capital invest-
ments, usually above minimum levels. Economic benefits and returns in revenue are
higher for programs targeted to businesses that commit to creating jobs and making
capital investments. In contrast to grants, other incentives often do not have similar
job creation and capital investment requirements for business recipients. The data
center exemption is one exception.
Estimates of grant programs’ economic benefits and returns in revenue are also more
precise and less likely to be underestimated than other programs. More precise esti-
mates of the economic benefit can be generated for grant programs because employ-
ment and capital expenditure performance data are readily available. Employment and
capital expenditure impacts of businesses that received tax credits and most sales and
use tax exemptions (with exception of the data center exemption) must be inferred
from model simulations and may be slightly underestimated. These simulations pro-
duce relatively conservative estimates of program employment and output impacts
and could result in slightly more conservative estimates of the economic benefits of
these programs.
28
Appendixes
Appendix A: Study mandate
2024–2026 Appropriation Act
Passed as Chapter 2 of the Acts Assembly, May 13, 2024
§ 1-11 Item 25 E
E.1. The General Assembly hereby designates the Joint Legislative Audit and Review Commission
(JLARC) to conduct, on a continuing basis, a review and evaluation of economic development
initiatives and policies and to make such special studies and reports as may be requested by the General
Assembly, the House Appropriations Committee, or the Senate Finance Committee.
2. The areas of review and evaluation to be conducted by the Commission shall include, but are not
limited to, the following: (i) spending on and performance of individual economic development
incentives, including grants, tax preferences, and other assistance; (ii) economic benefits to Virginia of
total spending on economic development initiatives at least biennially; (iii) effectiveness, value to
taxpayers, and economic benefits to Virginia of individual economic development initiatives on a cycle
approved by the Commission; and (iv) design, oversight, and accountability of economic development
entities, initiatives, and policies as needed.
3. For the purpose of carrying out its duties under this authority and notwithstanding any contrary
provision of law, JLARC shall have the legal authority to access the facilities, employees, information,
and records, including confidential information, and the public and executive session meetings and
records of the board of VEDP, involved in economic development initiatives and policies for the
purpose of carrying out such duties in accordance with the established standards, processes, and
practices exercised by JLARC pursuant to its statutory authority. Access shall include the right to
attend such meetings for the purpose of carrying out such duties. Any non-disclosure agreement that
VEDP enters into on or after July 1, 2016, for the provision of confidential and proprietary
information to VEDP by a third party shall require that JLARC also be allowed access to such
information for the purposes of carrying out its duties.
4. Notwithstanding the provisions of subsection A or B of § 58.1-3 or any other provision of law,
unless prohibited by federal law, an agreement with a federal entity, or a court decree, the Tax
Commissioner is authorized to provide to JLARC such tax information as may be necessary to
conduct oversight of economic development initiatives and policies.
5. The following records shall be excluded from the provisions of the Virginia Freedom of
Information Act (§ 2.2-3700 et seq.), and shall not be disclosed by JLARC:
(a) records provided by a public body as defined in § 2.2-3701, Code of Virginia, to JLARC in
connection with its oversight of economic development initiatives and policies, where the records
would not be subject to disclosure by the public body providing the records. The public body
providing the records to JLARC shall identify the specific portion of the records to be protected and
the applicable provision of the Freedom of Information Act or other provision of law that excludes
the record or portions thereof from mandatory disclosure.
29
Appendixes
(b) confidential proprietary records provided by private entities pursuant to a promise of
confidentiality from JLARC, used by JLARC in connection with its oversight of economic
development initiatives and policies where, if such records are made public, the financial interest of
the private entity would be adversely affected.
6. By August 15 of each year, the Secretary of Commerce and Trade shall provide to JLARC all
information collected pursuant to § 2.2-206.2, Code of Virginia, in a format and manner specified by
JLARC to ensure that the final report to be submitted by the Secretary fulfills the intent of the General
Assembly and provides the data and evaluation in a meaningful manner for decision-makers.
7. JLARC shall assist the agencies submitting information to the Secretary of Commerce and Trade
pursuant to the provisions of § 2.2-206.2, Code of Virginia, to ensure that the agencies work together
to effectively develop standard definitions and measures for the data required to be reported and
facilitate the development of appropriate unique project identifiers to be used by the impacted
agencies.
8. The Chairman of JLARC may appoint a permanent subcommittee to provide guidance and
direction for ongoing review and evaluation activities, subject to the full Commission's supervision
and such guidelines as the Commission itself may provide.
9. JLARC may employ on a consulting basis such professional or technical experts as may be
reasonably necessary for the Commission to fulfill its responsibilities under this authority.
10. All agencies of the Commonwealth shall cooperate as requested by JLARC in the performance of
its duties under this authority.
30
Appendixes
Appendix B: Research methods and activities
JLARC contracted with the University of Virginia’s Weldon Cooper Center for Public Service (Weldon
Cooper Center) for this review. Key research activities performed by Weldon Cooper Center for this
study included
• data collection and analysis,
• estimation of sales and use tax exemptions,
• agency staff interviews, and
• review of documents and research.
Data collection and analysis
Weldon Cooper Center collected project data from 13 state agencies that administer Virginia economic
development incentive programs. Data was provided for grant, tax credit, and loan or gap financing
programs that have made awards. Among the data elements collected for the incentive programs were
business identifiers, location, industry type, amount of grant approved and paid, and program
performance metrics, such as number of jobs created, average wage levels, and capital investment
(Table B-1). Some programs, namely the small business loan and tax incentive programs, do not collect
performance data or maintain it electronically.
TABLE B-1
Data and information were collected from 13 state agencies on incentive awards
Agencies Types of information
Department of Housing and Community Development Business identifiers (name, federal tax ID number)
Department of Rail and Public Transportation Industry
Tobacco Region Revitalization Commission Location (locality) of project
Virginia Department of Agriculture and Consumer Amount of incentive approved and paid
Services
Number of jobs promised and created and timing
Virginia Department of Aviation
Capital investment promised and delivered and timing
Virginia Department of Taxation
Average wages promised and delivered and timing
Virginia Department of Transportation
Other performance metrics as specified
Virginia Economic Development Partnership
Virginia Film Office
Virginia Innovation Partnership Corporation
Virginia Port Authority
Virginia Small Business Financing Authority
Virginia Tourism Corporation
SOURCE: Weldon Cooper Center.
31
Appendixes
Analysis of grant programs
For the spending analysis, program spending for discretionary and by-right grant programs by fiscal
year were computed as the funds paid for completed projects and grant funds still committed toward
active but unfinished projects. For most grant programs, spending was assigned to the same date/year
when awards were approved. For this report, the approval date represents when a contract between
the agency and the business is signed in either a memorandum of understanding or performance
agreement. Many programs make award payments upon approval or soon after. Because custom grants
are often large awards with long performance periods, spending is assigned to the fiscal year in which
payments are made. Program expenditures by fiscal year were computed as the funds paid for
completed projects and grant funds still committed toward active but unfinished projects.
For the grant award analysis, awards for all grant awards and amounts were assigned to the year in
which the award was approved. Grant program awards and amounts were also categorized by location
and industry using North American Industrial Classification System (NAICS) codes provided by the
agency administering the grant or from information available from the Virginia Employment
Commission (VEC) or other sources. Several agencies did not provide NAICS codes for each project.
For many grant projects, project awards were matched with VEC unit-level Quarterly Census of
Employment and Wages (QCEW) records obtained under a confidentiality agreement with VEC.
These grant records were matched with QCEW records using firm name, address, and when available,
taxpayer identification numbers. In some instances, matches could not be found. In these cases,
additional online research using Manta.com, other business directories, and company websites was
conducted to characterize the primary industry of the establishment and/or firm primary. When
information was not available, certain assumptions about the nature of the firm or prospective firm
were made. For Enterprise Zone Real Property Investment Grant projects that could not be otherwise
identified (generally Limited Liability Corporation beneficiaries set up for commercial real estate
development purposes), a NAICS code of “531120” (“Real Estate and Rental and Leasing”) was
assigned. Governor’s Motion Picture Opportunity Fund projects were characterized as NAICS 512110
(“Motion Picture and Video Production”). Speculative infrastructure projects funded by the Tobacco
Commission Megasite Program, Virginia Business Ready Sites Program, and Economic Development
Access Program were assumed to be NAICS 333000 (“Machinery Manufacturing”).
Nineteen grants were not assigned to localities. Twelve Governor’s Motion Picture Opportunity Fund
awards, totaling $17.7 million, were also not assigned to localities because filming activities for these
projects occurred in multiple locations throughout the state but principally in Central Virginia. Eight
GO Virginia projects ($10.4 million) for site improvements benefited several multijurisdictional
industrial parks. Lastly, one New Airline Incentive Fund grant benefited an airline (Breeze Airways)
that provided new airline service to several airports ($250,000).
Grant project records do not systematically include the employment of businesses receiving awards
across programs. Estimation of the employment size of the business that received the grant was
conducted by matching grant records with VEC QCEW payroll employment records that
corresponded to the year of the award. Many companies have more than one location in Virginia, and
only the employment levels for the specific location of the business that qualified for the grant were
included in the analysis. Project records for FY14 through FY23 were matched by fiscal year of award
32
Appendixes
with the corresponding VEC employment data by calendar year between 2013 and 2022 (i.e., FY23
project records were matched to calendar year 2022 VEC employment records). Using this process,
59 percent of the total number of awards and 65 percent of the award amounts were accounted for.
Project awards were weighted to account for the underrepresentation of smaller awards (and
correspondingly small establishments) relative to their occurrence in the grant files to improve the
representation of smaller establishments in the tabulations.
Analysis of loan programs
For the four loan programs administered by the Virginia Small Business Financing Authority—the
Economic Development Loan Fund, Loan Guaranty Program, State Cash Collateral Program, and
SWaM Loan Fund—there were no state appropriations for the programs for the FY14–FY23 period.
These programs are primarily revolving loan funds or secure funding outside the legislative
appropriation process, but some have received state appropriations in the past. Since some programs
have relied or continue to rely on federal funding, only those projects that could be attributed to
previous state funding were included in this analysis. The costs of the programs were estimated to be
the actual or projected defaults. The average default rate (1.1 percent) for these loans was also applied
to awarded loans to estimate the “cost” of the loan portion of Tobacco Region Opportunity Fund
(TROF) awards. In the last seven years, the Tobacco Region Revitalization Commission has begun to
issue a larger portion of its TROF awards in the form of revolving loans.
Analysis of Virginia Venture Partners GAP Funds
The Virginia Venture Partners GAP Funds, administered by the Virginia Innovation Partnership
Corporation, generate a return on its investments in early-stage firms. Gross realized returns derive
from merger and acquisition activity, to include escrows, dividends, and milestone payments, along
with secondary sale of assets (GAP Funds’ equity positions) and convertible note repayments. Based
on prior analysis of the program for the period FY11–FY20, the funds recouped nearly $20 million
in gross returns for $32.3 million in state appropriations during the period (62 percent). Thus, to
estimate program expenditures in this report, it is assumed that only 38 percent of total completed
project investments relied on new state appropriations over the period and represented new state
spending on the program.
Analysis of tax credits
For quantifying the revenue impact of state economic development-related tax credits, Weldon Cooper
Center used corporate and individual tax credit files obtained from the Virginia Department of Taxation
(Virginia Tax). These files list tax credit redemptions by fiscal year of utilization based on when the
return was processed. (See the Virginia Tax annual report, Table 3.1: Fiscal Year Tax Credits.)
Incentives excluded from the analysis and report
Several programs did not make awards during the period of analysis (FY14–FY23) and are not included
in this report. Three grant programs have been active for over a decade but have not yet funded private
business projects:
• Tobacco Commission Agribusiness Grant Program,
33
Appendixes
• Tobacco Commission Southside Economic Development Grant Program, and
• Tobacco Commission Southwest Economic Development Grant Program.
Four grant programs made awards that occurred earlier than FY14, and these incentives are not
included in the sections pertaining to awards and performance. They are included in the spending
analysis since grant payments were issued between FY14 and FY23. These grants include:
• Aerospace Engine Manufacturing Performance Grant Program (Rolls-Royce),
• Advanced Shipbuilding Training Facility Grant Program (Huntington Ingalls)
• Semiconductor Grant Program (custom grant for Micron awarded in 2005), and
• SRI custom grant.
The award analysis does not include these four custom grants, but the spending analysis includes
payments made to Rolls-Royce, Huntington Ingalls, Micron, and SRI.
This report describes four economic development incentive programs that were not included in the
2024 report that had not yet made awards or provided financial benefits as of FY23. They include
the Cloud Computing Cluster Infrastructure Grant (Amazon Web Services), the Financial Services
Expansion Grant (Wells Fargo), the Property Analytics Firm Infrastructure Grant (CoStar Group),
and the Controlled Environment Agriculture Exemption.
Estimation of business savings from sales and use tax exemptions
Sales and use exemptions provide relief from sales and use taxes on selected taxable goods and
services for businesses in targeted industries. For most exemptions, eligible businesses obtain a sales
and use exemption certificate from Virginia Tax (available online) and present it to merchants at the
point of sale to claim the exemption. Neither the merchant nor the purchaser is required to report the
tax savings to Virginia Tax outside of an audit process. Therefore, the size of these tax savings to
businesses must be estimated by other means. For other exemptions, such as the data center and
pollution control equipment exemptions, Virginia Tax issues the exemption certificate after approving
an application. The business may not have the certificate at the time of eligible purchases and can
apply for a refund once the exemption certificate is obtained.
For quantifying forgone revenue because of sales and use tax exemptions, Weldon Cooper Center
relied on Virginia Tax fiscal impact estimates and staff-generated estimates based on IMPLAN and
other data sources (Table B-2). Virginia Tax estimates are based on a variety of approaches, including
industry surveys, industry association tallies, and imputations made from secondary data sources such
as federal statistical data. Some estimates rely on sales and use tax exemption estimates published as
part of detailed tax expenditure studies conducted by Virginia Tax in the early- and mid-1990s. More
recent estimates are sometimes available when Virginia Tax issues fiscal impact estimates to inform
new General Assembly legislation. Weldon Cooper Center estimates were substituted for Virginia Tax
estimates in three different situations:
• if the Virginia Tax estimates were based on much older estimates and credible estimates
could be generated using more recent data and alternative methods;
• if Virginia Tax estimates were not available for a specific sales and use tax exemption; and
34
Appendixes
• if an alternative methodology had practical or conceptual advantages over the Virginia Tax
estimates.
Weldon Cooper Center tax revenue estimates rely primarily on IMPLAN data for Virginia. IMPLAN
is a commercial economic impact model produced by IMPLAN Group, LLC. It is based on input-
output analysis, which requires estimates of the value of intermediate input purchase for each industry.
The intermediate input purchase estimates for Virginia formed the basis of the relevant sales tax base
for sales and use tax revenue impact calculations. Spending on durable and leased good inputs is
estimated by multiplying industry output by gross absorption coefficients for relevant IMPLAN
commodity sectors, using the most recent data for industries and commodities. These coefficients
represent the input purchases for various commodities per dollar of output. For example, the
construction machinery manufacturing industry spent $0.00170 per dollar of output on commodity
railroad rolling stock. This absorption coefficient was multiplied by the output of the construction
machinery equipment industry for 2015 ($122,220,940) to obtain the estimated expenditure on this
input ($208,000).
Because the exemptions are sometimes more narrowly targeted than the individual IMPLAN sectors
available, supplemental data from LightcastTM, Virginia Employment Commission, Bureau of Labor
Statistics, and Bureau of Transportation Statistics was used to apportion the sector purchases to
narrower industry subsets. For example, the airline common carrier exemption is available for air
common carriers that provide scheduled service to Virginia airports at least once per week. Eligible
purchases were imputed by apportioning IMPLAN input purchase estimates by the percentage of the
air transportation industry (NAICS 481) providing scheduled service (NAICS 4811---Scheduled Air
Transportation) and apportioning again based on the percentage of scheduled departures performed
by airlines that provide service at least once per week based on Bureau of Transportation Statistics T-
100 Air Carrier Traffic Segment data.
35
Appendixes
TABLE B-2
Estimates of business savings from sales and use tax exemptions were based on different
methods and sources
Exemption Sources used to derive estimate
IMPLAN, Bureau of Transportation Statistics (BTS),
Airline Common Carriers Exemption
LightcastTM
Federal Aviation Administration aircraft registration
Aircraft Parts, Engines, and Supplies Exemption data and Conklin& de Decker Aircraft Cost Evaluation
V18.20
Certain Printed Materials for Out-of-State Distribution Exemption Virginia Tax (Sales and use tax study 1991)
Contractor Temporary Storage Exemption Virginia Tax (Sales and use tax study 1995)
Data Centers Exemption VEDP Data Center Exemption Survey data
Electrostatic Duplicators Exemption IMPLAN, LightcastTM
Film, Television, & Audio Production Inputs Exemption IMPLAN, LightcastTM
Media Provider Equipment Exemption Virginia Tax estimates (2017 and 2022)
Out-of-State Nuclear Facility Repair Exemption IMPLAN, VEC, LightcastTM
Weldon Cooper Center survey of Virginia Tax form ST-
Pollution Control Equipment & Facilities Exemption
11A users
Railroad Common Carriers Exemption IMPLAN
Railroad Rolling Stock Exemption RailInc, LightcastTM, U.S. Census Commodity Flow data
Research & Development Exemption NSF Business R&D and Innovation Survey
Semiconductor Manufacturers Exemption IMPLAN, industry use estimate
Semiconductor Wafers Exemption IMPLAN, industry use estimate
Weldon Cooper Center survey of ship repair and
Ships and Vessels Exemption
dredging firms, VEC
Taxi Parts & Radios Exemption Virginia Tax fiscal impact, HB1488 (2004)
Uniform Rental & Laundry Businesses Exemption IMPLAN, LightcastTM
Number of Mid-Atlantic Regional Spaceport launches
Virginia Spaceport Users Exemption and revenue per launch from Federal Aviation
Administration
SOURCE: Weldon Cooper Center.
For the current report, the data center exemption methodology was revised to bring it into conformity
with the methodology used by Virginia Tax and VEDP. Previous estimates were based on the job
creation and capital investment information data centers reported to VEDP to demonstrate they met
the eligibility requirement to use the exemption. In 2021, VEDP began collecting annual job creation,
capital investment, and the value of the exemption from all data centers using the exemption for a
new biennial report required in statute. The previous method markedly underestimated actual data
center exemption tax expenditures, at least in part, because it did not accurately capture information
36
Appendixes
from data centers after they qualified for the exemption. Eligible data center expenditures for
computer equipment and software were multiplied by the effective state tax rate (4.28 percent after
adjusting for the dealer discount) to arrive at new state revenue impact estimates. Exempted amounts
pertaining to the local option sales tax and regional sales taxes are excluded in this report. This new
and more complete information is available only for FY21 through FY23.
For other sales and use tax exemptions, the sectors targeted vary by exemption, as do the categories
of purchases that are eligible for exemption. Generally speaking, tangible personal property purchases
and leases are covered though the specific items sometimes differ. For instance, the railroad rolling
stock exemption gives Virginia manufacturing firms an exemption on purchases of rolling stock. The
tax base is determined by aggregating purchases of rolling stock across all Virginia manufacturing
industries.
Other adjustments are needed to convert calendar years to fiscal years. IMPLAN purchases are
expressed in terms of calendar years; thus fiscal year estimates were calculated by averaging two
calendar years (e.g., FY15 is the average of CY14 and CY15). The last calendar year of data available
from IMPLAN is 2022. Therefore, FY23 revenue estimates were calculated by inflating the FY22
estimates by the consumer price index (CPI).
Agency interviews
In 2017, Weldon Cooper Center and JLARC staff conducted structured interviews with state agency
staff that administered and/or provided research support for economic development incentive
programs. The interviewees included representatives of each of the 13 agencies that administer grants,
loans, and gap financing and several staff from Virginia Tax. Topics included the purpose of each
program, criteria used in selecting award recipients and amounts, and data availability and quality for
tracking program performance. Additional interviews are performed only as needed, such as when
new incentive programs are adopted, programs are substantially changed, or programs are selected as
part of an intensive review for that year.
Review of documents and research
Weldon Cooper Center reviewed several sources of information, including documents, reports, and
published or unpublished research. The purpose of this literature review was to understand the
purpose and goals of Virginia economic development incentive programs, determine the best
approach to quantify the revenue impacts of sales and use tax exemptions, and develop an approach
for performance evaluation that draws on best practices from other states. Sources consulted included
• Virginia agency documents that describe economic development incentive program
purpose, application requirements, award criteria, and other features;
• Virginia Legislative Information System documents describing grant and sales and use
exemption statutes and Virginia Tax fiscal impact estimates; and
• state economic development performance evaluations published by state agencies or their
consultants in Virginia and other states.
37
Appendixes
Appendix C: Incentive program descriptions
Ninety-six economic development incentive programs are subject to this review. These include 47
grant programs, 16 tax credits, 20 tax exemptions, and 13 other programs.
Grant programs
Twelve state agencies administer 47 economic development incentive grant programs that are subject
to this review. These programs reflect a variety of economic development goals and often target
different activities, including development in disadvantaged regions (Tobacco Region Opportunity
Fund and Enterprise Zone grants), transportation enhancements for business expansion and
recruitment (Economic Development Access Program, Rail Industrial Access Program, and
Transportation Partnership Opportunity Fund grants), and small business development (Small
Business Investment Grant).
Programs also target industries such as agriculture and forestry (Agriculture and Forestry Industries
Development Grant), corporate headquarters (Virginia Economic Development Incentive Grant),
motion picture production (Governor’s Motion Picture Opportunity Fund), and port-related
industries (Port of Virginia Economic and Infrastructure Development Grant).
The state has also created customized grants for individual large industrial attraction and expansion
projects, such as
• Amazon HQ2 (Major Headquarters Workforce Grant),
• Amazon Web Services (Cloud Computing Cluster Infrastructure Grant),
• Amazon Web Services (Special Workforce Grant Fund),
• Blue Star Manufacturing (Nitrile Glove Manufacturing Training Grant),
• CMA CGM (Shipping and Logistics Headquarters Grant),
• Costar Group (Property Analytics Firm Infrastructure Grant),
• LEGO Group (Precision Plastic Manufacturing Grant),
• Merck (Pharmaceutical Manufacturing Grant),
• Micron (Semiconductor Manufacturing Grant),
• Morgan Olson (Advanced Production Grant),
• Microsoft (Technology Development Grant Fund),
• Huntington Ingalls (Advanced Shipbuilding Training Facility Grant and Advanced
Shipbuilding Production Facility Grant),
• Rocket Lab (Space Flight Operations Facilitation Program),
• Rolls-Royce Corporation (Aerospace Engine Manufacturing Performance Grant),
• Siemens Gamesa (Offshore Wind Component Grant),
• Volvo (Truck Manufacturing Grant Fund), and
• Wells Fargo (Financial Services Expansion Grant Fund).
The Major Eligible Employer Grant program likewise targets large expansions; so far both Booz Allen
Hamilton and Philip Morris have received awards for expanding their state footprints.
38
Appendixes
Seventy-six percent of total spending on economic incentive grants over the FY14 to FY23 period
was administered by two state agencies, the Virginia Economic Development Partnership (60 percent)
and the Department of Housing and Community Development (16 percent). The Tobacco Region
Revitalization Commission and Virginia Film Office also awarded large portions of total grant funding
at 9 percent and 5 percent of the total, respectively.
TABLE C-1
Forty-seven incentive grant programs are administered by 12 state agencies
State agency/program
Purpose Description
(year enacted)
Virginia Innovation Partnership Corporation (formerly Center for Innovative Technology)
Grants are made based on
scientific merit and economic
Commonwealth development potential for
Promote high technology economic
Commercialization Fund technology at the proof-of-
development through commercialization
concept stage or earlier in
(2011) of promising research and development.
targeted high-technology
industries. Funds must be
matched by recipient.
Department of Agriculture and Consumer Services
Eligible projects must produce value
added agricultural or forestry products
Agriculture and Forestry Attract new and expanding agriculture that derive at least 30% of agricultural
Industries Development Grant and forestry processing value-added or forestry product inputs from
(2012) facilities that use Virginia-grown products. Virginia. Incentive grants requests are
made by the host political jurisdiction
and must be locally matched.
Department of Small Business and Supplier Diversity
Grants are made to small businesses in
targeted sectors that create at least
Small Business Jobs Grant
five full-time positions paying at least
Fund Program
Support small business job creation and 1.35 times the federal minimum wage
(2010) investment. and making a capital investment of at
least $50,000 within two years.
(eliminated 2020)
Funding ($500–$2,000) per job is
based on job characteristics.
Department of Housing and Community Development
Grants are awarded to qualified
businesses that create at least four
Job Creation Grant (Enterprise permanent full-time jobs in an
Encourage job creation in distressed
Zone) enterprise zone. Qualifying jobs must
communities designated as enterprise
pay at least 1.75 times the federal
(2005) zones.
minimum wage (lowered to 1.5 times
for high unemployment areas) and
offer health benefits.
39
Appendixes
State agency/program
Purpose Description
(year enacted)
Grants are awarded to investors
making qualified investments in
Real Property Investment industrial, commercial, or mixed-use
Encourage private investment in
Grant (Enterprise Zone) real property in an enterprise zone.
distressed communities designated as
The grant is computed as 20% of the
(2005) enterprise zones.
investment amount minus a base
investment with a project cap of
$200,000.
Grant funds are allocated to
GO Virginia (Virginia Growth cooperative business site development
and Opportunity Fund Grants) Promote private sector business and
projects using the guidance of
site development projects employment growth through regional
competitive assessments developed by
cooperation.
(2017) the VEDP Business Ready Sites
Program.
Department of Rail and Public Transportation
The grant is available to businesses that
seek access to a common carrier
Encourage construction, reconstruction, or railroad. Funding is capped at $750,000,
Rail Industrial Access Program improvement of railroad tracks serving and businesses must match Railroad
new or expanding industrial sites and Industrial Access funding with a
(1987) divert truck traffic to the freight rail minimum of 30% local or private
network. funding. The program evaluates
applicants using a project scoring
system.
Department of Transportation
The grant is made in support of road
enhanced access for basic employers
Economic Development that export at least half of output
Encourage construction, improvement, or
Access Program outside state. Award amount is based
maintenance of roads serving new or
on value of capital investment by
(1956) expanding industrial sites.
qualifying companies who locate at the
economic development site with a cap
of $850,000 with a qualifying match.
Grants of up to $5 million are available
to companies that make onsite and
offsite transportation access
improvements related to economic
Transportation Partnership development such as road, rail, mass
Opportunity Fund Improve transportation access for
transit, or other transportation access
business development projects.
(2006) improvements. Projects must meet
Commonwealth’s Development
Opportunity Fund or Virginia
Investment Performance Grant program
criteria.
Department of Aviation
Governor's New Airline Service Grants are available for the first 12
Provide or assist in the provision of
Incentive Fund months of service. Grant amounts vary
marketing, advertising, or promotional
from $5,000 to $25,000 for one route
(2020) activities by airlines in connection with the
based on whether service is year-round
40
Appendixes
State agency/program
Purpose Description
(year enacted)
launch of new air passenger service at or seasonal and daily or less than daily.
Virginia airports. Applicant airlines may qualify for
multiple routes throughout the state
and receive combined grants of up to
$250,000.
Small Business Financing Authority
Grant for equity or subordinated debt
Small Business Investment investment in eligible small business.
Grant Fund Assist small businesses obtain investment
Grant amount equals 10% of qualified
capital.
(2012) investments made in small businesses
not to exceed $250,000 per investor.
Tobacco Region Revitalization Commission
Awards are made to projects likely to
Promote agricultural and agribusiness generate new income and investment
growth, development, and diversification and align with targeted categories such
Agribusiness Grants in the tobacco region to help the as applied research and education,
(2002) agricultural industry pursue market product processing, livestock and crop
opportunities and reduce dependence on demonstration, local foods, multi-
tobacco and tobacco-related business. purpose agriculture centers, and
wholesale/retail cooperatives.
Megasite funding is available only for
the eight sites that have been
Develop large, business-ready and
Megasite Grants developed to date with Tobacco
publicly owned industrial sites across the
Commission support. Megasite projects
(2010) tobacco region to attract major employer
are defined as those that create at least
and investment projects.
400 jobs and $250 million in private
investment.
Funds are allocated by locality. Awards
fall into strategic funding categories
Southside Economic identified as important for economic
Promote economic development in the
Development Grants development including infrastructure
Southside localities of the Tobacco
improvements, workforce training,
(1999) Region.
regional tourism, building industry
clusters, and entrepreneurial
development.
Awards fall into strategic funding
categories identified as important for
Southwest Economic Promote economic development in the economic development including
Development Grants Southwest localities of the Tobacco infrastructure improvements, workforce
(1999) Region. training, regional tourism, building
industry clusters, and entrepreneurial
development.
41
Appendixes
State agency/program
Purpose Description
(year enacted)
Program provides both grants and
loans. Requests are initiated by the
host. Eligible projects must create jobs
Tobacco Region Opportunity that pay an annual average wage that is
Attract new jobs and investments for the
Fund above the locality’s prevailing annual
Tobacco Region through business
average wage and make capital
(1999) attraction and expansion.
investments of at least $10,000.
Applications are evaluated using a ROI
model with award amounts based on
that analysis.
Virginia Economic Development Partnership
Incentive payments are based on
Promote the location of business truck
Advanced Production Grant attainment of performance milestones
manufacturing facility in the
Program and Fund (Morgan specified in a performance agreement
Commonwealth. This customized
Olson) between the state and the company.
performance-based grant is used to
Performance measures include
(2020) support the location and expansion of
employment and capital investment
Morgan Olson, LLC in Pittsylvania County.
and annual average wage.
Incentive payments are based on
Advanced Shipbuilding Promote the expansion of advanced attainment of performance milestones
Training Facility Grant shipbuilding in the Commonwealth. This specified in a performance agreement
Program (Huntington Ingalls) customized performance-based grant was between the state and the company.
used to support the growth of Huntington Performance measures include
(2011) Ingalls Shipbuilding in Newport News City. employment, capital investment, and
training expenditures.
Promote the expansion of advanced Incentive payments are based on
Advanced Shipbuilding shipbuilding in the Commonwealth. This attainment of performance milestones
Production Facility Grant customized performance-based grant is specified in a performance agreement
Program (Huntington Ingalls) used to support the expansion of between the state and the company.
(2016) Huntington Ingalls Shipbuilding in Performance measures include
Newport News City. employment and capital investment.
Incentive payments are based on
Attract an aerospace engine manufacturer attainment of performance milestones
Aerospace Engine to locate in the Commonwealth. This specified in a performance agreement
Manufacturing Performance customized performance-based grant was between the state and the company.
Grant Program (Rolls Royce) used to support the growth of the Rolls Performance measures include
(2007) Royce turbine plant in Prince George employment, annual average wages,
County and industry cluster firms. capital investment, and number of
trainees.
Incentive grants consist of two types.
Site characterization grants fund site
Encourage the development of sites and
Business Ready Sites Program needs assessment. Site development
associated infrastructure for industrial and
grants fund site development
(2016) commercial uses as tools for business
costs. Eligible sites must have at least
attraction.
100 contiguous, developable acres and
meet additional criteria.
42
Appendixes
State agency/program
Purpose Description
(year enacted)
Promote cloud computing by providing Incentive payments are based on
Cloud Computing Cluster funds for companies creating significant attainment of performance milestones
Infrastructure Grant numbers of jobs and making large capital specified in a performance agreement
(Amazon Web Services) investment. This customized performance- between the state and the company.
based grant is used to support the Performance measures include
(2023) expansion of Amazon data centers in employment, annual average wages,
multiple Virginia localities. and capital investment.
Grant program is a discretionary deal
Commonwealth’s closing fund for firms exporting at least
Development Opportunity half of output outside state. Funds must
Attract new businesses and support
Fund be matched by host locality and are
existing business expansion.
used for site acquisition and
(1996) improvement, infrastructure, building
construction, and employee training.
Incentive payments are based on
Support expansion of financial services attainment of performance milestones
Financial Services Expansion
facility in the Commonwealth. This specified in a performance agreement
Grant Fund (Wells Fargo)
customized performance-based grant is between the Commonwealth and the
used to support the expansion of Wells company. Performance measures
(2024)
Fargo in Roanoke County. include employment, capital
investment, and average annual wages.
The grant is targeted to major
employers that make a capital
Major Eligible Employer Grant Attract new or expanding large employers investment of at least $100 million and
(1999) to the state. create at least 1,000 jobs. This job
threshold is reduced if high-paying jobs
are created.
Incentive payments are based on
Major Headquarters Attract a major corporate headquarters to attainment of performance milestones
Workforce Grant Fund locate in the Commonwealth. This specified in a performance agreement
(Amazon HQ2) customized performance-based grant is between the Commonwealth and the
used to support the establishment of the company. Performance measures
(2019) Amazon HQ2 in Arlington County. include employment, capital
investment, and average annual wages.
Incentive payments are based on
Support location, recruitment and training attainment of performance milestones
Nitrile Glove Manufacturing
for nitrile glove manufacturing company. specified in a performance agreement
Training Program (Blue Star)
This customized performance-based grant between the Commonwealth and the
is used to support the location of Blue Star company. Performance measures
(2022)
Manufacturing in Wythe County. include employment, capital
investment, and average annual wages.
Incentive payments are based on
Support expansion of pharmaceutical
attainment of performance milestones
Pharmaceutical Manufacturing manufacturing facility in the
specified in a performance agreement
Grant Program (Merck) Commonwealth. This customized
between the state and the company.
performance-based grant is used to
(2020) Performance measures include
support the expansion of Merck Sharp &
employment, annual average wages,
Dohme Corp. in Rockingham County.
and capital investment.
43
Appendixes
State agency/program
Purpose Description
(year enacted)
Support the location of a company that Incentive payments are based on
Precision Plastic engages in the manufacture and attainment of performance milestones
Manufacturing Grant Program distribution of precision plastic products in specified in a performance agreement
(LEGO Group) the Commonwealth. This customized between the Commonwealth and the
performance-based grant is used to company. Performance measures
(2023) support the location of LEGO Group in include employment, capital
Chesterfield County. investment, and average annual wages.
Performance-based payments based on
employment, capital investment, and
average annual wages are used to
reimburse the City of Richmond for
Support expansion of real estate analytics
funding infrastructure improvements in
Property Analytics Firm firm in the Commonwealth. This
vicinity of firm expansion. The firm is
Infrastructure Grant* customized performance-based grant is
also given option to utilize Market
(CoStar Group) used to support the expansion of the
Based Sourcing in corporate income tax
Costar Group in the City of Richmond.
apportionment in lieu of Cost of
Performance method if performance
benchmarks are achieved and
maintained.
Semiconductor Custom Grant Incentive payments are based on
(Micron)--Semiconductor Promote and expand semiconductor
attainment of performance milestones
Memory or Logic Wafer product manufacturing. This customized
specified in a performance agreement
Manufacturing Performance performance-based grant was used to
between the state and the company.
Grant support the expansion of Micron in
Performance measures include
Manassas City.
(2004) employment and capital investment.
Incentive payments are based on
Promote and expand semiconductor attainment of performance milestones
Semiconductor Manufacturing product manufacturing and research. This specified in a performance agreement
Grant Fund (Micron) customized performance-based grant is between the Commonwealth and the
(2019) used to support the expansion of Micron company. Performance measures
in Manassas City. include employment, capital
investment, and average annual wages.
Incentive payments are based on
Support retention and expansion of
Shipping and Logistics attainment of performance milestones
shipping and logistics company in the
Headquarters Grant Program specified in a performance agreement
Commonwealth. This customized
(CMA CGM) between the Commonwealth and the
performance-based grant is used to
company. Performance measures
support the retention and expansion of
(2021) include employment, capital
CMA CGM in the City of Norfolk.
investment, and average annual wages.
Support location, including site
Performance-based payments based
Space Flight Operations development and construction, for guided
upon employment, capital investment,
Facilitation Program (Rocket missile and space vehicle parts company
and average annual wages used to
Lab) in the Commonwealth. This customized
reimburse the Virginia Space Authority
performance-based grant is used to
for funding construction of a shell
(2024) support the location of Rocket Lab in
building for the company’s use.
Accomack County.
44
Appendixes
State agency/program
Purpose Description
(year enacted)
Incentive payments are based on
Attract an eservices company to locate attainment of performance milestones
Special Workforce Grant Fund operations in the Commonwealth. This specified in a performance agreement
(Amazon Web Services) customized performance-based grant was between the Commonwealth and the
(2019) used to establish Amazon Web Services in company. Performance measures
Fairfax County. include employment, capital
investment, and average annual wages.
Promote public-private R&D and
Incentive payments are based on
commercialization activities to facilitate
attainment of performance milestones
SRI custom grant economic growth. This customized grant
specified in a performance agreement
was used to support SRI Shenandoah
(2006) between the state and the company.
Valley to establish the Center for
Performance measures include
Advanced Drug Research in Rockingham
employment and capital investment.
County.
Incentive payments are based on
Promote location of technology company. attainment of performance milestones
Technology Development This customized performance-based grant specified in a performance agreement
Grant Fund (Microsoft) is used to support attraction of the between the Commonwealth and the
(2021) Microsoft software development and R&D company. Performance measures
facility in Fairfax County. include employment, capital
investment, and average annual wages.
Incentive payments are based on
Promote the expansion of truck attainment of performance milestones
Truck Manufacturing Grant manufacturer in Pulaski County. This specified in a performance agreement
Fund (Volvo) customized performance-based grant was between the Commonwealth and the
(2021) used to support the expansion of Volvo company. Performance measures
Trucks in Pulaski County. include employment, capital
investment, and average annual wages.
Companies must agree to create a
minimum of 400 jobs that pay 1.5 times
Virginia Economic Encourage the location of significant
the local prevailing average wage (or
Development Incentive Grant headquarters, administrative, research and
create 300 jobs paying 2.0 times the
development, and basic service
(2005) local prevailing average wage) and
companies.
make a capital investment of $6,500 per
job or more.
Grant is targeted to manufacturers that
have operated in the state for at least 3
Virginia Investment Encourage Virginia manufacturer retention years, make a capital investment of at
Performance Grant and expansion through new capital least $25 million, and face high risk of
(1999) investment and R&D. relocating elsewhere. New job creation
is not required, but current employment
levels must be maintained.
45
Appendixes
State agency/program
Purpose Description
(year enacted)
Grants are awarded for creating new
jobs or upgrading skills for existing
workers. Criteria vary for small and large
Virginia Jobs Investment businesses: job creation awardees must
Program Support private business job creation and create at least 5 or 25 new jobs and
worker training and retraining. make a capital investment of at least
(1965) $100,000 or $1 million. Retraining
awardees must retrain 10 full-time
employees and make a capital
investment of $500,000.
The VALET program provides grants,
technical assistance, and training to
Virginia Leaders in Export assist eligible businesses to develop
Help companies expand their markets and
Trade Program international export markets.
encourage the export of products and
Reimbursement is up to $30,000 per
(2002) services to international markets.
company for approved export-related
expenses and is competitive. Awardees
must complete a two-year program.
The program provides training and
recruitment services in partnership with
the Virginia Community College System
to qualifying competitive economic
Virginia Talent Accelerator projects in the manufacturing,
Program (custom workforce Expedite set-up and scale-up of new distribution, IT, corporate headquarters,
incentive) tradeable sector operations. R&D and shared service center sectors
(2019) that create at least 25 jobs (for
manufacturing and distribution) or 50
jobs (for other eligible operations) in
the first year of operation and make a
significant capital investment.
Virginia Trade Show Help companies expand their markets and The grant reimburses company trade
Assistance Program encourage the export of products and show attendees for up to $10,000 of the
(2016) services to international markets. cost of trade exhibits.
Virginia Film Office
Grants are awarded to production
companies that film in Virginia. Awards
Governor's Motion Picture are made on a discretionary basis
Opportunity Fund Support growth of the film and television considering project expenditures in
industries in Virginia. Virginia, employment, presence of any
(1999) local commitment, geographic diversity,
and industry or company growth
potential in Virginia.
46
Appendixes
State agency/program
Purpose Description
(year enacted)
Virginia Port Authority
Fund capital projects for infrastructure
improvements necessary to improve the
Incentive payments are based on
Offshore Wind Component Portsmouth Marine Terminal to handle
attainment of performance milestones
Grant Program (Siemens loading in and out of large, heavy offshore
specified in a performance agreement
Gamesa) wind components and serve as an
between the Commonwealth and the
offshore wind hub. This customized
company. Performance measures
(2021) performance incentive (bond
include employment, capital
authorization) is used to support the
investment, and average annual wages.
location of Siemens Gamesa in the City of
Portsmouth.
Grants are awarded to companies in
maritime industries that create at least
Port of Virginia Economic and Encourage maritime companies to locate 25 permanent full-time jobs and are
Infrastructure Grant or expand to promote the growth of the involved in maritime commerce or
(2014) Port of Virginia. import/export industry. The award per
job is scaled to the number of jobs
created.
*No date of enactment yet because the memorandum of understanding between the state and the company has not been signed.
Tax credits
Sixteen economic development tax credits, which are available to eligible applicants when filing income
tax forms, were subject to this review. The state offers three types of credits: transferable, refundable,
and non-refundable and non-transferable. Most economic development tax credits in this report are
the latter two types. In most cases, non-refundable and non-transferable tax credits can be credited
against a company’s tax liability over a designated “carryover” period. For these programs, carryover
periods vary from a low of three years to a high of 15 years. Three of the economic development tax
credit programs offer refundable credits: Coalfield Employment Enhancement Tax Credit, Motion
Picture Production Tax Credit, and Research and Development Expenses Tax Credit. A refundable
tax credit allows taxpayers to be reimbursed by the difference between the credit amount and tax
liability. The Virginia Port Volume Increase Tax Credit was changed from a non-refundable and non-
transferable tax credit to a transferable one in 2019.
TABLE C-2
Sixteen economic development tax credits are available through state’s corporate and
individual income tax
Program Purpose Description
Tax credit for facilities engaged in
port-related activities utilizing barge
Barge and Rail Usage Tax Encourage use of rail and waterway and rail rather than motor
Credit transportation and decrease Virginia road transportation. Credit is awarded
(2011) congestion. based on amount of increased cargo
shipped by barge and rail over
previous tax year.
47
Appendixes
Program Purpose Description
Tax credit for biodiesel and green
Biodiesel and Green Diesel diesel fuel producers making up to
Fuels Producers Tax Credit Promote biodiesel and green diesel
two million gallons of fuel per year.
production.
(2008) The credit amount is $0.01 per gallon
but cannot exceed $5,000 per year.
Coalfield Employment
Tax credit for metallurgical coal and
Enhancement Tax Credit
Encourage production of Virginia coalbed methane producers that is
(1996) metallurgical coal and coalbed methane. based on mining method and seam
thickness.
(expired January 1, 2022)
Tax credit for eligible vineyards and
Farm Wineries and Vineyards winery qualified expenditures such as
Tax Credit Promote growth of the Virginia wine
equipment and supplies used in
industry.
(2011) winemaking. Credit is 25% of all
qualified expenditures.
Tax credit for creating green jobs
during the taxable year. The annual
credit amount is $500 per green full-
Green Job Creation Tax Credit time job created that pays at least
Promote creation of jobs in renewable and
$50,000 per year in wages. The credit
(2010) alternative energy industries.
is first allowed for the taxable year in
which the job has been filled for at
least one year and for each of the four
succeeding taxable years.
Tax credit for international trade
International Trade Facility Tax Encourage port-related economic activity facilities that show at least 5% increase
Credit by increasing capital investment or new in Virginia port shipments. Job credit is
hiring connected to international trade equal to $3,500 per job. Capital
(2011) facilities. investment credit is equal to 2 percent
of capital investment.
Promote growth of company
Tax credit of $1,000 per job for
Major Business Facility Job Tax headquarters; manufacturing, agricultural,
creation of new, full-time jobs
Credit and transportation businesses; and
exceeding threshold of 50 jobs or 25
export-oriented service industries such as
(1995) jobs for enterprise zone/economically
legal and financial services. Retail
distressed areas.
industries are excluded.
Tax credit for qualified R&D expenses
Major Research and greater than $5 million. Credit is based
Development Tax Credit Promote research and development on difference between R&D expenses
activities. during taxable year and 50% of the
(2016) average expenses incurred during
previous 3 years.
Tax credit for qualifying expenses of
eligible productions that complete a
Motion Picture Production Tax Encourage motion picture production and motion picture. Tax credit is equal to
Credit use of Virginia resident labor and 15% of qualifying expenses, with
(2011) merchants in production. bonuses rates for Virginia resident
payroll and production in economically
distressed areas.
48
Appendixes
Program Purpose Description
Tax credit for equity or subordinated
Qualified Equity and debt investment in qualified small
Subordinated Debt businesses engaged in technology-
Encourage investment in high-tech small
Investment Tax Credit related fields. Credit amount is equal
business ventures.
to 50% of qualified investments during
(1999) the taxable year but may not exceed
tax liability or $50,000.
Tax credit for qualifying purchases of
Recyclable Materials equipment to produce items from
Processing Equipment Tax recyclable materials. Credit is equal to
Encourage recycling of waste and
Credit 20% of the purchase price of the
pollution control.
recycling equipment. The allowable
(1991) credit cannot exceed 40% of tax
liability.
Tax credit for qualified R&D expenses.
Credit is equal to 15% of first $300,000
Research and Development of expenses or 20% if conducted with
Expenses Tax Credit Promote research and development
Virginia higher education.
activities.
(2011) Alternatively, credit may be computed
as 10% of difference of expenses and
50% of previous 3-year average.
Tax credit for eligible expenses
incurred for permitting employees to
Telework Expenses Tax Credit
telework. Credit is equal to up to
Encourage telework to ease road
(2012) $1,200 per teleworking employee or
congestion.
$20,000 for conducting a telework
(expired January 1, 2019)
assessment. Maximum credit is
$50,000 per calendar year.
Virginia Coal Employment and
Tax credit of $3 per ton of Virginia
Production Incentive Tax
Encourage use of Virginia coal by Virginia mined coal purchased and consumed
Credit
power generators to increase Virginia coal by qualified electricity generator or
(2001) production and employment. person with an economic interest in
coal.
(expired January 1, 2022)
Tax credit for qualified agricultural,
Virginia Port Volume Increase manufacturing, or mining entities that
Tax Credit Promote use of state port facilities. use Virginia port facilities and increase
(2011) cargo volume by at least 5%. Credit is
$50 per 20-foot equivalent unit.
Tax credit for training costs of
providing eligible worker retraining for
Worker Retraining Tax Credit
qualified employees. The retraining
Encourage worker retraining to improve
(1999) must occur with a pre-designated
productivity and employment retention.
program such as a noncredit course or
(expired January 1, 2019)
apprenticeship. Tax credit is up to 30%
of qualified training costs.
49
Appendixes
Program Purpose Description
Tax credit equal to 35 percent of the
expenses incurred for eligible worker
training up to $500 per qualified
employee or $1,000 for training
Worker Training Tax Credit related to each non-highly
(replaces Worker Retraining compensated worker. Manufacturing
Encourage worker training to improve
Tax Credit) businesses that currently qualify for
productivity and employment retention.
the Worker Retraining Tax Credit for
(2019) conducting orientation, instruction,
and training in Virginia related to its
manufacturing activities are also
eligible. The annual aggregate credit
cap is $1 million.
NOTE: The Worker Training Tax Credit replaced the Worker Retraining Tax Credit, and they are counted as one credit for purposes of this
review.
Sales and use tax exemptions
Twenty sales and use tax exemptions reduce taxes for eligible firms that purchase or lease selected
tangible personal property. Sales and use tax exemptions are generally realized at the point of sale
when eligible items are purchased. Eligible firms must complete Department of Taxation forms
(Commonwealth of Virginia Sales and Use Tax Certificate of Exemption) and present them to
merchants at time of sale. Two exemptions require additional authorization before use. The data center
exemption statutorily requires qualifying firms to meet minimum employment, capital investment, and
wage requirements and enter into a memorandum of understanding with VEDP. The MOU requires
data centers to provide annual reports to VEDP to demonstrate the actual capital investment and job
creation that was made. Companies using the pollution control equipment and facilities exemption
must first obtain certification from a state monitoring agency (i.e., Department of Environmental
Quality, Department of Energy) before applying for the exemption. For these exemptions, the
certificate may not have been issued at the time of eligible purchases, but the business can request a
refund once the certificate is obtained.
TABLE C-3
Twenty sales and use tax exemptions reduce taxes at point of sale
Exemption Purpose Description
Tax exemption for tangible personal
property sold or leased to an airline
Airline Common Carriers operating in intrastate, interstate, or foreign
Exemption Encourage commercial airline service to and
commerce as a common carrier. The airline
from Virginia airports.
(1966) must provide scheduled air service on a
continuing basis to one or more Virginia
airports at least one day per week.
Aircraft Parts, Engines, and Encourage growth of aviation sector,
Tax exemption for parts, engines, and
Supplies Exemption including unscheduled common carriers,
supplies used for maintaining, repairing, or
private planes, and unmanned aviation
(2018) reconditioning aircraft.
systems.
50
Appendixes
Exemption Purpose Description
Tax exemption for catalogs, letters,
Certain Printed Materials for brochures, reports, and similar printed
Out-of-State Distribution Encourage out-of-state business purchases materials, and paper furnished to a printer
Exemption of printing materials from state firms. for fabrication into such printed materials,
(1976) when stored for 12 months or less in Virginia
and distributed outside the state.
Tax exemption for Controlled Environment
Controlled Environment Promote growth of indoor, closed, Agriculture (CEA) enterprises. Exemption
Agriculture Exemption controlled-environment commercial applies to items needed to create, support,
agricultural facilities including indoor vertical and maintain the necessary growing
(2023) farming and greenhouses. environment for plants, including internal,
external, and structural components.
Tax exemption for personal property
purchased by a contractor for use solely in
Contractor Temporary Storage another state or in a foreign country and
Exemption Promote competitiveness of state
temporarily stored in Virginia pending
construction material supply firms.
(1989) shipment, if such property could be similarly
purchased free from sales tax in such other
state or foreign country.
Tax exemption for Virginia data centers and
tenants meeting certain minimal investment,
Data Centers Exemption Promote the establishment of large-scale employment, and wage-level
(2010) data centers. criteria. Exemption is for processing,
storage, retrieval, and communication
equipment.
Tax exemption for high-speed electrostatic
Electrostatic Duplicators duplicators or any other duplicators having a
Promote small-scale printing businesses by
Exemption printing capacity of 4,000 impressions or
providing exemption comparable to
more per hour purchased or leased by
(1986) industrial printers.
persons engaged primarily in the printing or
photocopying of products for sale or resale.
Tax exemption for audiovisual works
acquired for licensing, distributing,
Film, Television, & Audio broadcasting, commercially exhibiting or
Production Inputs Exemption Promote motion picture production and
reproducing or production services or
sound recording industries.
(1995) fabrication connected with such production.
The exemption applies to purchases and
leasing tangible personal property.
51
Appendixes
Exemption Purpose Description
Tax exemption for broadcasting equipment,
parts and accessories used by radio,
Media Provider Equipment Promote radio and television broadcasting, television, cable, and broadband media
Exemption cable television, and broadband media companies. The exemption also applies to
(1966) industries. amplification, transmission, and distribution
equipment used by cable television systems
or other video systems.
Tax exemption for tangible personal
Out-of-state Nuclear Facility Promote nuclear maintenance and repair property purchased for use or consumption
Repair Exemption industry by exempting purchases of supplies in the performance of maintenance and
used for the purpose of providing services to repair services at Nuclear Regulatory
(2000) out-of-state buyers. Commission-licensed nuclear power plants
located outside the state.
Pollution Control Equipment & Tax exemption for pollution control
Encourage business adoption of pollution
Facilities Exemption equipment and facilities used for air and
control equipment and technologies by
water pollution abatement certified by a
(1972) reducing capital costs.
state certifying authority.
Railroad Common Carriers Tax exemption for tangible personal
Exemption Promote maintenance and expansion of property sold or leased to a public service
state railroads. corporation that is a common carrier of
(1978) property or passengers by railway.
Railroad Rolling Stock Exemption Encourage capital investment in railroad Tax exemption for railroad rolling stock
(2007) rolling stock. when sold or leased by the manufacturer.
Tax exemption for tangible personal
Research & Development property purchased for use or consumption
Exemption Encourage research and development of
directly and exclusively in basic research or
new and improved products and processes.
(1966) research and development in the
experimental or laboratory sense.
Tax exemption for semiconductor
Semiconductor Manufacturers cleanrooms or equipment, fuel, and supplies
Exemption Promote semiconductor manufacturing
used when designing, developing,
industry.
(2006) manufacturing, or testing semiconductor
products or equipment.
Semiconductor Wafers Tax exemption for semiconductor wafers for
Exemption Promote semiconductor manufacturing
use or consumption by a semiconductor
industry.
(2006) manufacturer.
Tax exemption for ships or vessels used or to
be used exclusively or principally in
Ships and Vessels Exemption Promote maritime shipping industries, interstate or foreign commerce. The tax
including commercial ship building, exemption also applies to fuel and supplies
(1966) repairing, supplying, and dredging. for use or consumption aboard ships or
vessels plying the high seas, either in
intercoastal trade or in foreign commerce.
52
Appendixes
Exemption Purpose Description
Taxi Parts & Radios Exemption Tax exemption for parts, tires, meters and
Encourage commercial taxi operations and
dispatch radios sold or leased to taxicab
(1984) prevent their further decline.
operators for use in their services.
Tax exemption for machinery and tools,
Uniform Rental & Laundry Promote the commercial uniform rental supplies and materials used directly in
Businesses Exemption industry by providing a tax exemption similar maintaining and preparing textile products
to other industrial manufacturers and for rental or lease by an industrial processor
(1980) processors. engaged in commercial leasing or renting of
laundered textile products.
Tax exemption for space facilities and
Virginia Spaceport Users hardware, including inputs, components and
Promote spaceport operations at facilities
Exemption supplies such as special fuels, machinery and
owned, leased, or operated by the state and
equipment, and other goods and services for
(1997) the commercial space industry.
activities undertaken at a Virginia
Commercial Space Flight Authority facility.
Other incentive programs
Thirteen other incentive programs included in this report fall into a “miscellaneous” category. These
incentives include tax preferences such as corporate income tax apportionment methods and income
tax subtractions as well as gap and loan financing programs that are difficult to classify elsewhere. The
latter programs are administered by the Virginia Small Business Financing Authority and the Virginia
Innovation Partnership Corporation and are designed to provide alternative funding sources for
business startups and established small businesses that face financing constraints. Based on current
estimates, the manufacturing single sales apportionment factor is the largest of these miscellaneous
incentives. The single sales formula allows manufacturers to calculate their taxable income in Virginia
based solely on the proportion of total sales that are in Virginia rather than a weighted average of
sales, property, and payroll. This creates tax savings for multistate firms that have sizeable operations
within the state but ship substantial amounts of products outside the state.
TABLE C-4
Thirteen other tax incentives, loan, and gap financing programs target economic development
Program Purpose Description
This tax rule allows eligible multistate
corporations that make a capital
Data Center Single Sales investment of at least $150 million in a
Factor Apportionment Promote the establishment and growth of data center to use the single sales factor
data centers. method of apportionment to reduce tax
(2017) liability. Companies that choose to use
this apportionment method must enter
into an MOU with VEDP.
53
Appendixes
Program Purpose Description
Loans are targeted to small businesses in
technology, tourism, manufacturing, and
Economic Development Loan services that generate a majority of sales
Fund Promote small business job creation and outside the state. Project must create
retention by providing gap financing. permanent full-time jobs that pay
(2007) minimum of $10 per hour. Maximum loan
available is 40% or $1 million, whichever is
less.
This program helps small businesses
obtain loans by reducing bank credit risk.
Loan Guaranty Program The maximum guarantee is the lessor of
Promote small business capital
$750,000 or 75% of the loan amount. The
(1985) investment.
program does not have job creation
requirements but considers job creation in
financing decisions.
This program helps small businesses
obtain loans by reducing bank credit risk.
State Cash Collateral Program The maximum guarantee is the lessor of
Promote small business capital
$500,000 or 40% of the loan amount. The
(2013) investment.
program does not have job creation
requirements but considers job creation in
financing decisions.
This tax rule allows manufacturing
companies to choose single sales factor
Manufacturing Single Sales apportionment to reduce tax liability.
Factor Apportionment Promote manufacturing employment Companies must certify that full-time
growth. employee average wages are above the
(2009) state industry average and that
employment is at least 90 percent of base
year employment for three years.
Program offers modified corporate
income tax apportionment factor and
consideration for grant from
New Company Incentive Commonwealth’s Development
Program Promote economic development in 51
Opportunity Fund for new traded sector
qualified economically distressed counties.
(2018) companies creating minimum of 10 new
jobs paying at least 1.5 times the Virginia
minimum wage and $5 million in capital
investment that locate in eligible counties.
54
Appendixes
Program Purpose Description
Tax subtraction for income attributable to
an investment in certain high technology
businesses that is taxed as long-term
Qualified Business Long-Term capital gain. Investment must be made
Capital Gain Subtraction Promote high technology business
between April 1, 2010, and June 30, 2020.
investment.
(2010) Qualified businesses must have gross
revenues of less than $3 million and have
received less than $3 million in equity or
debt investments.
This fund provides a maximum of $10,000
to eligible businesses, or $25,000 if
business received counseling from a Small
SWaM Loan Fund Promote small, women-owned, and
Business Development center. Loans are
minority-owned business capital
(2012) allocated on credit score basis. Loans may
investment and expansion.
be used for working capital, financing
accounts receivable and inventory, and
other purposes.
The program provides gap financing for
tourism development projects otherwise
Tourism Development unable to access capital. The locality must
Financing Program Promote tourism and economic
apply, demonstrate a tourism deficiency,
development in Virginia.
(2012) and provide tax incentives or regulatory
flexibility for a designated tourism zone
where the project occurs.
Income tax subtraction or certain income
attributable to an investment in a Virginia
venture capital account, defined as an
investment fund that (i) invests at least 50
percent of its funds invested during the
Venture Capital Account year in which the taxpayer claims a
Subtraction Promote investment in Virginia early-stage subtraction, or any of the previous five
companies. years, in qualified portfolio companies and
(2018) (ii) employs at least one investor who has
either at least four years of professional
experience in venture capital investment
or substantially equivalent experience.
Investment must be made between
January 1, 2018, and December 31, 2023.
55
Appendixes
Program Purpose Description
Seed-stage equity investments in Virginia-
based technology, green technology, and
Promote expansion of early-stage high-
Virginia Venture Partners Gap life science companies with a high growth
science and technology companies in
Funds potential. The Virginia Innovation
targeted fields with rapid growth
(2005) Partnership Corporation (VIPC) holds an
potential.
ownership position in the company while
the company grows operations and value.
Tax deduction for gains realized from the
Zero G Zero Tax Act (Part I) Encourage the location and expansion of sale of launch services to space flight
Subtraction companies at a Virginia airport or participants or launch services intended to
spaceport involved in flying or training provide individuals the training or
(2009) humans in suborbital flight. experience of a launch, without
performing an actual launch.
Tax deduction for gains realized from
Zero G Zero Tax Act (Part II) resupply services contracts for delivering
Encourage the location and expansion of
Subtraction payload with the Commercial Orbital
companies at a Virginia spaceport
Transportation Services division of the
(2009) involved in resupplying the space station.
National Aeronautics and Space
Administration or other space flight entity.
56
Appendixes
Appendix D: Spending or tax expenditures by incentive
TABLE D-1
State spending on incentive grant payments ($ millions)
Incentive FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Total
Advanced Production Grant Program and Fund (Morgan Olson) -- -- -- -- -- -- -- 0.5 0.0 0.0 $0.5M
Advanced Shipbuilding Training Facility Grant Program
5.00 8.03 7.59 7.16 -- -- -- -- -- -- 27.8
(Huntington Ingalls)
Advanced Shipbuilding Production Facility Grant Program
-- -- -- -- -- 6.0 0.0 8.0 8.0 8.0 30.0
(Huntington Ingalls)
Aerospace Engine Manufacturing Performance Grant Program
0.0 0.0 0.0 0.0 0.0 0.0 11.0 0.0 -- -- 11.0
(Rolls Royce)
Tobacco Commission Agribusiness Grant 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Agriculture and Forestry Industries Development Grant 0.4 0.6 0.8 1.6 0.8 1.3 0.6 1.0 3.0 1.3 11.2
Virginia Business Ready Sites Program -- -- -- 0.9 0.0 0.4 0.0 0.0 5.7 89.3 96.3
Commonwealth’s Development Opportunity Fund 9.4 15.0 14.4 22.2 7.3 10.1 12.5 16.5 21.4 19.0 147.8
Commonwealth Research Commercialization Fund 0.9 1.0 1.5 1.3 0.9 1.3 1.9 3.3 2.8 6.5 21.4
Economic Development Access Program 1.4 0.7 0.7 3.6 2.4 1.5 1.3 2.0 0.7 0.9 15.1
GO Virginia (site development projects) -- -- -- 0.0 0.4 2.8 0.0 7.6 2.2 5.7 18.6
Governor's Motion Picture Opportunity Fund 1.7 2.9 12.1 0.8 5.8 1.4 3.0 5.5 7.9 9.3 50.4
Governor's New Airline Service Incentive Fund -- -- -- -- -- -- -- -- 0.25 0.04 0.3
Job Creation Grant (Enterprise Zone) 2.9 3.1 2.7 1.8 2.2 2.7 2.9 1.9 2.5 1.8 24.5
Major Eligible Employer Grant 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Major Headquarters Workforce Grant Fund (Amazon HQ2) -- -- -- -- -- -- 0.0 0.0 0.0 0.0 0.0
Tobacco Commission Megasite Grant 12.8 6.2 0.0 0.0 4.8 0.0 0.0 0.0 0.0 0.0 23.7
New Company Incentive Program (grant portion) -- -- -- -- 0.0 0.0 0.0 0.6 0.7 0.0 1.3
Nitrile Glove Manufacturing Training Program (Blue Star) -- -- -- -- -- -- -- -- 0.0 0.0 0.0
57
Appendixes
Incentive FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Total
Offshore Wind Component Grant Program (Siemens Gamesa) -- -- -- -- -- -- -- -- 0.0 0.0 0.0
Pharmaceutical Manufacturing Grant Program (Merck) -- -- -- -- -- -- -- 0.0 2.5 2.5 5.0
Port of Virginia Economic and Infrastructure Grant 0.5 0.3 2.2 0.5 0.1 1.3 0.7 1.0 0.5 7.0
Precision Plastic Manufacturing Grant Program (LEGO Group) -- -- -- -- -- -- -- -- 0.0 0.0 0.0
Property Analytics Firm Infrastructure Grant Fund (CoStar Group) -- -- -- -- -- -- -- -- -- -- 0.0
Rail Industrial Access Program 2.1 0.3 0.9 0.0 1.3 0.7 0.6 1.3 2.3 3.0 12.5
Real Property Improvement Grant (Enterprise Zone) 11.3 9.1 9.3 10.9 10.7 10.8 11.6 12.6 11.1 9.4 106.5
Semiconductor Custom Grant (Micron 2004) 5.4 5.4 3.8 -- -- -- -- -- -- -- 14.6
Semiconductor Manufacturing Grant Fund (Micron 2019) -- -- -- -- -- -- 50.0 20.0 0.0 0.0 70.0
Shipping and Logistics Headquarters Grant Program (CMA CGM) -- -- -- -- -- -- -- -- 0.0 0.0 0.0
Small Business Investment Grant Fund 0.0 0.1 0.1 1.2 0.5 0.8 0.8 0.8 0.8 0.8 6.0
Small Business Jobs Grant Fund Program 1.2 0.3 0.0 0.3 0.0 0.0 -- -- -- -- 1.8
Southside Economic Development Grants 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Southwest Economic Development Grants 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Space Flight Operations Facilitation Program (Rocket Lab) -- -- -- -- -- -- -- -- -- -- --
Special Workforce Grant Fund (Amazon Web Services) -- -- -- -- -- -- 0.00 0.0 10.5 0.0 10.5
SRI custom grant -- -- -- -- -- -- -- -- -- -- 0.0
Technology Development Grant Fund (Microsoft) -- -- -- -- -- -- -- 0.0 0.0 5.6 5.6
Tobacco Region Opportunity Fund 27.0 5.5 9.1 2.9 3.2 3.5 3.4 1.1 1.8 0.9 58.4
Transportation Partnership Opportunity Fund 0.7 6.0 0.0 0.0 0.0 11.2 0.0 1.0 0.0 3.5 22.5
Truck Manufacturing Grant Fund (Volvo) -- -- -- -- -- -- -- 2.0 0.0 0.0 2.0
Virginia Economic Development Incentive Grant 0.0 2.0 0.0 13.3 0.0 1.5 0.0 3.5 2.0 9.0 31.3
Virginia Investment Performance Grant 0.8 5.5 5.4 1.6 1.0 3.4 4.3 8.4 10.7 0.0 40.9
Virginia Jobs Investment Program 7.7 5.9 9.1 8.4 4.6 2.2 2.8 4.4 3.2 1.2 49.4
VALET Program 0.3 0.3 0.3 0.6 0.7 0.5 0.6 0.5 0.8 0.7 5.3
58
Appendixes
Incentive FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Total
Virginia Talent Accelerator Program -- -- -- -- -- -- 1.3 2.7 10.8 1.3 16.0
Virginia Trade Show Assistance Program -- -- -- 0.6 0.5 0.6 0.7 0.4 0.5 0.6 3.9
Total 91.7 77.8 78.1 81.1 47.4 62.8 110.5 106.1 113.0 179.7 $949.4
SOURCE: Weldon Cooper Center analysis of economic development incentives.
NOTE: Adjusted for canceled projects, recaptures, and award reductions. Not adjusted for inflation. Numbers may not sum because of rounding. Spending on the New Company Incentive
Program is included here because the incentive payments were in the form of grants.
-- indicates program had not been adopted or was no longer in effect.
TABLE D-2
Tax savings to businesses because of tax credits ($ millions)
Incentive FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Total
Barge and Rail Usage Tax Credit 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.1 0.4 $1.2M
Biodiesel and Green Diesel Fuels Producers Tax Credit 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Coalfield Employment Enhancement Tax Credit 21.5 28.4 23.4 18.9 15.2 16.1 7.9 9.3 0.3 8.9 149.9
Farm Wineries and Vineyards Tax Credit 0.2 0.2 0.2 0.1 0.1 0.2 0.1 0.1 0.2 0.2 1.7
Green Job Creation Tax Credit 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.2
International Trade Facility Tax Credit 0.2 0.1 0.3 0.3 0.3 0.9 0.1 0.1 0.0 0.1 2.4
Major Business Facility Job Tax Credit 1.3 4.1 0.8 6.8 1.8 1.3 6.3 2.2 0.8 4.0 29.5
Major Research and Development Tax Credit -- -- -- -- 6.1 4.8 17.2 12.0 9.9 21.3 71.3
Motion Picture Production Tax Credit 3.0 7.2 5.5 6.6 6.1 0.0 7.2 5.8 4.5 6.5 52.3
Qualified Equity and Subordinated Debt Investment Tax Credit 2.4 2.1 2.4 2.2 2.8 3.2 3.9 4.2 3.2 5.0 31.2
Recyclable Materials Processing Equipment Tax Credit 1.2 0.6 2.1 1.7 1.4 1.5 2.2 2.2 1.3 1.8 16.1
Research and Development Expenses Tax Credit 3.4 4.2 4.7 4.2 4.2 4.1 5.2 2.6 2.7 2.4 37.7
Telework Expenses Tax Credit 0.1 0.1 0.1 0.0 0.1 0.0 0.1 0.0 0.0 -- 0.4
Virginia Coal Employment and Production Incentive Tax Credit 6.7 8.9 3.1 3.7 6.8 0.5 1.3 0.6 0.1 0.0 31.7
Virginia Port Volume Increase Tax Credit 0.4 0.7 0.9 2.2 1.8 1.8 1.4 1.8 0.3 2.2 13.5
59
Appendixes
Incentive FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Total
Worker Retraining Tax Credit 0.2 0.2 0.2 0.2 0.3 0.0 0.2 0.0 0.0 -- 1.3
Worker Training Tax Credit -- -- -- -- -- -- 0.0 0.1 0.0 0.1 0.2
Total 40.3 56.9 44.1 47.0 47.1 34.5 53.0 41.1 23.6 52.9 $440.5
SOURCE: Weldon Cooper Center analysis of Virginia Tax’s Annual Reports for Fiscal Years 2014–2023.
NOTE: Credits were claimed for the Biodiesel and Green Diesel Fuels Producers Tax Credit, but amounts were very minimal. Not adjusted for inflation. Numbers may not sum because of
rounding.
-- indicates no credits were claimed in that year because they had not been adopted yet.
TABLE D-3
Estimated tax savings to businesses on sales and use tax exemptions ($ millions)
Incentive FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Total
Airline Common Carriers Exemption 8.5 10.5 11.4 11.0 9.8 9.9 8.7 9.7 14.9 15.8 $110.0M
Aircraft Parts, Engines, and Supplies Exemption 0.0 0.0 0.0 0.0 0.0 5.5 5.6 5.7 5.8 6.0 28.5
Certain Printed Materials for Out-of-State Distribution Exemption 2.1 2.1 2.2 2.2 2.3 2.3 2.3 2.4 7.4 7.9 33.2
Contractor Temporary Storage Exemption 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 1.1
Data Center Exemption ** ** ** ** ** ** ** 613.5 411.5 685.2 1,710.2
Electrostatic Duplicators Exemption 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1
Film, Television, & Audio Production Inputs Exemption 0.7 0.8 0.9 1.0 2.2 3.8 4.2 4.0 4.3 4.6 26.6
Media Provider Equipment Exemption 4.4 4.5 4.5 4.6 4.7 4.8 4.9 5.0 5.3 5.7 48.3
Out-of-state Nuclear Facility Repair Exemption 0.5 0.5 0.6 0.6 0.6 0.7 0.6 0.6 0.7 0.7 6.2
Pollution Control Equipment & Facilities Exemption 2.3 4.2 4.1 3.2 3.2 3.3 3.4 3.4 3.7 3.9 34.7
Railroad Common Carriers Exemption 24.6 25.7 24.2 17.7 17.5 20.3 16.4 14.9 18.6 19.7 199.6
Railroad Rolling Stock Exemption 2.1 2.1 2.3 2.4 2.4 2.5 2.6 2.6 2.8 2.9 24.7
Research & Development Exemption 3.7 3.5 2.9 3.4 5.1 5.4 6.4 6.6 7.0 7.0 51.1
Semiconductor Manufacturers Exemption 1.2 0.8 0.6 0.6 0.5 0.4 0.5 0.5 0.7 0.7 6.5
Semiconductor Wafers Exemption 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 1.0
60
Appendixes
Incentive FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Total
Ships and Vessels Exemption 6.2 6.3 6.3 6.5 6.4 7.0 7.1 7.3 7.8 8.3 69.4
Taxi Parts & Radios Exemption 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4 0.4 0.4 3.5
Uniform Rental & Laundry Businesses Exemption 0.8 0.9 1.0 1.0 1.0 0.9 0.8 0.6 0.6 0.6 8.2
Virginia Spaceport Users Exemption 1.2 0.9 0.0 0.5 1.0 1.0 1.0 1.6 1.1 0.6 8.8
Total 59.1 63.6 61.4 55.0 57.2 68.3 65.0 678.9 492.8 770.4 $2,371.7
SOURCE: Weldon Cooper Center analysis of economic development incentives.
NOTE: Exempted amounts exclude the 1 percent sales tax for localities and, in most cases, the additional amounts collected in localities with higher rates, such as Northern Virginia and the
Historic Triangle. Numbers may not sum because of rounding.
-- indicates exemption had not been adopted yet.
TABLE D-4
State spending on other incentives ($ millions)
Incentive FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Total
Data Center Single Sales Factor Apportionment -- -- -- -- -- 0.1 0.1 0.1 0.2 0.2 $0.8
Economic Development Loan Fund 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Loan Guaranty Program 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Manufacturing single sales factor apportionment 1.9 20.9 22.3 22.7 23.3 23.7 24.1 24.7 26.4 28.1 218.1
New Company Incentive Program (Corporate Apportionment -- -- -- -- 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Portion)
Qualified Business Long-Term Capital Gain Subtraction 1.7 3.0 1.5 1.9 1.2 0.8 0.9 2.6 2.8 3.0 19.2
State Cash Collateral Program 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
SWaM Loan Fund 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1
Tobacco Region Opportunity Fund (Loan Portion) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1
Tourism Development Financing Program 0.0 8.4 0.0 0.9 0.6 1.8 0.0 0.0 2.0 73.8 87.6
Venture Capital Account Subtraction -- -- -- -- 0.0 0.0 0.0 0.0 0.0 ** 0.0
Virginia Venture Partners GAP Funds 1.3 0.6 0.6 0.8 0.8 1.0 1.2 1.3 2.7 2.1 12.5
61
Appendixes
Incentive FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Total
Zero G Zero Tax Act (Part I) Subtraction 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Zero G Zero Tax Act (Part II) Subtraction 0.1 0.1 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.7
Total 5.0 33.0 24.4 26.4 25.9 27.7 26.5 28.8 34.2 107.2 $339.1
SOURCE: Weldon Cooper Center analysis of economic development incentives.
NOTE: Not adjusted for inflation. Virginia Small Business Financing Authority loan program amounts listed are legislative appropriations since these revolving loan program costs are not equal
to the loan award amount.
-- indicates incentive had not been adopted yet.
** indicates data was not provided for the program.
62
Appendixes
Appendix E: Regional distribution of grant awards
The largest amount of grant awards went to businesses in highly populated localities such as Arlington
County, Newport News City, Fairfax County, and Richmond City and to rural localities in the tobacco
region and on the Eastern Shore (Figure E-1). Adjusted for population size, awards are concentrated
in urbanized localities in Northern Virginia and in rural southern and Eastern Shore localities (Figure
E-2).
FIGURE E-1
Awards are concentrated in several highly populated areas and the southern region (FY14–
FY23)
SOURCE: Weldon Cooper Center analysis of economic development incentives.
NOTE: Localities were not assigned to 10 Governor’s Motion Picture Opportunity Fund (GMPOF) projects, eight Go Virginia site
development projects, one Virginia Business Ready Sites Program project, and one Governor's New Airline Incentive Fund project because
the grants benefited more than one locality.
63
Appendixes
FIGURE E-2
Awards are concentrated in urban areas in Northern Virginia and in rural southern and eastern
shore localities, adjusted for population size (FY14–FY23)
SOURCE: Weldon Cooper Center analysis of economic development incentives.
NOTE: Localities were not assigned to 10 Governor’s Motion Picture Opportunity Fund (GMPOF) projects, eight Go Virginia site
development projects, one Virginia Business Ready Sites Program project, and one Governor's New Airline Incentive Fund project because
the grants benefited more than one locality.
64
Appendixes
Appendix F: Average employment size of grant recipients by
program
The average establishment size of a grant recipient was 175 employees across all programs. However,
the average size varied widely by program (Figure F-1). The largest average sizes were for the
Transportation Partnership Opportunity Fund (3,983 employees), Virginia Talent Accelerator
Program (1,475), the Virginia Investment Performance Grant (865), and the Virginia Economic
Development Incentive Grant (428). The smallest average employee sizes were for finance programs
for startups—the Small Business Investment Grant Fund (9 employees) and Commonwealth Research
Commercialization Fund (8).
Figure F-1
Average employment size of business location at time of award varies widely by program
(FY14– FY23)
SOURCE: Weldon Cooper Center analysis of economic development incentive grants and VEC data.
NOTE: Employment records were matched with 2,930 of the 5,021 awards (58%) and $1.299B of $2.010B in total awards (65%).
65
Appendixes
Appendix G: Project-specific goals used by grant programs
Some programs award grants or make award commitments before projects begin. These programs
require projects to achieve specific goals to obtain or keep the full award promised. Job creation,
capital investment, and average wages paid are the most common goals, but several programs establish
other goals that are more aligned with the purpose of the program (Table G-1).
TABLE G-1:
Job creation, average wages, and capital investment are most common performance measures
Capital
Job creation
Wages expenditures
Grant program Other
Advanced Production Grant (Morgan Olson) X X X
Advanced Shipbuilding Training Facility Grant Number of apprentices, training
X X X
(Newport News) expenses
Advanced Shipbuilding Production Facility Grant
X X
(Newport News)
Aerospace Engine Manufacturing Performance
X X X
Grant (Rolls Royce)
Agriculture and Forestry Industries Development
X X X Value of Virginia agricultural products
Grant
Commonwealth’s Development Opportunity Fund X X X
Commonwealth Research Commercialization Fund Capital attracted from other sources
Economic Development Access Program X
Virginia Venture Partners GAP Funds Capital attracted from other sources
Go Virginia (site development) X X
Total Virginia spending, Value of
Governor's Motion Picture Opportunity Fund X
advertising
Governor's New Airline Service Incentive Fund Frequency of air service
Job Creation Grant X
Major Eligible Employer Grant X X X
Major Headquarters Workforce Grant (Amazon
X X X
HQ2)
Nitrile Glove Manufacturing Training Program (Blue
X X X
Star)
Offshore Wind Component Grant (Siemens
X X X
Gamesa)
Pharmaceutical Manufacturing Grant (Merck) X X X
66
Appendixes
Capital
Job creation
Wages expenditures
Grant program Other
Port of Virginia Economic and Infrastructure Grant X Port user
Precision Plastic Manufacturing Grant (LEGO
X X X
Group)
Rail Industrial Access Program X Carloads
Real Property Improvement Grant X
Semiconductor Custom Grant (Micron) X X
Semiconductor Manufacturing Grant (Micron) X X X Establishment of R&D facility
Shipping and Logistics Headquarters Grant
X X X
(CMA CGM)
Small Business Investment Grant Fund X Private equity investment
Small Business Jobs Grant Fund Program X X X
Space Flight Operations Facilitation Program
X X X
(RocketLab)
Special Workforce Grant (Amazon Web Services) X X X
SRI custom grant X X
Technology Development Grant (Microsoft) X X X
Tobacco Commission Megasite Grant
Tobacco Region Opportunity Fund X X X
Transportation Partnership Opportunity Fund X X
Truck Manufacturing Grant (Volvo) X X X
Virginia Business Ready Sites Program
Virginia Economic Development Incentive Grant X X X
Virginia Investment Performance Grant X X X
Virginia Jobs Investment Program X X X Job retraining
Virginia Leaders in Export Trade (VALET) Program International sales
Workers receiving recruitment and
Virginia Talent Accelerator Program X
training services
Virginia Trade Show Assistance Program International sales
SOURCE: Weldon Cooper Center analysis of agency documents.
67
Appendixes
Appendix H: Economic and revenue impact analysis
The economic impact analysis for incentives involved modeling (1) the additional economic activity
that occurred because of the incentive and (2) the simultaneous increase in taxes that was used to
“pay” for the incentive. Increasing taxes has the general effect of decreasing employment and other
economic activity. Thus, increasing taxes to pay for the incentive reduced the total effect of the
incentive on the economy.
Economic impact modeling
Weldon Cooper Center staff conducted economic impact analyses of Virginia economic incentives
using REMI PI+ (Policy Insight Plus) software. REMI PI+ is a dynamic, multi-sector regional
economic simulation model used for economic forecasting and measuring the impact of public policy
changes on local economies. The model combines different contemporary regional economic
modeling methods such as input-output analysis, econometric forecasting, and computable general
equilibrium to characterize the mechanics and path of a regional economy. The model has been
extensively peer-reviewed and is widely used by state agencies elsewhere in the nation to model
economic and tax revenue impacts of economic development incentive programs, including economic
development incentives. The model used for this analysis was customized for Virginia and includes 70
industry sectors. Outcome variables examined include total employment, state GDP, and personal
income. In addition, a state tax revenue impact analysis was conducted based on a methodology
described further below.
The modeling of each program was conducted differently depending on the type of economic
stimulus provided by the program and available information on program outcomes (Table H-1). The
most comprehensive information on establishment-level performance outcomes was available for
grant programs, which typically track employment, capital investment, and other performance metrics
related to the specific economic aims of the programs. Information on employment benchmarks was
also available for four Small Business Financing Authority loan programs, which a previous JLARC
study corroborated are in aggregate indicative of ultimate employment creation. (See Workforce and
Small Business Incentives, JLARC 2018.) Similar information was available for the data center
exemption because users are required to enter into a Memorandum of Understanding with VEDP
and report employment and capital investment goal attainment. However, it was not available for other
sales and use tax exemptions and tax credits. Thus, those programs were generally modeled as
decreasing either firm capital or production costs. Programs were modeled as decreasing firms’ capital
costs if the incentive reduced the costs of purchasing tangible personal property. They were modeled
as decreasing firm production costs if the costs of labor as well as equipment and supplies were
reduced by the incentive.
68
Appendixes
Table H-1
REMI Policy Variables
REMI model policy
Name of incentives Modeling description
variables
Agriculture and Forestry Industries Development Grant
Commonwealth’s Development Opportunity Fund
Governor's Motion Picture Opportunity Fund
Job Creation Grant
Major Eligible Employer Grant
Port of Virginia Economic and Infrastructure Grant Model economic impact based
on 10 percent “but for”
Small Business Investment Grant Fund
assumption for grant programs
Small Business Jobs Grant Fund Program Labor and Capital and 31 percent for loan
Tobacco Region Opportunity Fund Demand>-Employment>- programs based on
Firm >-Industry documented or projected
Virginia Economic Development Incentive Grant
employment increase. Assign
Virginia Investment Performance Grant REMI industry based on grant
project industry identifiers.
Virginia Jobs Investment Program--Job Creation
Economic Development Loan Fund
Loan Guaranty Program
State Cash Collateral Program
SWaM Loan Fund
Special Workforce Grant Fund (Amazon Web Services)
Labor and Capital Model economic impact based
Demand>- on 95 percent "but for"
Governor's Motion Picture Opportunity Fund assumption based on
Employment>Industry >-
Industry documented employment
increase.
Economic Development Access Program
Model economic impact
Rail Industrial Access Program estimate based on 10 percent
Output and Demand>-
Real Property Improvement Grant “but for” assumption based on
Investment Spending>-
documented investment. Assign
Megasite Grants (Tobacco Commission) Nonresidential
REMI industry based on grant
Transportation Partnership Opportunity Fund project industry identifiers.
Farm Wineries and Vineyards Tax Credit
Model economic impact based
Recyclable Materials Processing Equipment Tax Credit
Compensation and Prices- on reduced capital cost equal to
>Production Costs->Capital tax credit or estimated
Airline Common Carriers Exemption Costs exemption tax revenue effect.
Assign REMI industry based on
Aircraft Parts, Engines, and Supplies Exemption
69
Appendixes
REMI model policy
Name of incentives Modeling description
variables
Certain Printed Materials for Out-of-State Distribution industry(ies) affected based on
Exemption program descriptions
Data Center Single Sales Factor Apportionment
Electrostatic Duplicators Exemption
Film, Television, & Audio Production Inputs Exemption
Virginia Venture Partners GAP Funds
Manufacturing Single Sales Factor Apportionment
Media Provider Equipment Exemption
Pollution Control Equipment & Facilities Exemption
Qualified Equity and Subordinated Debt Investments Tax
Credit
Qualified Business Long-Term Capital Gain Subtraction
Railroad Common Carriers Exemption
Railroad Rolling Stock Exemption
Research & Development Exemption
Semiconductor Manufacturers Exemption
Semiconductor Wafers Exemption
Ships and Vessels Exemption
Taxi Parts & Radios Exemption
Uniform Rental & Laundry Businesses Exemption
Virginia Spaceport Users Exemption
Zero G Zero Tax Act (Part I and II)
Barge and Rail Usage Tax Credit
Biodiesel and Green Diesel Fuels Producers Tax Credit
Green Job Creation Tax Credit
Model economic impact based
International Trade Facility Tax Credit on reduced production cost.
Major Business Facility Job Tax Credit Assign REMI industry based on
Compensation and Prices-
industry(ies) affected based on
Motion Picture Production Tax Credit >Production Costs-
program descriptions and
>Production Costs
Telework Expenses Tax Credit corporate tax credit records
matched with VEC employment
Virginia Coal Production and Employment Incentive Tax
records.
Credit
Virginia Port Volume Increase Tax Credit
Worker Retraining Tax Credit
70
Appendixes
REMI model policy
Name of incentives Modeling description
variables
(1) Labor and Capital
Demand>-Employment>-
Firm >-Industry (Exogenous
Model economic impact based
Production, Nullify
on 100 percent "but for"
Data Centers Exemption Investment); (2) Output and
assumption. Employment
Demand>-Industry Sales
assigned to industry.
(Exogenous Production)>-
Power and Communication
Structures
(1) Output and Demand>-
Investment Spending>-
Equipment, (2) Output and Model economic impact based
Demand>-Real Disposable on 1.5 percent wage and salary
Income>-Compensation increase with associated output
(Adjust compensation by increase. Also, capital
Virginia Jobs Investment Program (VJIP)--Retraining
amount of training-related investment based on 10 percent
wage increase). (3) Output "but for" factor. Assign to
and Demand>-Output industries based on grant
(Adjust by ratio of output to project records.
training-related wage
increase)
Model economic impact of state
Tobacco Commission Megasite Program Output and Demand>-
grant outlay and local match as
Industry Sales (Exogenous
output for the construction
Virginia Business Ready Sites Program Production)>-Construction
industry.
Virginia Trade Show Assistance Program
Model economic impact as
Contractor Temporary Storage Exemption Output and Demand>- increased sales of (a)
Out-of-state Nuclear Facility Repair Exemption Industry Sales (Exogenous advertising, public relations and
Production)> related services, (b) warehousing
and storage, and (c)
construction.
Model economic impact as
increased international sales for
industry based on grant project
records. “But for” effect is
estimated as 11.78 percent of
Output and Demand>- firm reported sales increase
VALET Industry Sales (International from firm entry and exit surveys
Exports) based on Weldon Cooper
Center firm economic incentive
survey. Change in sales assigned
to REMI industries based on
NAICS codes of firms for
completed grants.
71
Appendixes
REMI model policy
Name of incentives Modeling description
variables
Model R&D tax credit
investment impact as 1.75xtax
Research and Development Expenses Tax Credit
credit utilization and Major R&D
Output and Demand>-
tax credit as 1.25xtax credit
Investment Demand>-
utilization. Investment is
Private investment in
assigned to private investment
Research and Development
Major Research and Development Tax Credit in research and development
based on REMI industry of tax
credit utilization.
Source: Weldon Cooper Center.
When employment, capital investment, and other documented performance metrics were modeled
(grant and loan programs), only a small portion of the program documented outcomes were attributed
to the incentive. In only one instance (data center exemption), program employment levels are equal
to program reported metric attainment. Even though the success of incentives in swaying business
decisions varies by program (and by project), general assumptions are made by program type. For
grants, the assumption was made that 10 percent of grant employment creation is attributable to the
programs, with one exception (the Governor’s Motion Picture Opportunity Fund). The 10 percent
effect for grant programs is derived from the 10 to 15 percent consensus value range commonly
recommended for use in economic incentive evaluations (Bartik 2018; Peters and Fisher 2004) and is
the same estimate used in two previous analyses of state economic incentive economic impacts. (See
Review of Economic Development Incentive Grants, JLARC 2012.) For the Governor’s Motion Picture
Opportunity Fund, 95 percent of film activity (job creation and Virginia spending) is attributed to the
grant program based on a previous film industry evaluation study. (See Evaluation: Film Incentives,
JLARC 2017). Film project employment was also converted to motion picture and sound recording
industries full-time-equivalents because of the preponderance of part-time and seasonal employees in
grant-supported film and television productions. For loan programs, 31 percent of loan program
employment benchmarks were established as the program effects of the loan programs based on a
previous analysis of loan program effects. (See Workforce and Small Business Incentives, JLARC 2018.)
Some REMI policy variables require industry level data aggregated into 70 REMI industry categories.
NAICS codes were obtained or assigned and then cross-walked to REMI industry categories. NAICS-
level industry information was obtained for grant projects as described in Appendix B. Tax credit
projects were assigned NAICS codes based on available corporate tax filer industry characteristics
when corporate users made up a large portion of filers or other information was not available. Thus,
industries of corporate filers are assumed to be similar to other pass-through entities that file through
the individual income tax system. Most sales and use tax exemptions are fairly narrowly targeted to
individual industries, and industry assignment was relatively straightforward. In some instances,
secondary data was used. For the Pollution Control Equipment exemption, utilization was assigned to
industries using industry information from the U.S. Census Bureau’s Pollution Abatement Costs and
Expenditures: 2005 survey (issued in 2008) on pollution abatement capital expenditures for the state
of Virginia (Table 8 of the survey report). For the Research and Development Exemption, industry
72
Appendixes
information was drawn from the National Science Foundation Business Research and Innovation:
2013 on corporate R&D expenditures by industry (Table 30 of that report).
Table H-2
REMI industry assignments for modeling impacts of tax credits and sales and use tax
exemptions
Programs Industries
Tax Credit Programs
Barge and Rail Usage Tax Credit Corporate tax credit utilization files from Virginia Tax
Biodiesel and Green Diesel Fuels Producers Tax Credit Chemical manufacturing
Coalfield Employment Enhancement Tax Credit Mining
Farm Wineries and Vineyards Tax Credit Beverage and tobacco product manufacturing
Green Job Creation Tax Credit Construction
International Trade Facility Tax Credit Corporate tax credit utilization files from Virginia Tax
Major Business Facility Job Tax Credit Corporate tax credit utilization files from Virginia Tax
Motion Picture Production Tax Credit Motion picture and sound recording industries
Qualified Equity and Subordinated Debt Investment Tax Corporate tax credit firm beneficiary files from Virginia Tax for
Credit TY2017-TY2020
Recyclable Materials Processing Equipment Tax Credit Corporate tax credit utilization files from Virginia Tax
Research and Development Expenses Tax Credit Not applicable
Telework Expenses Tax Credit Corporate tax credit utilization files from Virginia Tax
Virginia Coal Production and Employment Incentive Tax
Corporate tax credit utilization files from Virginia Tax
Credit
Virginia Port Volume Increase Tax Credit Corporate tax credit utilization files from Virginia Tax
Worker Retraining Tax Credit Corporate tax credit utilization files from Virginia Tax
Sales and Use Tax Exemptions
Airline Common Carriers Exemption Air transportation
Aircraft Parts, Engines, and Supplies Exemption Air transportation
Certain Printed Materials for Out-of-State Distribution
Printing and related support activities
Exemption
Contractor Temporary Storage Exemption Warehousing and storage
Internet publishing and broadcasting; ISPs, search portals, and
Data Centers (Broad) Exemption data processing; Other information services (50%); Other
information services and telecommunications (50%)
73
Appendixes
Programs Industries
Electrostatic Duplicators Exemption Administrative and support services
Film, Television, & Audio Production Inputs Exemption Motion picture and sound recording industries
Media Provider Equipment Exemption Broadcasting except internet
Out-of-state Nuclear Facility Repair Exemption Construction
Pollution Control Equipment & Facilities Exemption U.S. Census Bureau PACE Survey
Railroad Common Carriers Exemption Rail transportation
31% Mining (4), 21% Chemical manufacturing (26), 20%
Railroad Rolling Stock Exemption Wholesale Trade (28), and remainder to other railroad rolling
stock using industries.
Research & Development Exemption National Science Foundation Business Research and Innovation
Semiconductor Manufacturers Exemption Computer and electronic product manufacturing
Semiconductor Wafers Exemption Computer and electronic product manufacturing
Ships and Vessels Exemption Water transportation
Taxi Parts & Radios Exemption Transit and ground transportation
Uniform Rental & Laundry Businesses Exemption Personal and laundry services
Virginia Spaceport Users Exemption Air transportation
Other Incentives
Internet publishing and broadcasting; ISPs, search portals, and
Data Center Single Sales Factor Apportionment
data processing; Other information services
Manufacturing Single Sales Factor Apportionment Manufacturing (REMI industry aggregation)
Corporate tax credit firm beneficiary files for Qualified Equity and
Qualified Business Long-Term Capital Gain Subtraction Subordinated Debt Investment Tax Credit from Virginia Tax for
TY2017-TY2020
Zero G Zero Tax Act (Part II) Subtraction Air transportation
SOURCE: Weldon Cooper Center.
For the purposes of the economic impact analysis, only completed grant and other incentive projects
(i.e., loans, gap funding) were counted. Outcomes and expenditures were grouped for analysis based
on the date/year when awards were completed.
When modeling firm employment increases, the REMI firm employment option is used. This option
assumes that firm sales associated with incentivized job creation may displace to various degrees the
sales of other Virginia-based firms in the same industry based on industry market-area characteristics.
To generate input data to capture the effect of firm retraining for the Virginia Jobs Investment
Program, data for wages and salaries and value-added by industry were obtained from the Virginia
REMI PI+ model. Ratios of value-added per wages were formed for each REMI industry. These
ratios were then multiplied by estimated wage increases (1.5 percent) that resulted from firm retraining
for the firms that were assumed to have been incentivized by the VJIP retraining grant.
74
Appendixes
The results by year were assigned to the REMI policy variables “Industry Sales/Exogenous
Production” by REMI industry. Estimated wage increases were assigned to the compensation policy
variable. This method is the same as used in an intensive review of the VJIP program. (See Workforce
and Small Business Incentives, JLARC 2018.)
Two sales and use tax exemptions affect the Virginia economy through reducing the costs of goods
sold to out-of-state buyers rather than Virginia-based firms. Thus, the sales tax exemption was
modeled as an increase in sales for the Virginia warehousing and storage industry (contractor
temporary storage exemption) and construction industry (out-of-state nuclear facility repair
exemption) caused by the de-facto price reduction. Industry demand for production inputs was
assumed to be relatively inelastic (0.5).
The data center exemption was modeled using employment and capital investment information from
VEDP MOUs. Based on analysis included in an in-depth review (Data Centers and Manufacturing
Incentives, JLARC 2019), approximately 90 percent of data center economic activity was attributed to
the existence of the sales and use exemption. However, recently revised estimates for the data center
exemption are several times as large as the estimates used in that study and would likely tip the balance
for the remaining 10 percent of projects. Therefore, for this report it is assumed that 100 percent of
the projects are attributed to the incentive. Data center employment was modeled as equally split
between the telecommunications sector and internet publishing and broadcasting; ISPs search portals
and data processing; and other information services. In addition to the employment and capital
investment figures estimated using information from VEDP MOU data, it was assumed that 22.3
percent of capital investment costs were building and equipment and 77.7 percent sales and use tax
exemption eligible equipment based on the expenditure pattern of a standard data center. These
expenditures are represented as sales to the construction and wholesale trade sectors (wholesale
margins only for the latter). Full-build out of data center employment and investment occurs over a
three-year period. Allowance is made for an equipment refresh cycle of every five years, which is
modeled as generating sales for the wholesale trade sector (again, only wholesale margin spending
occurs in the state).
For each economic impact analysis, the opportunity cost of state funds was accounted for by raising
personal income taxes. Personal income taxes are the largest source of tax revenue for the general
fund, and thus seemed appropriate as a source for offsetting the cost of the incentive programs.
REMI PI+ discontinued tax revenue estimation as part of its base package beginning with the 2.0
version and moved improved revenue modeling capabilities into its new REMI Tax PI model. To
conduct tax revenue analysis, this study scaled revenues to economic outputs using the procedure
described in Regional Economic Models, Inc. (2012). State tax revenues were derived from the Census
of Government’s State and Local Government Finance and Annual Survey of State Tax Collections.
Revenue estimates are calculated by multiplying state revenue rates by the corresponding base quantity,
which included state-level demand for selected industries (general sales tax, selective sales tax, license
taxes), state-level personal income less transfer payments (individual income tax), corporate income
tax (gross domestic product), and personal income (other taxes). The tax revenue impact analysis does
not include the effect of economic development incentives on other revenues, including non-general
revenues. Nor does it estimate the effect on local tax revenues. Lastly, it does not estimate the effect
of economic development incentives on government expenditures at the state or local level.
75
Appendixes
Economic impact estimates
Tables H-3 through H-14 provide estimates of the total economic activity induced by each group of
incentives (i.e., grants, sales and use tax exemptions, tax credits, and other incentives), and the net
impact (total activity adjusted for the reduction). Economic activity reported in the tables is defined
as follows:
• Total employment – private and public employment,
• Private employment – private non-farm employment,
• Virginia GDP – Gross domestic product for Virginia (the market value of goods and
services produced by labor and property in Virginia), and
• Personal income – received by persons from all sources.
76
Appendixes
TABLE H-3
Impact of economic development grant programs to the Virginia economy
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Economic activity induced by grant program
Total employment 696 1,480 2,207 3,679 4,973 6,884 7,676 8,493 10,548 10,776
Private employment 661 1,392 2,055 3,421 4,593 6,353 7,022 7,735 9,636 9,772
Virginia GDP $94,563,788 $212,688,795 $337,084,456 $595,850,567 $878,222,749 $1,230,828,785 $1,491,767,905 $1,711,466,178 $2,137,370,387 $2,306,863,097
Personal income $47,513,579 $103,573,093 $167,891,954 $295,397,353 $438,635,919 $634,985,229 $778,380,665 $911,753,901 $1,157,552,956 $1,267,386,377
Reduction in economic activity because of the tax increase to fund grant program costs
Total employment (202) (234) (230) (345) (331) (353) (489) (285) (501) (264)
Private employment (192) (219) (211) (319) (301) (321) (448) (250) (456) (227)
Virginia GDP -$20,909,015 -$27,583,438 -$28,579,311 -$43,116,916 -$44,568,139 -$48,824,709 -$67,971,598 -$45,171,723 -$72,719,944 -$44,789,860
Personal income -$14,137,945 -$18,023,548 -$19,652,803 -$30,511,849 -$31,941,287 -$36,472,943 -$51,187,874 -$36,208,757 -$58,601,189 -$38,932,382
Net economic impact of grant program
Total employment 494 1,246 1,977 3,334 4,643 6,531 7,187 8,208 10,047 10,511
Private employment 469 1,173 1,844 3,103 4,292 6,032 6,574 7,485 9,179 9,544
Virginia GDP $73,654,773 $185,105,356 $308,505,146 $552,733,651 $833,654,609 $1,182,004,076 $1,423,796,306 $1,666,294,455 $2,064,650,442 $2,262,073,237
Personal income $33,375,634 $85,549,546 $148,239,151 $264,885,503 $406,694,632 $598,512,286 $727,192,791 $875,545,144 $1,098,951,768 $1,228,453,995
TABLE H-4
Revenue collections from economic development grant programs and their return in revenue
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Revenue tax collections induced by economic development grant programs
General sales tax $1,101,300 $2,206,061 $3,686,081 $6,431,024 $8,508,260 $14,090,892 $18,433,686 $20,975,904 $25,463,983 $28,871,940
Selective sales tax $765,501 $1,571,357 $2,763,995 $4,772,023 $7,537,831 $10,242,821 $14,006,342 $16,684,105 $20,931,410 $25,662,251
License taxes $120,902 $237,666 $378,315 $679,429 $922,486 $1,188,840 $1,501,203 $1,647,168 $2,064,554 $2,797,962
Individual income tax $1,430,959 $3,236,613 $5,195,218 $9,372,135 $14,448,134 $21,002,914 $25,350,654 $31,726,462 $43,394,777 $38,055,037
Corporate income tax $145,599 $354,036 $505,229 $948,943 $1,878,376 $2,694,142 $3,615,204 $4,390,480 $6,269,687 $14,320,398
Other taxes $53,541 $116,001 $192,779 $348,101 $421,123 $684,165 $964,948 $1,540,087 $1,887,362 $1,378,786
Total revenue $3,617,803 $7,721,734 $12,721,616 $22,551,655 $33,716,210 $49,903,775 $63,872,037 $76,964,207 $100,011,774 $111,086,374
Program cost $21,557,485 $22,592,637 $21,418,042 $36,525,160 $35,235,817 $40,446,649 $61,634,652 $34,371,613 $72,418,598 $37,381,742
Net revenue -$17,939,683 -$14,870,903 -$8,696,426 -$13,973,506 -$1,519,607 $9,457,126 $2,237,385 $42,592,594 $27,593,176 $73,704,632
Return on investment
Return per $1 spent $0.17 $0.34 $0.59 $0.62 $0.96 $1.23 $1.04 $2.24 $1.38 $2.97
77
Appendixes
TABLE H-5
Impact of economic development tax credits to the Virginia economy
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Economic activity induced by the tax credit program
Total employment 219 399 408 451 484 377 453 374 288 345
Private employment 209 376 378 415 444 339 412 335 253 310
Virginia GDP -$11,449,833 -$1,010,459 $21,285,120 $27,437,803 $38,177,848 $42,285,046 $49,564,447 $45,569,228 $47,491,775 $41,432,671
Personal income $14,388,590 $28,030,783 $31,805,337 $37,882,252 $43,645,757 $38,495,288 $47,540,344 $42,980,538 $37,118,960 $43,904,921
Reduction in economic activity because of the tax increase to fund tax credit
Total employment -377 -571 -485 -478 -441 -304 -392 -286 -139 -297
Private employment -359 -535 -444 -434 -397 -265 -352 -250 -112 -266
Virginia GDP -$39,083,070 -$65,729,001 -$61,207,127 -$62,378,874 -$60,076,056 -$44,393,804 -$54,626,820 -$43,100,805 -$22,382,650 -$42,551,741
Personal income -$26,426,891 -$43,347,605 -$41,602,971 -$44,798,141 -$45,144,197 -$36,413,349 -$45,839,213 -$38,342,894 -$25,630,946 -$41,089,666
Net economic impact of tax credit program
Total employment -158 -172 -77 -28 43 74 61 88 148 47
Private employment -150 -159 -66 -19 47 74 60 85 141 44
Virginia GDP -$50,532,903 -$66,739,460 -$39,922,007 -$34,941,072 -$21,898,208 -$2,108,758 -$5,062,373 $2,468,423 $25,109,125 -$1,119,069
Personal income -$12,038,301 -$15,316,822 -$9,797,634 -$6,915,890 -$1,498,439 $2,081,939 $1,701,131 $4,637,645 $11,488,014 $2,815,254
TABLE H-6
Revenue collections from economic development tax credits and their return in revenue
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Revenue tax collections induced by tax credit program
General sales tax $243,128 $450,236 $465,587 $515,187 $553,514 $556,313 $807,898 $686,386 $552,608 $697,824
Selective sales tax $168,996 $320,699 $349,119 $382,285 $490,382 $404,390 $613,860 $545,947 $454,244 $620,247
License taxes $26,691 $48,505 $47,785 $54,429 $60,013 $46,936 $65,794 $53,900 $44,804 $67,626
Individual income tax $433,592 $868,571 $963,335 $1,167,901 $1,392,432 $1,207,405 $1,488,056 $1,416,423 $1,285,804 $1,246,351
Corporate income tax -$17,629 -$1,682 $31,903 $43,697 $81,656 $92,557 $120,116 $116,900 $139,311 $257,203
Other taxes $16,214 $31,394 $36,520 $44,641 $41,903 $41,477 $58,935 $72,600 $60,522 $47,764
Total revenue $870,991 $1,717,724 $1,894,248 $2,208,140 $2,619,901 $2,349,077 $3,154,659 $2,892,157 $2,537,294 $2,937,016
Program cost $40,295,087 $56,868,837 $44,145,808 $46,958,185 $47,130,867 $34,545,450 $53,027,156 $41,092,270 $23,594,117 $52,890,120
Net revenue -$39,424,096 -$55,151,112 -$42,251,560 -$44,750,045 -$44,510,966 -$32,196,373 -$49,872,497 -$38,200,113 -$21,056,823 -$49,953,104
Return on investment
Return per $1 spent $0.02 $0.03 $0.04 $0.05 $0.06 $0.07 $0.06 $0.07 $0.11 $0.06
78
Appendixes
TABLE H-7
Impact of data center sales and use tax exemption to the Virginia economy
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Economic activity induced by the exemption
Total employment - - - - - - - - 30,071 66,085
Private employment - - - - - - - - 28,905 63,019
Virginia GDP $0 $0 $0 $0 $0 $0 $0 $0 $3,331,602,076 $7,678,438,385
Personal income $0 $0 $0 $0 $0 $0 $0 $0 $1,996,467,421 $4,666,414,751
Reduction in economic activity because of the tax increase to fund the exemption
Total employment - - - - - - - - (3,853) (6,783)
Private employment - - - - - - - - (3,665) (6,365)
Virginia GDP $0 $0 $0 $0 $0 $0 $0 $0 -$399,160,740 -$772,400,945
Personal income $0 $0 $0 $0 $0 $0 $0 $0 -$269,959,050 -$511,782,313
0 0 0 0 0 0 0 0 3331602076 7678438385
Net economic impact of the exemption
Total employment - - - - - - - - 26,218 59,302
Private employment - - - - - - - - 25,241 56,654
Virginia GDP $0 $0 $0 $0 $0 $0 $0 $0 $2,932,441,336 $6,906,037,440
Personal income $0 $0 $0 $0 $0 $0 $0 $0 $1,726,508,370 $4,154,632,437
TABLE H-8
Revenue collections from the data center sales and use tax exemption and their return in revenue
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Revenue tax collections induced by exemption
General sales tax $0 $0 $0 $0 $0 $0 $0 $0 $35,273,585 $85,781,698
Selective sales tax $0 $0 $0 $0 $0 $0 $0 $0 $28,994,909 $76,245,359
License taxes $0 $0 $0 $0 $0 $0 $0 $0 $2,859,892 $8,313,051
Individual income tax $0 $0 $0 $0 $0 $0 $0 $0 $79,077,140 $147,306,216
Corporate income tax $0 $0 $0 $0 $0 $0 $0 $0 $9,772,805 $47,665,723
Other taxes $0 $0 $0 $0 $0 $0 $0 $0 $3,255,191 $5,076,579
Total revenue $0 $0 $0 $0 $0 $0 $0 $0 $159,233,521 $370,388,625
Program cost $0 $0 $0 $0 $0 $0 $0 $0 $411,518,565 $685,194,946
Net revenue $0 $0 $0 $0 $0 $0 $0 $0 -$252,285,044 -$314,806,321
Return on investment
Return per $1 spent -- -- -- -- -- -- -- -- $0.39 $0.54
79
Appendixes
TABLE H-9
Impact of economic development sales and use tax exemptions to the Virginia economy
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Economic activity induced by the exemptions
Total employment 923 1,446 1,690 1,622 1,537 1,565 1,444 1,323 1,363 1,395
Private employment 884 1,366 1,578 1,495 1,406 1,427 1,306 1,189 1,227 1,256
Virginia GDP $59,578,133 $135,349,867 $182,865,555 $197,668,050 $197,829,971 $205,730,762 $203,124,939 $194,685,913 $196,595,416 $208,662,341
Personal income $61,082,420 $103,175,367 $130,951,170 $138,525,479 $143,047,621 $155,824,643 $155,380,294 $153,575,351 $164,419,276 $174,233,937
Reduction in economic activity because of the tax increase to fund the exemptions
Total employment (553) (658) (657) (570) (533) (569) (505) (466) (537) (541)
Private employment (526) (613) (603) (516) (479) (512) (449) (413) (480) (482)
Virginia GDP -$57,292,969 -$77,191,206 -$81,381,973 -$75,435,160 -$72,560,137 -$78,522,267 -$72,897,425 -$68,629,895 -$79,216,900 -$83,106,354
Personal income -$38,740,338 -$50,484,524 -$55,909,900 -$54,120,808 -$55,079,792 -$61,675,879 -$59,734,302 -$59,165,473 -$68,513,102 -$72,280,789
Net economic impact of the exemptions
Total employment 370 789 1,033 1,051 1,004 996 939 857 826 854
Private employment 358 753 975 979 927 915 856 776 747 774
Virginia GDP $2,285,164 $58,158,661 $101,483,581 $122,232,890 $125,269,833 $127,208,495 $130,227,514 $126,056,018 $117,378,516 $125,555,988
Personal income $22,342,081 $52,690,843 $75,041,271 $84,404,671 $87,967,829 $94,148,764 $95,645,992 $94,409,878 $95,906,173 $101,953,149
TABLE H-10
Revenue collections from the economic development sales and use tax exemptions and their return in revenue
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Revenue tax collections induced by exemptions
General sales tax $997,493 $2,120,462 $2,865,345 $2,874,803 $2,829,478 $3,969,018 $4,121,538 $4,004,331 $3,952,629 $4,232,032
Selective sales tax $693,346 $1,510,385 $2,148,568 $2,133,195 $2,506,756 $2,885,122 $3,131,640 $3,185,020 $3,249,064 $3,761,558
License taxes $109,506 $228,445 $294,080 $303,719 $306,779 $334,864 $335,650 $314,447 $320,469 $410,124
Individual income tax $1,835,532 $3,194,385 $3,989,102 $4,273,615 $4,543,766 $4,943,216 $4,823,713 $5,065,763 $5,829,066 $4,966,066
Corporate income tax $91,732 $225,300 $274,083 $314,803 $423,126 $450,321 $492,260 $499,434 $576,686 $1,295,321
Other taxes $68,831 $115,556 $150,362 $163,241 $137,336 $167,893 $192,623 $259,412 $268,082 $189,549
Total revenue $3,796,441 $7,394,533 $9,721,540 $10,063,376 $10,747,241 $12,750,433 $13,097,424 $13,328,407 $14,195,996 $14,854,650
Program cost $59,069,549 $63,568,662 $61,422,967 $55,048,996 $57,167,942 $68,260,359 $65,015,423 $65,468,882 $81,319,706 $85,166,503
Net revenue -$55,273,108 -$56,174,130 -$51,701,427 -$44,985,620 -$46,420,701 -$55,509,926 -$51,917,999 -$52,140,475 -$67,123,709 -$70,311,853
Return on investment
Return per $1 spent $0.06 $0.12 $0.16 $0.18 $0.19 $0.19 $0.20 $0.20 $0.17 $0.17
80
Appendixes
TABLE H-11
Impact of other incentives (loan, gap financing, manufacturing single sale apportionment, and income tax subtractions) to the Virginia economy
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Economic activity induced by other incentives
Total employment $26.36 $178.75 $246.85 $299.48 334 367 379 415 438 465
Private employment $25.02 $169.12 $229.63 $275.58 304 333 341 373 393 418
Virginia GDP $101,209.31 $2,760,498.74 $16,303,217.22 $26,371,473.48 $35,706,567 $46,404,914 $50,867,162 $58,185,426 $64,806,908 $71,945,240
Personal income $1,794,088.14 $12,810,252.43 $19,123,056.17 $24,975,788.69 $29,802,773 $34,866,905 $38,356,015 $43,475,299 $48,124,327 $53,522,280
Reduction in economic activity because of the tax increase to fund costs of other incentives
Total employment -$33.90 -$223.30 -$243.59 -$253.88 -241 -223 -210 -204 -201 -201
Private employment -$32.24 -$211.61 -$226.13 -$232.86 -218 -201 -187 -182 -179 -178
Virginia GDP -$3,511,968 -$24,238,716 -$29,692,331 -$32,743,996 -$32,663,784 -$31,471,966 -$30,318,485 -$30,093,210 -$30,308,466 -$31,052,910
Personal income -$2,374,645 -$16,389,104 -$19,800,356 -$22,627,936 -$23,536,815 -$23,888,583 -$24,211,093 -$25,005,449 -$25,976,800 -$27,188,145
Net economic impact of other incentives
Total employment -$7.54 -$44.55 $3.26 $46 93 143 169 211 236 265
Private employment -$7.23 -$42.48 $3.50 $43 86 132 154 192 214 239
Virginia GDP -$3,410,758 -$21,478,217 -$13,389,114 -$6,372,523 $3,042,783 $14,932,949 $20,548,678 $28,092,216 $34,498,441 $40,892,330
Personal income -$580,557 -$3,578,852 -$677,300 $2,347,853 $6,265,958 $10,978,322 $14,144,922 $18,469,850 $22,147,527 $26,334,135
TABLE H-12
Revenue collections from other incentives and their return in revenue
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Revenue tax collections induced by other incentives
General sales tax -$27,333 -$253,742 -$125,165 -$22,875 $49,274 $213,451 $290,782 $346,150 $395,603 $455,217
Selective sales tax -$18,999 -$180,738 -$93,854 -$16,974 $43,654 $155,160 $220,943 $275,326 $325,186 $404,611
License taxes -$3,001 -$27,337 -$12,846 -$2,417 $5,342 $18,009 $23,681 $27,182 $32,074 $44,115
Individual income tax $53,852 $398,994 $583,352 $774,433 $954,521 $1,115,382 $1,205,324 $1,462,460 $1,735,500 $1,551,950
Corporate income tax $156 $4,595 $24,436 $41,999 $76,371 $101,575 $123,273 $149,265 $190,102 $446,617
Other taxes $2,022 $14,347 $21,958 $29,432 $28,613 $37,567 $47,549 $73,436 $78,466 $58,227
Total revenue $6,697 -$43,881 $397,880 $803,597 $1,157,776 $1,641,144 $1,911,552 $2,333,820 $2,756,930 $2,960,737
Program cost $3,620,896 $24,049,204 $23,844,576 $25,030,446 $24,863,136 $24,975,957 $25,911,383 $27,754,626 $29,591,496 $31,531,124
Net revenue -$3,614,199 -$24,093,085 -$23,446,696 -$24,226,849 -$23,705,361 -$23,334,813 -$23,999,832 -$25,420,807 -$26,834,566 -$28,570,387
Return on investment
Return per $1 spent $0.00 $0.00 $0.02 $0.03 $0.05 $0.07 $0.07 $0.08 $0.09 $0.09
81
Appendixes
TABLE H-13
Impact of all economic development incentives to the Virginia economy
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Economic activity induced by all incentives
Total employment 1,864 3,505 4,551 6,051 7,328 9,193 9,952 10,605 42,708 79,066
Private employment 1,779 3,303 4,241 5,607 6,747 8,451 9,081 9,632 40,415 74,774
Virginia GDP 142,793,297 349,788,702 557,538,348 847,327,893 1,149,937,135 1,525,249,507 1,795,324,453 2,009,906,744 5,777,866,561 10,307,341,735
Personal income 124,778,677 247,589,496 349,771,517 496,780,872 655,132,070 864,172,065 1,019,657,319 1,151,785,089 3,403,682,939 6,205,462,265
Reduction in economic activity because of the tax increase to fund the costs of all incentives
Total employment (1,166) (1,687) (1,616) (1,648) (1,546) (1,449) (1,596) (1,242) (5,232) (8,087)
Private employment (1,109) (1,578) (1,484) (1,502) (1,395) (1,299) (1,436) (1,094) (4,892) (7,519)
Virginia GDP (120,797,022) (194,742,362) (200,860,742) (213,674,947) (209,868,117) (203,212,745) (225,814,328) (186,995,633) (603,788,701) (973,901,810)
Personal income (81,679,820) (128,244,781) (136,966,030) (152,058,734) (155,702,091) (158,450,755) (180,972,482) (158,722,572) (448,681,087) (691,273,295)
Net economic impact of all incentives
Total employment 698 1,818 2,936 4,403 5,782 7,744 8,356 9,363 37,476 70,979
Private employment 670 1,725 2,756 4,105 5,352 7,152 7,645 8,538 35,522 67,254
Virginia GDP 21,996,275 155,046,340 356,677,606 633,652,946 940,069,018 1,322,036,762 1,569,510,125 1,822,911,112 5,174,077,860 9,333,439,925
Personal income 43,098,857 119,344,714 212,805,487 344,722,138 499,429,980 705,721,310 838,684,836 993,062,517 2,955,001,852 5,514,188,970
TABLE H-14
Revenue collections from all economic development incentives and their return in revenue
Impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Revenue tax collections induced by all incentives
General sales tax $2,314,589 $4,523,017 $6,891,848 $9,798,139 $11,940,527 $18,829,673 $23,653,904 $26,012,772 $65,638,408 $120,038,712
Selective sales tax $1,608,844 $3,221,703 $5,167,827 $7,270,528 $10,578,623 $13,687,493 $17,972,785 $20,690,399 $53,954,813 $106,694,025
License taxes $254,098 $487,280 $707,334 $1,035,161 $1,294,620 $1,588,648 $1,926,327 $2,042,697 $5,321,794 $11,632,877
Individual income tax $3,753,935 $7,698,563 $10,731,007 $15,588,083 $21,338,854 $28,268,917 $32,867,746 $39,671,108 $131,322,287 $193,125,620
Corporate income tax $219,858 $582,249 $835,650 $1,349,442 $2,459,528 $3,338,595 $4,350,854 $5,156,080 $16,948,591 $63,985,262
Other taxes $140,608 $277,299 $401,619 $585,415 $628,976 $931,103 $1,264,056 $1,945,536 $5,549,622 $6,750,904
Total revenue $8,291,932 $16,790,110 $24,735,284 $35,626,768 $48,241,128 $66,644,430 $82,035,672 $95,518,591 $278,735,515 $502,227,401
Program cost $124,543,017 $167,079,340 $150,831,393 $163,562,787 $164,397,762 $168,228,416 $205,588,615 $168,687,392 $618,442,482 $892,164,435
Net revenue -$116,251,085 -$150,289,230 -$126,096,108 -$127,936,019 -$116,156,635 -$101,583,986 -$123,552,943 -$73,168,801 -$339,706,967 -$389,937,034
Return on investment
Return per $1 spent $0.07 $0.10 $0.16 $0.22 $0.29 $0.40 $0.40 $0.57 $0.45 $0.56
82
Appendixes
Appendix I: Agency responses
As part of an extensive validation process, the state agencies and other entities that are subject to a
JLARC assessment are given the opportunity to comment on an exposure draft of the report. JLARC
staff sent an exposure draft of this report to the Virginia Economic Development Partnership, Vir-
ginia Tax, secretary of commerce and trade, secretary of finance, and secretary of transportation.
Appropriate corrections resulting from technical and substantive comments are incorporated in this
version of the report. This appendix includes a response letter from the Virginia Economic Develop-
ment Partnership and Virginia Tax.
83
October 30, 2024
Mr. Hal E. Greer, Director
Joint Legislative Audit & Review Commission
919 East Main Street, Suite 2101
Richmond, VA 23219
Re: VEDP response to the draft JLARC report, Economic Development Incentives
2024: Spending and Performance
Dear Mr. Greer:
Thank you for providing an opportunity for us to comment on the Joint Legislative Audit &
Review Commission’s (JLARC’s) draft report, Economic Development Incentives 2024:
Spending and Performance.
The report provides a helpful overview of economic development incentive spending and
performance in the Commonwealth. Among other things, we appreciate your analysis showing
that projects that received grant awards between FY14 and FY23 and completed their location
or expansion project collectively created an estimated 61,000 jobs and $14.7 billion in capital
investment and other spending in Virginia.
Your report demonstrates the impact of VEDP’s most important economic development
incentive programs. Notably, completed projects that received Virginia Jobs Investment
Program (VJIP) grants accounted for the largest share of jobs (39,304) and capital investment
and other spending ($6.1 billion) associated with Virginia’s economic development grant
programs during this time. Similarly, projects funded through the Commonwealth’s
Development Opportunity Fund (COF) ranked third in job creation (11,806 jobs) and business
spending ($4.5 billion). In addition, 66 percent of completed projects met or exceeded their
project-specific goals for capital investment or other spending and COF recipients achieved
132 percent of wage goals. Your report also highlights the effectiveness of VEDP’s VALET
program, noting that program participants collectively increased international sales by 109
percent of the expected goal.
We understand that the goal of the report is to review and evaluate the effectiveness of
economic development incentives, and we appreciate the level and quality of analysis that
goes into this report each year. In this context, as noted in response to previous reports, it is
important to note that the sidebar on page 16 makes a generalization about the effectiveness
of economic development incentive programs that is not based on this analysis. In practice, the
effectiveness of economic development incentives in influencing company location decisions
varies by program design and the amount of incentives offered relative to job creation and
901 E. Cary Street, Suite 900
Richmond, Virginia 23219
VEDP.org
Mr. Hal E. Greer
October 30, 2024
Page 2 of 2
investment, among other factors. VEDP agrees with the use of state-of-the-art research and
modelling in the evaluation of the effectiveness of incentives, but it is important to keep in mind
the limitations of these methodologies and how they may be predisposed to underestimate the
competitive influence and economic impact of VEDP’s incentive programs.
Regarding the data center retail sales and use tax exemption, we are pleased the enhanced
reporting requirements are yielding a more accurate estimate of the full economic benefits of
this exemption. While limited data is available at present, your report underlines that this
exemption accounts for more than half of the net additional jobs and almost half of Virginia
GDP and personal income from incentives. The impact of the program, as the report points out,
is supported by the fact that the data center exemption is unique among tax incentives (as
opposed to grants and most other types of incentive programs) in requiring verified job creation
and investment. Finally, this report focuses exclusively on state fiscal impact, but it is important
for readers to keep in mind that a significant portion of the fiscal impact of this program is at the
local level. All these factors highlight the importance of this critical program.
As always, we appreciated the professionalism and engagement of JLARC staff during the
project and compliment your team on its insightful analysis and reporting.
Sincerely,
Jason El Koubi
President & CEO
JLARC.VIRGINIA.GOV
919 East Main Street Suite 2101 Richmond, VA 23219
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