Agencies want public to better understand incentives, culture

Brice Wallace 

Utah’s two main corporate recruitment entities are tweaking some public relations materials in an effort to dispel some misperceptions.

The Economic Development Corporation of Utah (EDCUtah) is putting forward brief videos aimed at showing that Utah is a welcoming and diverse state. Meanwhile, the Governor’s Office of Economic Opportunity (Go Utah) is making a change to its news releases designed to ensure the public better understands its corporate incentives.

EDCUtah’s three “We Are Utah” videos were an idea of a group of diversity, equity and inclusion (DEI) practitioners at large Utah companies. Theresa Foxley, president and CEO of EDCUtah, described the videos as “a stereotype-busting asset.”

“This group identified the need for a number of shared assets, including videos to help dispel some misperceptions and to welcome diverse talent into Utah,” Foxley said during a briefing to the Go Utah board in November.

“The target audience of this is diverse talent considering relocating into the state of Utah. It’s intended to be an icebreaker that can be shared with them by an HR or a talent recruiter. We also want the asset as we’re working with site selectors because, again, now so many companies are considering this as a really fundamental factor in their corporate relocation and expansion strategy. … We also know there’s work to be done for our community to be more welcoming and to create a sense of belonging for all.”

The four-minute version of the video includes Latino, Indian, Pacific Islander, Taiwanese, LGBTQ and other people with various types of jobs and interests describing how Utah is full of business and job opportunities. They call Utah’s people helpful, accommodating, accepting and embracing of differences. They list several of Utah’s charms, including diverse and beautiful landscapes and opportunities for entertainment, nightlife, dining and work/life balance. It is available at https://youtu.be/NpQofK-elNI.

Two 30-second versions also are available, and all of the videos can be used free of charge for companies to use in their recruiting efforts.

EDCUtah held focus groups with leaders from Utah’s multicultural communities to frame the tone and content of the videos. Comcast, an EDCUtah investor, funded and produced the videos.

“We know that helping Utah become a more diverse, equitable and inclusive state will help make it a more innovative and successful one,” said Deneiva Knight, Comcast external affairs director. “Our support of this video project reflects a commitment to leverage our unique platforms to create positive change.”

“We acknowledge that there is work to be done to make our state more welcoming and to create a sense of belonging for all,” Foxley said. “Our hope is that these videos will help those efforts, and they anchor a broader ‘Belong in Utah’ initiative we are launching in coming months.”

The change to the Go Utah news releases deletes any mention of the maximum amount an incentivized company can receive in a tax credit through the Economic Development Tax Increment Financing (EDTIF) and Rural Economic Development Tax Increment Finance (REDTIF) programs.

Those incentive programs allow companies to get a tax credit after they meet certain capital investment or job-creation obligations. The incentive is post-performance, meaning the companies must meet those obligations first to be eligible for the credit. Utah does not provide upfront cash incentives for corporate retention and recruitment, and the credit is a percentage of the taxes the company has paid to the state as a result of the project.

In the past, news releases about incentives have included a dollar amount for the maximum credit a company could claim. For example, a news release about an incentive awarded to Udo LLC in October noted that the startup communications technology company would be eligible for a tax credit of up to nearly $2.9 million over five years for an expansion project in Farmington projected to lead to 300 new jobs over five years.

In the future, that amount will be deleted, with the releases focusing instead on projected new state revenues, in conjunction with the timeframe and percentage of the award — information that has always been included.

“The inclusion of the maximum amount has caused confusion,” Go Utah said in announcing the change. “Utah does not give a company a cash incentive to continue or expand operations in the state. That is not how the EDTIF/REDTIF program works. … Highlighting the maximum award in news releases has led many to mistakenly believe that this amount is an upfront cash payment or that every business that receives an EDTIF award gets the maximum amount. These perceptions are not accurate.”

In announcing the change, Go Utah noted that its board had granted 237 EDTIF awards since the program was created in 2005, but only 126 of the companies sought a tax credit by entering into a contract with the state. And of that 126, only 12 reached their maximum credit. On average, incentivized companies have received 34 percent of the maximum tax credit amount.

“We hope these adjustments will help the public better understand how the state’s corporate incentive program functions,” Dan Hemmert, executive director of Go Utah, said in a prepared statement. “Here at Go Utah, we take the administration of the state’s incentive program very seriously, and we’re always striving for the best transparency, accuracy and accountability possible.”

Hemmert said Utah is “not one of those states you hear about that gives away millions of dollars in advance for corporate recruitment.”

“Our approach is fiscally conservative as we limit the state’s liability and ensure the company is doing its part by first investing in the state and its workers. Then, after they’ve paid state taxes, and our office compliance team has conducted an annual audit, companies can receive a tax rebate for a limited amount of time, as outlined in the EDTIF contract.”

Pete Codella, associate managing director of communications for Go Utah, said Hemmert would be meeting with news media “to talk about how the incentive works, how Utah’s approach is post-performance, how we’re not giving out cash in advance.”

Occasionally in the past, members of the board and staff at Go Utah have complained that many people, including state legislators, did not understand that state incentives were post-performance and instead believed they consisted of upfront cash incentives. This happened when the agency was known as the Governor’s Office of Economic Development (GOED), and earlier when it was part of the Division of Business and Economic Development in the state Department of Community and Economic Development.

Some of that confusion has to do with the agency’s history. Before the EDTIF program was created, the state’s main incentive was the Industrial Assistance Fund (IAF). The IAF was a loan-based program, with loans forgiven if certain job-creation or other milestones were met.

About two decades ago, Utah took a hit when it approved a $3.5 million IAF loan for American Stores Co. Boise-based grocery giant Albertsons later acquired the company and moved the created jobs out of Utah. The state sued to recover nearly $6 million in the original loan, interest and other costs, but it was unsuccessful. From that point, Utah instituted the post-performance element in its incentives.