While many site selection decisions overlook the long-term impact of property taxes and incentives, a strategic approach can turn hidden risks into lasting savings.
When companies are planning a new facility, distribution center, or headquarters, the site selection process is one of the most critical steps—and one of the most expensive to get wrong. While operational factors like labor availability and infrastructure tend to dominate decision-making, companies often overlook the financial implications of property taxes and credits & incentives (C&I). These factors can swing the long-term cost of a location by millions of dollars.
At DMA, we’ve seen how easily well-intentioned companies and developers make avoidable mistakes—and we’ve helped them course-correct, reclaim value, and negotiate smarter. Here are the top five pitfalls we see during site selection, their consequences, and how DMA helps clients get it right the first time.
1. Failing to Engage Incentives Experts Early
The Mistake
Many companies don’t bring in credits and incentives (C&I) professionals until after a site is chosen—or worse, after the project has been publicly announced. This often happens because companies assume incentives are a nice-to-have rather than a strategic driver.
Why It Matters
Most discretionary incentives, such as job creation tax credits, local grants, infrastructure reimbursements, and tax abatements, require pre-commitment and confidentiality. If a site is publicly disclosed, the project may become ineligible—regardless of how attractive the investment might be.
Example: A manufacturing company announces its $100M plant expansion before applying for incentives. The state’s economic development agency rejects the incentives application because the project is no longer a “competitive opportunity.”
Our Solution
DMA embeds C&I strategy into the very beginning of the site selection process—before locations are disclosed or applications are submitted. We:
- Identify all available discretionary and statutory incentives across potential sites
- Manage confidentiality protocols with local/state authorities
- Lead incentive negotiations in parallel with site and cost analysis
- Ensure project announcements and approvals are timed to preserve eligibility
2. Not Structuring the Project to Maximize Incentives
The Mistake
Companies often assume that incentives will follow past patterns or mirror deals offered to competitors. At the same time, they may inadvertently structure their projects—legally, operationally, or by timeline—in ways that fail to maximize the value of the programs.
Why It Matters
Incentives are neither uniform nor guaranteed. They vary significantly by:
- State and local taxation policy
- Industry focus and policy priorities
- Geographic zones and designated opportunity areas
- Legal and operational entity structures
- Timing of capital investment and hiring milestones
- Current funding availability and legislative cycles
Missteps—such as using a holding company that doesn’t directly hire staff or investing just outside a qualified zone—can result in reduced or lost incentive value. Relying on anecdotal knowledge or outdated examples can also create a false sense of what’s possible.
Example 1: A distribution center project is structured under a holding company, which doesn’t directly create jobs—disqualifying it from hiring tax credits.
Example 2: A tech firm moves into a new city expecting training grants received by a peer company, only to discover the program was defunded months earlier.
Our Solution
DMA combines real-time program intelligence with deep structuring expertise to ensure your project is built to qualify for maximum incentives. We:
- Conduct site-specific, current-state program analysis
- Align project timelines and hiring plans with program thresholds
- Structure legal entities and operations to meet eligibility rules
- Engage economic development agencies early to assess flexibility
- Prevent false assumptions by validating every opportunity against current policy and funding realities
The result is a project that’s both compliantly structured and optimally positioned to capture every incentive dollar available—without surprises or missed opportunities.
3. Not Anticipating Post-Project Compliance
The Mistake
Companies may assume that after approval, an incentive is locked in—far from it. Almost all incentives require post-project compliance reporting, which at times can be rigorous and complex.
Why It Matters
C&I programs often require after-the-fact reporting and compliance to maintain their qualification. Some thoughts to consider when considering a C&I project are:
- What data must be tracked to comply with the incentive agreement
- Who will be responsible for ensuring compliance and timely reporting
- What reports must be filed
- What the impact is of a failure to report
- Whether the metrics necessary for compliance are attainable
It is not uncommon for C&I compliance to require filing standardized forms with supporting company-generated data to demonstrate compliance with promised job creation and investment commitments.
Example: A solar company receives a tax abatement for installing a new solar farm with an assurance that a certain number of construction jobs held by local residents were employed during its development. The local community requires not just a headcount, but also names, addresses, wages, and additional personal data to verify the information—and will audit this data once the project is complete. If the data isn’t verified, the solar company will lose the tax benefit, potentially threatening the economics of the project.
Our Solution
DMA conducts incentive compliance activities for every site incentive program successfully approved, including:
- Statutory review of compliance requirements of all programs prior to approval
- Tracking of all incentive compliance filing deadlines
- Working with internal teams and third parties to ensure accurate data is being tracked
- Incentive negotiation that includes ongoing compliance activities
We ensure clients are never left missing a filing deadline and are always set up for success, with an understanding of all compliance obligations before applying for an incentive program. We even offer this service for programs granted prior to our involvement.
4. Overlooking Property Tax Burden Differences
The Mistake
Companies often prioritize direct real estate costs, labor, and utility access, but neglect the massive long-term impact of property taxes, which can account for 30–50% of total location-related costs over time. Often, personal property taxes are not adequately forecasted or even accounted for.
Why It Matters
Property effective tax rates (millage combined with depreciation analyses), valuation methods, and available abatements vary significantly even between neighboring counties or municipalities. A site that appears cheaper due to lower land costs or a myriad of reasons may carry much higher annual tax bills, eroding profitability.
Example: Two sites have comparable industrial properties, but one is located in a jurisdiction with favorable tax rates but long-lived depreciation. Even though the lower tax rate may appear advantageous, the extended depreciation timelines actually lead to a much higher indicated value and tax liability. It is not just the rate or the depreciation, but a combination to consider.
Our Solution
We perform multi-jurisdictional real and personal property tax modeling that includes:
- Effective tax rate analysis and comparisons
- Projected assessed value trends
- Tax phase-in schedules or abatement potential
- Long-term exposure over 5-10 years
DMA equips clients with total cost of ownership models that include ongoing tax obligations—not just upfront real estate expenditures—so you can choose the truly cost-effective site.
5. Misunderstanding Local Assessment Practices
The Mistake
Companies assume property assessments follow standard state-level rules, or they misunderstand how new construction or personal property / machinery & equipment is taxed at the local level.
Why It Matters
Some localities:
- Assess new buildings at full market value immediately after construction
- Apply different depreciation schedules for personal property, varying greatly from jurisdiction to jurisdiction
The result? Post-construction tax bills that far exceed expectations can have a material, negative impact on budgetary expectations.
Example: A logistics company expands a warehouse and adds significant materiality in equipment costs. The local jurisdiction applies a higher-value personal property tax than the neighboring jurisdiction, and the company was anticipating general state-level figures to be applied or the equipment to be classified differently.
DMA’s Solution
DMA deploys local property tax professionals who understand jurisdiction-specific assessment policies and appeals procedures. We:
- Review assessment methodologies
- Evaluate how assets will be classified, valued, and bifurcated between real and personal property
- Recommend design or asset grouping strategies to reduce exposure
- Advocate for exemptions, abatements, and fair valuations
The Bottom Line:
Your Location Decision Deserves a Strategic Tax Strategy
Choosing a location is a long-term strategic decision—and one that can have significant financial consequences if the tax and incentive dimensions are neglected. At DMA, we bring together experts in property tax and credits & incentives to make sure you don’t leave value on the table or get blindsided by costs.
We help clients:
- Select the most tax-efficient site
- Maximize and secure incentive packages
- Reduce long-term property tax exposure
- Stay compliant and fully optimized for years to come
Our goal is to reduce your post-construction tax liability before you even break ground.
Planning a new facility or expansion?
Let’s talk. DMA’s specialists are ready to guide your site selection process from day one.