As manager of economic development for The BOC Group, a more than $6 billion multinational company, Breen's full-time job is to seek, negotiate and manage incentives as the firm expands into new territory and modernizes existing facilities.

BOC -- an industrial gas, vacuum technologies and distribution services company operating in more than 60 countries -- created Breen's position four years ago as it undertook a massive U.S. capital investment program.

Breen, based in Murray Hill, N.J., says incentives can be pivotal to whether a project goes forward.

"Given the competitiveness of today's business environment, we face tremendous pressure to reduce both construction and operating costs, and the ongoing development of our work force is crucial," Breen says. "Incentives can help companies meet these challenges. Tax incentives, training and infrastructure grants and other financial programs help projects to 'hit the ground running.'"

If you're like most people who are responsible for corporate site selection, you've probably read countless opinions on the role of incentives.

By now you've probably formed your opinion on incentives and either pursue them regularly or ignore them altogether. Even if you have chosen to ignore them, it would be hard to deny that incentives can represent an enormous potential for savings.

Perhaps the reason you choose not to pursue incentives is because your company is so profitable that saving money isn't important. Perhaps you have rationalized that incentives are somehow evil and that you personally don't agree with the practice of "corporate welfare."

Perhaps you think that accepting an incentive in some way obligates you to the community more than if you had rejected the opportunity.

Most likely, you don't pursue incentives because you simply don't have the time or the resources to do so, or don't know where to begin.

Regardless of your reasons not to pursue incentives, you need to weigh your reasoning with your obligation to maximize shareholders' value.

If you own the company, shareholder value is only as important as you make it. But if you don't own the company, I'm sure your company's shareholders are interested in maximizing profitability.

And remember, even though you may not be pursuing incentives, your competition probably is.

First things first
If you want to pursue incentives but don't know how or where to begin, you should first start with a little introspection. Although it may sound a bit academic, the first step to successfully pursuing incentives is to adopt the proper frame of mind.

Realize that your project possesses a certain intrinsic economic attractiveness to the community in which it ultimately resides and that it has a significant value.

You have to realize that your business is entitled -- yes entitled -- to an economic benefit as compensation. Failing to realize this simple point is like making a charitable contribution and forgetting to take a tax deduction.

Too many companies provide communities with enormous economic benefits and never get a dime from the community in return for their investment. The only one to blame is the company, because it simply didn't make incentives a priority when it expanded.

Building leverage

You can't expect the state or community to pay for 100 percent of your project cost, but you could conservatively expect to save between 10 to 20 percent of your start-up costs and between 5 to 10 percent of your ongoing operating costs for at least 10 years.

The ways that each state and community passes on those savings can differ vastly, but they can all do it, and will do it, if your project is attractive enough. It's up to you to convince them.

This "get what you can" manifesto may seem a little too harsh to some, but the corporations that have learned to use their projects as clout have walked away with tremendous savings time and time again. It's the simple law of supply and demand in action.

Determining your project's value
In order to be aggressive in your negotiations with economic developers, you first need to know what your project is really worth. Getting an exact value is not easy, but you can come pretty close with a minimal amount of analysis.

The best shorthand method for determining the value is simply to look at the jobs you create and the capital you invest.

Without getting overly technical, the base value of your project is the amount of property taxes you will pay and the amount of payroll taxes both your company and your employees pay for the first 10 years of operation. Although it's only a rough estimate, if you manage to secure an incentive package worth even 50 percent of those two factors alone, you will have done a great job.

If you want to refine that analysis even more, you can try to determine the amount of additional income and/or franchise tax you will pay as a result of the project.

This, not surprisingly, can be a very difficult task and one that is rarely a flawless forecast. With so many factors influencing the analysis, you will need to involve your corporate tax department or an outside tax specialist.

Be aware that income and franchise tax liability can work for or against you.

If your company has large net operating losses in a particular state and already pays no tax, any tax credits you generate may become virtually worthless because they can only be carried forward for a limited period of time.

Knowing this sort of information ahead of time, before you enter negotiations, can dramatically effect the type of incentive package you try to negotiate for and whether what you get is really worth anything in the end.

Other factors that typically increase the value of a project include your utility usage, the amount of your consumption of tangible personal property at the facility, and the use of over-the-road motor vehicles.

Remember to think about your business and to try to identify different ways that a state or local government taxes it. Doing this will help you identify the state's revenue potential from your project, and consequently, your project's value in incentive terms.

More than meets the eye
You need to realize that the true value of your project may be more than only the jobs that you create and the capital that you invest.

Rather, it often includes an intangible component known by eco- nomic developers as the multiplier effect.

The multiplier effect is the amount of any additional development that is caused directly or indirectly by a particular project.

This effect may not always be self evident to the state or local officials you negotiate with. It is up
to you to educate them.

Know what they can do for you

If you go to the negotiating table knowing not only what you deserve, but also what they can give you, you dramatically shift the negotiation in your favor.

Some of the most common incentives that states provide include tax abatements, tax credits, tax increment financing, grants and direct payments, loans and loan guarantees, as well as technical assistance.

Some programs are available everywhere within a state and others are available only in designated areas.

Some of the incentives must be negotiated up front, while others are automatically available as long as the company meets certain eligibility thresholds and knows enough to take advantage of them when it files tax returns.

Figuring out what all of the available incentives are is where the sleeves get rolled up, the phone calls get made and you have to turn into an investigative reporter. It's also the fun part.

Currently, there is no comprehensive resource of information about incentives.

To thoroughly review available incentives, you will need to include a good tax service, the state's marketing literature, a news retrieval service and a good consulting firm that has experience in the areas you are interested in.

Local real estate developers, attorneys and CPA firms can also prove to be helpful. If your project is big enough, I would recommend using all of them.

If you do use a tax service, you should find good listings of the tax credits and abatements that each state has to offer. These services rarely offer any planning techniques, but are certainly worth reviewing if they are readily available.

There are tremendous advantages to bringing in a tax department or tax consultant to help you make sense of the laws. Understanding the interrelationships in the tax code requires years of experience and is not something to be taken lightly.

Definitely refer to the state's marketing literature. Realize, however, that the information rarely provides planning techniques to maximize the incentives and is often not a complete list. These omissions are often the incentives that the state employs only on an as-needed basis and would rather not publicize.

In addition, state marketing literature often omits any incentives that are available from local governments.

Performing a news retrieval on either the Internet or through a paid service can tell you about the types of incentives that other companies are receiving, and can also give you a sense of the magnitude of the incentives being offered.

Although most press releases omit the exact programs that a company is tapping into, almost every release gives at least a total dollar value to the incentive package being offered. Considering there are hundreds of news releases each month concerning incentive awards, it would not be difficult for you to amass a retroactive study of incentive patterns in your geographic area of interest rather quickly.

Even if a particular news release details incentives that a project like yours received in a different state, don't hesitate using it as an example of what your project is worth. It may be just the leverage you need to get more out of a program.

Consultants work on projects repeatedly in all of the states, and bring with them a wealth of knowledge and insight. They can quickly provide the information you need and help keep your project on schedule. Many firms have entered the incentive arena, so be sure to use one that truly has the depth and breadth of experience your project deserves.

You may also find out information from your real estate broker. Although these individuals often don't know the ins and outs of the state's incentives, they are often acutely aware of local opportunities or can refer you to some professional who is aware of these items.

The tax strategy: savings beyond incentives
Incentives may not have to be offered in order for you to take advantage of them.

For example, knowing how a state treats legal entities can save you far more than any incentive package. Having your tax department or tax consultant review putting your project into a separate legal entity may provide a tremendous savings.

Separate legal entities, partnerships, limited liability companies and leasing subsidiaries are all sophisticated ways of possibly saving money on state taxes.

One excellent example of this exists by setting up what is commonly called a "Delaware Holding Company." Keep in mind that not all states allow this technique.

In those that do, a company doing business can reduce its state income tax liability by paying expenses to a Delaware company in the form of royalties for the use of any patents and copyrights the company may have.

Those copyrights and patents must first be put in the Delaware Holding Company. The Delaware company would pay no income tax to the state the project is located in because it has no legal obligation to do so. Furthermore, Delaware has no income tax, so all of the royalty income is sheltered from state taxation.

The company would then have less taxable income in the project state because it will incur expenses in the form of royalty payments that effectively reduce its state income, possibly down to zero. You can be sure that economic developers in states that allow this technique are not advertising it.

This opportunity could be changed legislatively and probably will be in the near future. For now however, companies that are exploiting this loophole are saving tremendously.

Knowing the Ins and Outs of Incentives

Be sure to find out just how the incentives are calculated and what factors influence their value. Also, be sure that you fully understand the definitions that affect the calculations.

An example of where this can dramatically affect an incentive is the definition of manufacturing equipment. Some incentives require that machinery must be used directly in manufacturing to qualify, while other incentives have a much broader definition and include all machinery used at a manufacturing facility.

These two numbers can be vastly different, and knowing the distinction can save you a lot of embarrassment if you assumed the more generous of the two.

An example of where a calculation can dramatically affect an incentive is in an average wage figure. Some incentives require that only base pay is included in the calculation, while others allow for employee benefits to be included. Some allow you to use actual wages while others allow you to use an average wage.

Turning incentives down
If, after a thorough analysis, you feel that a requirement placed on your company by an incentive is too stringent or would restrict the way you do business, ignore it. Try to negotiate something else.

If you know everything a community can do for you, chances are you will know of an alternative that you can suggest.

You may also know things about your business that would make you shy away from a particular incentive.

For example, if you know that the production run behind the current expansion will be limited, and layoffs will result in a few years, don't get involved in a job dependent incentive that has time requirements and clawbacks (requirements that you pay taxes that were initially deferred because your company didn't meet its projections).

Again, try to negotiate something else. You will always be better off declining an incentive than taking something that you'll only have to give back later.

The reward
If you make incentives a priority when you expand and take the time to educate yourself, you should find significant savings for your company.

Once you've convinced yourself that your company is entitled to these benefits, the rest should fall into place simply by asking questions and having reliable resources to help you get your answers.

If you make it a point to fully understand what it is you are getting your company involved in, you will never regret putting forth the energy it takes to tap into this lucrative opportunity.

John Skowronski is the director of proactive incentive programs at MINTAX, Inc., an East Brunswick, N.J., economic development consulting firm specializing in incentives.