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ECONOMIC DEVELOPMENT AND POLICY

JUNE 2015 VOLUM E 25 NUMBER 3

THE UNIVERSITY PARTNERSHIP: A GROWING INCENTIVES TOOL IN A CHANGING LANDSCAPE 6

THOMAS H. BRINKLEY AND GEOFFREY J. TROAN

The authors discuss solutions to the workforce development component of economic development through partnerships between government, business and institutions of higher learning.

ECONOMIC DEVELOPMENT AND POLICY

STATE TAX INCENTIVES FOR THE REHABILITATION OF HISTORICAL PROPERTIES 14

LARRY R. GARRISON

The author provides a broad overview of the incentives for the rehabilitation of historical properties offered by the various states and includes a chart listing these incentives with relevant contact information.

TRENDS IN STATE TAX LEGISLATION AND POLICY

CREDITS & INCENTIVES TALK WITH DELOITTE

EV TAXING ISSUES

KPMG CORNER

SHOPTALK

FROM THE EDITORS

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Modern university partnerships seek t embed university staff and students in key corporate cultures, to improve the match if tween school curriculum and workforce skills.

JOURNAL OF MULTISTATE TAXATION AND INCENTIVES

r

JOURNAL OF MULTISTATE TAXATION AND INCENTIVES

the two decades following World War I I, the United States enjoyed a wonderfu l monopoly in economic prosperity. Emerg­ing as the sole major industrialized na­tion whose infrastructure was not ravaged by the war, exports flourished , enlivened by significant international demand and fostered by the Marshall Plan and other foreign aid programs.

International competition began to come back on-line with the reemergence of the European economies in the latter 1960s, primarily those of Germany and the United Kingdom. Japan aggressively emerged in the 1970s, drastically reduc­ing the U.S. production monopoly and exports. Only the late adoption of Total Quality Management (TQM) by U.S. man­ufacturers in the early 1980s stemmed the tide. That recovery was overwhelmed by the explosion of South Korean produc­tion in the 1990s, which in turn was over­shadowed by the reentry of China and India into world markets that came with the new millennium.

In short, we live in a very competitive world in the twenty-first century, one that only promises to become more compet­itive as additional emerging countries in ­dustrialize on the capitalist model, seeking jobs and increased standards ofliving for their populations.

As necessity is most assuredly the mother to invention, so is prosperity, in turn , the father of complacency. The in ­dustrial infrastructure, taxation systems and educational protocols in the United States were all founded in the post-war decades at a time when prosperity fos ­tered a complacency that allowed the three primary engines of civilization-namely,

private industry, municipal government and education- to develop as independ­ent entities with limited regard to each other's role in community development.

Ever increasing foreign competition is bringing that complacency to an end, driven by the emerging discipline that we now call "Economic Development:' Best viewed as a new sub-discipline within mi­croeconomics, economic developers in municipal government seek to modify local economies artificially to prese rve heritage core industries and to deve lop new, targeted industry sectors. They u n­derstand that community development can only be achieved as the product of a vi­able economic engine, sustainable only through the expansion of private industry.

Though this certain ly should not be considered a dark time in human history, it is most assuredly a challenging and com­petitive one. And, as Charles Darwin once noted, it is neither our strength nor our intelligence, but our ability to adapt, that will solve the cha ll enge of maintaining prosperity.

Workforce Development and the U.S. Economy By the 2000s, many U.S. operations were giving up on the domestic business envi­ronment and relocating overseas to main­tain profitability. Often portrayed as villains, CFOs were simply reacting to in­creased scrutiny from Wall Street- dri ­ven by hostile takeover activity, Internet visibility and technical trading- leading to amplified shareholder demand for short­term performance.

Depending on your perspective, cap­italism is either a wonderfully efficient, or a ruthlessly brutal , economic master. Adam Smith's invisible hand will un ­flinchingly relocate all production to those locations with the optimum business process and climate. It cares not for the aging production worker, the established

TJ-JOMAS /-I. BRINKLEY is a shareholder with the Alabama-based law firm of J\lay11ard Cooper c- Gale, PC. (1vww.111aynardcoopercom ) and Chair of the firms Eco110111ic Development, lnce11tives & Tax Practice Group. /-le has more tha11 25 years of experience i11 eco11omic develop111ent, i11ce11tives a11d state and local tax and ca11 be reached at tbri11kley@111ay11ardcoopercom. GEOFFREY}. TROA N is a retired aerospace executive with over three decades of experience i11 Operations, Corporate Real Estate a11d Corporate Eco11omic Developme11t al the Fortu11e 50 level. I le 11ow consults, writes and teaches corporate se111i11ars 011 eco11omic develop111e11t a11d corporate fi11a11ce a11d ca11 be reached at Jeff]. Troa11 @°fROA N. ORG. The authors welcome inquiries a11d co111me11ts related to the article.

JOURNAL OF MULTISTATE TAXATION ANO INCENTIVES June 2015

brand name, or the town desperately try­ing to save its heritage core industries.

In the U.S., it became increasingly clear that TQM theory had to be extended to the business climate (business climate op­timization) to maintain a competitive pos­ture. Corporations began looking at taxation, infrastructure costs and work­force demographics with much more scrutiny. With the realization that con­tinued operation of even an optimi zed facility in an area with a high cost-of-liv­ing adjustment (COLA) index and/or un­favorable taxation represented no more than a slow bleed to extinction, both ex­isting and new operations were opened to consideration for relocation.

Formal site selection matrixing was introduced as a standard for production location decisions, with factors added for business climate criteria. This facilitated the need to develop internal company economic development skill sets, and forge new strategic partnerships with skilled corporate real estate and tax partners.

As corporations became increasingly dynamic in their production location de­cisions, the economic development pro­fession in municipal government emerged as a much more significant component of a public sector commerce strategy. The discipline expanded from a few statutory tax abatements to a more complex inter­related system of statutory legislation, dis­cretionary programs, legal construction and target -sector legislation.

All that internal site selection matrix­ing, however, highlighted one continu­ously growing deficiency: Skilled Workforce. While it continued to be true that pro­duction in heritage facilities with a poor business climate was a recipe for bleed­ing out, locating in a great business cli­mate with an inadequate workforce was equa lly disastrous. No matter how good the economic development deal was fi ­nancially, the absence of a skill ed work­force at a reasonable cost doomed many a project to failure .

Since the community offering the best overall economic climate was usually one with a workforce development challenge, that problem was systemic and had to be addressed. In this way workforce devel­opment became an increasingly impor-

ECONOMIC DEVELOPMENT ANO POLICY

tant part of economic development strat­egy, drawing in the educational system as the third leg of the economic develop ­ment triad .

With private industry, municipal gov­ernment and the educational system fi ­nally talking to each other, the stage was set for dynamic change. Taxation, infra­structure and workforce demographics had to be merged into a business model that was sustainable in twenty-first century markets. While tax policy and infra ­structure were financial considerations that could be addressed directly, work­force demographics was a far more diffi ­cult issue to address. For this reason, this article focuses on solutions to the work­force development component of eco­nomic development.

Workforce Demographic and Development in the United States Historicall y, heritage university partner­ship models have involved a private cor­poration choosing a university as a targeted educator. The university and the company held a few career days and recruiting sem­inars, some internships and co-operative work agreements were pledged, and every­one seemed content. That rudimentary relationship does not even begin to ad­dress the gulf between productive work­ers and the curriculum of the modern age.

ECONOMIC DEVELOPMENT AND POLICY

Over the decades, the U.S. educational system changed. K-12 educators removed industrial trades programs, higher math and science requirements from their cur­ricula. That jettisoned many of the key conceptual and practical skills necessary to produce young engineers and techni­cians at the baccalaureate level. Univer­sities found themselves with an incoming population of students that had excellent information -gathering and problem-solv­ing skills from their familiarity with the Internet and gaming, but little mathe ­matical dexterity or mechanical aptitude.

Whether by design or inevitability, col­lege programs evolved to suit their pop­ulace, addressing the reinforcement of math skills with computer modeling, and teaching conceptual engineering. The re­sult was young graduate engineers that had never turned a wrench or operated industrial equipment. These graduates had little drafting experience because credit hours had to be spent learning higher math missed in high school, and man y only understood how to run the computer models, lacking a grasp of the al­gorithms behind the input screens. This suited low-tech production operations but was notably deficient for advancing the state of the art. Technical intuition comes from an intuitive grasp of math and physics, not the ability to run a com­puter model.

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Children and parents changed. Chil ­dren began spending their time tinker­ing with video games rather than bicycles, electronics, motorcycles and automobiles. As a result, they missed out on developing key mechanical skills (that should have at least left us with a glut of computer sci­entists, but, note to parents: video game aptitude does not translate into coding ex­pertise-you need the math). Parents saw success for their children rooted in a col­lege education, rather than in the trades. Trade education was viewed as a semi­skilled environment with waning union influence that was going to leave partici­pants short of money, down-sized , and often looking for work.

The opposite was in fact true. Skilled trades were becoming ever more chal­lenging as workers needed higher math and significant mechanical aptitude to operate and maintain increasingly com­plex and automated fabrication and as­sembly equipment. Unfortunately, many students that should have been destined for the trades, opted for an unmarketable college major that left them unemployed and indebted (U.S. college loan debt is now over$ I trillion).

Finally, industries' needs changed. Gone are the days when a corporation hi red mechanically adept high school gradu­ates as assemblers, converted them to draftsman at community college night

JOURNAL OF MULTISTATE TAXATION AND INCENTIVES 9

school, and then trained them into engi­neers and program managers at local uni­versity night school, all the while training them "on-the-job;' a process generally re­ferred to as "scarring'.' The changing de ­mographics referenced above meant that more and more job applicants were com­ing straight from the educational system. Corporations found themselves i ncreas­ingly short of qualified applicants, and spending two to three years "sca rring" their young recruits.

Something else had to change.

Modern University Partnerships Modern university partnerships seek to embed university staff and students in key corporate cultures, to improve the match between school curriculum and work­force skills. Many programs are designed to extend beyond the hiring date, sup­porting the concept oflife-long learning for retained workers. Like many aspects of economic development, there does not seem to be one model for these partner­ships, and the practitioners should design a program specific to the corporate need. Here are some great examples of the art.

Rolls-Royce-Virginia partnership.

Production partnerships provide tax, in­frastructure and workforce development benefits to the corporation in return for embedding the participating university into the manufacturing process. One example of such an approach can be found in Rolls­Royce's decision to locate its manufacturing facility in the Commonwealth ofVirginia. Of primary importance to Rolls -Royce throughout the process of site selection was the availability of a high-quality workforce in an ecosystem of research and develop­ment in partnership with area universities. Workforce itself was a primary part of the incentive package and a driver of the deci ­sion to locate. Included in this partnership were the Commonwealth of Virginia, Prince George County, the University of Virginia, Virginia Tech, Old Dominion University, Virginia Commonwealth University and Virginia State University.

In agreeing to invest over $500 mil ­lion and create over 500 new jobs in Prince George County, Rolls-Royce received J ,000 acres of land and roadway infra ­structure improvements. Rolls-Royce pro­vided over $25 million to local universities for research and educational funding, as well as 20 acres to the University ofVir-

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ginia, for the creation of the Common­wealth Center for Advanced Manufac­turing (CCAM). CCAM is now an active applied research center, bridging the gap between fundamental research typically performed at universities and product de­velopment routinely performed by pri­vate industry.

Built in 2012, CCAM increased research and development for partner companies while offering research op­portunities to area universities, their fac­ulty and students. These universities also hired additional faculty and created Rolls­Royce Doctoral Fellowships and Rolls­Royce International Internships. The Commonwealth ofVirginia invested over $40 million to assist the universities in their partnership with Rolls-Royce.

In addition to CCAM, the universities created the Commonwealth Center for Aerospace Propulsion Systems (CCAPS) which enables engineers to engage in re­search and educational opportunities for the creation of a more efficient jet engine propulsion system. In the spring of 2014, UVA and Virginia Tech joined the Rolls­Royce University Technology Centre Net­work, a global group of affiliated universities all providing research and technology to Roi ls- Royce.

NASA-Lockheed Martin-Univer­

sity of New Orleans partnership. For the three decades that the U.S. Space Shut­tle saw service, NASA and Lockheed Mar­tin constructed the large external tank in a government-owned facility in Michoud, Louisiana, just outside of New Orleans.

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When NASA and Lockheed Martin wanted to implement an improved tank­welding process, namely friction stir weld­ing, they turned to the State of Louisiana, through the Louisiana Economic Devel­opment Corporation (LEDC) and the University of New Orleans (UNO) for an economic development partnership.

Under the agreements, the State of Louisiana provided $20 million in tool­ing to the NASA Michoud facility through the University of New Orleans via a discounted lease. Lockheed Mar­tin operated the sensitive equipment under contract to NASA, and partici­pated in a partnership with UNO stu­dents to develop the new tank-welding process. Today, the equipment is still in use, primarily constructing natural gas storage tanks for ocean shipping and Louisiana State University (LSU) has joined the partnership.

IBM-Louisiana State University

(LSU) partnership. In September 20 l J, International Business Machines began searching for a place to locate a new serv­ices center. With the increasing relevance of the software and data services offered by IBM, the company sought to partner with a university in order to assist research and create a potential pool of talented fu­ture employees. After assessing its needs, IBM chose Baton Rouge, Louisiana.

The lBM Services Center/ Baton Rouge was formally announced in March 2013 and broke ground that fall. A collaboration between the Louisiana Economic Devel­opment Corporation (LEDC), IBM and

ECONOMIC DEVELOPMENT AND POLICY

Heavy-equipment manufacturers are in the business of selling expensive equipment and provide training as a necessary part of selling those items, but are not always the

best curriculum developers. LSU, the $55 million facility is expected to open in 20 15.

LEDC partnered with the non-profit Baton Rouge Area Foundation (BRAF), whose real estate branch, Commercia l Properties Realty Trust, is developing the project. LEDC offered $30 .5 million of public funding for the project: $14.8 mil­lion from the state, $3 million from the City of Baton Rouge/Parish of East Baton Rouge and $12.7 million in Community Development Block Grants. The remain­ing funds needed to construct an adja ­cent 10-story residential building as part of the complex are being gathered from private sources.

LEDC has also offered IBM grants , based on success, over 12 years totaling $29.5 million. According to the LEDC, thi s incentive package was designed to refund IBM its costs for "personnel re­cru itment , relocation and other work­force-re lated costs; internal training; and fac ility operating expenses'.' The project is predicted to result in the creat ion of 800 direct and 542 indirect permanent jobs in the area. The project also included an educatio nal initiative between the State of Louisiana, IBM and LSU.

In turn, LSU has realigned its electrical engineering and computer science pro­grams into one school, the School of Elec­trical Engineering and Computer Science, part of the College of Engineeri ng. The school will receive 14 million in funding over 10 years from the State of Louisiana. At least 65% of these funds are to go to­ward the expansion of the computer science program at the university. As part of the agreement, LSU plans to double its com­puter science facu lty and triple the num­ber of computer science graduates that it produces in the next five years.

As of the 2013 fa ll term, computer sci­ence enrollment was already up 60% from the previous term. In addition to this state funding project, lBM is helping LSU form a science curric ulum centered around "technology, math and software develop­ment, [to] equip students to meet the grow-

ECONOM IC DE VELOP MENT AND PO LICY

ing demand for business services includ­ing advanced ana lytics, process innova­tion and app li cation development ," according to LSU.

Clemson-BMW partnership. ln 2012 , Clemson built the Clemson Uni ­versity-International Center for Auto ­motive Research (CU-ICAR) in Greenville, South Carolina, after obtaining $250 million of in vestment from both public and private sources. There are five categories ofCU-ICAR partners: Cam ­pus, Equipment, Fellowship, Founding and Research. BMW funded two endowed chairs for the program ( $10 million) , whi le Michelin and Timken funded one each. BMW wanted to invest in a "talent funnel" to educate skilled automotive en ­gineers in a location very near its Spar­tan burg, South Carolina plant. This program also created 770 on-site jobs with an announced creation of720 more.

Lockheed Martin-State of Mary­

land partnership. When Lockheed Mar­tin wanted to centralize its employee­training requirements at a single corporate learning center in 2005, they teamed with the State of Maryland th rough the Mont­gomery County Department of Economic Development and the Maryland Depart­ment of Business and Economic Devel­opment. The result was the $100 million plus Lockheed Martin Center for Lead­ership Excellence, a centralized learning center with classrooms and meeting space, as well as an adjoining employee dormi­tory. The economic development part ­nership ensured that the faci lity wou ld be treated as an educational center, provid­ing significant tax benefits, as well as work­force development assistance for the center's employees.

Research and development part­

nerships. Purely research and develop­ment partnerships are another model. These are patterned on the partnerships referenced above, except that the primary goal is the invention of new technology rather than the integration of a new pro­duction process.

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University facult y and students par­ticipate in the R&D efforts of a company and infrastructure is paid for with pub ­lic funds. The Ii m iting factor in these types of partnerships tends to be own ­ership of resulting intellectual property. Generally, the universities are not satis ­fied with the curriculum development value of the partnership and want to share in the value of the intellectual property. There is a risk to a company in sharing its proprietary information with a group of students and faculty who may wind up working for a competitor. So, while such partnerships can be lucrative from a tax savings and investment perspective, com­panies must be wary of risks arising under such arrangements.

Simulation training partnerships. In­dustries which use expensive simulation equipment generally face the problem of justifying the cost of taking such equip­ment out of service to train the operator (flying a new aircraft, for example). Further, many training exercises put the asset at risk (stalling a new aircraft and recover­ing, for example). Probably the entity fac ­ing the greatest challenge in this arena is the United States Military, one of the authors' primary customers for three decades.

Beginning with the advent of video games and personal computers in the 1980s, the United States Military began integrating simulation equipment to train its workforce. Today, everything from tank simu lators and aircraft simulators to bat­tle simulation versions of''Call to Duty" are fully deployed, and the practice is ex ­panding into commercia l markets. From airline pilots to production line workers, companies are learning the value offully engaging the operator, versus providing a written manual.

The military is the primary simulation market to date and the commercial mar­kets are likely to fo ll ow its form. Histori ­cally, the military bought its own equipment and either trained its own workers , or hired a contractor to do so. As simulation training became more per­vasive and the number of expensive sim­ulators increased, the military has been moving towards a service strategy in which the contractor (often the original equip­ment manufacturer) provides training as an "integrated service:· pushing the sim­ulator investment over to the private sec­tor. That is creating a windfall for the states, as a lot of equipment previously exempt

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from tax under the federal exemption be­comes taxable.

Heavy-equipment manufacturers are in the business of selling expensive equip­ment (and, sometimes, equally expensive simulators). They provide training as a necessary part of selling those items, but are not always the best curriculum de­velopers. Further, the personal property tax on simulation equipment in many states renders this business model for training untenable. That is too bad, because train­ing facilities generate a lot of induced and indirect tax (rental cars, hotel rooms, restaurant meals, golf, etc).

However, it is possible to alter the legal construction and bring in a valuable simu­lation training partner at the same time. The original equipment manufacturer (OEM) can set up an educational partnership with a university or trade school with a program akin to the simulation market (e.g., aero­space engineering for a flight simulation center). Utilizing their respective natural strengths, the university takes the lead in constructing the simulation curriculum while the manufacturer concentrates on construction of the simulator. The simula­tor is then sold at cost to the university or to a tax-exempt economic development agency. The simulator is ultimately funded by a combination of discretionary grants, special legislation and public sector financing. It is then leased back to the educational part­nership for an amount equal to any debt service in the financing, resulting in a very competitive cost structure.

The model for the bilateral operation of the training center by the OEM and the university is an open one, centered on a design that best favors the strengths of each party in that particular deal. Gen­erally, however, the university's internal curriculum is enhanced by the exposure to practical engineering applications. Its students receive preference in the manu­facturer's internship and co-op programs, and the university positions itself for the coming world of interactive education.

The heavy-equipment manufacturer gets to sell heavy equipment and make a little money on training, without having to make a significant capital investment that impacts its internal rate of return or return on assets. The partnership pays no income or sales tax on the simulator pur­chase, and the simulator is likely exempt from personal property tax on its own­ership and use.

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Customer partnerships. Aside from partnerships with manufacturers, part­nerships directly with the ultimate cus­tomer are worth exploring. Jn 2013, one of the authors visited the University of Arizona in Tucson with his employer's head of university R&D partnerships and training grants lead. Speaking to the uni ­versity's Engineering Department, the di ­alogue was more akin to talking to a second-tier subcontractor in the aero­space sector.

The Dean of Engineering calmly walked the company through all the fed­eral government contracts that the uni­versity had garnered in the past five years, and the university's performance level on them. The Dean understood the customer's business model, the Federal Acquisition Regulation , Performance Measurement Systems accounting and the industry's proprietary information and classified data conventions.

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The difference between this model and an R&D partnership is that the univer­sity adjusts its curriculum not by part­nering with a private corporation, but by doing so directly with the ultimate cus­tomer. It is worth highlighting that most federal military and civilian contracts re­quire that more than 20% of the content be performed by small business. On major bids, the prime contractor's award points include a category for small business per­formance, leaving the major contractors scrambling to find qualified small busi­nesses. Further, many federal awards are targeted so that only a small business can bid them, and agencies like the National Institute of Health target university leads.

As more and more universities create in­ternal economic development practices, there is a real opportunity for them to op­erate both as educational institutions and qualified contractors for federal business. The model focuses around expanding the

ECONOMIC DEVELOPMENT AND POLICY

As more and more universities create internal economic development practices,

there is a real opportunity for them to operate both as educational institutions and

qualified contractors for federal business.

normal R&D grant process pursued by faculty to create a full operational busi ­ness model. This involves creating com­pliant accounting systems, understanding the Federal Acquisition Regulation (a lengthy volume), and, most importantly, de­veloping a marketing arm that can research and identify Federal Request for Proposal work being offered. Far more lucrative than grants, this is a revenue and profit­generating exercise that greatly enhances the university's stature with industry, en­couraging a second tier of R&D partner­ships with prime and major subcontractors.

Financial Benefits of University Partnerships The formats for modern university part ­nerships vary widely, from R&D and pro­duction partnerships , to internal and customer training facilities . These are re­all y "one-off" custom economic devel ­opment agreements designed specifically to enable a corporation to bring direct, indirect and induced jobs and economic impact to a region. Though the examples we've provided here are domestic , em ­bedded universit y partnerships can be just as effective internationally.

Though an agreement should be con ­structed to fit the participants' specific challenges, there are some common un ­derlying themes important to look for in constructing a successful partnership. Re­call that there are four general types of economic development agreement: a) statutory; b) discretionary; c) legal con ­struction; and d) special legislative. Proper usage of economic development leverage in a partnership is best realized by mix­ing types. Following are some of the more common opportunities.

Statutory incentives. Statutory in ­centives are composed of economic de­velopment legislation that is on the federal, regional, or local government books, and is applied for by application. Though these programs are generally designed to give

ECONOMIC DEVELOPMENT ANO POLICY

a large number of companies a little bit of help, they represent real cash to offset expenses and are easily obtained.

Virtually every state and many foreign regional governments have workforce de­velopment programs for new and retained workers. To the extent a university part­nership can utilize these funds for in­house or third-party training, they should be employed. Further, if the enterprise cannot achieve a blanket tax exemption th rough legal construction , most of its tax abatement legisl ation rests in this realm. Examples would be special tax abatements and grants for curriculum de ­velopment, training aides, classroom con­struction , prototyping, etc. Because these funds do not have to be approved through a legislative process, they can often be ob­tained with relative ease.

Discretionary incentives. Discre­tionary incentives are special pools of money generally retained by the state or regional government executive branch, often in the form of deal closing funds. Awards here are reserved for projects that are deemed strategic to the region and are mad e at the discretion of the executive branch. Depending on the jobs created, awards of several million dollars are rea­sonable to expect, and can generally be used for any expense associated with the university partnership, often with ties to job creation and retention.

Because the programs are not statu­tory in nature, the partnership agreements are customized to the project, and the en­terprise can generall y reach better terms with the public coalition here than on a similar smaller statutory grant. Companies can use this money for all of the same ap­plications noted above, with the addi ­tion al benefit that the larger grant size can fund infrastructure up to and including a training center itself. Because these funds do not have to pass through the legisla ­tive process , they can also be obtained with relative ease through a written proj ­ect agreement under the right facts.

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Legal cons truction. Legal construc­tion represents potentially the largest fi ­nancial savings that can be obtained through a university partne rship. The technique is simply to construct the part­nership in a manner that makes maxi ­mum use of existing exemptions and abatements available to universities and public economic development agencies. Unless the particular state or regional

government has a leasehold interest statute, generally property owned by a pub I ic en­tity in a university partnership is exempt from sales tax on the acquisition and prop­erty tax over its useful life. lf heavy in­dustrial tooling is integral to the partnership, the savings can be significant.

Likewise, if the enterprise is construct­ing a centralized training center, the goal should be to have it owned by and taxed through an educational entity, rather than as an extension of corporate operations. Utilizing this process can be time-con ­suming, as the enterprise generally wants assurance from revenue agencies that its tax interpretation will be recognized. Start this process earl y in the timeline.

Special legislation. Special legisla ­tive incentives are obtained by going to the state or regional government legisla­ture and securing specific legislation. It is generally reserved for mega-projects like the $900 million Boeing Dreamliner facility in South Carolina or the multi ­billion dollar ThyssenKrupp (now Arcelor­Mittal/Nippon ) steel mill in south Alabama. Since the process requires draft­ing and passing new legislation, the agree­ment pallet is open to design any mix of public/private partnership. Because this type of project must go through the full legislative process , however, it can take quite a bit of time and resources, so work must start well ahead of workforce de ­velopment requirements.

Conclusion The world is indeed a very competitive place, and the United States faces signifi­cant workforce development challenges that must be addressed ifit is to remain the world's economic leader. Modern university partnerships provide an excellent platform for private industry, state and municipal government and the United States educa­tional system to work together, as the y should, to address workforce development and other business climate issues. •

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