Compliance Reporting for Economic Development Projects During the COVID-19 Pandemic

Economic Development News

Client Alert

Author(s) ,

The COVID-19 pandemic continues to impact every aspect of both the public and private sectors, and COVID-19’s long-term effects on the U.S. economy remain uncertain. In order to spur economic growth, state and local governments have enacted various measures to provide relief to businesses with active economic development agreements. Every community understands that supporting current business operations in their respective jurisdictions is vital to a successful post-pandemic economic recovery. Despite budget shortfalls, policymakers are beginning to implement various administrative measures that support their local business community while maintaining healthy fiscal policy.  

Many state and local governments have implemented programs that allow businesses to (1) renegotiate incentive agreements or (2) extend incentive filing deadlines. These programs often allow businesses to continue qualifying for various incentives and prevent business from defaulting, thus triggering potential claw backs.

A common theme seems to be renegotiation of incentive agreements to include employees who are temporarily working from home or have been furloughed. For example, in Alabama, businesses that are eligible to receive Alabama Jobs Act incentives must meet certain targets related to job creation and job maintenance. Pursuant to a notice published by the Alabama Department of Commerce on November 12, 2020, the department now allows businesses to include employees who are temporarily working remotely, that would otherwise be located on-site, to be counted towards the jobs target. Similarly, any employees who have been furloughed may also be counted towards a jobs target, provided the furloughed employees continue to receive health benefits. Virginia also allows work-from-home, Virginia resident employees to be counted as eligible jobs under its incentive programs.

In addition to allowing economic incentive agreement renegotiations, many jurisdictions also now allow pandemic-related compliance filing extensions. North Carolina permits Job Development Investment Grant recipients to carry forward hiring obligations by one year. For example, if a business is required to hire 100 employees between 2020 and 2025, the business is now required to hire those same 100 employees between 2021 and 2026. North Carolina also permits remote employees to be counted for the 2020 and 2021 grant years.

Like North Carolina, Ohio has implemented an automatic waiver of compliance reporting requirements for businesses with active economic development projects through 2021. Oklahoma passed legislation that allows Quality Jobs Program incentives to continue, even if the recipient fails to meet payroll requirements from April 1, 2020, through June 30, 2021.

Nebraska issued guidance suspending claw backs assessed under the Nebraska Advantage Act against businesses who fail to meet the job creation requirements if those businesses can show the failure was COVID-19 related.

Other states have indicated that they will address compliance issues individually. For example, Nevada’s Office of Economic Development issued a memorandum stating that it will address compliance extensions on a case-by-case basis.

As 2021 begins, the COVID-19 pandemic will continue to dramatically affect both the business community as well as public budgets. Thus, it’s important for local governments to provide support for those who are struggling to navigate compliance benchmarks. We are pleased to see so many state and local governments acting to do just that.