Determining Whether a Company Has Received Subsidies

Determining whether a company has received subsidies

Accountable development researchers are generally asked to carry out one of two types of subsidy research. One ways involves the researcher gathering information about a known subsidy deal, whether proposed or implemented. In other cases, the research project starts with a given company – probably one at the center of a controversy involving some aspect of its social responsibility record – and the goal is to find out whether the firm has received economic development subsidies of any kind.

Doing this kind of research has been much easier since Good Jobs First introduced our Subsidy Tracker   in 2010. While the largest publicly facing database of economic development subsidies given to companies that we’re aware of, it cannot capture every dollar. Here are some tips for researching the missing deals.

Location-Specific Searches

The way you design your research strategy depends a great deal on whether you are looking for subsidies awarded to a company in a specific jurisdiction or if you are on a broader fishing expedition involving a company that operates in numerous jurisdictions and may have received subsidies from any of them. We begin here with location-specific searches.

Disclosure sites

In addition to checking Subsidy Tracker, you may wish to go directly to the government websites from which we derive our data; they are listed here.

Doing so may turn up awards that we have not yet collected for Subsidy Tracker, or there may be details not included in our entries. Also check the posted minutes of bodies such as city councils and county commissions for discussions of subsidy deals and practices.

Economic development agencies and elected officials

While some deals are kept quiet, others are publicized by public officials taking credit for the jobs and other economic benefits the deals will supposedly bring about. It is thus worthwhile to search the websites of the relevant state and local economic development agencies, which often list the companies that have been lured to the area (or kept from leaving the area) with economic inducements. If the website doesn’t have the information, email the agency and ask. For possible subsidies involving larger companies, be sure to check out the database of the state’s governor. It is common for governors to issue press releases touting agreements by companies to make large investments in the state, and attendant subsidies will often be described. Also check the websites and annual reports of bond agencies and state commerce departments.

Local and regional media, social media, search engines

Given the gaps in public disclosure, subsidy researchers need to make extensive use of media coverage to track down deals. Subsidies may be mentioned in the media because public officials have issued a press release about a deal, because the subsidy is the subject of a public hearing, because a community or public-interest group is criticizing the deal, or because an investigative reporter is looking into the matter. In any event, such media mentions will alert you to the existence of the subsidy and give you leads for doing further research. Pay attention to project code names mentioned in the media. They can be handy for looking through city/county meeting minutes.

Consequently, any location-specific subsidy research must include a thorough search of the archives of the relevant local or regional media outlets, including local business publications and journalists’ social media posts. Start with Google but check the websites of local publications, especially those that allow you to search their archives. Also see if your local public library provides access to commercial services such as Nexis that collect content from thousands of publications.

The next challenge is to formulate the right search online strategy. If your company is small, you might want to view all the “hits” on the company name to see if any of them mention subsidies. For larger companies, this may be impractical, given the large number of hits that are likely to occur. You’ll need to combine the company name with relevant search terms.

The problem is that the vocabulary of economic development subsidies is far from consistent. Apart from the word subsidy (which is not commonly used), you will need to search a variety of synonyms, such as incentive, financial assistance, tax break, and infrastructure support, as well as the names of specific subsidy types, including property tax abatements, tax increment financing, enterprise zones,  investment tax credits, and industrial revenue bonds.

Industrial Revenue Bonds

Industrial revenue bonds, also known as industrial development bonds, are mechanisms by which government give companies access to lower-cost financing through the issuance of tax-exempt bonds. (See the overview of IRBs in our Researcher’s Guide.) IRBs are the only category of state or local economic development subsidy for which a fairly comprehensive database exists (other than Subsidy Tracker). The reason is that, when IRBs are issued and offered to the public, the issuer must distribute a prospectus known as an Official Statement.

These documents are analogous to the filings a company makes to the Securities and Exchange Commission during an initial public offering of stock, but with an important difference. The Official Statement is not issued by the company receiving the benefit of the bond offering, but instead by the government entity that is issuing the bond on behalf of the company.

Official Statements can be obtained from a website known as EMMA (Electronic Municipal Market Access) produced by the Municipal Securities Rulemaking Board. Once you have located an Official Statement, you will find that most of it deals with the financial terms of the bond offering, though there is usually a description of the purpose of the offering, including the name of the company involved and the intended use of the proceeds.

Property tax abatements

Since property tax records are public information, it might be assumed that property tax abatements would be readily available. In our experience, this is not always the case, especially in the online versions of property tax records that governments make available on their website or via commercial services such as Lexis-Nexis. The best approach is to use the electronic databases as a way of identifying where a given company owns property. Armed with that information (including identifiers such as lot and block numbers), contact the local tax assessor’s office (usually at the county level) and inquire about the existence of any abatements or exemptions. Visiting the assessor’s office in person can often yield records not available online.

SEC documents

If your target company is publicly traded, do a full-text search of its SEC filings at the EDGAR website. Plug in terms such as “tax credits” and “tax increment financing” to see where there are references to the receipt of such subsidies in the company’s financial statements. Most companies do not include this information in their filings; those that do are ones that make extensive use of subsidies.