Understanding the Role of Incentives in Project Feasibility
Incentives can make or break a deal when companies are weighing relocation, expansion, or major capital investments. They often tip the scales on whether a project gets the green light. That’s where the “but for” test becomes a central factor in the site selection process.
Many states have built a “but for” clause into their incentive policies. It requires a business to clearly demonstrate that, without the incentive, the project wouldn’t move forward. This clause isn’t just legal fine print—it serves a practical purpose:
For governments, it ensures public resources are directed toward projects that truly need a financial nudge.
For KE Andrews, it’s a critical point of leverage—used to maximize the value of incentives for our clients.
Using Competition as a Strategic Advantage
When trying to secure meaningful incentives, competition is your best friend. The more viable location options on the table, the stronger the argument that incentives play a defining role in the final decision.
KE Andrews leans into this by presenting competing states or cities under genuine consideration. Take, for example, a manufacturer evaluating Mississippi for its MFlex tax credit. Texas might step in with its own package to retain the investment. By framing the project as a competitive opportunity, we increase negotiating strength—and, often, the total value of the incentive deal.
Why Timing Can Make or Break a Deal
A common misstep we see? Companies announcing their move or expansion before the ink dries on the incentive agreement. Once word is out, the leverage behind the “but for” argument fades fast. If decision-makers already know the project is happening, justifying incentives becomes a much tougher sell.
That’s why we advise clients to keep plans under wraps until everything’s finalized. Confidentiality isn’t just strategic—it’s essential for maximizing benefits.
Final Thoughts
The “but for” test is more than a policy hurdle—it’s a smart negotiation tactic. It protects public investment and positions businesses to receive the strongest possible incentive package. At KE Andrews, we use this approach—alongside strategic timing and a competitive framing—to help clients turn opportunity into real, measurable advantage.
