Economic Development Corporations

An Economic Development Corporation (EDC) is a nonprofit created to finance new and expanded business enterprises. Cities define projects for the EDC and adopt a sales tax to fund those projects. City voters must approve this sales tax.

Performance Agreements

EDCs cannot simply give sales tax proceeds to businesses. An EDC enters into a written performance agreement with any business it funds directly or that makes expenditures benefitting an eligible project. At a minimum, the performance agreement must contain:

A schedule of additional payroll or jobs to be created or retained.
The capital investment to be made by the business enterprise.
The terms for repayment of the EDC's investment if the business fails to meet the performance requirements specified in the agreement.

Primary Jobs Requirement

The main requirement is that the businesses bring new money into the community. Certain projects are required to create or retain primary jobs. A primary job is one at a company that exports a majority of its products or services to markets outside the local region, infusing new dollars into the local economy. Primary jobs are further limited to specific industry sectors such as agriculture, mining, manufacturing and scientific research and development.

Allowable Costs

There are limitations on how sales tax revenues are used. Eligible expenditures include:

Acquisition of land.
Machinery and equipment.
Construction costs.
Planning and professional services related to the project.
Financial transactions and reserve funds.
Administrative and other necessary expenditures.

EDC types A and B

Type A EDCs — Developing Industries

Type A EDCs are created to fund industrial development projects such as business infrastructure, manufacturing and research and development. Type A EDCs can also fund military base realignment, job training classes and public transportation. More details on Type A EDCs »

Type B EDCs — Developing Industries and Cultivating Communities

Type B EDCs can fund parks, museums, sports facilities and affordable housing, in addition to projects eligible for Type A. However, Type B EDCs are subject to more administrative restrictions than Type A. More details on Type B EDCs »

Need Help?

For additional information, contact the Data Analysis and Transparency Division via email or at 844-519-5672.

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