Virginia Economic Development Incentive Grant (VEDIG)
The Virginia Economic Development Incentive Grant program (VEDIG) assists and encourages companies to invest and create new employment opportunities by locating significant headquarters, administrative, or service sector operations in Virginia. There must be an active and realistic competition between Virginia and another state or country for attracting the project.
The amount of each VEDIG grant is determined by the Secretary of Commerce and Trade, based in part on the Virginia Economic Development Partnership’s (VEDP) Return-on-Investment analysis and recommendation, and is subject to the approval of the Governor.
All projects must meet the following eligibility requirements:
- Project must be affiliated with a basic employer, meaning 51% or more of the facility’s revenue must be generated outside the Commonwealth.
- There must be an active and realistic competition between Virginia and another state or country for attracting the project.
A company locating in a Metropolitan Statistical Area (MSA) with a population of 300,000 or more in the most recent decennial census must:
- Create 400 new full-time jobs with average salaries at least 150% of the local prevailing average wage, or create 300 new full-time jobs with average salaries at least 200% of the local prevailing average wage.
- Make a capital investment of at least $5 million or $6,500 per job, whichever is greater.
A company locating elsewhere in Virginia must:
- Create 200 new full-time jobs with average salaries at least 150% of the local prevailing average wage.
- Make a capital investment of at least $6,500 per job.
Minimum capital investment, new job, and wage thresholds must be met and are based on the area of Virginia in which the company is locating.
- “Capital investment” means an investment in real property, tangible personal property, or both at the facility within the Commonwealth.
- "New job" means employment of an indefinite duration for which the company pays the wages and standard fringe benefits for its employee, requiring a minimum of either (i) 35 hours of the employee's time a week for the entire normal year of the firm's operations, which "normal year" must consist of at least 48 weeks or (ii) 1,680 hours per year. If there are existing jobs at the firm’s facility, it is expected that the performance agreement will state the number of existing jobs and will require that any new jobs be in addition to the existing jobs.
- At the discretion of VEDP, jobs may include teleworking positions, held by Virginia residents, who are employees of the recipient company or its affiliates.
Public announcement of the project must be coordinated by VEDP and the Governor’s Office.
- The project is initiated with a VEDP Business Investment Manager.
- Due Diligence Review – In order for a VEDIG grant to be awarded, projects are subject to a due diligence review process. During this process, the VEDP Business Investment Manager works with the company to attain the information required to begin the project review process, including company information, financials, and investment and job information.
- VEDP then performs a Return-on-Investment (ROI) analysis and risk assessment for the project.
- The project is then reviewed by VEDP’s Project Review and Credit Committee (PRACC) (1-2 weeks, subject to all necessary documentation being provided).
- If approved by PRACC, the proposed incentive award is forwarded to the Secretary of Commerce and Trade for preliminary approval (approximately 1 week).
- VEDP delivers a financial proposal to the company.
- The company accepts or rejects the offer.
- A VEDIG application is submitted. The application consists of a detailed letter sent by the company to VEDP.
- A performance agreement is drafted and reviewed by company.
- The Governor gives final approval or rejection (approximately 2 weeks).
- A press release is issued and/or an announcement event is scheduled.
- VEDIG grants are paid in no fewer than five equal annual installments beginning in the third year after the capital investment and job creation are completed.
The company will be asked to provide annual reports indicating progress toward achieving its capital investment and employment performance targets. Reports include:
- Initial Company Notification – The performance agreement will require the company to notify VEDP in writing within 90 days of completion of the capital investment and new job creation, certifying the amount of capital investment and the number of net new jobs created and maintained at the facility, the average annual wage rates paid to such employees, and an indication whether the company has provided a benefits package to its standard employees.
- Annual Progress Report – During the performance period and the payout period for the grant, the company will be asked to annually verify the level of capital investment, new jobs, and wages, and (during the payment period) to note whether the facility continues to be operated at substantially the same level as existed at the time that the capital investment was completed.
- Verification of New Jobs: The company will be asked to report the number of jobs created and maintained through the performance period and the payment period, and the average annual wage for those jobs.
- Verification of Capital Investment: The company will be asked to report the amount and type of capital investment made through the performance period, by broad categories (e.g., land, land improvement or machinery, fixtures and equipment).
How are awards calculated?
There is no formula for calculating the amount of the grant award. In determining grant amounts, the following criteria are considered: a Return-on-Investment (ROI) analysis, new jobs, wage levels, overall employment, capital investment, area and regional unemployment, poverty and fiscal stress, the locality’s interest in the project, and company growth potential.
How long does the company have to make its qualifying investment?
In general, project completion will occur within three years, but no more than five years, from the date the performance agreement is signed.
What is prevailing average wage?
"Prevailing average wage" is the amount determined by the Virginia Employment Commission to be the average wage paid to workers in the city or county of the Commonwealth where the economic development project is located. The prevailing average wage will be determined without regard to any fringe benefits.
What happens if the statutory minimums are not met or maintained?
No VEDIG payment in any amount will be paid if the company fails to achieve by the end date stated in the performance agreement:
- The greater of (i) the statutory minimum capital investment requirement and (ii) 50% of its capital investment goal; and
- The greater of (i) the statutory minimum new jobs requirement with average salaries at least 50% or 100% greater than the prevailing average wage in the locality, as applicable, and (ii) 50% of its goal of new jobs with average salaries at least 50% or 100% greater than the prevailing average wage in the locality, as applicable.
What happens if capital investment does not remain in place or if employment is not maintained during the payout period?
To the extent that the company achieves a significant proportion of the capital investment and new jobs by the end date stated in the performance agreement, but does not completely attain its goals, the total VEDIG grant to be paid shall be reduced proportionately, but only if the capital investment remains in place and the new jobs are maintained during the payment period, and the facility continues to operate throughout the payment period at substantially the same level as existed at the time of the completion of the capital investment.
For this purpose, in the performance agreement, it is expected that the VEDIG grant will be allocated between the capital investment goal and the new job creation goal. Generally, the allocation will reflect the results of the Return-on-investment analysis.
What positions do not qualify as new jobs?
Seasonal or temporary positions, positions created when a job function is shifted from an existing location in the Commonwealth, and positions with construction contractors, vendors, suppliers, and similar multiplier or spin-off jobs shall not qualify as new jobs.
Are contract employees allowed to count as new jobs?
The Commonwealth will consider dedicated, full-time, Virginia-based contractors as eligible net new jobs should the company desire to count them toward the new job targets. The requirements for contract positions are the same as those positions on the company’s payroll and would be required to meet the same requirements as a “new job.”
Can the company receive multiple VEDIG grants?
An applicant may be granted more than one VEDIG grant at a time if the scope of each project has a different timeframe and independently meets the minimum investment and all other criteria.
For a project investment and employment occurring in phases or stages, however, the Commonwealth will consider it as one project if: (i) the entire investment and employment are announced at one time, (ii) the phases are clearly related to one project, and (iii) the entire investment and employment proceeds normally to substantial completion, without extraordinary delays. If these conditions are met, the negotiated amount will reflect the entire single investment.
What programs are included within the Virginia Investment Partnership Act?
The Virginia Investment Partnership Act comprises the Virginia Investment Performance Grant (VIP), the Major Eligible Employer Grant (MEE), and the Virginia Economic Development Incentive Grant (VEDIG).
Can the company participate in multiple performance incentive programs under the Virginia Investment Partnership Act at the same time?
Companies are only allowed to participate in one program per project under the Virginia Investment Partnership Act at any given time.