The Fiscal Grid

Glossary

Clawback

A contractual provision allowing a jurisdiction to recover incentive value when performance conditions are missed. Forms include binary (full repayment on a missed threshold), proportional (recovery scaled to the shortfall), recapture (reclaiming prior benefits), and suspension (halting future benefits until cure).

Community-benefit agreement

A negotiated commitment alongside the tax package that directs a defined stream of value to the locality — for example fixed school payments, workforce training funds, road or park improvements, or local hiring preferences — converting an abstract abatement into benefits residents can name and defend.

Payment in lieu of taxes (PILOT)

An agreement, often arranged through a local development authority, that replaces the ordinary tax bill with a privately negotiated payment schedule. It trades the uncertainty of the reassessment cycle for contractual predictability, with terms and escalators that repay close reading.

Property-tax abatement

A time-limited reduction in the assessed value on which real or personal property is taxed. Key variables are the term length, the abatement percentage, whether it phases down, and which assets — land, building, or equipment — are covered.

Sales-and-use tax exemption

Relief from sales or use tax on qualifying purchases such as servers, switchgear, and cooling equipment. Because a large build installs equipment worth hundreds of millions at once, an avoided six-to-seven percent tax functions as an immediate capital event rather than a small discount.

Social license

The informal, revocable acceptance a community extends to a project, granted by no permit and conferred by no ordinance. It is earned through the sequence and openness of the conversation, and its loss can collapse an otherwise lawful and well-financed incentive deal.

Statutory versus discretionary incentive

A statutory incentive is written into law and available by right to any applicant meeting published criteria, so it can be underwritten at near-full value. A discretionary incentive is granted case by case at a body judgment and should be carried at a discount reflecting the risk it shrinks or is denied.

Tax increment financing (TIF)

A mechanism that earmarks the incremental taxes a project generates above a pre-project baseline to repay debt a jurisdiction issues for enabling infrastructure such as roads, utilities, and substation access. The owner still pays; the money is routed to serve the project rather than the general fund.