Another difference between these programs and other development strategies is that the state does not choose which investment firms may participate based on their investment plans or their track record with similar investments. Instead, the investment firms are selected on a first-come, first-serve basis, until all of the credits have been assigned.
This benefits well-connected investment firms, according to Julia Sass Rubin, an associate professor at Rutgers who has studied the use of equity capital for economic development, including these programs. The firms that have participated in the programs for years in multiple states have long-standing relationships with the cash-rich companies that qualify for the tax credits, Rubin said, and are often able to quickly secure large commitments from them.