The Commonwealth’s Development Opportunity Fund (COF)

The Commonwealth’s Development Opportunity Fund (COF), administered by the Virginia Economic Development Partnership (VEDP), is a strategic incentive tool used at the discretion of the Governor of Virginia to secure competitive business investments and expansions within the Commonwealth. Designed as a "deal-closing" fund, the COF provides financial support to local governments on behalf of companies when Virginia faces serious competition from other states or countries for high-impact projects. The fund aims to attract significant capital investment and job creation by offering cash grants to help offset a range of project-related costs. These include expenses related to site acquisition and preparation, infrastructure improvements, utility development, building construction or build-out, and workforce training. The amount of the COF grant is determined through negotiation and is based on a comprehensive review conducted by VEDP and the Secretary of Commerce and Trade, subject to the Governor’s approval. The awarded funds are directed to the local government where the project is sited, which then enters into a performance agreement with the company receiving the benefit. This agreement outlines the specific performance metrics the company must meet in terms of job creation, capital investment, and wage levels. Failure to meet statutory thresholds may result in full repayment of the grant. Eligible projects must be associated with a basic employer—defined as one where at least 51% of revenue is generated from outside Virginia—and must represent a genuine competition between Virginia and another jurisdiction. The program enforces a cost-sharing requirement, mandating a 1:1 local match, which can be provided through cash or in-kind contributions. Eligibility thresholds vary depending on the economic condition of the locality. General thresholds require either 50 new jobs and $5 million in capital investment, or 25 new jobs and $100 million in capital investment. Localities with higher unemployment or poverty levels may qualify for reduced thresholds under "Single Distressed" or "Double Distressed" designations. The application process is facilitated by a VEDP Business Investment Manager and involves a thorough due diligence review, including financial analysis, risk rating, and return-on-investment (ROI) calculation. The project proposal is reviewed by VEDP’s Project Review and Credit Committee (PRACC), followed by approvals from the Secretary of Commerce and Trade and the Governor. Once approved, a financial offer is extended to the company, leading to a formal performance agreement with the locality. The grant is typically disbursed after performance targets have been met, although in some cases, early payouts may occur based on revenue generation for the Commonwealth. Allowable uses of COF funds are limited to specific project-related costs and may not be used for lease payments, equipment purchases, or general overhead. The performance period to meet the investment and job creation goals is generally 36 months from the effective date specified in the performance agreement. Employers must offer new, full-time, Virginia-based jobs paying W-2 wages and providing standard fringe benefits. Both payroll and contract employees can be considered as new jobs if they meet these standards. To ensure compliance, companies must provide annual reports detailing progress on job creation, wage levels, and capital investment. These reports are used to verify adherence to the performance agreement. Additional program resources, including templates and reporting forms, are available through the VEDP. The COF is a critical tool in Virginia’s economic development strategy, designed to position the Commonwealth as a leading location for business investment and job creation in a highly competitive global landscape.