Loan Department wants to generate new business with the help of a developer that we do commercial business with. The developer would distribute a package, like a welcome package, to new residents of the community. It might include free checks, a certificate for a free appraisal or something else of value that would encourage new residents to bank with us. Is there a problem with this if we don't give the developer any preferred rates or other thing of value?

I don't see a problem with it. The benefits go to the potential bank customer and not to the developer.