Copyright Which programs are right for your business?

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1 Which programs are right for your business?

2 Donna Harak Harak Associates is a consulting firm that manages the application and reimbursement process for state and local incentive programs available to local businesses, including but not limited to: Training grant programs Workforce programs Tax refund programs 2

3 What s happening with Incentives in Florida Under Gov. Rick Scott, the state has revamped the economic development activities and has determined the following business clusters are critical to the state s long term growth: CleanTech (Biofuels, Photovoltaic, etc) Life Sciences (Pharmaceutical, Medical Devices, etc) InfoTech (Modeling, Simulation, Software, Electronics, etc) Aviation/Aerospace (Aircraft parts, maintenance, repair as well as space vehicles, satellite communications, etc) Homeland Security/Defense (Equipment, transportation and technology products and services) Financial/Professional Services National, Regional or Local Headquarters 3

4 TAX REFUNDS Qualified Targeted Industry Tax Refund Program Qualified Defense & Space Contractor Tax Refund Program Brownfield Redevelopment Bonus Refund Manufacturing & Spaceport Investment Incentive TAX CREDITS Capital Investment Tax Credit Jobs for the Unemployed Tax Credit TAX EXEMPTIONS Semiconductor, Defense & Space Technologies Sales Tax Exemption CASH GRANTS High Impact Performance Incentive Quick Action Closing Fund Innovation Incentive Program Economic Development Transportation Fund Local Government Distressed Area Matching Grant 4

5 Qualified Targeted Industry (QTI) tax refund Economic Development Transportation Fund aka the Road Grant State Sales Tax Exemptions for Manufacturing Electricity and Steam Machinery and Equipment County specific programs Each county may offer special Business Bonus programs Each county may offer Impact Fee Mitigation programs 5

6 State of Florida Qualified Targeted Industry (QTI) tax refund Conduct business nationally or globally Be a Qualified Targeted Industry Generate 50% of revenues from outside the state of Florida Be competitively attractive to other states or nations Plan to add at least ten new jobs in the first calendar year that pay at minimum 115% of the state, county or MSA average annual wage, whichever is lowest. In 2012, in Alachua it would be $39,613; in Flagler $33,642 in Hillsborough County they use 115% of the state s avg wage or $46,638. 6

7 State of Florida Qualified Targeted Industry (QTI) tax refund (cont) Based on wages of jobs to be create, a business can earn $3,000 - $5,000 in tax refunds for every new job created over 3 years 10 new jobs = $30,000 - $50,000 tax refund 25 new jobs = $75,000 - $125,000 tax refund Types of taxes it will offset include: Corporate Income taxes Property (ad valorem) taxes Sales taxes paid during the course of the job creation timeframe Refund pays back in 25% increments over 4 years This ensures sustainable jobs are created This ensures the refund does NOT exceed the liability every year 7

8 State of Florida Economic Development Transportation Fund Provides funding for transportation infrastructure improvements to spur job creation/retention and capital investment Awarded as an inducement for a specific business to locate to Florida or remain and expand by agreeing to alleviate transportation impediments Stop lights, turn lanes, entrance/egress improvements from the business into the flow of traffic Monies are awarded to the local county/municipality to facilitate the road improvement based on the business agreeing to locate or expand at that site and create new jobs 8

9 State of Florida State Sales Tax Exemptions for Manufacturing Machinery and Equipment Machinery & equipment purchased by new & expanding businesses that use such equipment at a fixed location to manufacture/process/compound/produce tangible personal property for sale, or for exclusive use in spaceport activities, is sales/use tax exempt. Electricity & Steam Charges for electricity and steam used directly and exclusively at a fixed location to operate machinery/ equipment that is used to manufacture/process/ compound/produce items of tangible personal property for sale, or to operate pollution control, recycling, maintenance, or monitoring/control equipment used in such operations, may be exempt from the sales tax. 9

10 State of Florida programs Quick Response Training (QRT) grant For Qualified Targeted Industries: CleanTech, Life Sciences, InfoTech, Aviation/Aerospace, Homeland Security/Defense, Financial/Professional Services, Headquarters 10% increase over existing employee headcount (new hires) or ten new jobs, whichever is greater Customized training Reimburses for Instructor Wages ONLY at a cap of $30/hr 2 year grant timeframe Can roll grants after each award is completed 10

11 State of Florida programs Incumbent Worker Training (IWT) grant For companies in business at least 1 year and with at least 1 FTE For existing employees only; No new hires Any type of training Management and supervisory training Train to learn new processes and procedures Certifications (IT, CEU, professional designations) Telephone etiquette Basic Office Suite (Word, Excel, PowerPoint, etc.) 50% reimbursement of training costs up to maximum $50,000 and companies have one year from date of approval to complete all training Every other year program (1 year in, 1 year out) 11

12 Local Workforce Board Programs Employed Worker Training Training is expected to help avoid reductions in staff and improve retention Training should qualify the candidate for potential career advancement, resulting in increased wage and/or creation of entry-level positions as a result of trainees moving up Instructor led training only and must result in a Certificate of Completion Grant award typically capped at $50,000 (set by Regional WFB) Only employees earning between $12/hr and $25/hr at time of training are eligible Must complete all training before end of state fiscal year (June 30 th ) On-the-Job Training Eligible candidates are new hires who have been unemployed for at least 30 days prior to their hiring Must apply for and be approved for the program prior to hiring Local Regional WFB sets the wage minimum for eligibility 50% reimbursement of candidate s wages while they are in OJ training 12

13 If your business meets the qualifying criteria for a program you could expect: QTI new job creation minimum $30,000 tax refund QRT new hire training grant $1,200 - $1,500/new hire over the two year period IWT existing employee training 50% reimbursement of training costs up to a maximum of $50,000 Employed Worker Training for existing employees maximum determined by RWB; usually $50,000 OJT new hire training 50% wages reimbursed for usually weeks (time frame negotiable) 13

14 Direct financial incentives provide direct monetary assistance to a business from the local government or through a local government funded organization. The assistance is provided through grants, loans, equity investments, loan insurance and guarantees. These programs generally address business financing needs but also may be invested in workforce training, market development, modernization, and technology commercialization activities. Cash grants provide the greatest flexibility and immediate benefit to the company by reducing capital outlays. However, loans, bonds, and equity financing are commonly used to make resources available with an expectation that the dollars will be returned for future investments. Another important category of direct financial incentives is in the area of training subsidies. Other forms of direct financial incentive include revolving loan funds, product development corporations, seed capital funds, and venture funds. These programs directly supplement market resources through public lending authorities and banks. Direct financial incentives are typically discretionary. 14

15 Indirect incentives include grants and loans to local government entities, non profits, and community organizations to support and promote business investment or develo pment. The recipients include communities, financial institutions, universities, community college s, training providers, venture capital investors, and childcare providers. In many cases the funds are tied to one or more specific business locations or expansion projects. Other programs are targeted toward addressing the general needs of the business community, including infrastructure, technical training, new and improved highway access, airport expansions and other facilities. Funds are provided to the intermediaries in the form of grants, loans, and loan guarantees. Indirect incentives may also be used to leverage private investment in economic development. For instance, linked deposit programs in which local government funds are deposited in a local financial institution in exchange for providing capital access or subsidized interest rates top qualified business borrowers. Indirect financial incentives are typically discretionary. 15

16 Taxbased Incentives Use the tax code (or tax base) as the source of direct or indirect subsidy to qualified businesses. It is more stable and less visible than direct financial or indirect incentives because it does not typically require an annual appropriation. Tax based incentives can be either discretionary or entitlements. While tax based incentives function like direct financial incentives, the ubiquitous use of these incentives justifies a separate categorization. Tax based incentives can be further classified into five sub categories: CREDITS, which provide a reduction in taxes due, after verification that statutory or contractual terms have been met. REFUNDS, which provide a return on taxes paid, after verification that statutory or contractual terms have been met. EXEMPTIONS, which provide freedom from payment of a variety of taxes normally applied to certain business activities. LOCAL PROPERTY TAX ABATEMENTS or ASSESSMENT REDUCTIONS, which reduce or decrease the assessed valuation of ad valorem taxes, to include real property and personal property. Because the ad valorem tax is a local government revenue source, the cost of the incentive is borne by local governments. 16

17 orkforceboards/rwbmap.php Opportunities/IWT.php Opportunities/QRT.php 17

18 QUESTIONS? Donna Harak Ph: (813) URL: 18