Middle Atlantic Region:

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1 ECONOMIC DEVELOPMENT INCENTIVES OF THE FIFTY STATES State Tax, Workforce Development and Financial Incentives Middle Atlantic Region: NEW YORK... 2 PENNSYLVANIA... 5 NEW JERSEY... 8 Compiled by the New Mexico Economic Development Department New Mexico State Data Center: June 2014

2 Tax Incentives NEW YORK Start-Up NY Start-Up NY is transforming communities across the state into tax-free sites for new and expanding businesses. Now, businesses can operate 100% tax-free for 10 years. This is a major incentive for businesses to relocate, start up, or significantly expand in New York State through affiliations with public and private universities, colleges and community colleges. Eligibility: Business must support the academic mission of the college or university they choose to work with Be a new company in NY, a company from out-of-state that is relocating to NY, or an expansion of an existing company already in NY Must not be located in an area where they would compete with existing local businesses Retail businesses are prohibited Participation in Start-Up NY does not necessarily require that your business be on or next to a campus, but it must be located on a property affiliated with a university. Business and employee tax benefits will be available for up to ten years. Businesses will be able to apply directly to schools once the tax-free areas have been approved. The credit would be calculated by the business when filing its tax return. Relocation and Employment Assistance Program (REAP) A 12 year annual tax credit of $3,000 for each qualified job relocated into targeted areas and $1,000 in non-targeted areas. Benefits for new hires are also available. Businesses relocating from outside New York City or from Manhattan below 96 th Street to any other area of the City qualify. Improvements to buildings are required. REAP benefits are also available to businesses relocating into Lower Manhattan. Retail firms are ineligible. Restrictions exist for businesses moving from south of Houston Street. Industrial Business Zone (IBZ) Relocation Credit A one-time tax credit for manufacturing firms moving into targeted IBZs. Businesses are credited for eligible moving costs up to the lesser of $1,000 per employee relocated or $100,000. There are no IBZs throughout the City. NYS Film Production Tax Credits Qualified film and television productions can receive a 30% State tax credit on eligible

3 production costs. Tax credits are available for feature length films, television pilots and television series. Financial Assistance Incentives Business Incentives Rate (BIR) BIT is an energy discount program designed to encourage economic growth in the manufacturing and industrial sectors by offering a discount to electric delivery charges. Retail establishments are excluded from participating in this program. This includes stores (such as grocery stores), restaurants, franchises, chain establishments, and related businesses. Government entities are also excluded from receiving the BIR benefit. BIR benefits are intended to assist projects that meet New York City goals and that would be beneficial for the City. If approved, the delivery components of electricity bills can be reduce by 30-35%. The program has a term of five years. Industrial and Commercial Abatement Program (ICAP) ICAP grants abatements on real estate property taxes for renovated and newly constructed commercial and industrial buildings. Benefits can last up to 25 years depending on location. Properties must be improved by at least 30% of their assessed value to qualify for the abatement. Industrial properties improved by at least 40% of their assessed value are eligible for an additional abatement. Restrictions on retail activity apply. Industrial Development Agency (IDA) Administered by the NYC Economic Development Corporation. IDA issues low-cost, double and triple tax exempt bonds to assist commercial and industrial businesses grow in the City. Projects may also qualify for abatements or exemptions on their mortgage recording taxes, real estate taxes and sales taxes. Energy Cost Savings Program (ECSP) ECSP reduces regulated electricity and natural gas costs up to 45% and 35% respectively for up to 12 years. Firms must either relocate out of targeted areas of the City or operate in property improved by at least 10% of the building s assessed value for firms applying jointly with the IDA; or 30% for firms applying jointly with ICAP. Companies moving into the City from outside the City or renovating City/State owned property may also be eligible. Hotels and retail firms are ineligible. Recruitment and Training Funds NYC Business Solutions Recruitment and Training Funds provide resources and funding to ensure that businesses can find and train the workers they need to succeed. NYC Business Solutions Recruitment helps employers identify, recruit, pre-screen, and hire employees, all at

4 no cost to the business. NYC Business Solutions Training Funds provide up to 70% of training costs for NYC based employees (max of $400,000) in nine priority sectors to address skill shortages in entry level positions. Commercial Expansion Program Qualified commercial or industrial tenants located in targeted Commercial Expansion Areas can receive a 3 or 5 year rent credit of up to $2.50 per square foot. Benefits are based on the length of the lease and the size of the company. Investments into the business space are required. Retail firms and hotels are ineligible. Qualified manufacturing firms can receive a maximum of a 10 year benefit with no phase out. Landlords are required to pass the full savings to tenants. Lower Manhattan Energy Program (LMEP) Eligible commercial tenants located in Lower Manhattan can receive up to a 45% reduction on regulated electricity costs for eight years, followed by a four year phase out. Buildings must apply for assistance with ICAP or IDA, or be owned by the City of New York or the Empire State Development Corporation. Buildings must meet program renovation criteria. New York State Energy Research and Development Authority (NYSERDA) NYSERDA programs provide industrial and commercial businesses with energy efficiency services for existing buildings, new construction, industrial facilities, and vehicle fleets. Workforce Development Incentives NYS Excelsior Jobs Program The NYS Excelsior Jobs Program provides job creation and investment incentives to firms in such targeted industries as biotechnology, pharmaceutical, high-tech, clean-technology, green technology, financial services, agriculture and manufacturing. Firms in these industries that create and maintain new jobs or make significant financial investment are eligible to apply for up to four new tax credits: Excelsior Jobs Tax Credit; Excelsior Investment Tax Credit; Excelsior R&D Tax Credit; and Excelsior Real Property Tax Credit. Source:

5 Tax Incentives PENNSYLVANIA Educational Improvement Tax Credit Program (EITC) Tax credits are available to businesses contributing to a Scholarship Organization, an Educational Improvement Organization, and/or a Pre-Kindergarten Scholarship Organization. Tax credits may be applied against the tax liability of a business for the tax year in which the contribution was made. Tax credits equal to 75% of its contribution up to a maximum of $750,000 per taxable year. The credit can be increased to 90%of the contribution, if business agrees to provide same amount for two consecutive tax years. For contributions to Pre-Kindergarten Scholarship Organizations, a business may receive a tax credit equal to 100% of the first $10,000 contributed and up to 90% of the remaining amount contributed up to a maximum credit of $200,000 annually. Tax credits not used in the tax year the contribution was made may not be carried forward or carried back and are not refundable or transferable. Film Tax Credit Program Tax credits are offered in an effort to expand the activity of film, television and other production companies in Pennsylvania. A project is eligible if at least 60% of the project's total production budget is used for Qualified Pennsylvania production expenses. The amount of the tax credit available for an eligible project is equal to 25% of expenses for the project. Historic Preservation Tax Credit (HPTC) HPTC provides tax credits to qualified taxpayers who will be completing the restoration of a qualified historic structure into an-income producing property. All projects must include a qualified rehabilitation plan that is consistent with the standards for rehabilitation of historic buildings. The tax credits awarded to a qualified taxpayer shall not exceed 25% of the qualified expenditures as determined by the application in connection with the completed project. The total tax credits awarded to a qualified taxpayer may not exceed $500,000 in any fiscal year. Job Creation Tax Credits (JCTC) $1,000-per-job tax credit to approved businesses that agree to create jobs within three years. Twenty-five percent of the tax credits allocated each year must go to businesses with less than 100 employees. Tax credits may not be utilized by a business until the jobs are actually created. Must create at least 25 new jobs or expand the existing workforce by at least 20%.

6 Financial Assistance Incentives Keystone Innovation Network (KIN) The KIN program provides matching funds to create an integrated approach to local and regional innovation based economic development strategies. The KIN leverages prior state investments in established local and regional innovation assets the Keystone Innovation Zones and Innovation Grant programs. Through the integration of these two programs, participating companies, universities, researchers, students and entrepreneurs will realize an improved level of access to technology and resources to grow firms. The KIN s services include, but are not limited to, the acceleration of technology commercialization, development of technology transfer infrastructure, leveraging of university research faculty and intellectual property, tax incentives, funding and other supportive services that foster further growth in companies and the communities where they are established. Grant funds will be used for zone coordination, strategic planning, personnel costs, hiring of consultants and administration of the zone. Companies located in tax zones, in operation less than 8 years and fall under the industry sector focus are eligible to apply for state tax credits. Pennsylvania Small Business Credit Initiative (SSBCI) This program is designed to increase access to credit for small businesses. This funding is used for land and building acquisition, building renovation and new construction, machinery and equipment acquisition and installation, infrastructure, and working capital. All types of businesses having 500 employees or less are eligible. Powdered Metals This program provides training programs for the existing workforce supported through Penn State and the regional community education councils. The program makes use of the facilities in the schools within the north central Pennsylvania region. The Powdered Metals grant funds are used for equipment and training related to the powdered metals industry. Funding is dependent upon budget recommendations and constraints set in the adopted annual budget for the Commonwealth. Alternative and Clean Energy Program (ACE) This program provides grants and loans that will be used by eligible applicants for the utilization, development and construction of alternative and clean energy projects, infrastructure associated with compressed natural gas and liquefied natural gas fueling stations, plus energy efficiency and energy conservation projects in the state. Grants for manufacturers of alternative and/or clean energy generation equipment or components shall not exceed $10,000 for every job projected to be created by the business within three years after approval of the grant. Grants for any alternative energy production or clean energy project shall not

7 exceed $2 million or 30 percent of the total project cost, whichever is less. Guaranteed grants shall not exceed $5 million and have a term of not more than five years. In the event of a default, the grant will pay up to 75 percent of the deficiency. A business, an economic development organization, or a political subdivision, includes municipalities, counties and school districts. Baseline Water Quality Data Program This program is used to fund statewide initiatives to establish baseline water quality data on private water supplied. Projects must involve practices for water sample collection and analysis to document existing groundwater quality conditions on private water supplies. Grants shall be awarded to eligible applicants for projects that do not exceed $250,000. The grant requires at least 15% match of the total project cost. Eligibility: Municipalities Councils of Governments Authorized Organization Institution of Higher Education Watershed Organization For-Profit Businesses Source:

8 Tax Incentives NEW JERSEY Research & Development Tax Credit This credit was established to encourage and assist companies to engage in research and development, and thereby become more productive and competitive. Eligible expenditures include: the salaries and wages of the engineers working on a project, the cost of supplies, and third party contractor fees. In addition to expenditures, tasks performed by executive leadership, legal, manufacturing, sales engineers, operations and IT are also evaluated. The credit may be retroactive for three years in addition to the current year and carry forward for 20 years. Activities for business process improvement include: Implementing lean manufacturing ISO 9000 and other standards Developing a new business component (product, process, software system, etc.) Improving an existing business component New Jobs Investment Tax Credit This credit is available for taxpayers who invest in new or expanded business facilities that create new jobs in New Jersey. The investment must create at least five new jobs for small or mid-size businesses or 50 new jobs for larger business taxpayers and must meet the median annual compensation requirement for the current tax year. Sales and Use Tax Exemption This program allows companies to make purchases for construction and renovation of their new business location without having to pay State sales tax. Eligible companies must have 1,000 or more employees in New Jersey and relocate 500 or more to a new business location. Life sciences, pharmaceutical and manufacturing companies may be eligible if they relocate 250 or more employees to a new research and development facility, a new headquarters or a new manufacturing facility. Work Opportunity Tax Credit This offers a federal tax credit of %2,400-$9,000 to hire employees with employment barriers including, but not limited to, the disabled, certain veterans, and general assistance recipients. Urban Transit Hub Tax Credit Program A developer, owner or tenant making a qualified capital investment within a designated Urban Transit Hub may be eligible for tax credits up to 100% of the investments made within an eight-year period. Taxpayers may apply 10% of the total credit amount per year over a 10-year period against their corporate business tax, insurance premiums tax or gross income tax liability.

9 Energy Sales Tax Exemption Manufacturing businesses in Salem County may be eligible for energy sales tax exemption for the retail sale, transmission or distribution of electricity and natural gas. Financial Assistance Incentives Technology Business Tax Certificate Transfer Program Unprofitable New Jersey-based technology or biotechnology company with fewer than 225 employees may apply for the ability to sell net operating losses and R&D tax credits to unrelated profitable corporations. Net operating losses and R&D tax credits may be sold for at least 80% of their value, up to a maximum lifetime benefit of $15 million per business. This is to be used for growth and operations, including working capital or to fund research. Edison Innovation Clean Energy Manufacturing Fund (CEMF) CEMF includes two separate program components offering up to $3.3 million as a grant and loan for New Jersey manufacturers of Class I renewable energy and energy efficiency technologies. Up to $300,000 is available as a grant to assist with the manufacturing site identification and procurement, design and permits. Up to $3 million is available as a loan to support site improvements, equipment purchases and facility construction and completion. One third of the loan may convert to a performance grant if certain business and technology-based milestones are met. Economic Redevelopment and Growth (ERG) Program ERG is an incentive for developers, business and owners to address redevelopment project financing gaps. The program utilizes up to 75% of the incremental increase in certain State and local revenue sources attributed to the project to provide gap financing of up to 20% of the total project cost, paid out over a period of up to 20 years. To be eligible, a developer/owner is required to make a minimum capital investment of 20% of the project s total cost. Brownfields and Contaminated Site Remediation Program Developers in need of financial assistance to clean up and redevelop polluted sites and closed municipal landfills may be eligible to recover up to 75% of approved costs associated with the remediation effort. Business Employment Incentive Program (BEIP) Companies seeking to relocate to or expand in New Jersey may be eligible for BEIP grants based on the number of new jobs created. By adding at least 25 qualified jobs (10 for qualifying technology companies) within two years, eligible companies can be reimbursed for up to 80% of gross withholding tax paid by new employees for up to 10 years, with a maximum of up to %50,000 per employee over the course of the grant. Companies must demonstrate that the BEIP grant is a material factor in the decision to relocate to or expand in New Jersey.

10 Foreign Trade Zones Foreign Trade Zones allow companies to bring foreign goods or raw materials for manufacturing and/or assembling into the United States without formal customs entry or payment of customs duties and government excise taxes until products leave the zone. If the final product is exported from the United States, no U.S. customs duty or excise tax is levied. If the final product is entered into the commerce of the United States, fees are only due at the time of transfer on the product or its parts, whichever is lower. Hazardous Discharge Site Remediation Fund (HDSRF) Loans, grants and matching grants are available to public, private and not-for-profit entities for the investigation and/or remediation of known or suspected contaminated sites. Edison Innovation Zones New Jersey has established three Innovation Zones that encompass State universities, research institutions and related businesses. These technology neighborhoods are designed to spur collaborative efforts and encourage the rapid transfer of discoveries from the laboratory to the marketplace. Resident businesses may be eligible for special benefits and financing incentives. Petroleum Underground Storage Tank Program This provides grants to business owners and residential property owner who have less than 10 tanks on site and are required by law to upgrade, close and remediate discharge from those tanks. Municipal Landfill Closure and Remediation Reimbursement Program An eligible developer seeking financial assistance in the closure, remediation and redevelopment of municipal landfill sites in New Jersey may be eligible for reimbursement of up to 75% of the closure or cleanup costs. Local Government Energy Audit Under this New Jersey Board of Public Utilities program, participants select from a list of pre-qualified auditing firms who will follow the strict parameters of New Jersey s Clean Energy Program and deliver an investment-grade audit to identify cost-effective measures for saving energy. The program will subsidize 100% of the cost of the audit. Eligible facilities include, but are not limited to, offices, courtrooms, town halls, police and fire stations, sanitation buildings, transportation structures, schools and community centers. All local governments, New Jersey State colleges or universities, and not-for-profit agencies located within the service territory of at least one of New Jersey s public utilities are eligible. New Jersey SmartStart Buildings Program The New Jersey SmartStart Buildings Program provides financial incentives for the purchase and installation of energy efficiency measures. Eligible equipment includes heating and cooling systems such as electric chillers, gas cooling, electric unitary HVAC, ground source heat pumps and gas heating and water heating; lighting and lighting controls; motors and variable frequency drives, refrigeration doors, covers and controls; and a custom measure track that provides incentives for innovative measures that are proven to be cost-effective.

11 Technology Business Tax Certificate Transfer Program Qualified biotechnology and technology companies may be eligible to sell unused net operating losses and R&D tax credits to unrelated profitable corporations for at least 80% of their value, up to a maximum lifetime benefit of $15 million. To qualify, the applicant must have at least one full-time employee working in New Jersey if incorporated less than three years, five full-time employees in New Jersey if incorporated more than five years. Workforce Development Incentives Workforce 55+ Program This federally funded program pays the full salaries of economically disadvantaged seniors, for up to 48 months after you hire them. Community Work Experience Program This program provides approved nonprofits with qualified, entry-level staff who are making the transition from welfare to work. The state provides workers compensation insurance at no cost to employers. On-the-Job Training To help defray the cost of training, New Jersey will reimburse employers 50-90% of the salary of a newly hired employee for up to six months. Registered Apprenticeship Program Employers with up to 450 employees may be eligible for financial resources to upgrade the skills of employees working in the direct production of goods. The program gives up to $5,000 for each employee participating as a registered apprentice and receiving on-the-job and classroom training. The apprentice must complete 52 weeks of employment. Business Retention and Relocation Assistance Grant (BRRAG) BRRAG provides corporate business tax credits to companies that are relocating operations within New Jersey, or maintaining jobs and making a qualified capital investment at a current location in the state. Companies may benefit from up to $2,250 per year for six years, per job retained, payable as a tax credit against a company s corporate tax liability. Companies must demonstrate that the grant is a material factor in the decision to stay in New Jersey, and that the capital investment and job retention resulting from the proposed project will yield a net positive benefit to the State. Source: