Tax Credits and Business Incentives for Economic Development in New Mexico

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1 Tax Credits and Business Incentives for Economic Development in New Mexico Compiled by Greg Fisher, CEdC, A. Federal Incentives The federal government offers numerous economic development incentives, in particular through the USDA Rural Development Program and through the U.S. Small Business Administration. Communities with a population of less than 25,000 people such as Los Alamos County can take advantage of several rural development programs, including: USDA Revolving Loan Funds with low interest for business development in rural areas, usually administered through a local bank or utility provider; Rural Development Business and Industry Loan Guarantees of 70-90% for loans of up to $10 million; Rural development Enterprise Grants (RBEG) funding through local governments or a private non-profit (such as the Regional Development Corporation) to facilitate land purchase, equipment, working capital and/or infrastructure for small and emerging private businesses; SBA 7 (A) guarantees of up to 80% on loans for land, buildings, equipment and working capital; SBA 504 low down payment (10%) loans of up to 20 year for land, buildings and equipment. 504 loans are often used in conjunction with Industrial Revenue Bonds, Enterprise Zone Tax Credits for disadvantaged areas are not applicable to Los Alamos County because no Los Alamos Census Tracts qualify by virtue of income. For more information on USDA programs contact: B.State Incentives I. Personal Income Tax Credits 1 P a g e

2 New Mexico offers personal income tax credits for various situations. These refundable tax credits have eligibility requirements in addition to the ones listed below. You may qualify for one or more credits if you were: a resident of New Mexico during the tax year; physically present in New Mexico for at least six months during the tax year; not eligible to be claimed as a dependent of another taxpayer for the tax year, and not an inmate of a public institution for more than six months of the tax year. Angel Investment Tax Credit for making a qualifying investment in a high technology or manufacturing business. Click RPD-41320, Angel Investment Credit Claim Form to see the claim form and Schedule A. Rural Health Care Practitioner Tax Credit for providing health care services in a rural health care underserved area. Click RPD-41326, Rural Health Care Practitioner Tax Credit Claim Form to see the claim form. Also, a person may be eligible to claim a refundable medical care credit if they are 65 or older, or receive an approved film production tax credit, working family s tax credit, special needs adopted child tax credit, or renewable energy production tax credit. For more information, click form 2010 PIT-RC, Rebate and Credit Schedule to see the form. Click 2010 PIT-RC, Instructions to see a rebate and credit schedule. Additional links will be either on the forms page, or in the instructions to the forms. II. Conservation and Preservation Tax Credits New Mexico has a number of conservation and preservation related tax credits that are given for qualifying efforts to preserve or conserve New Mexico s cultural, agricultural, and natural resources. You may use qualifying tax credits against various taxes. Below is a summary of the tax credits available in this category and links to forms. For these tax credits, there are additional qualifiers to the ones listed below. To get more specific information about qualifying and applying for them, please see FYI- 106: Claiming Tax Credits for CRS Taxes and Business-Related Income. Conservation and preservation tax credits include: Advanced Energy hold an interest in a qualified power-generating facility. Click RPD-41334, Advanced Energy Tax Credit Claim Form to see the claim form. Click RPD-41333, Application for Advanced Energy Tax Credit to see the application. Agricultural Water Conservation - make eligible improvements in irrigation systems or water management methods. Click RPD-41319, Agricultural Water Conservation Tax Credit Claim Form to see the claim form. 2 P a g e

3 Alternative Energy Product Manufacturers - manufacture certain alternative energy products. Click RPD-41330, Application for Alternative Energy Product Manufacturers Tax Credit to see the application. Click RPD-41330, Application for Alternative Energy Product Manufacturers Tax Credit Schedule A to see Schedule A. Click RPD-41331, Alternative Energy Product Manufacturers Tax Credit Claim Form to see the claim form. Biodiesel Blending Facility are a rack operator who installs biodiesel blending equipment. Click RPD , Biodiesel Blending Facility Tax Credit Claim Form and Approval to see the claim and approval forms. Blended Biodiesel Fuel - pay special fuel excise tax on blended biodiesel fuel. Click RPD-41322, Application for Blended Biodiesel Fuel Tax Credit to see the application or click RPD-41340, Blended Biodiesel Fuel Tax Credit Claim Form to see the claim form. Cultural Property Preservation - restore, rehabilitate, or preserve properties listed on the New Mexico Register of Cultural Properties. Click CIT-4, Preservation of Cultural Properties Credit to see the form. Geothermal Heat Pump - purchase and install a geothermal ground-coupled heat pump between January 1, 2010, and December 31, Click RPD-41346, Geothermal Ground-Coupled Heat Pump Tax Credit Claim Form to see the claim form. Land Conservation Incentives - donate land to private non-profit or public conservation agencies for conservation purposes. Click form RPD-41335, Application for Land Conservation Incentives Credit Instructions to read instructions. Click RPD Land Conservation Incentives Tax Credit Claim Form to see the claim form. Click RPD-41335, Application for Land Conservation Incentives Credit to see the application. Click RPD-41336, Notice of Transfer of Land Conservation Incentives Credit to see the application. Click RPD-41347, Application for Designation as a Qualified Intermediary to see the application. Renewable Energy Production - produce electricity by solar light or heat, wind or biomass at a penny per kilowatt-hour. Click RPD-41227, Renewable Energy Production Tax Credit Claim Form to see the claim form. Solar Market Development - purchase and install a solar thermal or photovoltaic system between January 1, 2006, and December 31, Click RPD-41317, Solar Market Development Income Tax Credit to see the claim form. Sustainable Building - invest in constructing or renovating sustainable residential or commercial buildings that meet green building standards. Click RPD-41329, Sustainable Building Tax Credit Claim Form to see the claim form. Click RPD-41327, Sustainable Building Tax Credit Approval to see the approval form. Click RPD-41327, Sustainable Building Tax Credit Instructions to see instructions. Click RPD-41342, Notice of Transfer of Sustainable Building Tax Credit to see the credit transfer form. 3 P a g e

4 III. General Industry Tax Credits New Mexico has a number of general industry incentive tax credits that are available to businesses. Below is a summary of tax credits available in this category and links to forms. For these tax credits, there are additional qualifiers to the ones listed below. To get more specific information about qualifying and applying for them, please see FYI-106: Claiming Tax Credits for CRS Taxes & Business-Related Income. Business Facility Rehabilitation for restoration, renovation or rehabilitation of a qualified business facility in an enterprise zone. Click CIT-5, Qualified Business Facility Rehabilitation Credit Claim Form. Electronic Card-Reading Equipment - for purchase and use equipment that electronically reads identification cards to verify age. Click RPD-41246, Income Tax Credit for Electronic Identification Card Reader to see the Purchase and Use Statement. High-Wage Jobs for creating high-wage jobs in New Mexico. Click RPD-41288, Application for High- Wage Jobs Tax Credit to see the application. Click RPD-41289, Certificate of Eligibility for the High- Wage Jobs Tax Credit to see the eligibility certificate. Click RPD-41290, High-Wage Jobs Tax Credit Claim Form to see the claim form. Intergovernmental Business - engage in growing, processing or manufacturing, and incur taxes by a New Mexico Indian nation, tribe or pueblo on income from new business activity on Indian land. Click RPD-41160, Indian Intergovernmental Tax Credit Information to see the information return form. Investment for purchasing equipment introduced into New Mexico for use in a new or expanded manufacturing operation. Click RPD-41167, Application for New Mexico Investment Credit to see the application. Click RPD-41168, Application for New Mexico Investment Credit, Schedule A to see Schedule A. Click RPD-41212, Investment Credit Claim Form to see the claim form. Research and Development Small Business - for a small research and development businesses from July 1, 2005, through June 30, 2009, and from July 1, 2011, through June 30, Click RPD-41298, Research and Development Small Business Tax Credit Claim Form to see the claim form. IV. Industry-Specific Tax Credits New Mexico offers specific industry incentive tax credits that are tailored to the interests and needs of particular businesses. Below is a summary of tax credits available in this category and links to forms. For 4 P a g e

5 these tax credits, there are additional qualifications and eligibility requirements to the ones listed below. To get more specific information about qualifying and applying for them, please see FYI-106: Claiming Tax Credits for CRS Taxes and Business-Related Income. Advanced Energy for those who hold an interest in a qualified power-generating facility. Click RPD , Advanced Energy Tax Credit Claim Form to see the claim form. Click RPD-41333, Application for Advanced Energy Tax Credit to see the application. Affordable Housing for those who invest in affordable housing projects for residences approved by the New Mexico Mortgage Finance Authority and located in a county of fewer than 100,000 persons. Click RPD-41301, Affordable Housing Tax Credit Claim Form to see the claim form. Biodiesel Blending Facility for those who are a rack operator who installs biodiesel blending equipment. Click RPD-41321, Biodiesel Blending Facility Tax Credit Claim Form and Approval to see the claim and approval forms. Film Production for film production companies that have direct production and direct postproduction expenditures that are subject to taxation by the State of New Mexico. Click RPD-41229, Application for Film Production Tax Credit to see the application. Click RPD-41228, Film Production Tax Credit Claim Form to see the claim form. Click RPD-41271, Declaration of Residency to see the form. Hospitals Gross Receipts - for a hospital licensed by the New Mexico Department of Health. Click RPD , Gross Receipts Tax Credit for Certain Hospitals Claim Form to see the claim form. Laboratory Partnership with Small Business for a national laboratory which offers assistance to individual small businesses in New Mexico and incurs expenses for doing so. Click RPD-41325, Application for Laboratory Partnership with Small Business Tax Credit to see the claim form and Schedule A. Unpaid Doctor Services for a licensed medical doctor or osteopathic physician having unpaid bills for medical services performed while on call to a hospital. Click RPD-41323, Gross Receipts Tax Credit for Certain Unpaid Doctor Services to see the form. V. Tax Credits for Additional Employment New Mexico has a number of tax credits that a company can qualify for by adding new employees in New Mexico. This page summarizes the tax credits available in this category and gives links to forms. For these tax credits, there are additional qualifications to the ones listed below. To get more specific 5 P a g e

6 information about qualifying and applying for each credit please see FYI-106: Claiming Tax Credits for CRS Taxes and Business-Related Income. Corporate-Supported Child Care for a corporation that provides or pays for licensed child care services for employees children under 12 years of age. Click CIT-3, New Mexico Corporate Child Care Credit to see the form. High-Wage Jobs for creating high-wage jobs in New Mexico. Click RPD-41288, Application for High- Wage Jobs Tax Credit to see the application. Click RPD-41289, Certificate of Eligibility for the High- Wage Jobs Tax Credit to see the eligibility certificate. Click RPD-41290, High-Wage Jobs Tax Credit Claim Form to see the claim form. Investment for purchasing equipment introduced into New Mexico for use in a new or expanded manufacturing operation. Click RPD-41167, Application for New Mexico Investment Credit to see the application. Click RPD-41168, Application for New Mexico Investment Credit, Schedule A to see Schedule A. Click RPD-41212, Investment Credit Claim Form to see the claim form. Job Mentorship for businesses that hire students in a school-sanctioned, -preparation education program. Businesses must employ students attending an accredited New Mexico secondary school full time. Click RPD-41279, Job Mentorship Tax Credit Certificate Request Form to see the request form. Click RPD-41281, Job Mentorship Tax Credit Claim to see the claim form and Schedule A. Click Job Mentorship Tax Credit Instructions to see instructions. Rural Jobs for employers who are approved by the Economic Development Department for a Job Training Incentive Program (JTIP) and who creates qualified jobs after July 1, 2000, in an area of low population density. Click RPD-41238, Application for Rural Job Tax Credit to see the claim form. Click RPD-41243, Rural Job Tax Credit Claim Form to see the application. Click RPD-41247, Certificate of Eligibility for the Rural Job Tax Credit to see the eligibility certificate. Technology Jobs for employers who conduct qualified research and development at a facility in New Mexico, except at a facility operated for the U.S. government. Click RPD-41239, Application for Technology Jobs Tax Credit to see the application. Click RPD-41244, Technology Jobs Tax Credit Claim Form to see the claim form. Welfare-to-Work for qualified employers who are approved for the New Mexico Welfare-to-Work credit under the laws existing prior to January 1, This program is administered by the Department of Workforce Solutions. Please contact that agency for requirements and certification. 6 P a g e

7 VI. Gross Receipts Tax Credits Certain tax credits can be taken against gross receipts, compensating or withholding taxes. You may qualify for one of these credits: Tax paid to another state on property acquired in that state or another state for use in New Mexico may be applied to gross receipts tax liability; Tax paid to another state product of research and development services performed outside New Mexico is initially used in New Mexico and the service has been taxed through a gross receipts, sales or similar tax in another state; Compensating tax on construction projects materials and services incorporated into the construction project may be applied to gross receipts tax liability; Investment credit may be applied against the state gross receipts (excluding local option gross receipts taxes). It can be applied also to compensating or withholding tax liability; Rural jobs tax credit may be applied against taxes due on the CRS-1 Form (excluding local option gross receipts taxes), or against personal or corporate income tax liability; Laboratory partnership with small business tax credit may be claimed only by national laboratories operating in New Mexico and is applied against gross receipts taxes due up to $1,800,000 excluding local option gross receipts taxes; Technology jobs tax credit may be applied against gross receipts, compensating or withholding tax. The additional credit may be applied against personal or corporate income tax liability; Sales or use tax paid to another state may be applied against compensating tax liability; High-wage jobs tax credit may be claimed by eligible employers against gross receipts, compensating, withholding tax and other CRS taxes, except local option gross receipts taxes. The excess is refundable to the taxpayer when the credit is more than the tax liability; Sale of service for resale tax credit may be applied against gross receipts tax or governmental gross receipts tax liability; Research and development small business tax credit may be claimed by qualified research and development small businesses and is applied against gross receipts or withholding tax liability; Affordable housing tax credit may be applied against gross receipts, compensating, withholding, personal income or corporate income tax liability through the sale or transfer of vouchers issued by the Mortgage Finance Authority; Hospital credit may be claimed by hospitals licensed by the New Mexico Department of Health against gross receipts tax phased in over a four-year period; 7 P a g e

8 Biodiesel blending facility tax credit may be claimed by a rack operator against gross receipts and compensating taxes for 30% of the cost of purchasing or installing biodiesel blending equipment; Licensed medical doctor or licensed osteopathic physician tax credit for unpaid charges for services provided in a hospital may be claimed against gross receipts taxes; phased-in over three years; Advanced energy tax credit may be claimed by an interest owner for expenditures for the development and construction of a new solar thermal electric generating facility or a new or repowered coal-based electric generating unit and an associated coal gasification facility; or Alternative energy products manufacturing tax credit may be claimed against gross receipts, compensating, withholding tax and other CRS taxes, except local option gross receipts taxes. The excess credit may be carried forward for up to five years. There are additional qualifications for these tax credits. For more specific information about qualifying and applying for these tax credits, click FYI-106: Claiming Tax Credits for CRS Taxes and Business-Related Income. VII. Job Training Incentive Program (JTIP) New Mexico has one of the most aggressive training incentive packages in the country. The Job Training Incentive Program (JTIP) funds classroom and on-the-job-training for newly created jobs in expanding or relocating businesses for up to six months. The program reimburses 50 to 70 percent of employee wages and required travel expenses. Custom training at a New Mexico public educational institution may also be covered. The New Mexico State Legislature created the Job Training Incentive Program in Since that time, the program has funded training for more than 35,000 workers in more than 600 companies. In July 2008, the program funded 253 new jobs with a total of $1.5 million. Eligibility Requirements Eligibility for JTIP funds depends on the company s business, the role of the newly created jobs in that business, and the trainees themselves. Company Eligibility Two categories of business are eligible for consideration: Companies that manufacture or produce a product in New Mexico. Non-retail service companies that export a substantial percentage of services out of state (60 percent + of revenues and/or customer base). The company must be financially sound and must be creating new jobs as a result of expansion or relocation to the State of New Mexico. Job Eligibility Jobs eligible for funding through JTIP must be: 8 P a g e

9 Full time (minimum of 32 hours/week) Year-round Directly related to the creation of the product or service. (One in ten positions applied for may be outside product/service creation.) Trainees must be guaranteed full-time employment upon successful completion of the training program. Trainee Eligibility To be eligible for funding under JTIP, trainees must be: New hires to the company Residents of the State of New Mexico for at least one year at any time prior to employment in an eligible position. Trainees must also not have left high school in the three months prior to employment, unless they have graduated or completed a GED. Reimbursable Training Costs JTIP funds three types of training: Custom classroom training at a public educational institution Structured on-the-job training (OJT) A combination of classroom training and OJT The following are eligible for reimbursement: A significant portion of trainee wages (50-70 percent) for up to six months. Cost of custom classroom training at public educational institution (100 percent) Percentage of approved travel expenses (50-65 percent). Expenses are reimbursed after training is completed. How to Apply Each company requesting funds from the Job Training Incentive Program (JTIP) must submit a written proposal. The proposal establishes the company s eligibility under the program, its viability as a business, and the relationship of the new jobs to business expansion. A training plan is required to help ensure the success of the trainees, the training program, and ultimately the business. A JTIP Proposal Guide is available from the JTIP staff in the New Mexico Economic Development Department. This guide outlines proposal requirements and provides examples for reference. Staff is available to answer questions and provide technical assistance with proposal development. Proposals are due to the JTIP staff in the Economic Development Department one month before the Board meeting at which funding is requested. The JTIP Board meets the second Friday of every month. Meetings are held in Albuquerque, Santa Fe, and rural communities. Additional Information For more information on the Job Training Incentive Program, contact the New Mexico Economic Development Department. Therese Varela, Program Manager : VIII. Capital Outlay Funds 9 P a g e

10 Capital outlay is funded through voter-approved general obligation bonds, paid off with property taxes; severance tax bonds, backed with tax revenue from oil and mining activity; and non-recurring general fund revenue. Each year the New Mexico sets aside funds to apply to projects of strong economic benefit including infrastructure for schools, MainStreet projects, plant expansions and other projects.. In 2012 there were only around $1 million in funds available, whereas in previous years there were millions of dollars available. In practice capital outlay funds are best acquired where a community can provide a strong match. Some capital outlay funds are available for government projects only, while others are discretionary for business or government use. Much of the state s capital outlay is funded through three sources: general obligation bonds, severance tax bonds and nonrecurring revenue in the general fund. Amounts vary from year to year depending on the economy. Nonrecurring general fund moneys are particularly unpredictable. The state also uses bonds for state transportation projects, projects funded by the New Mexico Finance Authority, and other projects but those bonds are repaid with other revenue. General obligation bonds are repaid through property taxes and must be approved through a general election. As a result, that money is only available in even-numbered years. General obligation bonds typically support projects for higher education, senior citizens, public schools, and libraries. State buildings, parks, roads, and equipment have been unpopular with voters in recent years, and elections on bonds to pay for projects in those areas have failed. Severance tax bonds generally are repaid with revenue from taxes on oil, gas, coal and other natural resources severed from the land. The amount available through severance tax bonds is largely dependent on the health of the oil and gas industry. Nonrecurring revenue in the general fund, the primary repository of state revenue, is typically the money left over after the Legislature has funded state government and public school operations and set money aside for reserves. The Department of Finance and Administration and the General Services Department are required by state law to develop a four-year plan for major state capital improvement projects. State agencies develop lists of priority projects internally and transmit those to a panel put together by the two lead agencies. That panel develops a statewide priority list based on a variety of factors, such as public safety and federal mandates. The list becomes part of the executive budget recommendation presented to the Legislature on the first day of the legislative session. During the legislative session, legislators introduce House or Senate capital outlay requests. The House Taxation and Revenue Capital Outlay Subcommittee holds hearings on all proposed capital outlay projects. The Senate Finance Committee holds hearings only for large state agency and higher education projects and as requested by the sponsor. Typically the House, Senate and executive split the available capital outlay funds into thirds. Most recently, the Legislature and the executive have funded some statewide and regional projects before splitting the remainder for local projects. The selected projects then become part of the capital outlay bill. IX. Double Weight Sales Factor A corporation (or family of corporations filing together) with income from sources within New Mexico as well as from sources outside the state, apportions the income based on a three-factor formula. New Mexico taxes the total corporate income multiplied by the average proportion of corporate sales, payroll and property in New Mexico. The three factors (sales, payroll and property) have equal weight (33.33% each) in the formula. For purposes of electing the four-factor apportionment method, manufacturing excludes construction, farming, power generation and processing of natural resources, while allowing certain natural-gas-fired, wholesale power plants to qualify. The taxpayer, having elected to use the double-weighted formula, must use it for at least three consecutive years. C. Local Incentives 10 P a g e

11 New Mexico offers a number of incentive programs aside from tax credits, and jurisdictions such as cities and counties may elect to establish their own incentive programs covering specific districts. Some of the more commonly used incentive programs are listed below. I. Tax Increment Financing and Tax Increment Development Districts Tax increment financing (TIF) is an economic development tool that provides funding for public infrastructure in a specific area by using part of the increased property and/or gross receipts tax (GRT) revenue generated within that area. The assumption is that redevelopment in that area will result in increased economic activity and increased tax revenue and this increase will cover the costs of the infrastructure. Bonds are issued to finance the infrastructure. The area receiving the TIF is called a tax increment development district, or TIDD. TIDDs are political subdivisions of the state, separate and apart from a municipality or county, and are governed by a board. They are their own entity and the bonds issued are the responsibility of the TIDD board, not the developer. Investors in TIDD bonds are intended to take all the investment risks rather than local or state government. Nationwide, most TIF is done with only city and/or county tax revenue. New Mexico is only one of a few states that use state tax revenue in TIF. Tax increment financing can be a good tool to provide incentives for development that is risky and may not occur without the government taking on some of the risk. Redevelopment projects are often risky because they involve renovating existing structures and dealing with possible environmental contamination. For example, TIF was used to redevelop the Stapleton Airport site in Denver, CO. After the airport was abandoned, 4,700 acres of land within the Denver city limits sat unused. However, this land had hundreds of acres of runways that needed to be removed and contamination from jet fuel that needed to be addressed, among other challenges. The city, county and the Denver Urban Renewal Authority partnered with Forest City Covington (Mesa del Sol s developer) to redevelop the property into residential and commercial areas. In New Mexico, the city of Las Cruces has formed a TIDD to encourage downtown redevelopment. This is an effort driven by the city, not by a developer, in the interest of revitalizing downtown. This is a more appropriate use of TIDDs. However, it is commonly understood among tax professionals that TIDDs should not be used for primarily retail or other projects that just relocate businesses from one part of the state to another. These types of projects do not bring in new tax revenue, but simply shift existing tax revenue from the General Fund into the TIDD. Per New Mexico Law, Tax Increment Development Districts (TIDD) are mechanisms to support economic development and job creation by providing gross receipts tax financing and property tax financing for public infrastructure. Section NMSA 1978 The steps and deadlines to create a TIDD in the process are: 1. Notice of Public Hearing The governing body of the municipality or county proposing to create a TIDD must hold a public hearing on the proposed TIDD formation. It sends written notice to the New Mexico Tax and Revenue Department (TRD) about the public hearing on the proposed formation of the TIDD no later than 10 days before the hearing. The notice, according to Section NMSA 1978, must contain the following: Date, time and place of the hearing; Information about alternative methods to submit objects or comments; Statement of the intention to form a TIDD; 11 P a g e

12 Map showing the boundaries of the proposed district; Statement that the TIDD plan is on file with the clerk of the governing body and may be reviewed upon request; Summary of the resolution as set forth in Section (D) NMSA 1978, and Copy of the resolution. 2. Notification Deadline for Adopting a Resolution to Form a District The governing body that adopts a resolution to form a TIDD notifies the TRD within 10 days after adopting the resolution to form a district Section NMSA 1978 and sends a copy of the resolution to the Department. 3. Notification to Department of Forming a District Although no statutory deadline is involved, the governing body must notify the TRD as soon as the formation process is complete. It also must send a copy of the resolution ordering the formation of the district. 4. Notification of Approval of Tax Increment Development Plan The governing body must timely notify the TRD when an approved tax increment development plan provides for the allocation of gross receipts tax increments. 5. Notification Deadlines for Approval of Dedication or Increase to Dedication The State Board of Finance and the local government taxing entity must notify the TRD at least 120 days before the effective date of dedication or increase of dedication. The deadline is August 31 for January 1, and February 28 for July 1. Section NMSA Notification of Bond Issues Although not mandated by statute, the TIDD should send the TRD a copy of the governing body s resolution to authorize bond issues against local gross receipts tax increments once the district board has approved the resolution. It should also send a copy of the Legislature s approval of bond issues against a state gross receipts tax increment. 7. When Outstanding Bonds Have Been Paid Off Section NMSA 1978 requires the governing body to timely notify the TRD when any outstanding bonds of the district have been paid off. 8. District Contact and Distribution Information For the Department to distribute increment revenue to a TIDD, two pieces of information are required from the TIDD: Name, address and telephone number of a TIDD contact person who can address increment revenue distribution issues, and The TIDD s Federal Identification Number (FEIN). 12 P a g e

13 This information should reach the TRD by November 1 for a January 1 effective date, and by May 1 for a July 1 effective date. II. LEDA Local Economic Development Act The New Mexico Local Economic Development Act (LEDA) allows communities to provide assistance to qualified economic development projects while maintaining safeguards against the unauthorized use of public resources. The Local Economic Development Act, adopted by the legislature in 2002 has been enacted in 64 New Mexico communities. Through passing LEDA, a community adopts an ordinance creating an economic development organization and a strategic plan. This empowers communities to embark on economic development projects tailored to their needs. LEDA funding can be garnished through a local option to reserve a small percentage, usually 1/16 of 1% of local Gross receipts Taxes for use as a LEDA fund in job-creating activities. LEDA funds may be used to purchase land, buildings, infrastructure, demolition, and in some cases machinery and equipment for economic development purposes. Businesses with a strict retail tax status are not allowed to use LEDA. LEDA applicants are required to follow a community-specific application process, and the state also requires that communities enact claw back agreements and other safeguards to ensure that companies give their best effort to create jobs and are made to pay back LEDA if the business is sold or transferred. Economic development projects must create new job opportunities. After a local governmental entity creates and adopts an economic development plan, a qualifying business is required to submit a project application, including all information the local government deems necessary. Projects are approved by ordinance, and the local government may negotiate with a qualifying business on the type and amount of assistance to be provided. Up to 10 percent of annual general fund expenditures may fund economic development projects. New revenue may also be generated through the imposition of a local option gross receipts tax (LOGRT), specifically designed for economic development projects. LEDA further allows municipalities and counties to enter into joint-power agreements to plan and support regional economic development projects, including investments in arts and cultural districts. III. LOGRT- Local Options Gross Receipts Tax PROGRAM: Local Options Gross Receipts Tax (LOGRT) Community AGENCY: Local Governments ELIGIBILITY: Communities that have already passed the Local Economic Development Act (LEDA) are able to pass a LOGRT. STRUCTURE: The community votes to raise its LOGRT. The rate is set at 1/8 of 1%. Revenue must be used for economic development projects. The LEDA - LOGRT allows communities the option of designating two of its four increments of the MIGR for economic development plans, payment of bonds, and infrastructure improvement. In the event a community passes a LEDA and allocates 5% of the general fund for economic development, LOGRT provides the community with a source of additional revenue to completely fund the economic development project. FOR MORE INFORMATIOIN, contact Frank Griego at the New Mexico Economic Development Department, Phone: (505) , frank.griego@state.nm.us GRIP- Gross Receipts Investment Program (GRIP) Article XZ, section 6 of the New Mexico Constitution and Municipal Charter Act enables communities to offer Gross Receipts Tax reimbursement for the construction of new buildings. For example, the city of Alamogordo adopted a GRIP ordinance permitting the city to reimburse Gross Receipts Tax on the cost of tangible personal property purchased in the local area and used in the construction of a building including retail and commercial uses where the construction cost is over $50, P a g e

14 IV. Industrial Revenue Bonds (IRBs) New Mexico Law enables local authorities to issue bonds that eliminate personal and real estate property taxes for manufacturers and other qualified businesses during the term of the IRB, typically 20 years. Bond structure is complicated and usually best accomplished through a qualified attorney who is familiar with the nuances of New Mexico business law. V. Community Development Incentive Act Section of New Mexico State Code authorizes communities to abate personal property tax on such items as computers, machinery and equipment (Dan Gonzales to complete). VI. Additional Incentives Additional local incentives, some tangible and others intangible include the following: 1. Business Incubators- often federal or private grant funding can be applied 2. Quality of Life (Physical, Recreational, Lifestyle, Safety, Cultural Amenities) 3. One Stop Development Shop to speed up development process and Fast-track Permit Processes 4. Professional Site Selection Assistance from a qualified economic developer can give clients the confidence they need to move ahead with investments. 5. Viewing a website with adequate data and land inventory is a basic task of today s site selector. The availability of an attractive and organized web presence with sufficient and accurate community data can make or break a community s reputation in the competitive global market. 6. Overall reasonable cost of doing business- compared to similar business regions around the country 7. Available workforce in specific quality and quantity for business targets 8. Transportation access (airport, highway, rail) depending on business 9. Location agreeable to and compatible with values of corporate leadership and top employees (attractiveness). Higher quality communities attract higher quality jobs. 10. High quality community infrastructure such as restaurant, shopping, entertainment and services. 14 P a g e