Jeremy R Shaffer, County Commissioner
Economic Development Incentives are "cash or near cash incentives provided on a discretionary basis to attract or retain business operations.<"Bartik, Timothy J. 2005. "Solving the Problems of Economic Development Incentives." Growth and Change 36 (Spring):p.140.>
The following are common examples of development incentives used by U.S. cities.[6]
Industrial revenue bonds- Loan issued for the purchasing of capital, supplies, and construction costs or equipment.
Tax increment financing- Improvements in public infrastructure or private development are financed based on the expected future revenue that will be generated by the increased property value of the improved area.
Industrial enterprise Direct/subsidized loans- state and local governments can provide direct and subsidized loans to private businesses based on the promise that a quota of jobs will be produced.
Site advantage- Governments may provide potential businesses with free land, buildings, exemptions from local and state regulations, and other customized services for agree to develop a specific area.
Tax incentives- government provided reduction in tax liability for a defined period without expectation of repayment. The lost revenue will theoretically be made up by the generation of new jobs in the area in addition to the additional revenue the company will pay once the abatement period is over. Examples include property tax abatement, corporate income tax credit, and sale tax exemptions.[7]
Public utility rate break (water, electricity etc.) - Utility rates are subsidized by the city for companies which launch construction projects within designated zones.
City projects/Infrastructure improvements- blighted areas are targeted for investment and improvement by state and local government to improve functions of the area and quality of life factors (From)
State of Ohio provides the Following Incentives
Ohio Economic Development Incentive Programs
TAX CREDITS
Job Creation Tax Credit Program: Qualifying businesses that create at least 25 net new full-time positions (within three years) and meet minimum wage requirements are eligible to receive tax credits, which are equal to a percentage of the tax withholdings generated by new employees. These tax credits can be used against the company’s corporate franchise or income tax and are refundable in the event the company does not have sufficient tax liability.
Job Retention Tax Credit Program: Qualified businesses that commit to retaining at least 500 full-time jobs, with an annual payroll of at least $40,000,000, and make an investment of at least $50 million are eligible to receive nonrefundable tax credits, up to 75% of the state income taxes withheld from the eligible full-time employees for a period of up to 15 years.
Research & Development Investment Tax Credit: A nonrefundable tax credit is available for qualifying companies with R&D expenditures. The tax credit may be used against the corporate franchise tax, credit equaling 7% of excess amount of Qualified Research Expenses. Taxpayers must invest in “Qualified Research Expenses”, which includes both in house research expense and contract research expenses. Tax credit can be carried forward for up to seven years.
GRANTS
Customized Training: This training program can assist with up to 50% (and up to 75% in eligible areas) of training costs through reimbursement. Eligible costs include instructor salaries, materials, travel and special needs. Additional grants are available for industrial and eligible administrative or office operations that create or retain jobs.
Chapter 312 Grant: The state has the discretionary authority to provide cash grants to help close the competitive cost gap of alternative locations.
LOW INTEREST FINANCING
Infrastructure Loans and Grants: The state offers low-interest financing and grant funds for public roadway improvements, private rail improvements and public road, water, and sanitary sewer improvements. The amount of and type of funding will depend on job creation or retention and project type. Loans are made directly to local communities on favorable interest rates and terms.
TAX EXEMPTIONS
Sales and Inventory Tax Exemptions: Machinery and equipment used in the manufacturing process; material handling equipment used in the warehousing of inventory that is primarily (51% or greater) distributed to retail operations associated with the warehouse operator; and equipment used for research and development purposes are exempt.
LOCAL INCENTIVES
Local governments may provide certain incentives including real property tax incentives for up to 15 years.
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