Transcript Slide 1

Economic Incentives 101
Marty Wilson, Vice President, Competitive
Programs and Policies, Enterprise Florida
Molly Weller, Incentives Manager, Enterprise
Florida
7/17/2015
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Incentives 101
June 23, 2011
Incentives 101
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Overview of Florida’s incentive process
Basic program information
Compliance process
Sales tax exemptions
Incentives for distressed areas
New legislation and FY 2011/12 budget for
incentives
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Role of Incentives in the Economic
Development Process
• Understanding the project’s needs is critical to
developing a compelling incentive package
• Instead of:
– What do I have to offer this company?
• Think of:
– What are the critical decision factors and how can we
address them?
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Enterprise Florida and the Department of
Economic Opportunity
• Enterprise Florida
– Works with businesses to understand needs
– Conducts competitive analysis
– Negotiates and recommends incentives
• Department of Economic Opportunity, Division of
Strategic Business Development
– Maintains approval authority
– Contracts with businesses and communities
– Additional responsibilities are still being determined as the new
department takes shape
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What is a Target Industry?
• Statutory criteria:
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Future growth
Stability
High wage
Market and resource independent (exception for clean energy projects)
Industrial base diversification and strengthening
Economic benefits with added emphasis on global trade and
logistics
• Cannot be companies with NAICS codes 5611 or 5641
except under certain circumstances
• List updated every three years
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Current List
Developed by EFI
and partners in
January 2011
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Qualified Target Industry (QTI)
Tax Refund
• Tax refund based on net new to Florida jobs
• Average wage at least 115% of state or local wage
($45,834 minimum for the state)
• Requires 20% match from local community
• Must be a clear inducement
• Special considerations for Rural areas, Enterprise
Zones, Brownfield areas, and Manufacturing companies
paying 100% or greater of the average county wage
• Performance based
• Lifetime cap of $7 million per company
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QTI Refund Amounts
• QTI award is based on the number of net new to Florida
jobs created, the average wage and location of the jobs, and
other factors
• Base award is $3,000 per job ($6,000 per job in a Rural
county or Enterprise Zone)
– $2,500 per job if project is located in a designated Brownfield area
(Brownfield Bonus)
– 150% of wage add $1,000 per job OR 200% of average wage add
$2,000 per job
– $1,000/job if local financial support is equal to the base QTI award
– $2,000/job if project is in a designated high impact sector OR
– $2,000/job for businesses increasing tonnage or volume through
Florida’s ports or airports by at least 10% per year
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New QTI Bonuses
• Local Financial Support Bonus
– Local Financial Support must be equal to the state’s portion of
total award
• Example: Total Award is $100,000. The State’s portion of
80% is $80,000. LFS must be equal to $80,000 to be eligible
for the extra $1,000 per job.
• The additional $1,000 per job bonus is then calculated and
split 80/20 with the local community.
• Additional LFS must come in the form of cash paid to the
Economic Development Trust Fund
• Increased Tonnage Bonus
– For existing Florida companies
– Company will be audited yearly to ensure eligibility for bonus
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QTI Resolutions
• Three required components:
– Recommend the project for QTI
– Identify local financial support ($ value)
– Average wage paid will be $X, which is 115% of the [state,
county or MSA] average wage
• This notification can come in the form of a statement in the
resolution or in a separate letter from the county or CITY providing
the local financial support for the project.
• Inclusion of other information can cause confusion and
require additional clarification and / or a new resolution
• Use project code name to maintain confidentiality
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Disproportionately Affected Areas
• 8 Counties affected by the Gulf Oil Spill
– Bay, Escambia, Franklin, Gulf, Okaloosa, Santa Rosa, Wakulla,
and Walton
• Allows for the waiver of job and wage requirements for
certain incentive awards up to $5 million
• For awards between $5 million but less than $10 million,
waivers may be granted after consultation with Governor
and legislative leadership
• Waivers in effect July 1, 2011 – June 30, 2014
• Reduction in Local financial support by one-half
– Gadsden, Jefferson and Leon Counties
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QTI Claim Process
Business commits to create 50 new jobs by December 31, 2011:
• November 2011 – Sharpton, Brunson & Co. (SBC) sends claim form
• November 2011 – SBC sends notice of local financial support (a
“bill”) to the community
• December 2011 – 50 net new jobs should have been created
• January 31, 2012 – QTI claim due to SBC (extensions available)
• February 2012 to June 2012 – SBC validates QTI claim and
confirms employment and wage commitments were met
• February 2012 to June 2012 – SBC confirms local financial support
has been received
• July 2012 – Business receives QTI refund claim (80% State and
20% Local)
• November 2012 – Process starts again for the second claim year
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Economic Recovery Extension
(ERE)
• Allows for business affected by the economic downturn
to request a 1 or 2 year exemption
• Eligible businesses are those with claims due between
January 1, 2009 and July 1, 2012
• Business must demonstrate a downturn in their
respective industry and how this downturn has
specifically affected the Florida operations of the QTI
business
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Qualified Defense and Space
Contractor (QDSC) Tax Refund
• Similar to QTI Program including lifetime cap limit except
– Program allows company to count retained jobs
– Does not allow for the Brownfield Bonus
• Designed for Department of Defense, Department of
Homeland Security, and Space Flight Business
contractors
• Available for job creation and retention for businesses:
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Securing new contracts
Consolidating existing contracts
Converting defense technology to commercial production
Reuse of a defense related facility
• All jobs must be tied to specific contracts
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Economic Development Transportation
Fund (EDTF) or Road Fund
• Grant to local government to alleviate a transportation
impediment
• Eligibility requirements similar to QTI
• Must be an inducement for retention, expansion, or
location
• Funding for FY 2011/12 is $10M (up from $3.7M in FY
2010/11)
• Project examples:
– Turn lanes
– Access roads
– Traffic signals
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Current High Impact Sectors
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Clean Energy
Corporate Headquarters
Financial Services
Life Sciences
Information Technology*
Semiconductors
Transportation Equipment Manufacturing
*Not currently eligible for the High Impact Performance Incentive
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High Impact Performance Incentive
(HIPI)
• Negotiable cash grant paid to business
• Eligible projects operate in designated portions of highimpact sectors
• Creation of at least 50 new jobs (25 for R&D) and $50M
capital investment ($25M for R&D)
• Paid in two installments, based on “commencement of
operations” and “commencement of full operations”
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Capital Investment Tax Credit (CITC)
• Tax credit for designated portions of high-impact sectors
– Information Technology is considered a High Impact Sector for
CITC
• Creation of at least 100 new jobs and $25M capital
investment
• Total amount of credit varies depending on capital
investment threshold
• Credit taken at 5% per year for 20 years, business
investing at least $100M with unused tax credits due to
insufficient tax liability may have an additional 10 years to
claim the credits beginning in year 21
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Governor’s Quick Action Closing
Fund
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Deal closing tool used at the Governor’s discretion
Addresses a competitive gap vis-à-vis other states
Awards under $2M can be approved by the Governor
Awards between $2-$5 million require notification of
House and Senate leadership
• Awards of more than $5 million must be approved by the
Legislative Budget Commission
• $42 M appropriated for FY 2011/12
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Sales Tax Exemptions
• R&D equipment (predominant use)
• Semiconductor, defense, and space technology
production equipment
• Manufacturing machinery and equipment and
subsequent labor, parts, and materials used to repair
equipment
– Refund of up to $50,000 available for equipment purchased in
FY 2010-11 or FY 2011-12
• Electricity used in the manufacturing process
• Certain aircraft and spacecraft expenditures
• Film, television, and other production activities
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Other Incentives
• The Jobs for the Unemployed Tax Credit
– Encourages the hiring of qualified employees who were
previously unemployed. The business will receive a tax credit for
qualified full time employees hired after July 1, 2010, and remain
employed for 12 months
• The Local Government Distressed Area Matching Grant
Program
– Stimulates investment in the state’s economy by providing grants
to match demonstrated business assistance by local
governments to attract and retain business in the state
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Brownfield Redevelopment Bonus
• Up to $2,500 in tax refunds per new Florida job created
• Two ways to qualify:
– Be a qualified target industry business under the QTI Program
OR
– “Stand-alone Brownfield” - demonstrate a fixed capital
investment of at least $500,000 in mixed-use business activities
($2 million if the site requires remediation) and create at least 10
new jobs with benefits
• Other Brownfield incentives:
– Voluntary clean-up tax credit
– Loan guarantee program
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Rural and Urban Incentives
• Rural Job Tax Credit
– $1,000 per job created within specific industries in a rural county
• Rural Infrastructure Fund
– Grant for assistance with infrastructure development and
feasibility studies
• Rural Community Development Revolving Loan Program
– Loan to local government for a specific economic development
related project
• Urban Job Tax Credit
– $500 to $1,500 per job created within specific industries in a
designated Urban area
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Enterprise Zone Incentives
• Enterprise Zone Jobs Tax Credit
– Credit based on wages paid to employees that are EZ residents
• Sales Tax Refund for Building Materials
– Refund of sales tax paid on building materials, up to $5,000 or
$10,000
• Sales Tax Refund for Business Machinery and
Equipment
– Refund for sales tax paid on the purchase of certain business
property, up to $5,000 or $10,000
• Property Tax Credit
– Credit equal to 96% of ad valorem taxes paid on new or
improved property, up to $50,000 annually for up to five years
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Quick Response Training
• Quick Response Training (QRT) is an employer-driven
training program administered by Workforce Florida
• The company may use in-house training, outside vendor
training programs or the local educational entity to
provide training. Reimbursable training expenses
include:
– instructors'/trainers' wages;
– curriculum development; and
– textbooks/manuals.
• Businesses approved for QRT funding are limited to one
grant award per site every two years.
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Incumbent Worker Training
• Incumbent Worker Training (IWT) is administered by
Workforce Florida and provides training to currently
employed workers
• The program is available to all Florida businesses that
have been in operation for at least one year prior to
application
• $50,000 maximum per business
• Priority is given to businesses in targeted industries,
Enterprise Zones, HUB Zones, Inner City Distressed
areas, Rural Counties and areas, and Brownfield areas.
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Incentives Budget
Program
FY 2010/11
FY 2011/12
Economic Development Tool
$16,567,473
$21,750,000
Quick Action Closing Fund
$16,000,000
$42,000,000
Brownfield Redevelopment Bonus
Refunds
$2,480,000
$1,250,000
Defense Infrastructure
$1,000,000
$1,581,245
Rural Infrastructure
$1,100,000
$1,581,244
Economic Development Transportation
Projects
$3,700,000
$10,000,000
Rural Community Development
$1,300,000
$1,170,000
Quick Response Training
$3,300,000
$6,000,000
NA
$9,000,000
$75,000,000
$15,000,000
Research Development Tax Credits (cap)
Innovation Incentive Fund
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Research and Development Tax Credit
• Annual Corporate Income Tax credit for qualifying
research and development expenses in Florida
• Credit will be equal to 10 percent of the current year’s
expenses that exceed the average expenses over the
past four years (base amount)
• Amount of credits capped at $9 million
• Applications filed through the Florida Department of
Revenue
– Due in March
– Credits awarded on a first come, first served basis
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Tax Credit for Spaceflight Projects
• Credit equal to 50% of the business’s Corporate Income
Tax liability in a given year OR
• Business may also convert net operating losses into
transferable Corporate Income Tax credits
• A business must
– Demonstrate that it is engaged in spaceflight projects
– Create 35 new jobs and
– Invested $15 million dollars in the three years prior to being
certified for the credits
• Amount of credits capped at $10 million
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Contacts – Business Retention and
Recruitment
Crystal Sircy, Senior Vice President of Business Retention and
Recruitment
850.298.6628 [email protected]
Rob Sitterley, Vice President of Business Development
407.956.5653 [email protected]
Casey Barnes, Director of Business Development
407.956.5609 [email protected]
Joel Gunter, Director of Business Development
407.956.5621 [email protected]
Todd Holt, Business Development Manager
407.956.5620 [email protected]
Tim Johns, Business Development Manager
407.956.5611 [email protected]
Matt Lowell, Business Development Manager
407.956.5659 [email protected]
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Contacts – Business Retention and
Recruitment
Brandon Carson, Business Development Manager
850.298.6622 [email protected]
Marty Wilson, Vice President, Competitiveness Programs & Policies
407.956.5633 [email protected]
Joseph Bell, Program Manager
407.956.5622 [email protected]
Molly Weller, Incentives Manager
850.298.6634 [email protected]
Heather Squires, Incentives Manager
407.956.5696 [email protected]
Bridget Merrill, Vice President, Targeted Opportunities
850.298.6626 [email protected]
Adam Henry, Business Development Coordinator
850.298.6624 [email protected]
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