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Regional Economic Incentives Update: Arizona, Arkansas, Florida, Virginia, Texas

by Kelley Rendziperis, on May 23, 2017 6:17:01 PM

Approximately half of the states in the U.S. have concluded their 2017 legislative sessions. Many states continue to analyze their tax structures, fiscal budgets and economic incentives. For this reason, businesses should frequently monitor the current landscape of a state’s economic development policies when making site selection decisions. 

To help navigate these ongoing changes, Site Selection Group monitors changes or modifications to various economic incentive programs to identify factors that may influence corporate site selection decisions.

Legislative news 

Arizona

The Quality Jobs tax credit offers up to $9,000 of Arizona income or premium tax credits spread over a three-year period for each net new quality job ($3,000 per year). Senate Bill 1416 extended the Quality Jobs program until July 1, 2025, and introduced a tiered model for eligibility in metro and rural areas:

Minimum Capital Investment Minimum Number of New Jobs Percent of County Median Wage
Urban Location  
$5,000,000 25 100%
$2,500,000 25 125%
$1,000,000 25 150%
$500,000 25 200%
Rural Location  
$1,000,000 5 100%
$500,000 5 125%
$100,000 5 150%

 The Qualified Facility tax credit established in 2012 promotes the location and expansion of manufacturing facilities, including manufacturing-related research & development or headquarters facilities. Subject to eligibility requirements, the Qualified Facility tax credit offers a refundable income tax credit equal to the lesser of 10% of the qualifying capital investment, $20,000 per net new job at the facility or $30 million per taxpayer per year. In this legislative session, the program was clarified to allow businesses preapproved by January 1, 2023, to claim all five years of credit.

 The Research & Development Credit and the Accelerated Depreciation provisions related to class six personal property used in a manufacturing application were extended beyond 2017.

 Finally, the Arizona Competes Fund was extended through July 1, 2026, and amended to add microenterprises.

 Arkansas

InvestArk is a sales and use tax credit program available to businesses established in Arkansas for two years or longer that invest $5 million or more in plant or equipment for a new construction, expansion or modernization project. Act 465 phases out InvestArk in favor of an exemption for the repair and partial replacement of certain machinery and equipment. The exemption phase-in for repairs and partial replacements begins July 1, 2018, with annual 1% rate reductions until the exemption is completely phased in on July 1, 2022. InvestArk will be phased out by prohibiting acceptance of new applications after June 30, 2017. Act 465 also prohibits the increased sales tax refund for major maintenance and improvement projects after June 30, 2022.

 Act 685 creates the Local Job Creation, Job Expansion, and Economic Development Act of 2017, which provides that a municipality or county may obtain or appropriate money for a corporation, association, institution, political subdivision of the state, the federal government, or an individual to finance economic development projects or provide economic development services but is limited to projects or services that do not exceed 5% of the total unobligated general revenue of the city or county.

 Florida

House Bill 7005 aimed to abolish 24 different economic development and tax credit programs, including Enterprise Florida and Visit Florida, but did not ultimately succeed. However, funding for both programs was scaled back. Enterprise Florida can still award economic incentives through the Qualified Target Industries (“QTI”) program, which is the state’s most commonly used incentive.

 In addition, Gov. Rick Scott requested $200 million for the Quick Action Closing Fund to award incentives for major corporate relocations and expansions, but was denied by the Legislature for the second year in a row.

 Virginia

Legislation regarding the reorganization and oversight of the Virginia Economic Development Partnership (VEDP) was passed on the heels of an undesirable audit report last fall. A new division would be created to oversee financial incentives and assure that companies abide by the terms of their agreements.

 Additionally, the funding levels for VEDP were maintained, the Commonwealth Opportunity Fund will continue and be funded at approximately $20 million a year, and GO Virginia, a bipartisan and business-led effort focused on creating economic incentives for localities and regions to collaborate on infrastructure and other regional investments, was funded at $7.5 million.

 Texas

Site Selection Group’s article in March summarized many of the economic development bills under consideration by the Legislature. At the time of this article, the main bills which have continued forward are:

 

HB 3360

Directs the Economic Incentive Oversight Board to study the effectiveness of Chapter 313 in meeting legislative objectives; requires the board to develop a performance matrix that clearly establishes the economic performance indicators, measures and metrics that will guide the board's evaluation

 

SB 277

Prohibits abatements and appraised value limitations on wind-powered energy devices near military aviation facilities

 

HB 4038

Expands the definition of "qualifying job" for a data center to include in the definition new employment positions staffed by a third-party employer under an eligible contract

 

SB 28

Authorizes TxDOT to use the Texas Mobility Fund to finance port access improvement projects; creates the ship channel improvement revolving fund administered by TxDOT

 

SB 400

Requires the comptroller to verify the information provided in compliance reports using information from the Texas Workforce Commission, chief appraiser and other reliable sources

 

HB 1352

Authorizes a city to convey real property via a Ch. 380 Agreement

 

HB 3294

Makes two NASCAR races & FIA Formula E eligible for the Major Events Reimbursement Program funding

 

 

On the eve of the drafting of this article, Texas passed a budget that added $110 million to its incentives program at the behest of Gov. Greg Abbott. The Texas Enterprise Fund will receive $60 million, $40 million for the Governor’s University Research Initiative and $10 million for film and music incentives. Another significant measure that could affect Texas’ economy is the “bathroom bill”, which at the time of this article was amended by the House and not yet voted on by the Senate. The 85th Legislature’s regular session will end soon, and the governor will sign or veto all the relevant bills by June 18.

 *On the eve of the drafting of this article, Texas passed a budget that added $110 million to its incentives programs at the behest of Gov. Greg Abbott. 

 For additional information about these bills and others, please contact Site Selection Group.

 

Texas Legislature Evaluates Bills in Texas

 

Topics:Call CenterDistribution CentersManufacturingEconomic IncentivesEconomic Development

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