Harak Associates is a consulting firm that
manages the application and
reimbursement process for state and local
incentive programs available to local
businesses, including but not limited to:
Donna Harak
www.HarakAssoc.com
•
Training grant programs
• Workforce programs
• Tax refund programs
What’s happening with Incentives in Florida
◦
Under Gov. Rick Scott, the state has revamped the
economic development activities and has determined the
following business clusters are critical to the state’s long
term growth:
CleanTech (Biofuels, Photovoltaic, etc)
Life Sciences (Pharmaceutical, Medical Devices, etc)
InfoTech (Modeling, Simulation, Software, Electronics, etc)
Aviation/Aerospace (Aircraft parts, maintenance, repair as
well as space vehicles, satellite communications, etc)
Homeland Security/Defense (Equipment, transportation and
technology products and services)
Financial/Professional Services
TAX REFUNDS
◦ Qualified Targeted Industry Tax Refund Program
◦ Qualified Defense & Space Contractor Tax Refund Program ◦ Brownfield Redevelopment Bonus Refund
◦ Manufacturing & Spaceport Investment Incentive
TAX CREDITS
◦ Capital Investment Tax Credit
◦ Jobs for the Unemployed Tax Credit
TAX EXEMPTIONS
◦ Semiconductor, Defense & Space Technologies Sales Tax Exemption
CASH GRANTS
◦ High Impact Performance Incentive ◦ Quick Action Closing Fund
◦ Innovation Incentive Program
◦ Economic Development Transportation Fund
Qualified Targeted Industry (QTI) tax refund
Economic Development Transportation Fund
aka the Road Grant
State Sales Tax Exemptions for Manufacturing
◦
Electricity and Steam
◦
Machinery and Equipment
County specific programs
◦
Each county may offer special Business Bonus
programs
◦
Each county may offer Impact Fee Mitigation
State of Florida
◦
Qualified Targeted Industry (QTI) tax refund
Conduct business nationally or globally
Be a Qualified Targeted Industry
Generate 50% of revenues from outside the state of
Florida
Be competitively attractive to other states or nations
Plan to add at least ten new jobs in the first calendar year
that pay at minimum 115% of the state, county or MSA
average annual wage, whichever is lowest. In 2012, in
Alachua it would be $39,613; in Flagler $33,642 in
Hillsborough County they use 115% of the state’s avg
wage or $46,638.
State of Florida
◦
Qualified Targeted Industry (QTI) tax refund (cont)
Based on wages of jobs to be create, a business can earn
$3,000 - $5,000 in tax refunds for every new job created
over 3 years
10 new jobs = $30,000 - $50,000 tax refund
25 new jobs = $75,000 - $125,000 tax refund
Types of taxes it will offset include:
Corporate Income taxes
Property (ad valorem) taxes
Sales taxes paid during the course of the job creation
timeframe
Refund pays back in 25% increments over 4 years
This ensures sustainable jobs are created
This ensures the refund does NOT exceed the liability every
State of Florida
◦
Economic Development Transportation Fund
Provides funding for transportation infrastructure
improvements to spur job creation/retention and
capital investment
Awarded as an inducement for a specific business to
locate to Florida or remain and expand by agreeing to
alleviate transportation impediments
Stop lights, turn lanes, entrance/egress improvements
from the business into the flow of traffic
Monies are awarded to the local county/municipality to
facilitate the road improvement based on the business
agreeing to locate or expand at that site and create
new jobs
State of Florida
◦
State Sales Tax Exemptions for Manufacturing
Machinery and Equipment
Machinery & equipment purchased by new & expanding
businesses that use such equipment at a fixed location to
manufacture/process/compound/produce tangible
personal property for sale, or for exclusive use in
spaceport activities, is sales/use tax exempt.
Electricity & Steam
Charges for electricity and steam used directly and
exclusively at a fixed location to operate machinery/
equipment that is used to manufacture/process/
compound/produce items of tangible personal property for
sale, or to operate pollution control, recycling, maintenance,
or monitoring/control equipment used in such operations,
may be exempt from the sales tax.
State of Florida programs
◦
Quick Response Training (QRT) grant
For Qualified Targeted Industries:
CleanTech, Life Sciences, InfoTech, Aviation/Aerospace,
Homeland Security/Defense, Financial/Professional
Services, Headquarters
10% increase over existing employee headcount (new
hires) or ten new jobs, whichever is greater
Customized training
Reimburses for Instructor Wages ONLY at a cap of $30/hr
2 year grant timeframe
State of Florida programs
◦
Incumbent Worker Training (IWT) grant
For companies in business at least 1 year and with at least 1
FTE
For existing employees only; No new hires
Any type of training
Management and supervisory training
Train to learn new processes and procedures
Certifications (IT, CEU, professional designations)
Telephone etiquette
Basic Office Suite (Word, Excel, PowerPoint, etc.)
50% reimbursement of training costs up to maximum
$50,000 and companies have one year from date of approval
to complete all training
Local Workforce Board Programs
◦
Employed Worker Training
Training is expected to help avoid reductions in staff and improve
retention
Training should qualify the candidate for potential career advancement,
resulting in increased wage and/or creation of entry-level positions as a
result of trainees moving up
Instructor led training only and must result in a Certificate of
Completion
Grant award typically capped at $50,000 (set by Regional WFB)
Only employees earning between $12/hr and $25/hr at time of training
are eligible
Must complete all training before end of state fiscal year (June 30
th)
◦
On-the-Job Training
Eligible candidates are new hires who have been unemployed for at least
30 days prior to their hiring
Must apply for and be approved for the program prior to hiring
Local Regional WFB sets the wage minimum for eligibility
If your business meets the qualifying criteria
for a program you could expect:
◦
QTI new job creation – minimum $30,000 tax refund
◦
QRT new hire training grant – $1,200 - $1,500/new
hire over the two year period
◦
IWT existing employee training – 50% reimbursement
of training costs up to a maximum of $50,000
◦
Employed Worker Training for existing employees –
maximum determined by RWB; usually $50,000
◦
OJT new hire training – 50% wages reimbursed for
Direct financial incentives
provide direct monetary assistance to a business from the local government or through a local government funded organization. The assistance is providedthrough grants, loans, equity investments, loan insurance and guarantees.
These programs generally address business financing needs but also may be invested in workforce training, market development, modernization, and technology commercialization activities. Cash
grants provide the greatest flexibility and immediate benefit to the company by reducing capital outlays. However, loans, bonds, and equity financing are commonly used to make resources available with an expectation that the dollars will be returned for future investments.
Another important category of direct financial incentives is in the area of training subsidies. Other forms of direct financial incentive include revolving loan funds, product development corporations, seed capital funds, and venture funds. These programs directly supplement market resources through public lending authorities and banks.
Indirect incentives
include grants and loans to local government entities,non‐profits, and community organizations to support and promote business investment or develo pment. The recipients include communities, financial institutions, universities, community college s, training providers, venture capital investors, and childcare providers.
In many cases the funds are tied to one or more specific business locations or expansion projects. Other programs are targeted toward addressing the general needs of the business community, including infrastructure, technical training, new and improved highway access, airport expansions and other facilities.
Funds are provided to the intermediaries in the form of grants, loans, and loan guarantees. Indirect incentives may also be used to leverage private investment in economic development. For instance, linked deposit programs in which local government funds are deposited in a local financial institution in exchange for providing capital access or subsidized interest rates top qualified business borrowers.
Taxbased Incentives
Use the tax code (or tax base) as the source of direct or indirect subsidy to
qualified businesses. It is more stable and less visible than direct financial or indirect incentives because it does not typically require an annual appropriation. Tax‐based incentives can be either
discretionary or entitlements. While tax based incentives function like direct financial incentives,
the ubiquitous use of these incentives justifies a separate categorization. Tax‐based incentives can be further classified into five sub‐categories:
• CREDITS, which provide a reduction in taxes due, after verification that statutory or contractual terms have been met.
• REFUNDS, which provide a return on taxes paid, after verification that statutory or contractual terms have been met.
• EXEMPTIONS, which provide freedom from payment of a variety of taxes normally applied to certain business activities.
LOCAL PROPERTY TAX ABATEMENTS or ASSESSMENT REDUCTIONS, which reduce or
decrease the assessed valuation of ad valorem taxes, to include real property and personal property. Because the ad valorem tax is a local government revenue source, the cost of the incentive is borne by local governments.
