IPT Credits and Incentives Symposium Northeast Incentives Update Terry Hansen Principal Hickey and Associates Michael Huber Executive Director EY
Agenda State of incentives in the Northeast State updates Workforce and training incentives Q&A 2
State Updates
State of incentives in the Northeast Economic development landscape remains highly competitive States aggressively using incentive programs for retention, attraction (and marketing) Targeted program changes have been implemented to address specific objectives 4
Rhode Island Recent passage of new discretionary incentives to support business growth Qualified Jobs Tax Credit Rebuild Rhode Island Tax Credit 5
RI Qualified Jobs Tax Credit Benefits Base tax credit of $2,500 per new full-time job per year for up to 10 years Base credit may be increased if project meets certain criteria Maximum credit is $7,500 per new full-time job per year for up to 10 years Credit may sold, refunded or carried forward 6
RI Qualified Jobs Tax Credit (continued) Eligibility Must create at least 10 net new full-time jobs Statewide FTEs New Jobs Required Targeted Industry?* 100 or less 10 Yes More than 100 10% of statewide or 100 Yes 200 or less 10% of statewide or 100 No * Targeted industry means any advance, promising or otherwise prioritized industry identified in the economic development vision and policy promulgated pursuant to 42-64.17-1 of the General Laws. 7
RI Rebuild Rhode Island Tax Credit Benefits Credit used to close financing gap on real estate projects Maximum tax credit of $15 million per project limited to 20-30% of total project costs Credit may be sold, refunded or carried forward Qualified projects may also receive sales tax exemption at discretion of Commerce Corporation 8
RI Rebuild Rhode Island Tax Credit (cont.) Eligibility Total project cost in excess of $5 million Project must be at least 25,000 square feet and employ 25 full-time employees Project equity must exceed 20% of total project cost Must demonstrate project financing gap that cannot be met by private enterprise 9
Massachusetts Economic Development Investment Program (EDIP) Consolidates EDIP categories Eliminates minimum threshold of job creation Requires company representatives to certify but for Greater flexibility in abatement percentages for STAs Greater authority to revoke project certification Decertified projects must repay tax credits as additional tax 10
Massachusetts (cont.) Massachusetts Life Science Center (MLSC) Program delays 2015 round delayed five (5) months due to administrative review 2016 round likely to be delayed until late fall 2016 Administration will make award off cycle for significant projects Program only authorized through 2018 11
Massachusetts (cont.) 20% angel investor tax credit established Number of economic development programs recapitalized and moved into capital program to avoid annual appropriation 12
Pennsylvania Relocation Assistance Capital Program (RACP) Grant program that supports acquisition and construction of new projects Budget impasse resulted in delay of 2015 awards Governor Wolf recently announced 2015 grants will be released incrementally starting this month However, Commonwealth is not currently accepting new applications due to current fiscal situation 13
Pennsylvania (continued) Data center sales and use tax refund Available starting July 1, 2017 Refund of SUT paid on certain equipment purchased for use in a data center Total refunds cannot exceed $5 million in any fiscal year Must invest at minimum of $25 million or $50 million depending on county population (250,000 +/-) Must apply to DOR by July 30 annually 14
Pennsylvania (continued) Manufacturing and investment tax credit Available starting July 1, 2017 Credit of up too 5% of increase in annual taxable payroll Credit applied against 100% of all tax bases Credit may be claimed for five years from receipt of certification or six years from start date Must make application to DOR $4 million annual allocation for each fiscal year after June 30, 2017 15
New Jersey BEIP Grant Conversion Gov. Christie signed law in January 2016 to allow onetime election to convert unpaid grants to tax credits Deadline for election was July 11, 2016 Credits disbursed on pro-rata basis through 2025 Grow New Jersey NJEDA continuing to actively support projects $64.9 million awarded in September 2016 16
New York Music & Digital Production Tax Credits Bill passed by legislature and pending Gov. Cuomo approval Credit generally equal to 25% of eligible music and video game production costs Credit is refundable in excess of NYS tax liability Maximum annual allocation of $50MM ($25MM for each program) 17
Maryland Augustine Commission report issued in February 2015 to assess state s competitiveness Number of changes contemplated, including adoption of single sales factor apportionment Momentum for possible incentive changes in FY17 and beyond 18
Critical takeaways Rhode Island with major programmatic changes recently Northeast states continue aggressive economic development approach utilizing incentives Budget challenges may impact ability to deliver on incentive commitments in the future 19
Training and Workforce Development Incentives
Discussion points Overview Why training incentives? Program characteristics State Programs Program types Cash Credit In-kind Current Trends 21
Why States Subsidize Training Build pool of skilled workers Compliment economic development programs Must Have to stay in the game Improve economic wellbeing 22
Program Characteristics: 1. Incumbent worker training 2. Funding 3. Who provides training? 4. Which businesses are eligible? 5. Evaluation & Effectiveness 23
Ohio Incumbent Worker Training Voucher Program (OIWTVP) Reimbursement of up to $4,000 per employee per fiscal year with an annual cap of $75,000 Qualified training costs are reimbursed for up to 50% 24
Ohio Incumbent Worker Training Voucher Program (OIWTVP) Targeted industries include: Advanced Manufacturing Aerospace and Aviation Automotive Back Office BioHealth Corporate Headquarters* Energy Financial Services Food Processing Information Technology and Services Logistics Polymers and Chemicals Research and Development 25
Ohio Incumbent Worker Training Voucher Program (OIWTVP) Employee requirements Employed in production, back office operations, info-technology, logistics, or research & development Earning an hourly wage of at least 150% of the federal minimum wage ($10.88) At least 18 years of age Working a minimum of 25 hours/week 26
Ohio Incumbent Worker Training Voucher Program (OIWTVP) Forms of training eligible for reimbursement: In-house instructors Classes at accredited institutions Industry recognized certificates New Equipment purchase Upgrading of Computer Skills Independently certified training curriculum/testing Improved process efficiency 27
Ohio Incumbent Worker Training Voucher Program (OIWTVP) Eligible training costs include: Tuition Instructor/trainer fees for in-house trainings Instructional materials 28
PA WEDNet Program Funded by the PA department of Community and Economic Development Managed by the Pennsylvania College of Technology 29
PA WEDNet Program Eligibility: Must be located in Pennsylvania Must be a manufacturer or tech business Employee/trainee must be a PA resident Must be full-time and earn at least 150% of minimum wage Training must improve skills for employee s job Grants limited to 2 years in a row or 3/5 years Maximum grant $125,000/year 30
PA WEDNet Program Eligible training costs include: Tuition Instructor/trainer fees for in-house trainings Instructional materials 31
PA WEDNet Program Application Process Apply online through ISAAC Partners help with assessment and training plans Partners prioritize applications and recommend grant amounts Stateside office reviews applications and approves awards Partners monitor contract activity and assists with invoicing 32
Sources of Information Maine Dawn Mealey Director Director for Governor s Training Initiative Bureau of Employment Training 55 State House Station Augusta, ME 04333-0055 Telephone: (207) 624.6390 (207)624-6390 FAX: (207) 624-6499 dawn.mealey@maine.gov Pennsylvania Thomas Venditti State Director Workforce & Economic Development Network of Pennsylvania (WEDnetPA) 4807 Jonestown Road, Suite 246 Harrisburg, PA 17109-1744 Telephone: (717)920-6660 Email: Tvenditt@pct.edu www.wednetpa.com 33
Critical Takeaways As with most states, training programs throughout the Northeast are: Under budget constraints Easy to identify Funded through a variety of initiatives Awards/incentives available on case by case basis 34
Contact information Mike Huber Michael.huber2@ey.com 212.773.2629 www.ey.com Terry Hansen thansen@hickeyandassociates.com 202.436.2750 www.hickeyandassociates.com @SiteTrend hickeyandassociatesllc 35
Questions?