Delaware Governor Signs Legislation Boosting Small Business R&D Tax Credits

Delaware Governor Jack Markell signed into law new legislation that will double the research and development tax credit the state offers to startups and small businesses.

Delaware Governor Jack Markell at HB 318 bill signing

Delaware Governor Jack Markell at HB 318 bill signing (photo – delaware.gov)

The Governor signed House Bill 318 at the Delaware BioScience Association’s headquarters in the Delaware Technology Park.

The bill was passed with overwhelming bipartisan support last month by the Delaware Senate and House of Representatives.

As per the new law, businesses with less than $20 million in average annual gross receipts for the most recent four years are eligible for a state R&D tax credit equal to 100 percent of the corresponding federal credit.

Before HB 318 became law, all businesses in the state were entitled to a state R&D tax credit of up to 50 percent of the federal credit. Larger companies will continue to be able to claim up to half of the federal credit.

The amendment is meant to boost Delaware economic development by attracting companies from out of state and by increasing the opportunities for entrepreneurs in the state to innovate and grow.

Gov. Markell said that state R&D tax credits have been proven to encourage research, attract out-of-state companies, and boost the high-tech sector.

Even so, only about two percent of these credits go to startups and small businesses. The Governor said this needs to change, and that’s what this law is about.

“By encouraging research and development at all of our companies, we will incentivize innovation and growth in emerging industries that are vital to our economic future,” said Gov. Markell.

The enhanced amount in tax credits available to each small business won’t reduce state revenues, because the total funding for the R&D tax credit program is still capped at $5 million. The law merely ensures a more equitable distribution, with small businesses and startups getting a larger share of this amount.

State Representative Bryon Short, who sponsored the bill in the House, said the passage and signing of the bill is another step in establishing Delaware as the best state to start and grow a business.

Rep. Short added that Delaware is increasing the opportunity for job growth and enhancing its competitiveness with other states by modernizing the state R&D tax credit to better support the growth of small businesses.

Kansas State University Kicks Off Construction of Bulk Solids Innovation Center

Kansas State University last week broke ground on their long-planned and much-awaited Bulk Solids Innovation Center project in Salina, KS.

Rendering of K-State Bulk Solids Innovation Center in Salina, KS

Rendering of Bulk Solids Innovation Center in Salina, KS (photo – k-state.edu)

The 13,000-square-foot innovation center is a public-private partnership involving K-State, the Salina Economic Development Corporation, the U.S. Economic Development Administration,State of Kansas, City of Salina, the Salina Area Chamber of Commerce, and a number of private companies.

Along with the university, Coperion K-Tron Salina Inc. and Vortex Valves will serve as the building’s anchor tenants.

This innovation center for researching the science and understanding of bulk solids materials handling will be the only one of its kind in North America.

Bulk solids are dry commodities such as sugar, grain, minerals, chemicals, recycled plastics and other pellets, granules and powders that make up 80 percent of items being transported worldwide and used as components of almost all manufactured goods.

Unlike liquids and gases, the science behind these bulk solids is not as yet thoroughly understood, and very little research has been done on the most efficient methods of handling, storage and distribution of bulk solids.

New research into the science behind bulk solids could provide a wide range of industries with significantly enhanced productivity and cost savings.

To facilitate this project, the EDA invested $1 million in 2013 for construction of the Bulk Solids Innovation Center, which had been in the planning stage for around five years.

Once operational after April 2015, the center will offer space for multiple small and medium-sized research projects related to improving storage and transportation of bulk solids. Major companies including Dow Chemical, Procter and Gamble, Exxon Mobil, Cargill and DuPont have expressed interest in contracting with the university for solving problems with their bulk solids processing operations.

Kurt Barnhart, associate dean of research and engagement at K-State Salina, said this center is the next step in defining K-State Salina in the field of research. Barnhart added that expert faculty and committed students are key to making K-State and the innovation center distinctive locally and internationally, which will in turn attract sponsored research funding and world-class industries, resulting in a positive economic impact on the area.

Mark Jackson, head of the engineering technology department at K-State Salina, said the innovation center will help them redesign degree programs to embrace project and product-based learning, and their graduates will start being immediately productive in the bulk solids processing industries.

New York and GE Launch Power Electronics Manufacturing Consortium as Public-Private Partnership

New York State is partnering with a group of more than 100 companies to launch the Power Electronics Manufacturing Consortium as a public-private partnership to develop and manufacture high tech materials used in semiconductors.

Gov. Cuomo at launch of Power Electronics Manufacturing Consortium

Gov. Cuomo at launch of Power Electronics Manufacturing Consortium (photo – ny.gov)

The Consortium, led by GE and the State, will invest more than $500 million and create thousands of new jobs in Upstate New York over the next five years.

The announcement was made at an event at the GE Global Research Center in Niskayuna, NY by Governor Andrew M. Cuomo, GE Chairman and CEO Jeff Immelt and other state and local officials.

“With commitment from our partners, we are advancing New York’s capability to compete in the international marketplace and make this state the place to develop and manufacture high tech materials,” said Gov. Cuomo.

The Governor added that this investment and the partnership today will be utilizing the workforce of tomorrow, creating jobs and increasing long-term investments in the state.

The Power Electronics Manufacturing Consortium (NY-PEMC) will be based out of a State-owned R&D facility in Albany, NY and managed through the SUNY College of Nanoscale Science and Engineering (CNSE/SUNYIT).

This site will function as a shared open-innovation facility that will enable the expansion and growth of SMEs and major corporate partners alike. GE is the lead partner in this fab, which will be housed at the CNSE Nano Tech complex. As the anchor tenant, GE alone will be investing more than $100 million to establish the facility.

“GE is proud to support New York’s Power Electronics Manufacturing Consortium, which places New York at the forefront of the next revolution in power,” said GE Chairman and CEO Jeff Immelt.

New York State is pitching in with another $135 million that will be provided to CNSE to fund the establishment of the NY-PEMC facilities.

Gov. Cuomo explained that they are using the same model that worked so brilliantly in the nanotechnology experience where the state owns the equipment and the facility.

Businesses come for the facility and equipment and research capabilities, and end up staying for the cluster and collective energy of all the companies already working on the same things. The state finances the magnet that initially attracts companies, and the effort then gathers its own momentum. The whole thing stays in place afterwards because the state owns all the essential facilities.

To make the prospect even more appealing, the operations of NY-PEMC partner companies at the CNSE site will be entirely tax-exempted under the STARTUP-NY initiative.

The Governor said it was a brilliant effort that was vastly different from not just New York economic development efforts in the past, but also from those by states all over the country.

SUNY CNSE/SUNYIT CEO and Officer in Charge Dr. Alain Kaloyeros said that power electronics is one of the fastest growing global markets, and New York is now poised to lead the way in their continued refinement.

Vanguard Furniture Creating 200 Jobs in Carroll County, Virginia

High-end upholstery producer Vanguard Furniture is making a foray into Virginia by establishing a production operation in the Carroll County Industrial Park.

Carroll County, VA

Carroll County, VA (photo – carrollcountyva.org)

The company will invest $550,000 to renovate and equip an existing facility in the industrial park, and expects to create 200 new jobs in Carroll County.

Vanguard already has 500 existing associates, with their headquarters and main manufacturing operations located in Conover, NC. They also have a showroom in High Point, NC.

“Vanguard is able to take advantage of an available facility that will allow a quick start-up to production, and Southwest Virginia offers an abundant workforce with a skill set in the furniture industry,” said Governor Terry McAuliffe.

The Governor added that Carroll County has gone to great lengths to meet the company’s needs and ensure that the Carroll County Industrial Park will be home to the company’s first Virginia operation.

The project was secured by a collaborative effort involving the Virginia Economic Development Partnership, Carroll County and the Carroll County IDA, and Virginia’s aCorridor.

aCorridor is a regional economic development organization representing six counties and two cities in the Mount Rogers region of southwestern Virginia.

Vanguard will receive workforce training funding and support under the Virginia Jobs Investment Program for training new employees.

Vanguard Furniture President Andy Bray said that they felt the need to expand operations because of unprecedented growth over the last few years. Bray added that communities surrounding their new facility in Virginia have proud traditions of manufacturing quality upholstered furniture, and they anticipate attracting some of the finest craftsmen in the area.

Virginia Secretary of Commerce and Trade Maurice Jones likewise noted that Southwest Virginia has a rich history in the furniture industry, and noted that 200 new jobs with wages higher than the prevailing average wage in the county is significant news for the region as it continues to rebound economically.

Carroll County Board of Supervisors Chairman David Hutchins said it was a great day in Carroll County, having secured more than 200 new jobs in an economic sector that is a natural fit. Hutchins noted that the project would not have been carried out but for the coordination and assistance of many groups and individuals such as the Carroll County IDA.

Wisconsin Economic Development Corp Reopens Historic Preservation Tax Credit Program

The Wisconsin Economic Development Corporation has lifted a moratorium on the state’s Historic Preservation Tax Credit (HTC) program.

Wisconsin

Wisconsin (Photo – inwisconsin.com)

Last month, the WEDC had placed a moratorium on the program and stopped accepting applications in order to conduct a review.

The HTC program was originally established with an expected budget impact of $4 million. However, the popularity and demand for the tax credit soon outgrew the funding.

The budgetary impact of the program has been creeping up steadily every year, and is currently at $35 million.

The incentive offered under this program is a 20 percent transferable tax credit on qualified expenses associated with rehabilitation of historic buildings. This means that credits can be transferred to a third-party in return for a cash payment.

The goal of the HTC program is to jumpstart investment in main streets, downtowns and small businesses in aging communities across the state. It’s one of the measures implemented to align with the WEDC’s Core Strategies outlined in the four-year strategic plan (pdf).

To be specific, Strategy 1.5 (scroll down to pg 12) calls for alignment of community development resources (main street, public infrastructure investment) to support WEDC objectives.

“The Historic Preservation Tax Credit has proven to be a successful economic development tool,” said Governor Scott Walker.

The Governor added that the moratorium was necessary in order for the Wisconsin Economic Development Corporation to determine the best method to continue the program, and worthwhile projects can now move forward and help grow local economies and revitalize communities throughout the state.

After completing the review of the program, the WEDC decided to end the moratorium on providing the HTC tax credit for rehabilitation projects in certified historic buildings. The moratorium is still in place for non-historic buildings dating back to before 1936, which were also previously eligible to apply for the tax credit.

The WEDC will also be collecting additional information now, in terms of the HTC program’s return on investment to the State. They will be collecting data on the projected permanent and construction jobs being created by the projects, and the wages for these jobs.

Information will also be collected about each project’s ability to leverage additional investments upon receiving the HTC tax credit, the extent of local participation in the project, tax impact, etc.

Volkswagen Greenlights Chattanooga, Tennessee Expansion With 2000 New Jobs

The long-awaited expansion of the Volkswagen plant in Chattanooga, Tennessee was made official by Governor Bill Haslam and company officials in Germany.

Gov. Haslam and Volkswagen officials in Germany announce Chattanooga, TN expansion

Gov. Haslam and Volkswagen officials in Germany announce Chattanooga, TN expansion (photo – TNECD)

The Volkswagen Group has decided to expand its industrial footprint in the U.S., starting with an investment of $900 million for producing their new midsize SUV for the North American market.

Out of this, $600 million will be invested in Tennessee, with 2,000 additional jobs being created in Hamilton County, TN.

The Chattanooga plant, which already has 2,500 employees, is the company’s first and as yet only U.S. manufacturing facility.

The manufacturing line for the SUV will be integrated into the existing plant structures by adding approximately 538,000 square feet to the available floor space.

The company said that from 2014-2018, they plan to invest a total of $7 billion in the U.S. and Mexico, and plan to produce 800,000 vehicles for delivery to the U.S. market by 2018.

As part of the expansion, Volkswagen Group will also build a National Research and Development and Planning Center in Chattanooga that will operate independently to collect feedback from customers and see that it gets integrated expeditiously into existing and new vehicle models. This new center will employ 200 engineers.

“Today is an exciting day not just for Chattanooga and Hamilton County but for all of Tennessee, and I want to thank Volkswagen for its significant long-term investment in our state,” said Gov. Haslam.

The Governor added that the impact of this announcement goes far beyond the 2,000 new jobs because of the large multiplier effect of the automotive industry.

A study conducted last year by Dr. William Fox of the University of Tennessee’s Center for Business and Economic Research showed that the VW Chattanooga plant has far exceeded expectations.

The study showed that the plant is generating $643.1 million in wage income and $233.6 million in spending with suppliers for products and services. This has helped create an additional 9,985 jobs in the region, adding up to a total of 12,400 new jobs. The plant has caused state and local tax revenues to increase by $53.5 million.

 

Volkswagen Chattanooga

Volkswagen Chattanooga (photo – vw.com)

The new $600 million investment and 2,000 new jobs will also produce the same exponential economic impact in the region. That’s what makes the enormous incentive packages being provided to the Volkswagen Group of America a good deal.

The original project in 2008 was secured with the help of $577 million in federal, local and State of Tennessee economic development incentives for Volkswagen. As per Dr. Fox’s study, this total amount was still less than the annual payroll and would be paid back in full by the company in the form of state and local tax revenues in just 11 years.

The Chattanooga plant was competing for the expansion with the VW plant in Puebla, Mexico. Tennessee, the City of Chattanooga and Hamilton County secured the project with the help of a huge package of state and local incentives that adds up to nearly $300 million. This is in addition to the original $577 million incentive package.

The new incentives offered to VW include a $165.8 million grant from the State of Tennessee for the project’s upfront costs including site development and preparation, infrastructure improvements, facility construction and equipment purchase and installation.

State incentives also include a $12 million grant for workforce training for the new employees.

Digital Domain Facing Legal Action Over Florida Economic Development Incentives

The Florida Department of Economic Opportunity has retained outside counsel for filing a suit against Digital Domain and related parties.

gavel

Photo by toridawnrector/flcikr

The announcement, made by Florida Governor Rick Scott’s General Counsel Peter Antonacci, is about recovering $20 million in Florida economic development incentives provided to the company for a project in Port St. Lucie, FL which ultimately didn’t create any jobs.

“The state has hired outside counsel to identify any and all legal action available against the company and any other individuals involved in wrongdoing related to this bad deal. We expect to announce specific legal action in the coming weeks,” said General Counsel Antonacci.

Back in 2009, under the previous administration before Gov. Scott took office, the Digital Domain Media Group, Inc. was awarded $20 million in State of Florida economic development incentives to locate a digital production company in Port St. Lucie.

Between Sept 2009 to April 2011, the company received four payments from the State totaling $20 million. On Sept 7, 2012, Digital Domain announced that it was closing down its Florida operations by reducing the workforce at the Port St. Lucie facility, which had by then grown to 300 employees. Shortly after that on Sept 11, 2012, Digital Domain filed a Chapter 11 bankruptcy petition.

A review conducted last year by the Florida Inspector General reveals how the company managed to obtain this funding.

Unspent funds under the state’s Quick Action Closing Fund (QACF) for 2008-09 were reverted back to the Legislature, and then appropriated to the Florida Office of Tourism, Trade and Economic Development (OTTED) and subsequently awarded to Digital Domain without having to go through the statutory process that is required in order to receive incentives from the QACF.

This was legal, but it was unusual in that it was pushed through concurrently with the usual process where a possible QACF award is recommended by Enterprise Florida (the non-profit public-private Florida economic development partnership) to OTTED. This process did not result in a recommendation to provide funds to Digital Domain.

The Inspector General  noted in the report that they were unable to determine all the factors that led to the decision to award funds to Digital Domain because of gaps in written documentation and unavailability of key witnesses.

The report added that although improvements have since been made to the process of awarding economic development incentives, the way in which Digital Domain was awarded the funds could still work if the Legislature appropriates funds and gives the Executive Branch discretion on using the funds.

NGA Chair’s Initiative for State Governments – Delivering Results

At the closing session of the National Governors Association Summer Meeting, Colorado Governor John Hickenlooper officially became the new chair of the NGA, and unveiled a new yearlong chair’s initiative called “Delivering Results.”

Delivering Results - NGA Chair's Initiative

Delivering Results (photo – nga.org)

The initiative is aimed at making state government work in a more cost-effective and efficient manner through various means including new and emerging technologies, sophisticated analytics, regulations and governmental process improvement.

The Governor said that states now collect and spend around $900 billion, which he said is more than what most countries do. “That makes it more important than ever to keep government lean and use data to track progress and deliver results to residents,” added Gov. Hickenlooper.

Specifically, the initiative will focus on improvements in the who, how and what of Delivering Results:-

Who – Change the “who” of state government by instituting hiring practices that enable recruitment and retention of the kind of employees who will be able to provide the best future government services, including harnessing private sector employees to assume roles in public service. Also engage the private sector and non-profits to create public-private partnerships that can finance and deliver public services.

How – Change the “how” of delivering services by using new technologies and adopting lean processes. The initiative will not only focus on digital government and transparency, but also a variety of technologies such as use of GIS for improving disaster response and land-use planning. The initiative will show how cutting rigid regulations that are impeding job creation can lead to a more efficient and lean government.

What – Show how the “what” of policies and programs can be changed by using the growing volume of available research to inform policymakers about what works. The evidence collected through research such as randomized controlled trials and other such techniques can be used to guide new programs and eliminate unsuccessful ones. Rapid and low-cost evaluation ensures that programs can be tweaked to provide peak performance while they run. This can be implemented in many areas ranging from education and health care to energy and workforce training.

All of this will be done by studying what many states are already doing in taking advantage of innovations implemented by universities, business and others to address the issue of delivering better results. The initiative will collect and showcase these successes in governance changes from various states so that the best practices can be shared among the states.

The results will be disseminated through webinars, podcasts and briefs that will be issued, along with a governor’s guide called “The Who, How and What of Delivering Results.” The initiative will also be holding an experts meeting in Washington D.C., and a Delivering Results summit in Denver, CO.

Greater New Orleans Economic Development Announces Coastal Resilience and Economy Coalition

Greater New Orleans economic development organization GNO Inc. announced the launch of the Coalition for Coastal Resilience and Economy to maximize the impact of RESTORE ACT and other federal funding to Louisiana.

Oil spill and coastal restoration in Louisiana

Oil spill and coastal restoration in Louisiana (photo – la.gov)

CCRE will be a business-led coalition for advocating sustainable restoration of the Louisiana coastline, wetlands, deltas and rivers.

The coalition will promote coastal restoration as good business and a way to enhance economic development in Southeast Louisiana.

They will work to secure the maximum possible federal funding, including funding under the RESTORE Act, allocated to Louisiana. CCRE will furthermore ensure that this federal funding is utilized for the intended restoration purposes.

The coalition will also leverage the federal funding to direct other revenue streams, and create opportunities to engage local businesses and the workforce in the implementation of restoration programs.

Jerome Zeringue, executive director of the Coastal Protection and Restoration Authority of Louisiana, said partnerships such as these allow the state to engage business interests and other stakeholders to work together for achieving the goals of restoring and protecting coastal Louisiana.

CCRE’s founding members include a diverse group of business leaders and executives from the Baton Rouge, Greater New Orleans and Terrebonne–Lafourche regions. Stirling Properties President and CEO Marty Mayer has been chosen as the coalition’s inaugural chairman.

“With the coming influx of funding from the RESTORE Act and other oil spill related settlements, we have a unique opportunity to ensure the continued prosperity and sustainability of Southeast Louisiana,” said Mayer.

Mayer said the issues ahead were not just environmental, but also cultural, economic and civic, and added that he was looking forward to the impact of their unprecedented effort on the crisis.

The CCRE membership includes, among others, New Orleans Saints and Pelicans owner Rita Benson LeBlanc; JP Morgan Chase Bank’s New Orleans Region President Lizette Terral; and Chevron’s State Government Affairs Manager Brent Wood.

“The future success and growth of our region is directly tied to the preservation and restoration of our coastal wetlands,” said Rita Benson LeBlanc.

CCRE is being supported by the Walton Family Foundation. Kristin Tracz, the Foundation’s Program Officer, said they believe smart restoration projects based on the best available science will create economic opportunities in Southeast Louisiana now and for generations to come.

Michael Hecht, president and CEO of GNO, Inc., said that the region has a “take it or leave it” opportunity for making strategic investments in the environment today for ensuring continued economic growth and opportunity tomorrow, and CCRE will help in ensuring that this happens.

Utah Awards Economic Development Incentives For Projects Creating 500 Jobs

The Utah Governor’s Office of Economic Development has awarded incentives for two companies that are creating a combined total of 500 new jobs in Weber County, UT.

Utah Jobs Connection

Utah Jobs Connection (photo – utah.gov)

Consumer United, Inc., which runs an online insurance comparison shopping service, plans to establish a new facility in Utah with a capital investment of $900,000.

The project will create 400 jobs over the next seven years. The aggregated wages for these jobs over the agreement period will exceed 125 percent of the county’s average wage.

Over the life of the agreement, these new jobs will add approximately $121,744,109 in state wages. New state tax revenues will likewise increase by $5,268,757 over the same seven-year period.

Justin Dangel, CEO of Boston-based Consumer United, Inc., said they considered several locations west of the Mississippi for this project. Dangel added that Utah not only offers an attractive combination of hard-working and skilled workers, but also visionary government leaders who have created an ideal environment for economic development.

The GOED Board has approved a post-performance tax credit of up to $1,053,751 as an EDTIF incentive for this project. The amount is 20 percent of the new state taxes Consumer United is expected to pay over the seven-year agreement period. The company will be able to claim a portion of the tax credit each year depending on their state tax liability.

GOED’s interim executive director Sopia DiCaro also noted that Utah’s qualified and well-educated workforce continues to be a huge asset in company recruitment.

Jeff Edwards, president and CEO of the Economic Development Corporation of Utah (EDCUtah), said that Consumer United is a big player in the online insurance industry, and the creation of their new office in Utah will strengthen the industry and help create the critical mass necessary for attracting more companies.

The second project approved for Utah economic development incentives is a planned $30.4 million expansion by Tucker, GA-based CSM Bakery Products in the City of Pleasant View, UT. This project to add a new cookie production line will result in the creation of 100 new jobs in Weber County over the next six years.

Again, the total aggregate wages ($12,582,743 over six years) are expected to exceed 125 percent of the county’s average wage. The CSM Bakery Products expansion will generate new state taxes estimated at approximately $1,567,621 over the six-year agreement period.

The GOED Board approved a tax credit of up to $313,524 as a post-performance EDTIF incentive for CSM Bakery Products that can be claimed in stages every year as the company fulfills its commitments under the agreement.

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