Training Incentives - Colorado Springs Chamber and EDC · 2019-02-12 · Training Incentives Menu...

Training Incentives

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Colorado Springs Chamber of Commerce & EDC | www.cscedc.com | 719.471.8183 | [email protected] 1

Colorado Springs will package private and public incentives for relocating or expanding primary employer companies that are responsive to the specific investments of the company. The approval of incentives in Colorado may require an application by the potential recipient, meeting specific eligibility requirements, and obtaining formal approval by the various governing entities. A typical package may include the following:

Vocational Training Funding

Customized training may be provided for new employees of eligible companies through funding from the State of Colorado’s “Colorado FIRST” program. Training may be provided for permanent, non-seasonal jobs being created by non-retail companies newly locating to, or undertaking a significant expansion in Colorado. All direct training program costs are eligible for reimbursement. Companies must pay an average hourly wage greater than $12.00/hour. Pikes Peak Community College administers the program locally and funding is based on availability. Funding may be provided for up to $1,200 per new employee.

The State of Colorado provides a credit of 10% of employer investment in a qualified school-to-work program.

Pikes Peak Workforce Center Training Dollars

Companies moving to Colorado Springs may be eligible for training dollars to hire and train new, local employees.

The Pikes Peak Workforce Center (PPWFC) is federally funded to provide training opportunities for laid off workers and other eligible individuals looking for work in demand occupations and industries. Individuals must be determined eligible for these funds, and companies must sign a contract with PPWFC before training may be funded. PPWFC generally maintains a cap on the amount of training dollars that may be spent per trainee.

If a company relocating to Colorado Springs has laid off any employees in another part of the country, the company must be established in Colorado Springs for 120 days prior to requesting federal funds for training.

On-the-job training (OJT) contracts may be developed on an individual basis or for several workers. PPWFC may reimburse up to 75% of the wages of eligible, newly-hired employees for a limited training period. The trainees must be retained as full-time, permanent employees after successful completion of training. A contract must be signed and a training plan developed with PPWFC prior to any training taking place.

Customized training is for eligible individuals who are not yet employees of the company. Training for the specific skill sets required by the company is developed by the company or another training entity, such as a community college. The company must agree to hire any trainees as full-time, permanent employees once they have successfully completed the training. The company must pay for at least half of the training costs. Again, a contract with PPWFC must be in place before the individuals receive training.

In determining if a company is appropriate for OJT or customized training, PPWFC will consider wages and benefits, including health care, as well as, the projected demand for the goods and services produced by the company.

In addition to OJT and customized training, PPWFC works with other industry specific grants aimed at training and education within demand occupations, as funds are available to the region. To assist new and relocating companies PPWFC is able to host, at no-cost, large-scale hiring and screening events.

Source: Pikes Peak Workforce Center, 01/17

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Colorado State Incentives

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Job Growth Incentive Tax Credit Program

The Job Growth Incentive Tax Credit (JGITC) is a performance based job creation incentive program which provides a state income tax credit to businesses undertaking job creation projects that would not occur in Colorado without this program and have met certain requirements. A business may not start the proposed project in Colorado (including locating or expanding in the state, hiring employees related to this project, signing a lease, or making material expenditures for this project) until a final application has been submitted to the Colorado Economic Development Commission (EDC) and approved. Businesses must create at least 20 net new jobs (FTE) in Colorado during the credit period (defined as 96 consecutive months where the business may qualify for an annual tax credit) with an average yearly wage of at least 100% of the county average wage rate based on where the business is located and be considering at least one other state for the project. All net new jobs must be maintained for at least one year after the positions are hired to qualify for the minimum amount of tax credits that may be available to a business. Businesses receiving an incentive from the EDC’s Strategic Fund may not receive an incentive from the JGITC Program for the same net new jobs. The maximum tax credit is calculated by taking 50% (approximately 3.83%) of the FICA paid by the business on the net job growth for each year in the credit period. Although the maximum tax credit authorized by the EDC is calculated by projected information submitted by the business, the actual tax credits issued will be based on actual performance.

If the issued tax credits exceed the taxpayer’s income tax for the income tax year in which the credit is being claimed, the amount of the unused tax credit shall not be allowed as a refund, but may be carried forward and applied in each of the 10 succeeding income tax years.

NOTE: El Paso County average wage was $46,605 in 2016.

Strategic Fund

The Strategic Fund provides a cash incentive commitment to businesses that have met certain requirements under the Colorado Economic Development Commission’s (EDC) Strategic Fund. A business may receive funding consideration if it creates net new full-time permanent jobs in Colorado that are maintained for at least one year.

A business must materially meet the circumstances noted below: • Potential for economic “spinoff” benefits, such as attracting suppliers, generating tourism/travel activity, high prestige, or large expansion initiative. • Capital investment, relative to the number of jobs (significant capital investment is $100,000 or > per employee) • Responds to a special local economic event, such as replacing recent lay offs • Inter-state competitive factors • Headquarters in Colorado • Level of local matching commitments ($1:$1) • Other unique conditions

The business will need to demonstrate feasibility and financial capability along with the ability to create the number of jobs committed. Business decisions clearly moving forward without assistance from the EDC will not be considered for funding if an announcement is made prior to an introduction to the EDC. Businesses receiving an incentive from the EDC for the Job Growth Incentive Tax Program may not receive an incentive from the Strategic Fund for the same net new full-time jobs.

The following tables reflect potential incentive levels per eligible job based on the annual average wage rate for the net new full-time permanent jobs compared to the county average wage rate (based on information provided by the Dept. of Labor and Employment). The annual average wage rate calculation does not include benefits.



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Colorado State Incentives (continued)

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Strategic Fund (con’t)

EZ Non-EZ Average Wage $ Incentive/ Average Wage $ Incentive/ Rate % Eligible Job Rate % Eligible Job 100% $2,500 100% $2,500 110% $3,000 120% $3,500 120% $4,000 140% or > $5,000 130% or > $5,000*The average wage in El Paso County during 2016 was $46,605.

EZ = Enterprise Zone

Additional consideration may be given to businesses that do not meet the EDC’s minimum 100% annual average wage rate requirement if the following criteria are met:

• The business is located in (or will be located in) a designated Enhanced Rural Enterprise Zone;

• The local community provides rationale to the EDC outlining the businesses’ economic importance to the community; and

• The local community requests consideration for use of an alternative wage rate source and provides documentation that supports that the businesses’ annual average wage rate is higher than the annual average wage rate paid by private employers within their jurisdiction.

Additional consideration may be given to businesses within targeted industries (Renewable Energy, Aerospace, Bioscience, Information Technology) on a case-by-case basis.

The EDC reserves the right to approve, deny or vary from these guidelines as necessary and appropriate and delay any decision due to budgetary constraints.

For further information on either of the programs, please contact: Colorado Office of Economic Development and International Trade Business Finance Division Phone: 303-892-3840 | Web site: www.AdvanceColorado.com

Aircraft Manufacturer New Employee Credit

Economic Development and International Trade. This program is a calendar year performance based job creation incentive. A business or any portion of a business that is involved in aircraft manufacturing or maintenance and repair, completion or modification of aircraft located within the boundaries of an ADZ may qualify for a state income tax credit of $1,200 per new full-time employee. The facility must employ 10 or more employees and the credit is based on the increase in the average number of ADZ employees for the calendar year over the previous base number. Businesses must create new jobs within a recognized ADZ at an airport to claim credits. ADZ eligible businesses are involved in: • Production of aircraft parts specifically used in the manufacture of aircraft; • Proof of concept, prototyping, test and evaluation, certification or production of aircraft

City of Colorado Springs – Commercial Aeronautical Zone

The Colorado Springs Airport is located within a regionally created Commercial Aeronautical Zone (CAZ), which recognizes significant tax incentives for aeronautical businesses. All local sales and use taxes are abated for companies located within the CAZ and specifically engaged in a variety of aeronautical activities. Entities participating in the CAZ exemption include the City of Colorado Springs, El Paso County, and Pikes Peak Rural Transportation Authority. Items exempt from sales and use tax under this tax code: • The sale, purchase, lease, rental, use, storage, distribution or consumption of any aircraft, aircraft parts or supplies, equipment, tooling, solvents and/or paints used or consumed in the manufacture, maintenance, repair or overhaul of aircraft within the CAZ. • Purchase of lease equipment directly and exclusively used or consumed in the manufacture, maintenance, repair or overhaul of aircraft within the CAZ.



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Colorado State Incentives (continued)

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Colorado Sales and Use Tax Exemption on Aircraft and Aircraft Parts

Aircraft used in interstate commerce by a commercial airline and parts permanently affixed to aircraft are exempt from state sales and use tax. This includes, but is not limited to, fuselage parts, parts for the aircraft’s engine(s), seats permanently affixed to the aircraft, and aircraft paint.

Biotechnology Sales and Use Tax Refund

Colorado promotes its biotechnology industries by providing them with a taxpayer-friendly means to recover the sales and use taxes paid in the preceding year on equipment and supplies purchased to conduct biotechnology research and development. Qualified taxpayers may seek a refund every year for all Colorado sales and use taxes they paid on purchases of tangible personal property used directly and predominately in research and development of biotechnology. This includes property such as microscopes, chemical reagents, and software. The refund helps promote the biotechnology industry in the state, aiding both start-up and established companies.

Tax Incentives

Tax incentives have been built into the tax codes of state and local taxing authorities. Examples include: no state or county sales tax on manufacturing equipment; no inventory tax, and others.




Local Tax Incentives

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Tax Incentives

Tax incentives have been built into the tax codes of state and local taxing authorities. Examples include: no state or county sales tax on manufacturing equipment; no inventory tax, and others.

Sales Tax Exemptions

Each business assisted will be analyzed to determine the tax issues that are important and a presentation of available incentives will be provided. Standard incentives include:

City of Colorado Springs Sales and Use Tax Rebates:

• Construction Materials • 50% rebate on City’s 2% General Fund Portion

• Business Personal Property (Annual Purchases) • 50% rebate on City’s 2% General Fund Portion 10 New jobs – 4 year agreement 100 New jobs – 10 year agreement 500 New jobs – 15 year agreement

• Alternative Rate of Tax on Machinery and Equipment • Sliding scale of sales and use tax on large purchases of manufacturing equipment $0 to $5 Million – 2.5% (no reduction) $5 to $7.5 Million – 2.0% $7.5 to $10 Million – 1.5% $10 to $15 Million – 1.0% $15 to $20 Million – 0.5% $20 Million and above – 0%

Note: Manufacturers may take advantage of the 50% Sales and Use Tax Rebate for Business Personal Property OR the Alternative Rate of Tax on Machinery and Equipment, but not both.

The City of Colorado Springs will also provide a sales tax exemption from manufacturing equipment if, in the acquisition of a manufacturing business, the purchaser maintains the employment present at the time of acquisition for 2 years.

City Sales and Use Tax incentives are subject to formal approval by the City of Colorado Springs and minimum criteria to qualify include: • Primary employer • Create 10 new jobs • $1 Million new capital investment




Local Tax Incentives (continued)

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City and County Personal Property Tax Credit

Colorado assesses a business personal property tax levied against personal property assets of a business or organization. Business Personal Property includes equipment, machinery, furniture, security devices, signs and personal effects not otherwise exempt. El Paso County is responsible for assessment and collection of all property taxes in El Paso County.

As a business incentive, El Paso County no longer collects their portion of the business personal property tax from any business – the only county in Colorado that offers this.

The City of Colorado Springs is following the County’s lead and is currently in the process of phasing out their portion of the business personal property tax as well, with full elimination of the City’s portion of the tax by 2018.



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Pikes Peak Enterprise Zone

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Businesses locating within the Pikes Peak Enterprise Zone may be eligible for one or several Colorado Business Income Tax Credits related to hiring new employees, making investments in equipment, training employees and conducting research and development activities. A business that plans to earn an Enterprise Zone (EZ) tax credit must receive pre-certification each year prior to earning the credit and then must receive final Certification from their local EZ Administrator after earning the credit.

These credits are more fully described below. The Colorado Springs Chamber of Commerce & EDC and the Pikes Peak Enterprise Zone Administrator will be able to elaborate on any of these credits.

Investment Tax Credit

Businesses making investments in equipment used exclusively in an Enterprise Zone for at least one year may claim a credit against their Colorado income taxes equal to three percent (3%) of the investment amount, subject to limitations on the amount that can be claimed in any one year. In general, only equipment purchases qualify for the investment tax credit. The credit is claimed on the state income tax return for the year it would have been claimed under federal law (the year the property was placed in service). Excess credits maybe carried back three years and forward twelve.

Jobs Tax Credit

Businesses hiring new employees / creating jobs in an Enterprise Zone may claim a state income tax credit of $1,100 for each new job created above the maximum number employed in the prior tax year. The taxpayer may prorate the credit based on the number of months the new facility is in operation at a rate of $91.67 per new employee per month of employment. If the credit exceeds the taxpayer’s Colorado income tax liability, the balance may be carried forward up to five years.

Employer-Sponsored Health Insurance Credit

For the first two full income tax years a business operates in an Enterprise Zone, the taxpayer can qualify for a two-year credit of $1,000 (or $2,000 total) for each employee who is insured under a health insurance plan or program provided through the employer. The employer must contribute 50% or more of the total cost of the plan.

Research & Development Tax Credit

Businesses involved in private expenditures on research and development activities in the Enterprise Zone qualify for an income tax credit. This credit equals three percent (3%) of the amount of the increase in the taxpayer’s R&D expenditures within the Enterprise Zone for the current tax year above the average of R&D expenditures within the Enterprise Zone during the previous two tax years. The total amount of the credit must be divided equally over a four-year period. Qualified research must satisfy three criteria: it must be technological in nature, it must be useful in the development of a new or improved product or component of the business and it must utilize the process of experimentation.

Credit for Rehabilitation of Vacant Buildings

There is a credit of twenty-five percent (25%) of rehabilitation costs up to a maximum credit of $50,000 to rehabilitate buildings that are at least 20 years old and which have been completely vacant for at least two years. Qualified expenditures include exterior, structural, mechanical, and electrical improvements.




Job Training Credit

Employers located in an Enterprise Zone are allowed to claim a credit of 12% of their eligible training investment in a qualified job training program, defined as a structured training or basic education program conducted on site or off site by the taxpayer or another entity to improve the job skills of employees who are employed by the taxpayer. These employees must be working predominately within Enterprise Zone. On the job training is not a qualified job training program.

Pikes Peak Enterprise Zone (continued)

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Manufacturing and Mining Equipment Exemption

Purchases of manufacturing machinery or machine tools and parts thereof are exempt from state sales and use tax (3%) when the machinery is to be used in manufacturing. Those purchases are also exempt from El Paso County’s sales and use tax (1.23%). For businesses in an Enterprise Zone, this exemption is further expanded to include the purchase of machinery and machine tools used in certain mining or oil and gas operations and to the purchase of materials for the construction of machinery and machine tools, as long as the machinery is used exclusively in the Enterprise Zone.

Manufacturers within the Enterprise Zone may claim this exemption whether the purchases are capitalized or expensed for accounting purposes. At the time of purchase, a “Purchases of Machinery and Machine Tools” form DR 1191 must be filed with the vendor from whom the item is purchased and with the Colorado Department of Revenue.

Source: Colorado Department of Local Affairs, El Paso County Financial Services Department – Division of Economic Development 01/17 http://adm.elpasoco.com/BudgetAdministration/ EconomicDevelopment/Pages/EnterpriseZone.aspx



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Foreign Trade Zone

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Colorado Springs Foreign Trade Zone #112 consists of 2,371 acres in four separate areas of the city. A Foreign Trade Zone is a restricted access area located within the United States and Puerto Rico, that is considered legally outside the customs territory of the United States. The key benefits in a Foreign Trade Zone are duty deferral, duty reduction and duty avoidance for the transfer, use and storage of imported materials. Import duties are deferred until the materials physically leave the Foreign Trade Zone or reduced if used in a product with a lower duty rate. There is no import duty if the materials, or products in which imported materials are used, are re-exported. Foreign Trade Zones enhance the ability of U.S. firms to compete in the international marketplace.




Rapid Response Team (RRT)

• Provide primary employers with expedited development plan review and permitting for both: • existing companies’ expansions; • new employers locating a facility in Colorado Springs. • Reduce by about half the typical approval process time.

Early in the project design phase and prior to preparing final plans, company representatives should contact the city’s Economic Development (ED) manager.

The ED manager will invite representatives from the company and the reviewing agencies to a RRT meeting to discuss the company’s development / building plans.

The RRT meeting is designed to accomplish the following objectives: 1. Company’s group meets plan reviewers 2. Company’s group hears requirements for plans to be approved 3. RRT members suggest ways to reduce the time involved in plan approval or project construction 4. RRT members are familiar with, and will be watching for, the company’s plans

When the company is ready to submit formal plans, the company notifies the city’s ED manager to initiate the following RRT services:

• RRT plans will be moved to high priority at each reviewing agency • RRT reviewers will forward plans with comments to the next reviewer

Online tracking:• Available on the Internet to check status of the plans: www.pprbd.org

Issue resolution:• City’s ED manager is the contact for centralized responses

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Private Activity Bond (PABs)

• Bond financing for investing in qualified projects; • Offered at a lower interest rate and provide significant savings over conventional financing; • Exempt from federal and state income tax; and • Repaid from the revenues of the entity on whose behalf the City has issued the bonds. Thus, the City assumes no financial risk since PABs do not constitute a debt for the City of Colorado Springs.

Qualified PAB projects, typically from $1 million - $10 million, can be used for:

• new facilities; • existing facilities that are rehabilitated; • purchasing new equipment; • facility infrastructure; • higher education facilities; • health care facilities; • other types of eligible projects which promote the public good; • essentially, PAB projects should include components that create jobs, improve neighborhoods, and/or increase the wealth in Colorado Springs.

A prospective borrower is required to demonstrate the financial soundness of the business and the project, similar to the requirements for securing a privately-funded loan. Proforma balance sheets, income statements, audited financial statements, and cash flow projections are examples of the types of documents required.

The borrower pays fees to the City associated with the City’s issuance of PAB financing. There are non-refundable fees of $1,000 and $5,000 for application and inducement resolution, respectively. In addition, the borrower also pays all City Attorney expenses related to the bond issuance, and bond services fees of up to .5% / $1,000 of bonds issued.

Some not-for-profit organizations may also be eligible for tax-exempt financing of capital projects under a different form of PAB, and the 501(c)(3) bonds.




El Paso County Revolving Loan Fund

The El Paso County Revolving Loan Fund (RLF) is a federally-funded loan pool created by the US Department of Housing and Urban Development (HUD). The funds, Community Development Block Grant (CDBG) monies, are provided by the State of Colorado and administered locally. El Paso County, through its Office of Economic Development, contracts with the Pikes Peak Regional Development Corporation to administer the program for the County.

GOALS - The primary goals of the RLF are to create and retain jobs and to expand and diversify the economic base of El Paso County. Highest priority will be given to manufacturing operations that create new investment in El Paso County. To ensure job creation and retention, the business receiving the loan will be required to create or retain at least one job for every $20,000 in RLF assistance. At least sixty percent (60%) of new jobs created must be filled by employees who, upon hiring, have a family income below El Paso County’s moderate income limits provided by HUD (family income may exceed the County’s moderate income limits after hiring).

ELIGIBILITY - The RLF monies are available to private, for-profit businesses within unincorporated El Paso County and its incorporated cities and towns. The City of Colorado Springs maintains a separate loan pool; therefore, businesses within the city limits of Colorado Springs are only eligible for monies from the City’s pool.

FUNDS - The RLF is primarily for financing fixed assets, including land, buildings, machinery, and equipment. Working capital and inventory are also eligible uses of loan funds. Minimum and maximum dollar amounts available for each loan are $10,000 and $100,000, respectively. Priority will be given to projects that exhibit the greatest public benefit. Generally, the RLF assistance may not exceed forty percent (40%) of the total project cost, and the borrower’s equity contribution will be at least ten percent (10%) of the total project cost.

TERMS - With the RLF program, loan terms are flexible and are determined on a case-by-case basis depending on the life of the asset being financed. Real estate loans will usually have a term ranging from seven to ten years; capital equipment loan terms usually range from three to five years; and working capital loan terms usually range from one to three years. All loans are fully collateralized and personal guarantees are required of all borrowers. Interest rates will be fixed at a rate that is below market rates at the time of closing.

Source: El Paso County Financial Services Department

Small Business Support

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Small Business Support

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Pikes Peak Regional Development Corporation (PPRDC)

PPRDC is an SBA Certified Development Company (CDC) that provides the SBA 504 Loan Program to businesses in Colorado. Through the SBA 504 loan program, PPRDC typically arranges funding for up to 40% of the project cost, up to a maximum of $5,000,000 or $5,500,000 for manufacturers. The first 50% of the project comes from a private lender such as a bank or credit union, leaving a 10% equity injection by the borrower. Eligible purposes or project costs for the funds are: (1) purchase of land, building, machinery and equipment; (2) land improvements; (3) renovation or major addition to existing building; (4) construction of new buildings; and (5) the project financed should stimulate economic development and create new jobs.

Eligible businesses: (1) are for-profit businesses; (2) have a tangible net worth less than $15 million; (3) average net profit after tax of less than $5 million dollars for the past two years; and (4) must be the user of the financed fixed assets with the expansion ranging from $250,000 to several million dollars. These assets can include real estate acquisition, new construction, renovation or expansion. Proceeds can also be used for land and site improvements such as parking lots, utility connections, and landscaping. Machinery and equipment can also be financed. Examples of other project costs that can be included are professional fees directly attributable and essential to the project such as surveying, engineering, architectural fees, legal fees, recording and title fees, and points on interim financing. Construction interest can be financed as well.

PPRDC also administers the El Paso County Business Loan Fund. Eligible for-profit businesses are located in El Paso County outside of the City limits of Colorado Springs or in designated Enterprise Zones. All for-profit manufacturing companies are eligible. Funds can be used for a variety of needs the small business may have ranging from $25,000 to $200,000.

Additional information about both programs can be found at www.pprdc.com or by calling 719.471.2044.

Source: El Paso County Financial Services Department – Pikes Peak Regional Development Corporation; 08/2016




Training Incentives - Colorado Springs Chamber and EDC · 2019-02-12 · Training Incentives Menu...

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