Financial assistance is typically provided on an incentive basis from a variety of state and local sources, in the form of a package custom-designed as appropriate for the needs and impact of the beneficiary business.
Local Incentives
Locally provided incentives vary with the business’s location, and are provided locally by various local municipalities, counties, industrial development agencies, empire zones, and local development corporations. A good strategy is to contact the industrial development agency for the particular county, and seek referral to all appropriate local economic development entities.
Locally provided economic development incentives include.
· Low Interest Loans. Typically, sub-market rate loans are made to qualifying businesses undertaking qualifying projects that result in the creation and/or retention of jobs and/or tax base. Often, these loans are made in conjunction with equity investment by the business and a loan by a commercial bank. In some cases, eligibility may be restricted to manufacturing and distribution companies, or to micro-businesses. Funds may be available for real estate, machinery, equipment, and/or working capital. Maximum and minimum loan size varies. These loan funds (called Revolving Loan Funds) are typically administered through the local and county economic development organizations serving a particular locality.
· Industrial Revenue Bonds. Industrial Revenue Bonds (IRB’s), issued by industrial development agencies, involve a loan of funds from a private investor to a business to finance a capital investment project. The most favorable incentive rates are available for tax exempt IRB’s, whose eligibility is strictly controlled by the US Internal Revenue Service. Tax exempt IRB’s provide their greatest cost advantages for manufacturing companies having eligible projects greater than $1 million and less than $10 million.
· Tax Leases. Tax leases, issued by industrial development agencies, can involve a transaction that is virtually identical to bonding transactions except that no bonds are involved. In a tax lease or straight-lease, the IDA takes title to a property and leases it back to a company this then makes the company eligible for partial real property tax abatements, sales tax exemptions on building materials, and mortgage tax/filing fees exemptions otherwise associated with a capital acquisition transaction. Eligibility typically includes manufacturing companies involved in land and building acquisition/renovation/construction.
· Grants. In some cases, a local development organization may have access to grant funds that may be made available to businesses. Also, counties and municipalities also may make application on behalf of the business to various grant-making organizations, including Community Development Block Grants; the New York State Industrial Access Program; New York State Empire State Development Corporation; the New York State Office of Science, Technology and Academic Research, the New York State Energy Research and Development Authority, and other New York State and federal agencies. Another class of grants may be available for employing and training certain classes of individuals, with funding available through county Workforce Investment Boards and training brokers.
· Real Estate Property Tax Abatements. To encourage development, expansion, and improvement of commercial property, municipalities can provide up to a 10-year property tax abatement, typically in combination with a reduced Payment In Lieu Of Taxes (PILOT) fee, that offsets increased assessments due to improvements to business and commercial property. Alternate routes to property tax abatements are through industrial revenue bonds or tax leases, which are provided by industrial development agencies.
· State Empire Zone Incentives. Empire Zones are specific geographic areas (parcels) designated by New York State. Businesses locating in these EZ’s may be eligible for specific benefits. These EZ’s are administered locally. However, many of the benefits are provided through the State, and thus the specific benefits are discussed below under State economic development incentives.
· Low Cost Utilities. Some communities are municipal power companies, and offer sub-market electricity to businesses. In other communities, electricity and natural gas utility services are provided by investor-owned utility companies, all of whom offer economic development incentive rate structures. Still other State programs, discussed below, can offer lower cost electric power. Most municipalities control their own water and wastewater utilities, and can offer custom incentive packages to qualifying businesses.
· Venture Capital. There are a number of for-profit venture capital firms operating regionally that can offer a combination of equity investment and management and technical services to qualifying companies.
· Employee Services. County Workforce Investment Boards (WIB’s) provide employee labor pool, screening, and training services.
· Job Training. A network of public and private job training service providers offer these services throughout the region. The On The Job Training (OJT) program, available through the county Workforce Investment Boards, offers a maximum 50% salary subsidy for the first six months of employment for qualified employment candidates. Employers also can obtain custom-designed training in specific skills from a network of public and private training service providers operating in the region.
· Procurement Assistance. The Cattaraugus County Department of Development provides assistance to the region’s businesses with accessing the federal and state purchasing (procurement) systems (specializing in defense procurement) as vendors.
· Export Assistance. The Cattaraugus County Department of Development provides export counseling assistance to the region’s businesses.
State Incentives
Economic development incentives provided by New York State fall into two categories: those incentives that are available to businesses located in State-certified Empire Zones and locally certified as such, and those incentives available to all businesses in New York State, regardless of location. Good strategies for accessing State incentives are either to contact New York State Empire State Development directly, or to contact the industrial development agency for the particular county, and seek referral to New York State Empire State Development.
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