NC State & Brunswick County Tax Incentives & Financing Programs for New and Expanding Eligible Business
The Department of Commerce annually ranks the state’s 100 counties based on economic well-being and assigns a tier designation to each. The 40 most distressed counties are designated a tier 1, the next 40 are tier 2 and the 20 least distressed counties are a tier 3. This tier system is incorporated into various state programs, including Article 3J Credits, to encourage economic activity in the less prosperous areas of the state. (Brunswick County is a tier 3 county.)
To qualify for Article 3J Credits, the following eligibility requirements must be met:
1. The primary activity at the business establishment must be an eligible type of business, which includes: aircraft maintenance and repair; air courier services hub; company headquarters that creates at least 75 new headquarters jobs; customer service call centers; electronic shopping and mail order houses; information technology and services; manufacturing; motorsports facility; motorsports racing team; research and development; warehousing and warehousing trade.
2. The average wage of all full-time workers employed by the taxpayer at the establishment during the taxable year must meet or exceed the applicable wage standard of the county in which the establishment is located. (Brunswick County wage standard for 2007 is $488.)
3. The taxpayer must offer qualifying health insurance for all full-time positions at the establishment and pay at least fifty percent (50%) of employee premiums.
4. The taxpayer must not have received any significant environmental violations with the North Carolina Department of Environment and Natural Resources within the prior five years.
5. The taxpayer must not have received any “willful” or “failure to abate” serious OSHA violations at the establishment within the prior tree years.
6. The taxpayer may not have overdue taxes.
Eligible taxpayers that meet a minimum threshold of new full-time jobs created during the taxable year may claim a credit for each new job created. The credit is taken in equal installments over four years following the year the jobs are created. The job threshold and the credit amount per job are determined by the tier designation of the county in which the jobs are created. All tax credits can be taken on either the North Carolina corporate income, franchise or North Carolina Gross Premium Tax returns. The North Carolina Ports also offers a tax credit for using the ports. The total value of credits may not exceed 50% of the corporation's annual tax liability. (The job threshold for Brunswick County is 15 and the credit per job is $750.00.)
Eligible taxpayers may claim a credit based on a percentage of the cost of capitalized tangible personal property that is placed in service during the taxable year, in excess of an applicable threshold. This credit is taken in equal installments over four years, beginning the year after the property is first placed in service. The credit percentage and threshold are based on the tier designation of the county where the property is placed in service. (The threshold for Brunswick County is $2 million and the credit is 3.5 %.)
Customized industrial training for employees is provided at no cost to the company by the North Carolina Community College system. The value of this training is typically $1,500 per person trained. North Carolina's Industrial Training Program is a national model for providing industry with customized training. The industrial training service is available to new or expanding industries that create at least 12 new jobs.
Industrial Development Funds provides grant funds at $5,000 per new job created up to a maximum of $500,000 for infrastructure needs via the local government. Available in tiers 1, 2, and 3 counties. Grants can be used for water/sewer, rail extension, natural gas lines, and electric upgrades for NC businesses committing to create full time jobs. The unit of local government must own the infrastructure.
Industrial Development Fund loans are made to businesses for building upgrades or the acquisition of new machinery and equipment - at $5,000 per job or a max of $500,000. A bank must match the IDF loan on a 1:1 basis, and the bank administers the loan.
Community Development Block Grants provides grant funds from $8,000 to $15,000 per job created (depending on county) up to a maximum of $1,000,000 for infrastructure needs via the local government. The unit of local government must own the infrastructure. Grants and loans are determined by the cost of the project and the availability of funding. Community Development Block Grant loans are made to businesses for building upgrades or the acquisition of new machinery and equipment - at $5,000 per job or a max of $500,000. A bank must match the IDF loan on a 1:1 basis, and the bank administers the loan.
Industrial Revenue Bonds which are tax-exempt bonds up to $10 million are available for building, equipment, and land. Interest rates are currently around 2.5%. The maximum tax-exempt bond amount is $10 million. Financing can be used for building, land, and equipment. Amounts larger than $10 million may be eligible for taxable bonds. Financing can be used for building, land, and equipment. Threshold for overall cost savings on the interest rate versus upfront issuance costs is approximately $2 million.
Composite Bonds allow companies with capital investments under $2 million to apply for revenue bonds and gain the advantages of lower interest rates. Companies apply collectively to achieve economies of scale and reduce the upfront issuance costs.
Job Development Investment Grant is a discretionary grant that may be available based on economic impact of project for jobs, investment, and wages--up to 75% of tax withholding for 10 years; annual cap of $10 million; positive fiscal impact required with jobs and investment. The company must meet the following requirements: result in a significant net increase in employment in this State; benefit the people of the State by increasing the opportunities for employment and by strengthening the State's economy; be consistent with the economic development goals of the State and of the area in which it is located; be necessary for the completion of the project in the State. The company must also meet certain State health insurance, wage standard, and workplace safety requirements and must maintain operations at the project location, or at another approved site, for at least 10% of the term of the grant.
One North Carolina Fund is a discretionary grant that may be used to provide financial assistance to a business or industry making significant efforts to establish a new facility or expand and existing one in North Carolina. Funds may be used only for the purchase or installation of equipment, renovation of existing buildings to be used for expansion, utility lines for existing buildings.