What Happened?
Fredericksburg, Virginia, has reported strong return on investment for tax waivers and grants it has offered businesses in the region. The financial incentive programs are not only generating revenue for the city – and savings for participating businesses – but also creating new job opportunities and attracting new residents.
Goal
In Fredericksburg, every dollar the city paid out to participating businesses through its financial incentive programs it received $8 in revenue. Since the start of its incentive programs in 2007, Fredericksburg has created about 700 jobs within 13 organizations that have designated $41.3 million into capital investments, The Free Lance-Star reported.
Of the 13 participating businesses, 10 in the tourism zone generated $8.87 million in tax revenue after receiving $844,607 in incentive payouts. Another three businesses in the city’s technology zone received $187,000 in incentives and contributed $438,000 to city revenue.
More specifically, the Hyatt Place hotel received a $310,000 from the city of Fredericksburg in 2011, as well as a matching grant for the same amount from the Virginia Tourism Development Financing Program. The sales tax revenues generated by the hotel repaid the state and city grants that helped fuel its development, the Free Lance-Star reported.
To further build on its economic growth, Fredericksburg has applied to become a Virginia Enterprise Zone where businesses can apply for job creation and real estate investment grants directly from the state of Virginia. The program designates enterprise zones throughout the state by offering two grant-based incentives: the Job Creation grant and the Real Property Investment grant to qualified investors and job creators. This program is designed to work collaboratively with local financial incentives such as those offered in Fredericksburg.
Incentives News
Governor Christie recently updated New Jersey’s corporate tax incentive programs to fuel economic growth in Atlantic City in the aftermath of casino closures. Atlantic City is now a Garden State Growth Zone where non-gambling developments can qualify for tax credits from the state. The incentive program offers businesses tax breaks in exchange for a promise that the business will not leave the state. The tax breaks increase if the business opts to locate in a struggling city, such as Atlantic City.
Nearby, New York is considering implementing a new tax credit for the music production industry that would be equal to 20 percent of the costs incurred in the production of music. The proposal defines the aggregate amount of credits available to music productions at $60 million annually. This would be separate from an existing tax credit for music production offered to filmmakers.
Furthermore, in Columbus, Ohio, an incentive agreement has been reached between the city and Ventech Solutions – which has pledged to create 65 full-time jobs with an average annual pay of $103,000. Ventech Solutions will put $425,000 toward new equipment and furnishings to support the expansion, while Columbus will offer a 25 percent incentive on income tax withholding for the new jobs created totaling $207,350 over a five-year period. If Ventech fulfills its side of the deal, Columbus stands to generate $622,000 in tax revenue, Columbus Business First reported.
Laws of Attraction
Gov1 has reported on a variety of incentive programs all designed to attract new opportunities and improve economic growth.