Regional Report: Mountain Region States Highlighting Innovation and Pioneer Industries
States in the mountain region are pulling out the stops to attract advanced technology companies. Nowhere is this more true than in Nevada, where Tesla is building its gigafactory, which will be the world’s largest and most advanced battery factory.
The search was intense and the anticipation was high, but in the end Tesla Motors selected Nevada for its Tesla gigafactory, a three-story, 5+-million-square-foot facility that will be the world’s largest and most advanced battery factory.
“Together with Panasonic and other partners, we look forward to realizing the full potential of this project,” said Tesla Motors Chairman and CEO Elon Musk upon thanking Governor Sandoval and Nevada legislators for partnering with Tesla to bring the gigafactory to the state.
To nab the deal, Tesla was offered a $1.3 billion incentives package, including tax breaks, the largest part of which is a 20-year, 100 percent sales tax abatement and a 100 percent abatement on real and personal property taxes for 10 years. In exchange, the company must invest a minimum of $3.5 billion in manufacturing equipment and real property in Nevada. Tesla is estimated to bring nearly $100 billion in economic impact to the Silver State over the next 20 years.
Wyoming has not landed a deal the scale of Tesla, but is panning for gold. Its Business Ready Community (BRC) program, introduced in 2003, continues to actively target Wyoming communities trying to diversify their economic bases, leverage private investments, foster job creation, and enhance quality of life. The program is unique in that it invests in publicly owned economic development infrastructure.
Businesses partner with local governments to identify infrastructure needed to expand or relocate in the community, such as road, water, sewer, or the leasing of a building. Local governments then apply to the Business Council for grant and/or loan funds. In the case of where a building is purchased or constructed with grant funds, a business may work out an option to purchase the facility through the local government. Oftentimes, lease payments are applied to the purchase price.
In addition, Wyoming offers a Managed Data Center Cost Reduction Grant through the BRC program. The grant fund is used to buy down the cost of power and broadband. Reducing these costs allows data centers to expand their operations sooner, while investing in job creation and capital expenses.
Last year, Laramie County received $2,250,000 from this program to help Green House Data reduce its broadband, utility, and electrical costs and assist in its expansion. The Cheyenne-headquartered company outgrew its 10,000-square-foot co-location and cloud hosting data center facility in five years. The grant made it possible to build a 35,000-square-foot facility, which was completed this year.
Attracting Technology Investment
Utah is already home to Google, Adobe, and eBay. But the pioneer companies keep coming. In fact, technology investments achieved new records in 2014. Spurring Utah’s growth is a splurge in venture capital investment, which hit $405.8 million by first quarter this year.
Also this year, Qualtrics, a software-as-a-service company, secured $150 million in venture capital financing. This is on top of nearly $11 million the company received from the Governor’s Office of Economic Development (GOED) Economic Development Tax Increment Financing (EDTIF) program.
EDTIF offers a post-performance refundable tax credit for up to 30 percent of new state tax revenues over the life of the project — typically five to 10 years. In Qualtrics’ case, the program covered 25 percent of new state tax revenues over seven years.
Another popular Utah economic development program is the Industrial Assistance Fund (IAF), a post-performance grant for the creation of high-paying jobs.
Colorado is taking a bottom-up approach to economic development through its Colorado Blueprint survey of regions and industries, seven of which are in advanced technologies: advanced manufacturing, aerospace, bioscience, electronics, energy and natural resources (including cleantech), infrastructure engineering, and technology and information. Those industries account for nearly 30 percent of Colorado’s wage earnings, nearly 30 percent of its total sales revenues across all industries within the state, and nearly 35 percent of the state’s total exports.
To foster their growth, Colorado offers incentives under its Advanced Industries (AI) Accelerator Grant Program. This includes a Proof of Concept grant (limit $150,000), Early-Stage Capital and Retention grants (limit $250,000), and infrastructure funding (limit $500,000).
“We can take the cap off the limit if a company operates in a way that their technology directly impacts two or more advanced industry sectors,” reports Jeff Kraft, director of Business Funding and Incentives, Colorado Office of Economic Development and International Trade.
Creating Jobs & Keeping Taxes Low
Idaho offers a new Idaho Tax Reimbursement Incentive (TRI), effective July 1, 2014. It applies to businesses that are adding or bringing high-paying jobs to Idaho. This post-performance incentive creates a maximum credit of 30 percent on income, payroll, and sales taxes for up to 15 years and is intended to encourage expansions and relocations. To be eligible, companies in rural areas must create 20 new jobs, and those in urban centers, 50 new jobs.
A recent recipient of a TRI is Diversified Fluid Solutions, a subsidiary of Critical Process Systems Group, which manufactures a variety of fluid blending and distribution systems. The company plans to invest $1.2 million to expand its Boise operations, creating 50 to 60 full-time jobs.
Think big sky, big opportunity - that’s the foundation of the Choose Montana initiative and pro-business policies that led CNBC to rank the state No. 5 for cost of doing business in its 2013 America’s Top States for Business survey. The 2015 State Business Tax Climate report by the Tax Foundation ranked Montana No. 6 for overall business tax climate.
Incentive programs range from providing financial assistance for promotional materials used at trade shows to conducting feasibility studies. The Montana Board of Investment’s in-state loan programs provide fixed-rate financing for up to 20 or 25 years with interest rates posted weekly, and a maximum participation rate of approximately $70 million.
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