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Regional Report: A Unique Focus on Business Expansion in the Pacific States

California is applying unique approaches to economic development programs in order to encourage in-state development while the other Pacific States are leveraging their unique geographic and market positions to focus on aerospace, clean tech and exports growth.

Directory 2015
In California, the Governor’s Economic Development Initiative provides for a New Employment Credit (NEC), whereby companies operating in areas of high unemployment can claim upward of $56,000 per employee over five years; a state sales and use tax exemption for biotech companies that are purchasing manufacturing equipment; and a $780 million California Competes Tax Credit that is available to businesses that want to come to California or stay and grow in California. For FY2014–2015, $151 million is allocated for the program — 25 percent of which is for small businesses.

A Unique Tax Credit Program
Making the California Competes Tax Credit program unique is its simple online application — the first and only one of a kind for an expansion program this size, which means a company does not have to utilize consultants to gain access to these types of credits, according to a GO-Biz spokesperson. In a controversial move, the state’s Office of Business and Economic Development banned consultants from receiving a fee contingent on procuring the California Competes Tax Credit for their clients. By alleviating consultant fees, California wants to ensure that all taxpayer dollars are used for the incentives.

Aerospace Cluster
Washington continues its aggressive global effort to attract suppliers that want to locate in the state to participate in Boeing’s 777X program, and those involved in advanced materials and composites; unmanned aerial systems; aviation biofuels; and maintenance, repair, and overhaul operations.

“This year has blown the doors open for opportunities to grow a world-class composite industry cluster in our state and develop further as a center for advanced manufacturing R&D, technology, materials, skilled workers, and green, innovative production facilities serving maritime, automotive, and clean-energy sectors in addition to aerospace,” says Washington Commerce Director Brian Bonlender.

By September, the Washington Small Business Credit Initiative had attracted $31.5 million in new private investment to support loans to small businesses. The success of this innovative public-private partnership has attracted additional support from the private financing sector and helped to ensure that financing is available for qualified businesses to expand and create jobs.

In July, a Collateral Support Program was added to Washington’s menu of credit assistance options available to businesses. It allows businesses to continue working with their current bank to access funding available through the SBA 504 loan program. The program mitigates a lender’s risk during the interim period before an SBA-guaranteed loan is in place. For example, it may cover a construction loan, while an SBA 504 loan provides permanent takeout financing.

A Focus on Exports
Oregon is focusing on exports via TEAM Oregon. The state incorporates local partners into its Global Strategies team to help existing Oregon businesses grow their companies by accessing overseas markets. Personal assistance is available from in-state professionals and from Oregon’s trade representatives in China, Japan, Korea, and Europe.

Business Oregon also provides Export Assistance grants ranging from $2,000 to $5,000 in matching funds to Oregon companies to help defray associated costs for international trade shows. In September, Oregon was awarded $300,000 in a third round of federal grant funding to help Oregon companies promote their products to customers around the world through the State Trade and Export Promotion (STEP) Program. Since 2012, STEP-funded export promotion grants totaling $594,000 helped 170 Oregon companies achieve immediate sales of more than $21 million.

Alaska’s recent passage of Senate Bill 71, a state act relating to the fishery industry, allows for a product development tax credit for certain salmon and herring products. Essentially the bill provides fishermen a fair system to pay state landing taxes, continues and expands value-added tax credits for fishermen and processors adapting to a rapidly-evolving seafood marketplace, provides credits to create more jobs for Alaskans in the seafood industry, and provides incentives to help meet burdensome federal mandates.

Positive effects include diversified products, expanded state revenues, and increased permit prices. Senate Bill 71 extends the credit until 2020 and broadens it for herring value-added processing.

Clean Technology
Hawaii is focusing on clean tech and energy efficiency. In September, the state and the U.S. Department of Energy (DOE) renewed their commitment to the Hawaii Clean Energy Initiative Memorandum of Understanding (MOU), which outlines a goal to increase energy efficiencies and maximize use of Hawaii’s abundant renewable energy resources to meet and exceed Hawaii’s 70 percent clean energy targets by 2030. This includes reducing Hawaii’s dependency on petroleum, which encompasses two-thirds of the state’s energy use.

In August, the Public Utilities Commission approved up to $150 million in state bonds to provide low-cost capital for a proposed loan program to expand access to solar photovoltaic systems and other clean energy improvements for Hawaii consumers. The financing order represents a significant milestone for the state’s Green Energy Market Securitization (GEMS) program.

And renewable energy is also continuing its ascent in California, which presently ranks second nationwide in terms of wind energy capacity, behind Texas and just ahead of Iowa, according to the U.S. Department of Energy. Much of that activity has occurred in Kern County, with some big projects in Solano, Contra Costa, and Riverside counties as well.

Additionally, the American Solar Energy Industries Association reports that 19,200 MW of utility-scale solar projects are under construction or development in California as of August 2014. The state’s Renewable Portfolio Standard requires that 25 percent of its electricity come from renewable resources by 2016, and 33 percent by 2020. Much of that is expected to come from solar power.

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