North Carolina Direct Financial Incentives 2010
North Carolina's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include the One North Carolina Fund, Composite Bonds Program, and the Article 3J Tax Credit Program.
The fund helps the state by recruiting and expanding quality jobs in high value-added, knowledge-driven industries, and by providing financial assistance to those businesses or industries deemed by the governor to be vital to a healthy and growing state economy. The fund currently consists of nonrecurring appropriations made by the General Assembly, and is intended to be available for companies seeking to undertake new expansion or locate new operations in the state. The fund is competitive, and the location or expansion must be in competition with another location outside the state. Payments are made on an incremental basis as performance targets are met.
Job Development Investment Grant:
The Job Development Investment Grant (JDIG) is a performance-based discretionary incentive capable of providing sustained annual grants to new and expanding businesses measured against a percentage of withholding taxes paid by new employees. In adopting JDIG, the North Carolina General Assembly intended to stimulate economic activity and to create new jobs for the citizens of the state by encouraging and promoting the expansion of existing businesses and industry within the state and by recruiting and attracting new business and industry to the state. Up to 25 grants may be authorized in a single grant year. The JDIG program requires companies to meet certain state health insurance and workplace safety requirements, and its benefits must outweigh its costs. The project must result in a net increase in employment and be competitive with another state or country.
Industrial revenue bonds:
Counties establish authorities to issue industrial revenue bonds, which provide tax-exempt financing for eligible new or expanded-product research and development facilities, manufacturing facilities and distribution centers necessary to the manufacturing process. The maximum tax-exempt bond amount is $10 million. Qualifying projects must include local support, a commitment to locate in an area of severe unemployment, the procurement of required environmental permits, the creation of a sufficient number of jobs to impact the local economy (a minimum of six jobs per $1 million of bonds) and the assurance that the new financing will not result in the company closing another North Carolina facility. Bonds are issued by a company based on the company's credit, and all privately owned companies must obtain a bank letter of credit to collateralize the bond.
Composite Bonds Program:
The Composite Bonds Program builds on the already advantageous aspects of the industrial revenue bonds. The program seeks to bring together a group of borrowers and issue the bonds collectively through the North Carolina Facilities Finance Agency in order to achieve economies of scale and reduce issuance costs of the bonds of each individual borrower.
Industrial Training Program:
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. The program provides for instructors' wages and travel expenses (even if the instructor is a company employee), as well as classroom materials and suitable training facilities.
Industrial Development Fund:
The Industrial Development Fund (IDF) is available to assist local governments of the most economically distressed counties in the state. An eligible county or city applies for the funds on behalf of a private manufacturing business located or locating in its jurisdiction. IDF funds may be used for the construction of water, sewer, gas, and electric lines to the site or for the construction or repair of industrial buildings. Funds available for a single project are determined by multiplying the number of jobs committed to be created by $10,000, up to a maximum of $500,000.
Tax credits for qualified investments:
The Article 3J Tax Credit Program replaced the William S. Lee Act on January 1, 2007. The new act maintains that credits may be combined to offset up to 50 percent of the taxpayer's state income and franchise tax liability, and unused credits may be carried forward for up to five years. The program establishes three basic credits: for creating new jobs, for investing in business property and for investing in real property in disadvantaged rural counties. The enterprise factors of the county in which the firm operates determine the value of the credits.
The primary activity of the business must be of eligible type, and that definition was expanded in the new Article 3J Program from its predecessor. Eligible companies now include aircraft maintenance and repair, air courier services hub, company headquarters, customer service call centers, electronic shopping and mail order houses, information technology and services, manufacturing, motorsports facility or racing team, research and development, and wholesale trade.
Credits are available based on the primary business at each establishment. A taxpayer may divide a credit between the taxes against which it is allowed. Previously, credits were taken against only one of the taxes against which it was allowed.
North Carolina State Contact:
North Carolina Department of Commerce
301 N. Wilmington Street
4318 Mail Service Center
Raleigh, NC 27699-4318
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.
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