Manufacturing Job Creation and Retention Programs

Topic:
ECONOMIC DEVELOPMENT; INDUSTRY (GENERAL); LABOR (GENERAL);
Location:
ECONOMIC DEVELOPMENT;

OLR Research Report


November 4, 2004		2004-R-0782
MANUFACTURING JOB CREATION AND RETENTION PROGRAMS

By: John Rappa, Principal Analyst

You asked us to describe the state’s programs for creating or retaining manufacturing jobs.

Most of the state’s economic development programs serve manufacturers, biotechnology firms, large insurance companies, and other “economic base businesses,” which as a class sell most of their goods and services to out-of-state customers. The legislature created these programs to create or retain jobs, boost productivity, increase tax revenue, refurbish abandoned or underused buildings, or provide some other public benefit. Some programs require businesses to set their own job goals while others require them to meet those specified in the statutes.

Whether a business must achieve a goal it or the statutes sets depends on the type of assistance it seeks. Like most states, Connecticut offers direct assistance (e. g. , low-interest loans or technical assistance) and tax incentives (e. g. , R&D tax credits). Businesses seeking the former must usually set and achieve their own goals while those seeking the latter must achieve goals the law sets.

Attachments 1 and 2 describe the direct assistance and tax incentive programs, respectively, available to manufacturers and other economic base businesses.

Attachment 1: Direct Financing Programs Available to Manufacturers and Other Economic Base Businesses

*Program*	*Description*	*Eligible Recipients*	*Administering Agency*
Manufacturing Assistance Act	Grants and loans for large scale real estate development projects	• Economic base businesses • Nonprofit developers • Towns	Department of Economic and Community Development (DECD)
Urban Sites Remediation Program	Funds to clean up contaminated sites with commercial potential	DECD-identified sites that can be reused for manufacturing and other purposes	DECD, in consultation with the Department of Environmental Protection (DEP)
Special Contaminated Properties Remediation and Insurance Fund	Loans to determine the level of contamination and demolish structures before cleaning up and redeveloping a site.	• Towns • Businesses • Developers	DECD and DEP
Urban Action Bonds	Grants for economic development, transportation, recreation, solid waste, social services, and urban development projects	• Businesses • Nonprofit developers • Towns	• DECD • Department of Transportation • DEP • Department of Social Services • Office of Policy and Management
Community Economic Development Fund	Low-interest, flexible-term loans for economic and domestic base small businesses	Start-up and established small businesses that cannot afford regular bank loans or meet conventional underwriting standards	Community Economic Development Fund (a state-chartered nonprofit organization)
Urbank	Loan guarantees	Businesses	Connecticut Development Authority (CDA)
Direct loans and loan guarantees	Loans and loan guarantees up to $ 5 million	Businesses	CDA
Industrial Revenue Bond Financing	Tax-exempt bond financing backed by the project’s revenues	• Businesses • Government agencies • Public Utilities	CDA
Small Business Administration 504 Program	Up to $ 2. 5 million in fixed asset loan guarantees	Businesses	CDA
Job Training Financing Program	Reimbursements for up to 25% of job training costs	Manufacturers	CDA
Equity Investments	Equity investments in companies developing high technology products and processes	• Information technology • Bioscience • Photonics • Energy and environmental sciences	Connecticut Innovations, Inc. (CII)
Bioscience Facilities Fund	Financing for wet laboratories and related space	Bioscience firms	CII
Yankee Ingenuity	Up to $ 300,000 grants for university-business partnerships	Businesses and universities jointly sponsoring R&D with commercial potential	CII
Next Generation Ventures LLC	Seed stage venture capital	High technology companies	CII

Attachment 2: Tax Incentive Programs Available to Manufacturers and

other Economic Base Businesses

*Program*	*Incentive*	*Project or Activity*	*Eligible Businesses*
Enterprise Zones (EZ) and Enterprise Corridor Zones (ECZ) Property Tax Exemptions and Business Tax Credits	• Five-year, 80% state reimbursed property tax exemption for real and personal property • 10-year, 50% business tax credit	• Constructing or rehabilitating facilities and acquiring new machinery and equipment • Create at least 150 jobs or fill 30% of new jobs (regardless of total) with EZ or city residents who are eligible for federal job training assistance	• Manufacturers • Specified types of financial service firms • Biotech firms in towns with major research university
Statewide Property Tax Exemption for Manufacturing Machinery and Equipment	Five-year, 80% state reimbursed property tax exemption for personal property	Acquiring new or used manufacturing machinery and equipment	• Manufacturers • Biotechnology firms
Targeted Investment Communities (TIC) Property Tax Exemptions and Corporate Business Tax Credits	• Five-year, 80% state reimbursed property tax exemption for real and personal property • 10-year, 50% business tax credit	• Constructing or rehabilitating facilities and acquiring new machinery and equipment • Create at least 150 jobs or fill 30% of new jobs (regardless of total) with EZ or city residents who are eligible for federal job training assistance	Manufacturing and specified financial service firms located in towns with EZs but outside of the zones.
Manufacturing Plants Property Tax Exemptions	Same as above	Renovating a plant located in a town with an EZ but outside the zone and that has at least 500,000 square feet	• Manufacturers
Railroad Depots Property Tax Exemptions and Corporate Business Tax Credits	• Five-year, 80% state reimbursed property tax exemption for real and personal property • 10-year, 50% business tax credit	• Renovating abandoned or under utilized depots located anywhere in a town with a EZ • Create at least 150 jobs or fill 30% of new jobs (regardless of total) with EZ or city residents who are eligible for federal job training assistance	• Manufacturers • Specified financial service firms
Defense Plants Property Tax Exemptions and Corporate Business Tax Credits	• Five-year, 80% state reimbursed property tax exemption for real and personal property • 10-year, 50% business tax credit	• Renovating or expanding a defense plant for nondefense production • Create at least 150 jobs or fill 30% of new jobs (regardless of total) with EZ or city residents who are eligible for federal job training assistance	Defense firms hurt by federal budget cuts and manufacturers occupying formerly vacant defense plants in any town except a state-designated “distressed municipality”
EZ Business Start-ups	Three-year, 100% business tax credit, followed by a seven-year, 50% credit	New businesses creating specified number of jobs for zone or town residents eligible for federal job training assistance	All businesses
Incremental R&D Tax Credit	20% business tax credit against the increase in R&D spending over the prior year, with a 15-year carry-forward for unused credits	R&D spending	All businesses
Non Incremental R&D Tax Credit for Small Businesses	Business tax credit against R&D spending by small businesses with under $ 100 million in annual revenue	R&D spending	All businesses
Rolling R&D Tax Credit	Business tax credit calculated based on two-step statutory formula	R&D spending	All businesses
Incremental Credit for Capital Goods	10% business tax credit for businesses with fewer than 250 full-time employees, 5% for those with between 250 and 500	Increased spending on capital goods: credit applies to the increase in the money spent on capital goods over the prior years	All businesses
Non-Incremental Tax Credit for Fixed Capital and Human Capital Investments	5% business tax credits	Fixed capital acquired from an unrelated business, having a depreciable life of at least four years, and meeting other statutory criteria Human capital investments include job training, day care facilities, and contributions to colleges and universities	All businesses
Tax Credit for Data Processing Equipment	100% business tax credit on property taxes paid on data processing equipment	Property tax payments on data processing equipment	All businesses
Unused R&D Tax Credits	Cash payments equal to 65% of unused R&D tax credits for firms that have no tax liability against which to apply the credits	R&D spending	All businesses with annual revenues under $ 70 million
Net Operating Loss	Net operating losses can be carried forward for up to 20 years	Operating losses	All businesses
Guarantee Fee Tax Credit	Credit against the fees paid for Small Business Administration Assistance	Applying for Small Business Administration loans, loan guarantees, and other forms of assistance	All small businesses
Urban and Industrial Sites Reinvestment Tax Credits	Up to $ 100 million in credits for investing in new facilities in designated towns or cleaned up sites anywhere in the state	Constructing or rehabilitating facilities	All businesses for any business use