March 3, 2008
Know How: Where The Dollars Are
How to expand and save money at the same time
By Lynn Tokarczyk
Special to the Worcester Business Journal
A real estate expansion is an exciting chapter in a company’s history, yet all too often significant dollars are left on the table because owners are too busy managing the day-to-day operations to investigate and apply for the many state and local government incentive programs that can save them thousands, even millions of dollars over time.
So, if you plan to expand your business in 2008, here’s what you need to know:
If so, you could be designated as a “certified project”. This designation allows you to unlock a variety of incentives that can include:
• A 5 percent state economic opportunity area (EOA) investment tax credit for qualifying, depreciable, tangible assets.
• A 10 percent state abandoned building tax deduction for costs associated with renovating an abandoned building.
• Tax Increment Financing (TIF) — a five to 20-year property tax exemption based on the increased value of the project property due to new construction or other significant improvements (TIF’s can be accessed in non-ETA’s under the state’s “exceptional opportunity” program).
• A 100 percent local personal property exemption with all TIF’s or.
• A special tax assessment — a four- to 20-year property tax exemption based on the total base value of the project property.
To find the programs that best fit your business, it’s important to first identify the right incentives. Navigating through the maze of bureaucracy in state and local governments is challenging and accessing benefits requires solid and diplomatic negotiating skills.
At the local level, moving your project forward requires that you interact and receive approval from various town and city boards and eventually the state. Be prepared to participate in several community outreach sessions. These sessions provide the opportunity to interact with the residents of the municipality. The goal is to have the municipality embrace the project to obtain the required votes at town meetings or city councils.
As a result of a real estate expansion the cities and towns benefit from new jobs, new tax revenue and the infusion of cash back into the local economy. The objective is to illustrate how your business expansion will create economic success for all of the stakeholders involved – the municipality, the state and your company.
Many companies prefer to have professional assistance throughout the process and engage a private government incentives consultant to help them identify, negotiate and secure these incentives.
The few hours you spend learning more about incentives and tax breaks that can help your business grow will be invaluable when taking that important next step.
Lynn Tokarczyk is president of Business Development Strategies Inc., a government incentives consulting firm based in Medway. For more information visit www.businessdevelopment-strategies.com.
By Lynn Tokarczyk
Special to the Worcester Business Journal
A real estate expansion is an exciting chapter in a company’s history, yet all too often significant dollars are left on the table because owners are too busy managing the day-to-day operations to investigate and apply for the many state and local government incentive programs that can save them thousands, even millions of dollars over time.
So, if you plan to expand your business in 2008, here’s what you need to know:
Is your company located in an “economic target area”?
In order to be eligible for state and local incentives, your company must be located in an “economic target area” or ETA. Eligibility is based on state statutory criteria. There are approximately 197 communities within ETAs in Massachusetts. A map of all current ETAs can be found online at www.mass.gov/Eoed/images/map/ETA-SM.pdf.Do you plan to make a real estate investment?
Tax incentives may be available if you plan to renovate or construct a newly-purchased or leased facility. Timing is critical so before you select a site, sign a lease or purchase property, review incentive program guidelines and coordinate your timing with the application.Are you planning to create new jobs with this expansion?
If so, you could be designated as a “certified project”. This designation allows you to unlock a variety of incentives that can include:
• A 5 percent state economic opportunity area (EOA) investment tax credit for qualifying, depreciable, tangible assets.
• A 10 percent state abandoned building tax deduction for costs associated with renovating an abandoned building.
• Tax Increment Financing (TIF) — a five to 20-year property tax exemption based on the increased value of the project property due to new construction or other significant improvements (TIF’s can be accessed in non-ETA’s under the state’s “exceptional opportunity” program).
• A 100 percent local personal property exemption with all TIF’s or.
• A special tax assessment — a four- to 20-year property tax exemption based on the total base value of the project property.
A Road Map
To find the programs that best fit your business, it’s important to first identify the right incentives. Navigating through the maze of bureaucracy in state and local governments is challenging and accessing benefits requires solid and diplomatic negotiating skills.
At the local level, moving your project forward requires that you interact and receive approval from various town and city boards and eventually the state. Be prepared to participate in several community outreach sessions. These sessions provide the opportunity to interact with the residents of the municipality. The goal is to have the municipality embrace the project to obtain the required votes at town meetings or city councils.
As a result of a real estate expansion the cities and towns benefit from new jobs, new tax revenue and the infusion of cash back into the local economy. The objective is to illustrate how your business expansion will create economic success for all of the stakeholders involved – the municipality, the state and your company.
Many companies prefer to have professional assistance throughout the process and engage a private government incentives consultant to help them identify, negotiate and secure these incentives.
The few hours you spend learning more about incentives and tax breaks that can help your business grow will be invaluable when taking that important next step.
Lynn Tokarczyk is president of Business Development Strategies Inc., a government incentives consulting firm based in Medway. For more information visit www.businessdevelopment-strategies.com.
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