North Carolina Incentives and Workforce Development Guide

NC Incentives | Finance, Loans, IRB, Workforce Development


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A comprehensive list of North Carolina financial aid, loans, grants, abatements, workforce development, exemptions, funds & capital investment opportunities.

North Carolina Incentives and Workforce Development Guide

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North Carolina Incentives and Workforce Development Guide

For a list of North Carolina economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.

 

INCENTIVE PROGRAMS

Building Reuse Program: The Building Reuse Program, under the Rural Grants/Programs Section of the North Carolina Department of Commerce, provides grants to local governments for three purposes: the renovation of vacant buildings; the renovation or expansion of a building occupied by an existing North Carolina company wishing to expand in their current location; and the renovation, expansion or construction of health care entities.

Grants are available to support the renovation of vacant buildings. A shell building built on speculation that has never been inhabited is not eligible, except in instances when the building is at least 5 years old without ever having a tenant. The building must be vacant for at least three months prior to application deadlines. Grants are also available to support the renovation or expansion of buildings occupied by a company operating in the state of North Carolina for at least 12 months.

Community Development Block Grant Program Economic Development (CDBG Economic Development): The Community Development Block Grant Economic Development Program (CDBG Economic Development), which is administered by the North Carolina Department of Commerce, provides grants to local governments for public infrastructure development. Funds available are administered based on an annual federal allocation to North Carolina from the U.S. Department of Housing and Urban Development and are made available to most local governments for economic development projects. Companies cannot apply directly for this funding, but instead work collaboratively with a local government applicant.

Eligible projects, primarily manufacturing projects, can receive a maximum of $10,000 to $15,000 per job committed depending on the tier designation of the county. Other types of projects can receive a maximum of $4,000 to $10,000 per job. CDBG Economic Development funds are limited to a maximum of $1,000,000 per project to a local government located in Tier 1 & 2 counties and $750,000 to a local government located in a Tier 3 county. The local government must provide at least one dollar for every three dollars provided by CDBG Economic Development. The 25 most economically distressed counties are not required to provide a local match.

Community Development Block Grants Building Reuse (CDBG Building Reuse) Program: The Community Development Block Grant Building Reuse Program (CDBG Building Reuse), which is administered by the North Carolina Department of Commerce, provides funds for renovation and up-fitting of vacant industrial and commercial buildings for economic development purposes. The building reuse program is designed to return vacant industrial/commercial buildings to economic use for new and/or expanding business and industry. The ultimate goal of the CDBG Building Reuse program is to provide jobs for low and moderate-income persons (LMI). The CDBG Building Reuse program is available to local government applicants that propose a project in conjunction with a company that wishes to place a vacant building into economic use resulting in the creation of permanent, full-time jobs. CDBG Building Reuse funds are limited to a maximum of $750,000 per local government. The grant amount is calculated based on $20,000 per job for tax credit eligible businesses and $12,000 per job for all other businesses.

Economic Infrastructure Program: The Economic Infrastructure Program under the Rural Grants/Programs Section of the North Carolina Department of Commerce provides grants to local governments to assist with public infrastructure projects that will lead to the creation of new, full-time jobs.

Foreign Trade Zones (FTZ): Foreign Trade Zones (FTZ), sometimes known as Free Trade Zones are geographically designated and secured areas that for legal purposes are considered outside of U.S. Customs territory. FTZs offer several economic advantages for businesses involved in international trade. There are four general-purpose FTZs in North Carolina, and seven active Sub-Zones approved for use by individual companies. In addition, all of the zones have successfully transitioned to the Alternative Site Framework (ASF), which greatly simplifies services to users.

Foreign or domestic merchandise may enter the zone without a formal customs entry or the payment of customs duties or government excise taxes and without a thorough examination. If the final product is exported from the United States, no Customs duty is levied. If the final product is imported into the U.S., duty and excise taxes are due at the time of transfer from the foreign trade zone and formal entry is made into the United States. Duty is paid on the product itself or its imported parts, whichever is lower. 

Job Development Investment Grant: The Job Development Investment Grant, or “JDIG” is a performance-based, discretionary incentive program that provides cash grants directly to new and expanding businesses to help offset the cost of locating or expanding a business facility in the state. The amount of the grant is based on a percentage of the personal income tax withholdings associated with the new jobs.

The amount of the grant is calculated by weighing a number of factors to determine the potential value, including the location of the project, the county tier designation, the number of net new jobs, the wages of the jobs compared to the county average wage, the level of investment, and whether the industry is one of the state’s targeted industry sectors. Grant funds are disbursed annually, for up to 12 years, to approved companies following the satisfaction of performance criteria set out in grant agreements.

Joint Economic Development Program with N.C. Dept. of Transportation: The North Carolina Department of Transportation works closely with the North Carolina Department of Commerce to provide transportation improvements and infrastructure that expedites industrial/commercial growth and provides new jobs or job retention. Projects must be jointly approved by the Secretary of Transportation and the Secretary of Commerce. Funds awarded are up to $2,500 per new job with a $400,000 limit per project. Funds may be used to fund highway projects, or supplement grant funding for aviation projects at publicly owned airports, rail or marine public access projects that contribute to economic growth and development by attracting new businesses, new industries, or expanding existing businesses or industries that increase employment opportunity.

N.C. Department of Transportation Rail Industrial Access Program: The N.C. Department of Transportation’s (NCDOT) Rail Industrial Access Program uses state funds to assist in constructing or refurbishing railroad spur tracks required by a new or expanding company to encourage economic development. This funding helps ensure that companies have safer, modernized railroad tracks so freight can deliver their goods and services more effectively and efficiently. Funding for the projects is contingent upon application approval prior to the company making their decision to locate or expand their facility in North Carolina and matching funds from private and or local sources.

Local governments, community development agencies, railroad companies, and companies are eligible for funds to improve rail access. Approval of requests is based on economic benefit of the project including the number of potential new jobs that will be created, the amount of capital investment, rail use and the area’s economic conditions. Program funding is an incentive to encourage firms to choose a location or expand in North Carolina as opposed to another state. 

One North Carolina Fund: The One North Carolina Fund, or “OneNC” is a discretionary cash-grant program that allows the Governor to respond quickly to competitive job creation projects. The North Carolina Department of Commerce administers OneNC on behalf of the Governor. Awards are based on jobs created, level of investment, location of the project, economic impact of the project, the importance of the project to the state and region, and quality of industry. Awards are allocated to local governments as part of a negotiated challenge grant. By statute, OneNC requires that a local government provide an incentive to match the OneNC funding.

The Utility Account: North Carolina’s Utility Account provides infrastructure grants to local governments in Tier 1 and Tier 2 counties in the State. The North Carolina Department of Commerce administers the Utility Account. All applications are reviewed and approved by the Secretary of Commerce.

Funding is based on the availability of funds and the merits of a project. Grants are awarded to local governments for infrastructure improvements that are publicly owned and maintained. The applicant must demonstrate that the project is expected to lead to job creation in the near future. The grant amount depends on the number of new, full-time jobs created and cannot exceed $10,000 per job created or $500,000 per project.

 

TAX REFORM

Tax Reform: In 2013 and again in 2015, Governor Pat McCrory signed new tax reform legislation into law. The corporate income tax has been reduced from 6.9% in 2013 to its current 4% in 2016. If the state meets revenue targets in 2017 or any subsequent year, the corporate income tax will drop to 3%. The Individual Income tax rate has been lowered to a flat rate of 5.75% in 2016 and will decrease further to 5.499% in 2017.

Single-Sales Factor Apportionment: On January 1, 2016, North Carolina began phasing in single-sales factor apportionment. This phasing will occur over a two–year span until single-sales factor apportionment is fully implemented as described below:

  • 2016: three times sales – All apportionable income of corporations shall be apportioned by multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus three times the sales factor, and the denominator of which is five. If the sales factor does not exist, the denominator of the fraction is the number of existing factors and if the sales factor exists but the payroll factor or the property factor does not exist, the denominator of the fraction is the number of existing factors plus two.
  • 2017: four times sales – All apportionable income of corporations shall be apportioned by multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus four times the sales factor, and the denominator of which is six. If the sales factor does not exist, the denominator of the fraction is the number of existing factors and if the sales factor exists but the payroll factor or the property factor does not exist, the denominator of the fraction is the number of existing factors plus three.
  • 2018: single sales factor – All apportionable income of corporations shall be apportioned by multiplying the income by the sales factor.

 

TAX EXEMPTIONS AND EXCLUSIONS

Data Center Sales and Use Tax Exemptions: North Carolina provides three different exemptions related to datacenters and their operations:

  • Exemption for a Qualifying Data Center – Sales of electricity for use at a qualifying data center and the purchase of data center support equipment to be located and used at the qualifying data center is exempt from sales tax. A Qualifying Data Center is defined as a data center that satisfies each of the following conditions: The Secretary of Commerce has made a written determination that at least $75 million dollars in private funds has been or will be invested by one or more owners, users, or tenants of the data center within five years of the date the owner, user, or tenant of the data center makes its first real or tangible property investment in the data center on or after January 1, 2012. The data center meets wage standard and health insurance requirements.
  • Exemption for Computer Software – Computer software that is sold to a person who operates a data center and is used within the data center is exempt from sales tax. Computer Software is defined as a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task.
  • Exemption for Eligible Internet Data Center – Sales of electricity for use at an eligible Internet data center and eligible business property to be located and used at an eligible Internet data center is exempt from sales tax.

Property Tax Exemptions: Inventories – Neither the State of North Carolina nor its localities assess property tax on inventories. In addition, raw materials are also defined as inventory, and are this excluded from property tax. Inventories owned by contractors, manufacturers, and merchants (retail and wholesale) are excluded from property tax.

Pollution Control – In North Carolina, real and personal property that is used or, if under construction, is to be used exclusively for air cleaning or waste disposal or to abate, reduce, or prevent the pollution of air or water is excluded from property tax.

Recycling – The NC Recycling Property Tax Exemption offers a tax exemption on equipment and facilities used exclusively for recycling and resource recovery.

Sales and Use Tax Exemptions: Manufacturing – Machinery & Equipment – Mill (generally manufacturing) machinery, mill machinery parts or accessories, and specialized equipment used to unload or process bulk cargo are exempt from sales and use tax, but are subject to a privilege tax. The privilege tax rate is 1% with a maximum of $80 per article.

Exemption for Electricity, Fuel, and Natural Gas for Manufacturing Facilities – The sale at retail and the use, storage, or consumption of fuel, piped natural gas, and electricity sold to a manufacturer is exempt from sales and use tax for use in connection with the operation of a manufacturing facility.

Raw Material for Manufacturing – Purchases of ingredients or component parts of a manufactured product that becomes an ingredient or component part of tangible personal property that is manufactured are exempt from sales and use tax.

Pollution Abatement Equipment – Pollution abatement equipment for manufacturing is exempt from sales and use tax, but subject to a 1% Privilege tax or maximum of $80 per item.

 

WORKFORCE DEVELOPMENT

NC Community College Customized Training Program: North Carolina pioneered free, customized job training for businesses experiencing job growth and continues to provide the nation’s most recognized customized training program. A training plan will be developed in collaboration with the company. Using the training plan, customized training programs can be designed and instruction for these programs can be provided through instructors from N.C.’s community colleges and individuals that are part of the statewide network of technical training experts. Company trainers can also be reimbursed for training activities consistent with the training plan and delivery schedules. For a defined number of instructors and for a designated instructional period, N.C.’s community colleges can reimburse the company for instructor wages up to $30.00 per hour. Instructor travel can also be supported for a defined number of instructors. All training supported through the Customized Training is coordinated through the local Community College, but can include College and 3rd Party instructors. The College is the responsible party for all contractual agreements and payments. The Customized Training Program is a very customer friendly process for the client.

The Customized Training Program provides education, training and support services for new, expanding and existing business and industry in North Carolina. The goal of the program is to foster and support three key aspects of a company’s well being:

  • Job Growth
  • Technology Investment
  • Productivity Enhancement

The purpose of the Customized Training Program is to provide customized training assistance in support of full-time production and direct customer service positions created in the State of North Carolina, thereby enhancing the growth potential of companies located in the state while simultaneously preparing North Carolina’s workforce with the skills essential to successful employment in emerging industries. Those businesses and industries eligible for support through the Customized Training Program include Manufacturing, Technology Intensive (i.e., Information Technology, Life Sciences), Regional or National Warehousing and Distribution Centers, Customer Support Centers, Air Courier Services, National Headquarters with operations outside North Carolina, and Civil Service employees providing technical support to US military installations located in North Carolina.

Workforce Development Network: Through a professional team representing the N.C. Department of Commerce, N.C.’s Community Colleges, the Division of Employment Security (DES), the University of North Carolina system and private colleges and universities, the State of North Carolina provides recruiting, screening and training services through a coordinated network of nationally recognized economic and workforce development agencies. This team also has the capacity and flexibility to customize any aspect of this process, from initial recruitment to personalized screening to pre-employment training to client specific training. These organizations will work to develop a customized plan and provide an extensive array of services to recruit, screen and train its workforce to allow companies to compete in a global market.

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