Local Financial and Technical Assistance Programs
Local Programs- city, county and regional programs including loans and tax abatement programs for job creation and capital investment.
Tax Increment Financing (TIF)
City councils or county boards of supervisors may use the property taxes resulting from the increase in taxable valuation due to construction of new industrial or commercial facilities to provide economic development incentives to a business or industry. Tax increment financing may be used to pay the cost of public improvements and utilities, which will serve the new private development, to finance direct grants or loans to a company, or to provide a local match for federal or state economic development assistance programs. TIF does not increase a company's property taxes, but it allocates virtually all of the taxes, which are paid back to the city or county, where they may be spent to benefit the company.
Local Tax Abatement
Iowa law allows cities and counties to abate local property taxes for value-added to industrial real estate. The maximum amount of actual value-added at a new or expanded facility, which is eligible to be exempt from taxation, is:
Regional Revolving Loan Fund
Southeast Iowa Regional Planning Commission administers a loan fund available to qualified businesses in Lee County. The Revolving Loan Fund (RLF) assists eligible businesses in retaining and creating private sector job opportunities. Approved applications may acquire funds for initial loans, or for loans to buy down the principal or interest on commercial loans. The maximum (RLF) loan is $125,000, at lower than conventional interest rates.
Fort Madison Revolving Loan Fund
The Fort Madison Revolving Loan Fund is used to make low interest loans (4%) for gap financing to qualifying individuals, partnerships, or corporations that want to start a new business in Fort Madison. The fund is specifically targeted toward commercial and service sector proposals, and is administered through the Southeast Iowa Regional Planning Commission (SEIRPC). The city forged a public-private partnership with SEIRPC, the Fort Madison Chamber of Commerce and local banks to establish this fund. The Fund was capitalized with $200,000 from the city's gaming revenues. The city's investment has leveraged $800,000 in low interest loan money pledged by four different banks. Local banks are the primary lenders for the business start-ups. As loan payments are made, and monies are repaid to the pool, the fund revolves back out to other candidates for the program.
Eligibility is based on the following:
- New business in the commercial sector
- Applicant must be creating or retaining jobs
- Applicant must demonstrate the need for gap financing
- Applicant proposal will support and enhance the local economy
- Maximum loan award - $25,000
- Cost per Job - $10,000
- 5-7 year term on fixed asset loans
- 10 year maximum on real property loans
- Minimum interest rate will be 4 points below prime with a floor of 4%
- Loan closing fee of $250
Targeted Jobs Withholding Tax Credit Program (Pilot City)
The Targeted Jobs Withholding Tax Credit Pilot Program is a new pilot program enacted in 2006 which allows the diversion of withholding funds paid by an employer to be matched by a designated "pilot" city to create economic incentives that can be directed toward the growth and expansion of targeted businesses located within Urban Renewal areas.
An approved "pilot" city may enter into a withholding agreement:
- ) with a business that is locating to its community from another state and is creating targeted jobs within an urban renewal area; or
- ) an existing Iowa business that is creating ten new targeted jobs or makes a qualifying investment of $500,000 within an urban renewal area.
For purposes of this program, a targeted job is defined as a job with a business that is or will be located in an urban renewal area of a designated "pilot" city that pays a minimum wage equal to the county-wide average wage ($14.81 for Lee County). A "pilot" city entering into a withholding agreement is required to provide a $1 match for every withholding dollar received. This match can be provided by a private donor, the "pilot" city, the employer, or a combination of all three; and can be either in the form of cash or in-kind contributions to be used for the project. The withholding agreement allows an amount of up to three (3) percent of the gross wages paid by the business to be directed to the "pilot" city on a quarterly basis. All designated withholding funds and those pledged by the "pilot" city are required to be used for an urban renewal project related to the employer pursuant to the terms of the withholding agreement. A "pilot" city must obtain approval of the project from the Department of Economic Development prior to the execution of any withholding agreement. The maximum term of a withholding agreement is ten years.
Transportation Enterprise Zone
Businesses locating or expanding in an established Transportation Enterprise Zone may be eligible to receive certain local and state tax incentives.
- The business must make a minimum qualifying investment of $500,000 over a three-year period. Qualifying investment includes the cost of land, buildings, improvements to buildings, manufacturing machinery and equipment, and/or computer hardware.
- The business must create at least 10 full-time, project-related jobs over a three-year period and maintain them for an additional 10 years.
- The business must provide all full-time employees with a standard medical and dental insurance plan of which the business pays 80% of the premiums for employee-only coverage or provide a monetarily equivalent benefit package.
- The business must pay new employees an average starting wage which is equal to or greater than 90% of the average county or regional wage, whichever is lower (currently at 13.93 for Lee County).
- The business can not be a retail establishment or a business whose entrance is limited by coverage charge or membership
- The business can not close or relocate its operation in one area of the state and relocate substantially the same operation in the Enterprise Zone.
- The local Enterprise Zone Commission and IDED must approve the business' application for Enterprise Zone program incentives prior to project initiation.Tax Incentives
- A local property tax exemption of up to 100% of the value added to the property to a period not to exceed 10 years.
- Additional funding for training new employees. If applicable, these funds would be in addition to those authorized under the Iowa New Jobs Training Program.
- A refund of state sales, service, or use taxes paid to contractors or subcontractors during construction.
- For warehouse or distribution center projects, a refund of sales and use taxes paid on racks, shelving, and conveyor equipment.
- An investment tax credit of up to a maximum of 10% of the qualifying investment, amortized over 5 years. This tax credit is earned when the corresponding asset is placed in service and can be carried forward for up to seven additional years or until depleted, whichever occurs first.
- The State's refundable research activities credit may be doubled while the business is participating in the program for up to a maximum of 10 years
HUBZone Empowerment Contracting Program
The Small Business Reauthorization Act of 1997 included a new program, the HUBZone Empowerment program. The HUBZone Empowerment Contracting Program stimulates economic development and creates jobs in urban and rural communities by providing contracting proferences to small businesses that are located in a HUBZone and that hire employees who live in a HUBZone. Lee County, and its communities all qualify under to HUBZone Empowerment Program because of the unemployment rate.