Economic Advantages

Any business located within the Round III, Federally designated Rural Empowerment Zone, in Aroostook County can take advantage of wage credits and tax exempt bonds.

 

 

In January of 2002, parts of Aroostook County were designated as the Aroostook County Empowerment Zone (ACEZ). The empowerment zone program was created in the early 1990s by the federal government to aid communities by providing opportunities for growth and revitalization. Today, the ACEZ is one of only 10 rural empowerment zones in the country. Over the course of the next several years, area businesses, organizations, and citizens will be called upon to work together to revitalize northern Maine through this and other programs.

Round III rural zones can each issue up to $60,000,000 in “new bonds” to finance zone facilities in addition to Round I type tax exempt bond. Round III “new bonds” are not subject to private activity bond volume caps or the special limits on issue size applicable to Round I type issues.

A 20% tax credit for the first $15,000 in wages paid to a qualified employee (for a tax credit of up to $3,000 per employee) is afforded businesses within the zone.

Businesses are allowed additional Section 179 expensing u p to $35,000 under Internal Revenue Code 26 U.S.C. § 179.

Read more about the program here.
Read more about the federal tax incentive here.

 

 

A municipality may choose to provide “financing” to any business that is making a significant capital investment within its borders. The source of the financing is taxes paid on new, real and personal property

 

 

TIF is a local financing tool that permits a municipality to use some or all of the new property taxes that result from an investment project within a designated district to assist in that project’s expenses. The municipality may disburse the tax increment directly to the investing business to help pay project costs, use it to retire bonds it issues as part of the project, or retain it for allowable economic development purposes.

TIF districts may be designated for up to 30 years. Bonds may be issued for up to 20 years. The community designation of a TIF district requires proper public notice, a public hearing, and a majority vote of the municipal legislative body.

 

 

A business plans to invest $4,000,000 to construct a state-of-the-art manufacturing facility on land presently valued at $200,000. The municipality’s property tax mil rate is $18 per $1,000 of valuation, so the business will have a tax obligation of $75,600 per year once the investment is recorded on the tax rolls. Of this tax obligation, $72,000 is new, or “incremental,” and therefore eligible to be included within a TIF development program. Two examples exist for financing this scenario:

Credit Enhancement Agreement . Once a municipality votes to financially support a business under the TIF program, the business may enter into a binding contract with the community called a “credit enhancement agreement.” If the municipality agrees to “capture” 50% of the increased value in the TIF district for a period of ten years and return the new tax revenues to the business mentioned above to assist in financing the new building, then the business would receive $36,000 in the first year of the agreement. If all things remain constant, the business would receive approximately $360,000 in financing over the term of the TIF district.

Municipal Bond . Additionally, the municipality may float a bond to pay this cost. It could do so by issuing a 10-year general obligation bond in the amount of $150,000. If annual debt service on the bond is $20,000, the municipality could “capture” another 20% of the increased value in the TIF district for a period of ten years and pay down the debt on the TIF bond.

The remaining 30% of the new tax revenues from the increased assessed value could be deposited in the general fund for use on regular municipal expenses.

Any business that pays local property taxes on qualified business property (excluding public utilities, radio paging services, mobile communications, cable television, satellite-based direct television broadcast, multi-channel, and multi-point television distribution services, certain energy facilities, most natural gas pipelines, and property used to produce or transmit energy primarily for sale).

 

 

The program reimburses, for up to 12 years (less any number of years for which a High-Technology Investment Tax Credit was claimed), all local property taxes paid on eligible business property. After the last property tax payment in a calendar year is made, a claim may be filed through April 1st of the following year. Once Maine Revenue Services receives the reimbursement form, a check will be issued within 180 days of the application due date.

Law defines the definition of eligible business property, but generally it means personal property first placed in service in Maine after April 1, 1995 . Eligible property includes certain property affixed or attached to a building or other real estate if it is used to further a particular trade or business on that site and so may include property which would be classified as real property for other purposes. Office furniture, lamps and lighting fixtures purchased after April 1, 1996 are not eligible for reimbursement and are excluded from the program. Vehicles on which excise tax has been paid are also ineligible for reimbursement. (Please note that this credit cannot be taken in tandem with the High Technology Tax Credit.)

$35,000

Municipal Mil Rate (per $1,000 of assessed value)

$18

Annual Personal Property Tax Liability

$4,500

Annual Average Reimbursement

$4,500

 

Any business that hires a minimum of 5 net new employees within a two year period, where those employees are: 1) paid an income that exceeds the average per capita income in the county of employment; 2) provided access to group health insurance, and; 3) provided access to an ERISA qualified retirement program. The business must also be able to provide written documentation that its expansion project will not go forward without ETIF.

 

 

ETIF is available to assist in the financing of business investment projects that create at least 5 net new, high quality jobs in Maine. An ETIF-approved business would receive 30, 50 or 75 percent of the state income tax withholdings paid by qualified employees for up to ten years. (Qualifying jobs created in a labor market area where the unemployment rate is at or below the state average earn a 30 percent reimbursement, while those with a higher than average unemployment rate earns 50 percent. In areas where the unemployment rate exceeds 150 percent of the state average, the reimbursement is 75 percent.) The percentage of reimbursement is established for a five-year period based upon the unemployment rate at the time of initial application, and again at the beginning of the sixth year. The amount of annual payment is based upon the actual number of qualified employees above the company’s base level of employment. The company may not accrue ETIF benefits for any period of time when employment, wages and/or employee benefits fail to meet the minimum qualification criteria. (Please note that ETIF cannot be taken concurrently with the Jobs & Investment Tax Credit.)

 

 

 

 

 

Total Jobs Created

45

Wage Ranges

$12.50/hr to $16.00/hr

$29,500

Area Per Capita Income

$15,033

Labor Market Area Unemployment Rate

5.8%

State Unemployment Rate

5.3%

Effective Tax Rate

4.00%

Number of Qualified ETIF Jobs

45

Annual Payroll

$1,327,5000

State Personal Income Tax Liability

$53,100

ETIF Reimbursement Rate

50%

Annual ETIF Reimbursement

$26,550

Any business, other than a public utility, that invests at least $5 million in a taxable year in qualifying types of personal property in Maine and creates 100 new jobs over the ensuing 2 year period.

 

 

The program provides a credit against Maine income taxes equal to 10% of investments in qualifying types of personal property. The investment must total at least $5 million in any taxable year and generate at least 100 new, qualifying jobs within two years of the date the investment is placed in service. The credit amount is limited to the lesser of $500,000 per year or the tax otherwise due. Unused credit may be carried forward for up to 6 years. Recapture provisions apply if the property is disposed of or otherwise ceases to qualify under the Code. (Please note, the Jobs and Investment Tax Credit may not be taken concurrently with the Employment Tax Increment Financing Program.)

 

 

Total Jobs Created

250

Personal Property Investments in two-year period

 

$45 million

Eligibility Formula (10% X 45 million)

$4,500,000

Maximum Annual Reimbursement
(Remaining Credits may be carried forward.)

$500,000

 

Any business that purchases custom computer programming.

 

 

Any custom computer programming purchased by a business is exempt from sales tax. If a standard program is purchased, then customized, the cost of the standard program would be taxable and the customizing, if separately stated, would be nontaxable.

 

Purchase of Standard Computer Program

$60,000

Customization Expenses

$30,000

State Sales Tax Liability

$4,500

Custom Computer Programming Sales Tax Exemption

$1,500

State Sales Tax Liability after Exemption

$3,000

 

Any business that purchases fuel and/or electricity for use in its manufacturing operation.

 

 

Manufacturers are exempt from paying 95% of the sales tax on fuel and/or electricity used in the manufacturing operation.

 

 

$100,000

Annual Fuel Expenses

 

$60,000

State Sales Tax Liability

$8,000

Fuel & Electricity Sales Tax Exemption

$7,600

State Sales Tax Liability after Exemption

$400

 

New or expanding firms creating a minimum of eight (8) new full-time jobs with benefits in the state of Maine . Consortia of businesses creating a minimum of eight new, full-time jobs are also eligible. The award is based on skill requirements, wage benefit levels, and company and labor market analysis.

 

 

The MQC program uses the states Community College network to generate a pool of trained applicants, from which a company can select its labor force. The program provides 100% state-financed education and training in support of job creation, as well as customized recruitment and guaranteed fast-track training designed to employer specifications. This program is offered at no cost to the company or trainees, and is delivered by the state’s seven technical colleges. Training can be for either pre-hire or post-hire trainees.

 

 

A local software development firm has received training assistance through Maine Quality Centers in support of 5 separate expansions since 1997, representing increases from 8 to 105 employees at a time. The company’s unique product required specialized training for new hires and, through Northern Maine Community College (NMCC), the cost of authorized proprietary training was paid for with funding from MQC grants. From programmers to sales representatives, employees participated in training delivered by company representatives on site at their growing facility. All participants were screened and hired first by the company and were trained on company time.

 

Most recently, MQC approved a grant through NMCC to support a combination of proprietary post-hire training provided by the company and the development of a new certificate program at the college. In this latest project, NMCC has partnered with the company to develop and deliver a customized Certificate in Commercial Software Development to be offered at the college as a either a stand alone associate degree or as a third year certificate option for graduates of NMCC’s Computer Information Systems (CIS) program. The grant will support up to 13 students in the first year of the program to be offered as pre-hire training for the company. ATX will participate in program and course development as well as in recruitment, assessment, and selection of the students for the first class; all of whom will receive training at no cost to them or to the company. Successful students will be interviewed by the company following training and the company will make final hiring decisions. Once developed and piloted during the coming school year, the program will likely be offered at NMCC as a regular tuition program to the general population. It will serve as a feeder to help meet anticipated future hiring needs as the company projects continued growth.

 

 

Total Jobs Created

100

 

75

$1,000

 

New or existing firms requiring financial assistance for the competitive skill development of new hires or existing workers. To be eligible, firms must:

1. Pay wages equal to, or above, 85% of the average wage for that occupation in the given labor market, and
2. Contribute 50% or more of the premium cost of employee health insurance. Small businesses with fewer than 25 employees, and in business less than 3 years, are exempt from the health insurance requirement.

 

 

The Governor’s Training Initiative may be used to provide partial reimbursement for the cost of non-routine workforce training, that contributes to workforce expansion, and/or the retooling of existing workers for new technologies, processes or markets. Eligible training includes workplace literacy, high performance skills, technical training, higher education, and on-the-job training.

Preference will be given to applications that exhibit:

• Formation of a local project partnership
• Provision of matching funds
• Investment in lifelong learning
• Increase in local training capacity
• Provision of quality employment
• Location in a depressed labor market
• Willingness to hire targeted populations
• Provision of registered apprenticeship

 

 

An Aroostook County firm needed to retrain 20 maintenance workers for industrial/electrical skill requirements. The Northern Maine Community College developed a customized Master Electrician course specific to the company’s industrial requirements. GTI provided the company with partial reimbursement for the cost of upgrading maintenance workers to Licensed Master Electricians.

 

 

Total Jobs Created

100

 

75

$1,000

 

MAINE INVESTMENT EXCHANGE (MIX)

What is MIX?	The Maine Investment Exchange (MIX) was created in 1996 by Maine & Company and is supported by private businesses throughout Maine . The organization was established to provide forums for qualified entrepreneurs* seeking risk capital to make formal presentations to providers of risk capital. This provides an opportunity for qualified entrepreneurs to meet potential investors. Since its inception in December 1996, MIX has conducted 18 forums where 100 companies have made presentations to average audiences of 60 or more people. The attendees consist of angel investors, venture capitalists, bankers, attorneys, accounting firms and consultants. It is estimated that 15%-20% of the presenters have received funding, directly or indirectly, as a result of the MIX forums.
Participation:	To Present – Entrepreneurs must submit an Application Form , two copies of their business plan, and an executive summary. A complete set of financials must accompany the business plan, including two years of historical and three years of pro forma. The executive summary and business plan must be submitted electronically and the application must be mailed accompanied by a $50 non-refundable fee. The application packages are reviewed by the MIX board, and selected applicants are invited to make a 10-minute presentation at a MIX forum. If selected to present, the applicant is required to pay an additional $200 fee. Presenting companies are invited to exhibit their products and literature at tables adjacent to the presentation area. Time is provided before and after the formal session for networking with investors. Key Criteria to Present: Clarity and thoroughness of Executive Summary and Business Plan. Growth potential of the venture. Demonstrated knowledge of the customer and marketplace. Reasonable investment opportunity. Exit strategy. Potential for interstate and/or global commerce
Program Results:	Since its inception in December 1996, MIX has conducted 18 forums where 100 companies have made presentations to average audiences of 60 or more people. The attendees consist of angel investors, venture capitalists, bankers, attorneys, accounting firms and consultants. It is estimated that 15%-20% of the presenters have received funding, directly or indirectly, as a result of the MIX forums.

MAINE TECHNOLOGY INSTITUTE (MTI)

Eligible Businesses:	Maine Technology Institute (MTI) will provide research & development money to companies and non-profit research organizations in the State of Maine to support the commercialization of new technology-related products and services that will create and support sustainable, high-quality jobs for Maine people. Awards are made on a competitive basis and support efforts in any of the state’s seven targeted technology areas: Advanced Technologies for Forestry and Agriculture, Aquaculture and Marine Technology, Biotechnology, Composite Materials Technology, Environmental Technology, Information Technology, and Precision Manufacturing Technology.
Program Summary:	MTI meets its purpose through direct investments in promising technologies. All MTI programs require a 1:1 cash match, and are awarded based on scientific or technical merit, commercial feasibility, and potential for economic impact to the State. MTI offers three awards programs: Development Awards are competitive awards of up to $500,000 per project and are awarded twice a year.   Seed Grants , awarded four times per year, are competitive grants of up to $10,000 per project to support very early activities for product development, commercialization, or business planning and development.   Cluster Enhancement Awards are competitive grants for up to $100,000 for collaborative projects that will stimulate and support the formation and growth of technology businesses and their infrastructure. These awards are considered on an on-going basis.
Program Results:	The Maine Technology Institute has approved funding for of 350 projects and committed over $15,000,000 to various projects. MTI funding has been matched by over $20,000,000 in other funding.

TAXABLE SMART BONDS

Eligible Businesses:	Any commercially viable borrower proposing to finance the acquisition or expansion of commercial or industrial assets.
Program Summary:	Program provides credit enhanced, taxable, long-term bond financing for the construction or acquisition of real estate and the purchase of new or existing machinery and equipment. The maximum bond amount is $7 million.
Program Example:	A $1 million loan for real estate could be eligible for a $900,000 taxable bond.
TAX-EXEMPT SMART BONDS (FAME)
Eligible Businesses:	Any commercially viable borrower that proposes to finance the acquisition or expansion of manufacturing assets.
Program Summary:	Program provides tax-exempt interest rate bond financing for manufacturing borrows whose needs do not exceed $7,000,000. Bonds may be used to purchase and/or construct a manufacturing facility, and/or purchase new machinery and equipment. Bonds may be structured to finance up to 90% of an eligible loan based on collateral value. Tax-exempt bonds amount may be issued up to $10,000,000, but credit enhanced amount may not exceed $7,000,000.
Program Example:	A $1 million loan for real estate could be eligible for a $900,000 tax-exempt bond.