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Economic Development Incentive Policy

Economic Development Incentive Policy

Purpose

This Economic Development Incentive Policy is adopted to provide incentives for the expansion of existing businesses within the Town of Limon and to encourage the location of new businesses within the Town, thereby stimulating the local economy by providing additional employment opportunities and expanding the tax base required to provide Town services. This Policy does not commit the Town to providing economic incentives in every instance, nor does it restrict the Town from providing additional incentives in a specific instance. The Policy contains specific criteria, guidelines and procedures necessary to effectively and fairly administer economic development incentives.

Eligibility Criteria

Economic Development Incentives shall be available to any new or expanding business that meets the following criteria:

Job Creation


Bullet Business must create 10 new jobs or have an increase of 10% (but not less than 1 new full-time employee) over the base number of persons employed at the facility.

Bullet Average annual wages paid to full-time employees shall be equal to or greater than county average individual wage by industry (as documented by Colorado Department of Labor and Employment). 

Capital Investment


Bullet Business must invest at least $250,000 in the facility, or an investment of an amount less than $250,000 will qualify if such investment is at least equal to the assessed value of the existing facility located within the Town limits. 

Incentives

Incentive Agreements are limited to four (4) years. These Incentive Agreements may be extended to up to ten (10) years when the agreement is approved by a 2/3rds vote of the Board of Trustees. The Town of Limon may include in Incentive Agreements the requirement that a business remain in Limon for a specific period beyond the incentive period or repayment of incentives will be required. Companies that continue to expand may re-apply for new Incentive Agreements. For expansions, incentives are calculated based on the amount of each new investment. New or expanding businesses that meet the Eligibility Criteria may apply for the following incentives.

Tax Refunds Based on Capital Investment:

Investment Ranking Index Percentage of Sales Tax Percentage of Real Property Refund of Taxes Paid Personal Property 
 $5MM or more 100  100  100
$2.5MM to $5MM 2 80 80 80
$250M to $2.5MM 3 60 60 60
Equal to Assessed Value 4 60 60 60

The Town may negotiate additional incentives, including:


Bullet Discounted Purchase Price for Land owned by the Town;

Bullet Application for Grants for Infrastructure Improvements (i.e. roads, relocation of utilities, capacity expansion of existing utilities);

Bullet Industrial Revenue Bonds - the Town may issue IRBs for a business to finance land acquisition, the construction of buildings and the purchase of equipment. The Town shall assume no financial obligation for repayment; the Applicant must establish that it has the financial resources to repay the principal and interest over the life of the bonds.
Bullet Tax Increment Financing - helps finance the front end costs of development by allowing the incremental increase in tax revenues from new development to pay for the public investments needed to realize the development.
Bullet Special Improvement District - to finance and build infrastructure improvements with provision for repayment with future property taxes. 

Procedural Guidelines

Preliminary Review

Prior to submittal of a formal Application, a business may inquire as to its eligibility for economic development incentives based on preliminary employment and capital investment figures. The business shall complete a pre-application form and submit the information to the Town Administrator. Staff will review the information submitted and respond to the business regarding apparent eligibility and the potential for incentives under this Policy, if approved by the Board of Trustees. The response from Staff shall in no way represent definitive findings or be seen as an expression of intent or obligation of the Board of Trustees to favorably consider or approve a formal request for incentives. The pre-application form and Staff response shall be deemed to be proprietary business information and shall be kept confidential.

Formal Application

The Town will consider economic development incentives for businesses that submit a complete Application and provide such additional information as may be reasonably requested. The Application shall include the following information:

Bullet Name and address of business, principal owners and officers, contact person, telephone and fax numbers.
Bullet A general description of the nature of the business, business history and experience.
Bullet Name and address of the owner of the land and building occupied or to be occupied by the business.
Bullet A general description of the proposed building project or improvements, including estimated capital costs.
Bullet A site plan of the proposed building project or improvements.
Bullet If the Applicant is an existing business, average total monthly employment figures for the past 12 months.
Number of new jobs (FTE) to be created by type or position and an estimate of wages/earnings of these jobs.
Bullet If tax refunds are being requested, certification from the Zone Administrator of the Northeast Colorado Enterprise Zone that the new business or the expansion of an existing business would constitute a "new business facility" in an enterprise zone as defined by C.R.S. 39-22-508.2(3), excluding subparagraph (b).
Bullet If tax refunds are being requested, a written representation by the Applicant that it will qualify for an income tax credit pursuant to C.R.S. 39-30-105.
Bullet Statement of how the proposed business will maintain or enhance the quality of life and provide social, economic, or cultural benefits to the community.
Bullet Statement that the business operation will not detract from the Town’s or the County’s aesthetic environment (addresses odor, noise, water quality, smoke, heat, glare vibration, lighting, etc.).
Bullet Economic impact analysis conducted by independent party (i.e. Lincoln County Economic Development Corp.). 

Application Review Procedures

Bullet Staff reviews Application for completeness and places the application on the Board of Trustees Agenda.
Bullet The Board of Trustees reviews the analysis of the costs and benefits and receives comments from the Applicant and the general public at a public meeting. The Board of Trustees will take formal action on the Application and, if approved, will direct the preparation of an ordinance setting forth the terms of the economic incentive agreement. Final approval shall be in the form of an ordinance. 

Monitoring Review

Each incentive agreement shall be subject to an annual review by Staff to determine if the business continues to meet all eligibility criteria and remains in compliance with the terms and conditions of the Ordinance. The Economic Incentive Agreement may be terminated by Board of Trustees if the business fails to continue to meet the Eligibility Criteria. 

 

Enterprise Zone

 

***IMPORTANT REMINDER TO BUSINESSES***

Pre-certification is required Beginning January 1, 2012

New legislation requires Enterprise Zone businesses to obtain pre-certification prior to engaging in an activity to earn a EZ tax credit starting January 1, 2012.

Pre-certification must be obtained from a business' local EZ Administrator ( This email address is being protected from spambots. You need JavaScript enabled to view it." style="text-decoration: underline; color: #999933;">This email address is being protected from spambots. You need JavaScript enabled to view it.) and EVERY YEAR therafter in which a business anticipates earning an EZ tax credit.  Therefore, BEFORE creating a job or making an investment, obtain precertification for that year.

Information regarding how to request pre-certification will be available at www.advancecolorado.com/ez . 

 


Limon is included in the East Central Enhanced Enterprise Zone which covers Lincoln, Elbert, Kit Carson and Cheyenne Counties. Colorado Enterprise Zone legislation provides state tax incentives to businesses located in the zone, particularly for new or expanded businesses.

General Information About Colorado Enterprise Zone is available from the Colorado Department of Revenue.

Visit Colorado Office of Economic Development and International Trade

Tax Credits and Information

 

1.   Investment Tax Credit

 

State tax credit is 3% of any qualified investment in section 38 property used exclusively (100%) in the enterprise zone for the first year of its ownership by the taxpayer. Taxpayer can carry the unused amount of their ITC back three years and forward up to 12 years.

 

New Legislation Taking Effect for Tax Year 2014 and Beyond

 

Beginning in tax year beginning January 1, 2014, for Renewable Energy Investments made before January 1, 2018, credits not used to offset tax can be carried forward for a period of up to 22 years. A Renewable Energy Investment means an investment that qualifies for the credit for solar, thermal electric, photovoltaic, landfill gas, wind, biomass, hydroelectric, geothermal electric, recycled energy, anaerobic digestion, or renewable fuel cell projects.

 

  2.  New Business Facility Job Credits

 

New Business Facility Employee Credit

 

An existing business facility that has not previously qualified as a new business facility can qualify as a "new business facility" if it expands to qualify as a "qualified replacement facility" or a "qualified expansion facility." A “qualified replacement facility” is a replacement business facility located in an enterprise zone in which the taxpayer's investment exceeds $3 million or, if less, 300% of the investment in the old facility.

 

Any taxpayer who establishes a new business facility in an enterprise zone can claim an income tax credit of $500 for each new business facility employee who is working with in the zone, prorated according to the number of months of employment during the tax year.

 

New Legislation Taking Effect for Tax Year 2014 and Beyond

 

Beginning in tax year beginning January 1, 2014, this credit increases to $1,000. In In an enhanced rural enterprise zone and additional credit of $2,000 can be claimed. For subsequent tax years, a credit of $500 and an additional $2,000 shall be allowed for any increase in the average number of new business facility employees working in the zone in excess of the maximum number employed in any prior tax year. The base New Business Employee Credit not used to offset tax can be carried forward for a period of up to five years. The enhanced portion of the New Business Facility Employee Credit not used to offset tax can be carried forward for a period of up to seven years.

 

New Business Facility Agricultural Processing Employee Credit

 

If a New Business Facility is engaged in a business which adds value through manufacturing or processing to agricultural commodities, an additional credit of $500 per new business facility employee is allowed. An additional $500 credit for each New Business Facility agricultural processing employee is available to businesses located in an enhanced rural enterprise zone.

 

The enhanced portion of the New Business Facility Employee Credit not used to offset tax can be carried forward for a period of up to seven years.

 

Employer Sponsored Health Insurance Credit

 

For the first two full income tax years while located in an enterprise zone, taxpayers are allowed a credit of $200 for each new business facility employee insured under a health insurance plan or program at least 50% of the cost must be paid by the employer. Such plan or program may be any health insurance, health maintenance organization or pre-paid health plan that is approved by the State Insurance Commissioner for sale in Colorado or it may be a self-insurance program. The Employer Sponsored Health Insurance Credit not used to offset tax can be carried forward for a period of up to five years.

 

New Legislation Taking Effect for Tax Year 2014 and Beyond

 

Beginning in tax year beginning January 1, 2014, the requirement to be a “New” Business Facility is removed and the credits are available to any business facility meeting the criteria. Business Facility means a facility that is operated by the taxpayer in the operation of a revenue producing enterprise.

 

Additionally the base Business Facility Employee Credit increases to $1,000 and both base and enhanced credits not used to offset tax can be carried forward for a period of up to twelve years and the Employer Sponsored Health Insurance Credit increases to $1,000.

 

3.  State Sales and Use Tax Exemption for Manufacturing Equipment 

 

Purchases of machinery or machine tools and parts thereof are exempt from state sales and use tax when the machinery will be used in manufacturing.

When machinery is used solely and exclusively in an enterprise zone, the manufacturing/machinery exemption is broader. Machinery used solely and exclusively in a designated enterprise zone does not have to be capitalized to qualify for the exemption. Materials for construction or repair of machinery or machine tools are exempt from the state sales and use tax if the machinery is used exclusively in an enterprise zone.

 

4.   Research and Development Tax Credit

 

Taxpayers who make expenditures on research and experimental activities in an enterprise zone qualify for an income tax credit. The 3% credit is based on the increase of a company’s research and experimental expenditures within an enterprise zone over the average of such expenditures conducted in the same enterprise zone during the previous two income tax years. The expenditures must meet the research and experimental activities as defined in section 174 of the federal Internal Revenue Code of 1986, as amended.

 

There is no limit on the number of years this credit can be carried forward.

 

5.  Tax Credit for Private Contributions to Enterprise Zone Administrators

 

Any taxpayer who makes monetary or in-kind contributions to an enterprise zone administrator or to an agent designated by the enterprise zone administrator for the purpose of implementing the economic development plan of the enterprise zone may claim an income tax credit of 25 percent of the value of the contribution up to a maximum credit of $100,000. In-kind contributions shall not exceed 50% of the total credit claimed.

 

Eligible projects in Lincoln County include:

  • Hugo Union Pacific RR Roundhouse Museum
  • Karval Alliance
  • Limon Area Fire District
  • Limon Heritage Society/Museum
  • Lincoln County Economic Development Corporation
  • Lincoln County Hospital & Nursing Home
  • Plains Medical Center
  • Your Community Foundation

6.  Tax Credit for the Rehabilitation of Vacant Commercial Buildings


The owner or tenant of a building in an enterprise zone that is at least 20 years old and that has been completely vacant for at least two years can claim a tax credit of 25% of the cost of rehabilitating such building for commercial use. The credit is limited to $50,000 per building.

If the amount of the credit exceeds the amount of income taxes owed by the taxpayer, the remaining credit which is not claimed in a tax year may be carried forward up to five years. The credit must be applied to the earliest income tax year possible.

 

7.   Qualified Job Training Program Investment Credit

 

Colorado taxpayers are allowed to claim a credit of 10% of their total current year investment in a qualified job training program. Qualified job training program means a structured training or basic education program conducted on-site or off-site by the taxpayer or another entity to improve the job skills of employees who are employed by the taxpayer. These employees must be working predominantly within an enterprise zone.

 

Excess credits may be carried forward for up to 12 years.

 

8.    Qualified School-to-Career Investment Credit

Colorado taxpayers can claim an income tax credit equal to 10% of their current year investment in a qualified school-to-career program.  Qualified School-to-Career Program means a program that integrates school curriculum with job training that encourages placement of students in jobs or internships that will teach them new skills and improve their school performance, and that is approved by:

  • The board of education of the school district in which the program is operating;
  • The State Board for Community Colleges and Occupational Education;
  • The Division of Private Occupational Schools
  • The Colorado Commission on Higher Education

Credits may be carried forward up to five years, but must be applied to offset tax in the earliest year possible.

For additional information contact:

East Central Enterprise Zone
Maryjo Downey 
P.O. Box 28 
Stratton, CO 80862 
(719) 348-5562

Prairie Development Coporation

 

PDC Logo 

Prairie Development Corporation (PDC) is a nonprofit economic development organization created by the East Central Council of Local Governments to provide assistance including lower interest lans to new and expanding businesses in Cheyenne, Elbert, Kit Carson and Lincoln counties. The Prairie Development Corporation is governed by a board of nine directors. Two board members each are appointed by the four counties, and the ninth member is appointed by the East Central COG. The PDC also administers the East Central Enterprise Zone and the Housing Program Options (HIPO) loan program.

Low Interest Business LoansPDC Image


PDC administers two different loan programs, a Revolving Loan Fund (RLF) and a Guaranteed Loan Program (GLP). Both loan programs are designed to eliminate the major barrier facing most business start-ups and expansions today: obtaining adequate capital at reasonable rates and repayment terms to provide the small business with a chance of positive cash flow until the initial start-up capitalization costs are reduced and the business can survive on its own. The ultimate goal of borrowing money by blending PDC dollars with other private source dollars, thus giving the small business a better chance of survival. By creating jobs for area residents, the outflow of dollars and population from East Central Colorado can be reduced; and eventually the area's economy can not only be stabilized by also experience moderate growth.

Housing Loans


The Prairie Development Corporaiton, using federal funds, also operaties Housing Improvement Program Options (HIPO) offering down payment assistance and other home ownership loan programs, home buyer counseling programs and housing rehabilitation loans for owner-occupied units, including emergency repair. For the best possible workmanship, contractors bidding on rehab projects must be pre-qualified. All work must meet applicable codes and must pass inspection. Owners using these programs must use the homes as their principal residences, and occupants of the homes must meet certain income guidelines. Interest rates range from zero to current market rate, and terms for most programs may be up to 10 years. The overall goals of the housing programs are to increase the stock of affordable housing for low-to-moderate-income families in the area, and to ensure the housing has no major safety or health hazards.

PDC MeetingsPDC Image


The Board of Directors of the Prairie Development Corporation meets on the fourth Wednesday of every month. The meetings are usually in Hugo and are open to the public. Business loan applications and guaranteed requests must be filed no later than one week prior to the board meeting. Applications filed after that day will be reviewed the following month. Housing loan applicaitons generally take from 30 to 60 days for processing.

For Additional Information


For more detailed information about any of the PDC programs, contact the ECCOG office at 128 Colorado Avenue in Stratton (1-800-825-5562); or the Colorado Small Business Development Center at the same address (719-348-5596). Persons also may contact their local banks or any PDC board member. The regional revolving loan fund can provide bridge financing to new and expanding businesses in Limon. For further information contact:

Prairie Development Corporation
P.O. Box 202 
Stratton, CO 80862 
719.348.5562

This email address is being protected from spambots. You need JavaScript enabled to view it.?subject=Business%20in%20Limon">E-Mail

 

PDC Image 

State Incentives

oeditThe State of Colorado offers a host of incentives for entrepreneurs and businesses of all sizes. Colorado has low taxes and business costs, provides performance-based incentives to qualifying companies that create new jobs, and offers customized training grants.

Job Growth Tax Incentive

The Job Growth Incentive Tax Credit provides a state income tax credit to businesses undertaking job creation projects that would not occur in Colorado without this program.

Strategic Cash Fund Incentive

The Strategic Fund Cash Incentive program supports and encourages new business development, business expansions and relocations that have generated new jobs throughout the state. In some cases, the Strategic Cash Fund may also be able to provide support for initiatives led by non-profit entities pertaining to key industries or regional development.

Job Training Grant Programs

The Colorado First and Existing Industry grants are jointly administered by OEDIT and the Colorado Community College System. The state may be able to provide specific support to retain jobs or offers business-friendly tools that assist in retaining jobs (such as the Enterprise Zone Program) for this grant.

Public Infrastructure Grants

The Infrastructure Assistance program is designed to create new permanent jobs and retain existing jobs, primarily for low‐ and moderate‐income persons. The state may be able to provide specific support to retain jobs or offers business-friendly tools that assist in retaining jobs (such as the Enterprise Zone Program) for this grant.

Biotechnology Sales and Use Tax Refund

Colorado promotes its biotechnology industries by providing them with a taxpayer-friendly means to recover the sales and use previously-paid tax expenses on equipment and supplies used for research and development.

Colorado Aircraft Manufacturer Tax Credit

Aircraft manufacturers located in a Colorado aviation development zone may qualify for a state income tax credit of $1,200 per new employee.

Click here to go to the Colorado Office of Economic Developent and International Trade Incentives.

http://www.advancecolorado.com/
   
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