There are a wide variety of incentive financing programs available to help a company that leases space in the Valley View Business Park. The following is a sampling of those programs most often used by companies that move into the park.
Local Tax Abatement Programs
Keystone Opportunity Zone (KOZ)
Thanks to an initiative started in 1998, local counties, municipalities and school districts are allowed to designate certain properties within their jurisdictions as special tax-free zones. All three taxing bodies have to agree to forgive most local taxes for a property to receive KOZ status.
Mericle’s site at 36 Valley View Drive is in a KOZ with an end date of December 31, 2024.
Existing Pennsylvania Business Relocating to a Keystone Opportunity Zone
Any business that moves from a non-KOZ Pennsylvania location into a KOZ is not eligible to receive the exemptions, deductions, abatements, or credits set forth in the Act unless the business meets at least one of the following:
- Increases full-time employment by at least 20% in the first full year of operation within the zone or;
- Makes a capital investment in the property located within the zone at least equivalent to 10% of the gross revenues of that business in the immediately preceding calendar or fiscal year attributable to the business location or locations that are being relocated to a zone or;
- Enters into a lease agreement for property located within the zone for a term at least equivalent to the duration of the zone and with the aggregate payment under the lease agreement at least equivalent to 5% of the gross revenues of that business in the immediately preceding calendar or fiscal year.
Companies from Outside Pennsylvania Moving to a Keystone Opportunity Zone
A business relocating from outside Pennsylvania into a KOZ is not subject to the relocation provisions. Such a business must simply own or lease real property in a KOZ from which it actively conducts a trade, profession, or business, and obtain annual certification from the Pennsylvania Department of Community and Economic Development.
Through credits, waivers and broad-based tax abatements, total taxes on economic activity in zones are significantly reduced. These benefits affect the following taxes:
- Corporate Net Income tax
- Personal Income tax
- Sales and Use tax (purchases consumed and used by the qualified business in the zone)
- Mutual Thrift Institution tax
- Bank and Trust Company Shares tax
- Insurance Premiums tax
- Earned Income/Net Profits tax
- Business Gross Receipts, Business Occupancy, Business Privilege and Mercantile tax
- Sales and Use tax (county/city; purchases exclusively used and consumed by the qualified business in the zone)
- Property tax
Please be advised that the Borough of Jessup imposes an annual $0.22 per square foot municipal services fee, which is not abated by the KOZ program.
State Funding Programs
Mericle has worked with the leadership of the Pennsylvania Department of Community and Economic Development (DCED) and the Governor’s Action Team to help obtain grants and low interest loans for many companies that have relocated into our buildings. We will be pleased to arrange a meeting between representatives of your company and the Governor’s Action Team to discuss the potential availability of incentive funding.
Here are brief descriptions of some of the state grant and low interest loan programs often utilized by eligible growing businesses.
Pennsylvania First Program
Quick Summary: Pennsylvania Department of Community and Economic Development (DCED) grant/loan program for companies that create/retain a substantial number of jobs. Provides funding for real estate, M&E, job training, etc… The company must pay at least $10.88/hour. A $10 to $1 private investment match is required. The max assistance is $5,000 per job (discretionary).
Pennsylvania Economic Development Finance Authority Tax-Free Bond Program
Quick Summary: Tax-free bond program. Provides loans between $400,000 and $20,000,000. Helps manufacturers and non-profit 501(c)(3)s among others. Funds real estate, M&E, working capital, etc… The loan term can be up to 30-years but not more than 120% of the depreciable life of the assets being financed. PEDFA can finance up to 100% of eligible project costs but will usually loan less because the participating bank will likely require some equity. Can be in a pool or stand-alone. Companies must apply through an Industrial Development Authority (IDA) or an Industrial Development Corporation (IDC). Loan rates are typically 20% to 30% lower than commercial alternatives.
Pennsylvania Industrial Development Authority
Quick Summary: Low interest, fixed rate loans for real estate (max 15 years) and M&E (max 10 years), for manufacturing, industrial, office, and R&D firms and others. Companies must apply through a certified economic development organization. A typical interest rate in Pennsylvania in mid-2018 was 3.5%, but the rate is subject to change quarterly. Companies must retain/create jobs (up to $35,000 for retained jobs and up to $50,000 for created jobs). The max loan for real estate is $2.25 million and the max loan for M&E is $1.5 million.
There are several grant programs available to help you reduce your training costs in Valley View Business Park. Mericle will arrange meetings between your human resources team and the state and local officials who coordinate the following grant programs:
Guaranteed Free Training Program
Quick Summary: Grant funding provided by the Pennsylvania Department of Community and Economic Development (DCED) for essential skills and advanced technology training. Max amounts are up to $450 per trainee and $75,000 per company for essential skills training and up to $850 per trainee and $50,000 per company for advanced technology training. To be eligible, employees must be full-time and earn at least $10.88 per hour.
Workforce Innovation & Opportunity Act
Quick Summary: This federal program, which is administered by local Workforce Development Boards (WDBs), provides grants to train individuals who meet certain eligibility requirements such as those who recently lost their job or are underemployed. The program typically covers 50% of wages during training but WDBs have the authority to increase the funding to 75% in certain circumstances.
Other Financial Assistance
Foreign Trade Zone
36 Valley View Drive has Foreign Trade Zone (FTZ) status. FTZs encourage and expedite import/export cargo movements. These specially designated zones are considered outside the Customs territory of the United States, which means that merchandise can be stored, exhibited, assembled, manufactured and processed without being subject to formal Customs entry procedures and payment of duties — unless and until the merchandise enters the Customs territory for domestic consumption.
- Duty Deferral:
No duty is ever charged on merchandise while it is in a Foreign Trade Zone, and there is no limit on the length of time merchandise may be kept in a Foreign Trade Zone. By deferring the duty, capital is freed for more important needs.
- Relief From Inverted Tariffs:
Generally, if foreign merchandise is brought into a Foreign Trade Zone or Subzone and manufactured into a product that carries a lower duty rate, then the lower rate applies.
- Duty Elimination On Waste And Scrap:
No duty is charged on most waste and scrap from production in Foreign Trade Zones.
- No Duty On Domestic Content Or Added Value:
The “value added” to a product in a FTZ (including manufacture using domestic parts, cost of labor, overhead, and profit) is not included in its dutiable value when the final product leaves the Zone. Final duties are assessed on foreign content only.
- Duty Exemption On Re-Exports:
If merchandise is re-exported after being placed in a FTZ or shipped to another FTZ and then re-exported then no duty is ever paid.
- No Duty On Rejected Or Defective Parts:
Merchandise found to be defective or faulty, may be returned to the country of origin for repair or simply destroyed. Whichever choice is taken, no duty is paid. Many companies suffer from the “double duty crunch.” That is, they pay duty on imported merchandise, find it to be faulty and return it to the country of origin for repair, and then pay duty again when the merchandise reenters the United States. If you are a Foreign Trade Zone user or Subzone, the “double duty crunch” is never a problem, because your merchandise never enters the commerce of the United States.
- Administrative Benefits:
Under Customs laws, a company is required to file a customs entry with each shipment of imported merchandise. This involves several associated costs including the cost of preparing, processing and filing the customs entry. Other costs include external service provider fees and a merchandise process fee (MPF) – a .21 ad valorem fee capped at $485 per customs entry – paid to the U.S. Government. However, under zone procedures, FTZ users are allowed to consolidate shipments from an FTZ to the customs territory of the U.S. into a single weekly entry transaction rather than filing an entry per shipment. This significantly reduces the number of customs entries filed by an importer resulting in significant operational and financial benefits.