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Economic Development TOOLBOX

Economic Development TOOLBOX. SWIDC. Economic Development... What it means to your community. Economic Development creates an environment where private enterprise does what it does best Creation of wealth Flow of capital Removing barriers to the flow of capital.

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Economic Development TOOLBOX

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  1. Economic DevelopmentTOOLBOX SWIDC

  2. Economic Development...What it means to your community • Economic Development creates an environment where private enterprise does what it does best • Creation of wealth • Flow of capital • Removing barriers to the flow of capital

  3. Economic Development TOOL BOX

  4. AUTOMATIC TAX PHASE-IN

  5. Automatic Tax Phase-In • Tax abatement or Phase-In is a valuable incentive to attract new businesses & stimulate reinvestment by existing business

  6. Automatic Tax Phase-In • Its major impact, is to stimulate reinvestment by existing businesses • Not penalizing business with a major tax bill when they can least afford it

  7. Automatic Tax Phase-In • first authorized by the State in 1977 • local government has options of allowing businesses to phase-in those new taxes that would otherwise be assessed to their property because of new building construction or the purchase of new equipment for • manufacturing   • research and development • logistical distribution • information technology  

  8. Automatic Tax Phase-In • new taxes are phased-in each year • new tax money goes into the community coffers while the businesses retain employees and create new job opportunities • Without this incentive, businesses might not make these capital improvements at all!

  9. Automatic Tax Phase-In • How it works...

  10. TIF – Tax Increment Financing

  11. TIF – Tax Increment Financing • a way for governments (usually municipal authorities) to help finance new capital projects by taking advantage of expected property tax returns

  12. TIF – Tax Increment Financing • The capture of real estate taxes from new development and application of that money to assist or stimulate that development.

  13. TIF Example • A city, for example, may designate as a TIF district a plot of land that is planned to be redeveloped • The city can borrow against expected increased tax revenues to build infrastructure such as sewers and transportation services.

  14. Cities use TIF to finance public infrastructure, land acquisition, demolition, utilities and planning costs, and other improvements including:

  15. Sewer expansion and repair Curb & sidewalks Storm drainage Street construction & expansion Street lighting Traffic control TIF Improvements...

  16. Bridge construction & repair Parking structures Water supply Landscaping Park improvements Environmental remediation TIF Improvements...

  17. TIF How it works... • .

  18. INDUSTRIAL REVENUE BONDS

  19. Industrial Revenue Bonds • Industrial Revenue Bond financing is a method of financing for private business development and expansion • Low-interest tax-exempt bonds • The interest on the bonds is exempt from federal and state income taxes • All Industrial Revenue Bond Programs must be approved against the State of Indiana's "pooled" allocation through the Indiana Development Finance Authority  

  20. Industrial Revenue Bonds • How it works...

  21. Industrial Revenue Bonds • An Example

  22. INDUSTRIAL DEVELOPMENT GRANT FUNDS

  23. Industrial Development Grant Funds (IDGF) • It’s about Infrastructure! • IDGF funds are awarded to eligible units of government to meet infrastructure needs of a new or expanding business. • The project must be related to economic development and have job-creation potential • Public-installed infrastructure may be improved up to, but not onto, the company's property; except in the case of rail spurs which may be funded on company property.

  24. Industrial Development Grant Funds (IDGF) • Eligible Activities Water lines Sewer lines Drainage facilities Wastewater treatment facilities Road improvements Rail spurs Fiber optic cable

  25. IDGFExample:

  26. ECONOMIC DEVELOPMENT INCOME TAX (EDIT)

  27. Economic Development Income Tax (EDIT) • The county income tax council may impose EDIT following a public hearing & passing a resolution • EDIT can be imposed at .1%, .2%, or at any multiple of .05% up to .5% of the adjusted gross income of taxpayers

  28. Economic Development Income Tax (EDIT) • The county distributes EDIT revenue received among the county unit and the cities and towns in the county based on the proportionate amount of property tax collections

  29. Economic Development Income Tax (EDIT) • In order to receive its share of the $ a Capital Improvement Plan must be in place • EDIT revenues may be used for economic development projects & for other uses specified in the EDIT law

  30. Expenditure for the acquisition of or interest in land Site improvements Infrastructure Buildings Structures Rehabilitation Renovation Enlargement of buildings & structures Machinery Equipment Furnishings Facilities Administrative Expenses of project Operating Expenses of government entity implementing project Uses for EDIT: Economic Development Project

  31. Uses for EDIT: Economic Development Project • An economic development project is a project that the county, city or town determines will promote significant opportunities for… • Gainful employment of citizens • Attract major new business enterprise • Retaining or expanding significant business

  32. Example: Economic Development Income Tax (EDIT)

  33. COUNTY OPTION INCOME TAX (COIT)

  34. County Option Income Tax(COIT) • COIT revenue may be used to allow a homestead credit against property taxes in the county • COIT revenue may be used as an additional revenue for the purpose of fixing a budget, COIT may be used for the retirement of bonds • A county, city, or town may use COIT for redevelopment bonds or leases • A county may pledge COIT for payment of bonds or lease rentals to finance a qualified economic development tax project

  35. County Option Income Tax(COIT) • COIT may be imposed in any county which the county adjusted gross income tax credit is not in effect • COIT is imposed on the adjusted gross income of county taxpayers

  36. Example:County Option Income Tax(COIT) • .

  37. COUNTY ADJUSTED GROSS INCOME TAX (CAGIT)

  38. County Adjusted Gross Income Tax (CAGIT) • The certified distribution received by a county is distributed to civil taxing units as …. • Property tax replacement credits • Certified shares • School corporations as property tax replacement credits

  39. County Adjusted Gross Income Tax (CAGIT) • May be imposed by the county council in any county in which the county option tax is not in effect

  40. Example: County Adjusted Gross Income Tax (CAGIT) • .

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