DELAWARE JOB CREATION TAX CREDIT
The state of Delaware is working on innovative and practical ways to spur economic development in the current non-recession recession. Our statewide unemployment rate hovers around 10 percent, although I personally believe that estimate is somewhat low since it is apparent that many in the work force population have simply given up looking for work.
Governor Jack Markell and Economic Development Office (DEDO) Director Alan Levin are doing all they can to attract employers and businesses to the First State. Successes have included Fisker Automotive for the Boxwood Road auto plant, and Petroplus Holdings negotiating for the former Valero Refinery in Delaware City. Both of these projects can be counted as major, national economic development improvements which will enhance our economic outlook.
Both of these companies will invest heavily in their plants, thereby renewing our aging infrastructure. We all hope there are complimentary companies and industries that will locate in the state in order to service these two companies.
Another innovation is working its way through the Legislature, and should easily become law in the coming weeks. The “Business Finder’s Tax Credit,” HB 380, enables a partnership between our statewide business community and State government. The bill reads, “The General Assembly finds and declares that the State should partner with the Delaware business community to create and develop new employment opportunities for the citizens of the State.”
I find is refreshing that the current administration and Legislature, “…finds that existing Delaware businesses are ideally situated to encourage new businesses to relocate and bring new jobs to the State. The purpose of this subchapter shall be to create incentives for existing Delaware business firms to develop new Delaware employment opportunities by encouraging out-of-state business firms to relocate to Delaware.”
The intent of the General Assembly is to achieve this result through the Business Finder’s Fee Tax Credit, “…which is designed to foster the recruitment efforts by Delaware businesses to relocate their suppliers, customers or other associated businesses to Delaware.”
It is hoped, of course, that the Business Finder’s Fee Tax Credit will increase tax revenues for the state, and expand the state’s economy by expanding Delaware’s employment base. More jobs means more money, and more money means more spending, and more spending means more GDP.
The program looks pretty simple. The “Sponsoring Firm” recruits a “New Business Firm,” and both firms are then “eligible for a tax credit equal to Five Hundred Dollars ($500.00) times the total number of Full-Time Delaware Employees of the Certified New Business Firm each tax year for three tax years from the New Business Certification Date.”
The Sponsoring Firm shall be a business organization that certifies in a joint application pursuant to all of the other necessary rules to be developed by DEDO that it (1) is a validly organized and existing corporation, limited liability company, limited partnership, general partnership, limited liability partnership, statutory trust or sole proprietorship; (2) has been doing business in Delaware for at least three years at the time it applies for the credit; (3) has a place of business in Delaware, has a current Delaware business license issued by the Delaware Division of Revenue or other Delaware licensing agency; (4) has not entered into a rental agreement for a commercial rental unit, as defined by the Delaware Code, with the New Business Firm; (5) is not a Real Estate Agency, Real Estate Developer, or landlord, as defined by the Delaware Code, for the New Business Firm, or a Bank or other lender who provides financing for the New Business Firm to establish a Delaware business location; and (6) is not an affiliate of a New Business Firm.
The New Business Firm shall be a business organization that certifies in a joint application pursuant to all of the other necessary rules to be developed by DEDO that it (1) is a validly organized and existing corporation, limited liability company, limited partnership, general partnership, limited liability partnership, statutory trust or sole proprietorship; (2) has been doing business for at least three years at the time it applies for the credit; (3) has a place of business outside of the state of Delaware; (4) has a current business license issued by an out-of-state agency; (5) does not have a place of business within the state of Delaware, and has not had a place of business within the state of Delaware for at least three years at the time it applies for the credit; (6) is not a tenant of a Sponsor Firm, and has not entered into a rental agreement for a commercial rental unit, as defined by the Delaware Code, with a Sponsor Firm; and (7) is not an affiliate of a Sponsor Firm.
There are limitations, however, not to mention that we cannot broker a transaction and be eligible for the tax credit. The statute reads, “The aggregate amount of such tax credits approved for all Sponsor and New Business Firms shall not exceed $3,000,000 in any state fiscal year; and (b) The Director shall ensure that each application has the date and time of submission recorded. Credits will be awarded in chronological order based upon the date and time upon which each complete application is received by the DEDO. If a credit award results in exceeding the $3,000,000 limitation for the fiscal year in which it is awarded, the amount by which such credit award exceeds $3,000,000 shall carry over to the succeeding fiscal year and shall receive priority for that year.” That is a lotta employees!
While McGinnis Commercial Real Estate Company may not be eligible as a Sponsor Firm, we can certainly help the New Business Firms navigate DEDO in pursuit of their tax credit entitlements, and help that New Business Firm secure its real estate plant or offices.
It is important for all business firms, not only the New Business Firms envisioned under the new legislation, to locate and secure the real estate location and facilities that enable that firm to efficiently transact its business and be as profitable as it can. It is important for all new business firms to find a real estate broker who knows the market as well as McGinnis Commercial Real Estate Company. And is important for any business to have a real estate broker who can navigate through the great number of rules, regulations, statutes and ordinances that face all new businesses at the state and local governments.
McGinnis Commercial Real Estate Company can handle of your commercial real estate needs, including sales, leasing, managing, and developing properties.
Thank-you for your comments, as I did not realize someone mistakenly excluded Real Estate Practitioners from the Business Credit. How is that possible, unless there is misconceptions about our Industry? How are Commercial or Res. Practitioners who are in fact Investors, encouraged to invest their hard earned dollars with such an exlusion?