Economic Development Progress, Programs and Plans in West Virginia. Morgantown, WV October 30, 2018

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2 Economic Development Progress, Programs and Plans in West Virginia Morgantown, WV October 30, 2018

3 IMPROVED BUSINESS CLIMATE WEST VIRGINIA Ranks in the top half of the country for tax competitiveness (18th) and better than all bordering states: Pennsylvania 24th Virginia 33rd Kentucky 34th Maryland 42nd Ohio 45 th Source: Tax Foundation

4 IMPROVED BUSINESS CLIMATE Measures taken to create a more business friendly environment The state enacted tax reforms that now rank it as #18 nationally in terms of low corporate taxes The Business Franchise Tax was eliminated in 2015 The Corporate Net Income Tax rate was reduced to 6.5% in 2014 from 8.5% in 2011 West Virginia became a right to work state in 2016, putting it at an advantage compared Ohio, Pennsylvania, and Maryland The state repealed the prevailing wage law West Virginia will reduce, for the 12th consecutive time, Workers Compensation rates in its current legislative session

5 IMPROVED BUSINESS CLIMATE Current state Corporate Real property Tangible personal property Standard new employer unemployment Supplemental wage / bonus rate WV 6.5% 1.6% 1.6% 2.7% 4.8% PA 9.9% 1.9% N/A 3.7% 3.1% OH N/A 1.6% N/A 2.7% 3.5% VA 6.0% 1.0% 4.2% 2.6% 5.8% MD 8.5% 2.7% 2.3% 2.6% 5.8% KY 6.0% 1.4% 0.6% 2.7% N/A SOURCE: Institute for Legal Reform, Cato Insitute, ECIT, Bureau of Commerce, Tax Foundation

6 BUSINESS TAXES Corporate Net Income Tax Corporate net income tax rate is 6.5% of the federal taxable income of the corporation for the year. Unemployment Compensation Tax Unemployment compensation tax rate is 2.7% on the first $12,000 of annual wage per employee for the contribution. After the first 36 months, an employer is granted an individual experience rate, which can range from 1.5% to 5% or higher. Sales and Services Tax The tax must be collected on the sale, lease or rental of tangible personal property and certain services. The sales tax is 6%. Local Tax: Property Tax Property is generally taxed on 60% of its appraised value with reduced valuation for qualified capital additions. Savings may be obtained on property taxes from county jurisdiction.

7 TAX CREDIT PROGRAMS Name Description Amount Economic Opportunity Credit Manufacturing Investment Credit Manufacturing Sales Tax Exemption Manufacturing Inventory Credit Freeport Property Tax Exemption Accelerated Deduction for Pollution Control Equipment Credit allowing companies who create at least 20 new jobs within specified time limits to offset the corporate net income tax; if less than 20 new jobs, allows a credit per job if it pays at least $32,000 per year and provides health insurance benefits Tax credit for qualified investment in eligible manufacturing property, regardless of job creation Exemption from the six percent sale tax for purchases of materials and equipment for direct use in manufacturing, including building materials Credit to offset the corporate net income tax in the amount of property tax paid on raw materials, work in process inventory, and finished goods inventory Exempts finished goods destined to be delivered in interstate commerce from the property tax. Immediate corporate net income tax deduction Up to 100% of corporate net income tax or $3,000 per new full-time job for 5 years Up to 60% of the corporate net income tax up to 10 years 100% of the sales tax Dependent on volume of inventory Project dependent Project dependent SOURCE : WV Department of Commerce

8 TAX CREDIT PROGRAMS Name Description Amount Payment in Lieu of Taxes (PILOT) Special Property Tax Valuation for Air & Water Pollution Equipment Special Property Tax Valuation 5 for 10 Special Property Tax Valuation for High Tech- (Data Centers) Sales Tax Exemption for High Tech Property owned by a tax exempt entity, then negotiated payment in lieu of real and personal taxes is potentially available. Property Tax Valuation on pollution equipment ((5% x Cost of the Property) x 60%) x Rate = Tax Investments greater than $50M in a manufacturing facility having $100M or more of preexisting investment in place prior to the new investment for a 10-yr. period. For $2B investment valuation applies for a 25-yr. period. Special property tax valuation on servers & tangible personal property directly used in a high-technology business or in an internet advertising business. Exemption from 6% sales and use tax for tangible personal property and services. Project dependent 5% of cost instead of market value Valued at 5% of cost of the new investment for property tax purposes. Valued at 5% of cost of the new investment for property tax purposes. 100% of the sales tax SOURCE : WV Department of Commerce

9 TAX CREDIT PROGRAMS Name Description Amount Tax Increment Financing Corporate Headquarters Relocation Credit R&D Sales Tax Exemption Special Property Tax Valuation for Aircraft Allows increases in property tax based on the improvement associated with qualified economic development and public improvement projects to assist with long-term financing A Taxpayer that moves its corporate headquarters to WV from a location outside of WV may be entitled to an Economic Opportunity Tax Credit, if the relocation creates at least 15 new WV jobs. If the relocation creates at least 15, but less than 20 new jobs, then the amount of credit is equal to 10% of the Taxpayer s adjusted qualified investment. Credit for purchases of tangible personal property and services directly used in R&D are exempt from the consumer sales tax Special property tax valuation on aircraft owned or leased by commercial airlines or private carriers. Also includes any parts materials or items used in the construction, maintenance or repair of aircraft which are, or are intended to become, affixed to or a part of an aircraft or of an aircraft s engine or of any other component of an aircraft. Project dependent Offset up to 100% of corporate net income tax attributable to qualified investment for a period of up to 13 years. Up to 100% of consumer sales tax Valued at 5% of cost of the new investment for property tax purposes. SOURCE : WV Department of Commerce

10 Results Major wins and recent success

11 MAJOR WIN ROXUL Inc. is the North American operations of ROCKWOOL International. ROXUL manufactures a full line of residential, commercial, industrial and roof board stone wool insulation products. Roxul announced its plans to invest $150 million to build a facility to manufacture its stone wool insulation. The company will initially create 150 jobs. Assistance from the State & Its Partners from Jefferson County: Economic Opportunity Tax Credit Eligibility Manufacturing Investment Tax Credit Eligibility Sales Tax Exemption for Materials/Process Equipment/ Construction Up to $280,000 in State Job Training Assistance (GGWFP) $2.2 million in Performance Based Financial Assistance for site acquisition/prep $3.25 million in loans to Jefferson Utilities for the provision of water service to the site. (38-year term) Approximately $6 million in loans to the City of Ranson for the provision of sewer service to the site. (20-year term) PILOT Agreement w/ Jefferson County Division of Highways to provide access road funding.

12 MAJOR WIN Consumer products giant, Procter & Gamble has announced a $500 million manufacturing project in Martinsburg, WV. Procter and Gamble selected Martinsburg from among 70 possible sites. Procter & Gamble is a global manufacturer leader of consumer products. The facility will occupy more than one million square feet while creating approximately 700 jobs. Assistance from the State & Its Partners from Berkeley County: Economic Opportunity Tax Credit Eligibility Manufacturing Investment Tax Credit Eligibility Sales Tax Exemption for Materials/Process Equipment/Construction Up to $1.2 million in State Job Training Assistance (GGWFP) $6.7 million Site Preparation Loan PILOT Agreement w/ Berkeley County Partnered with Blue Ridge Community & Technical College to establish a customized Training Program

13 MAJOR WIN Macy s has invested over $150 million into its 1.3 million square foot fulfillment/distribution facility in Martinsburg- the largest in their company. Macy s selected Martinsburg from among 157 possible sites. Currently employs 1200 full time workers; increases to 3,000 for Christmas season. Assistance from the State: Economic Opportunity Tax Credit Eligibility $5 million Site Preparation Loan Up to $1.8 million in State Job Training Assistance (GGWFP) PILOT Agreement w/ Berkeley County Partnered w/ Blue Ridge Community & Technical College to established a Fulfillment Center Training Program

14 MAJOR WIN GESTAMP West Virginia has invested more than $100 million into its 1.3 millionsquare-foot manufacturing facility in South Charleston. Gestamp is the largest privately owned independent stamping company in the world. A minimum of 400 jobs will be created within five years. Assistance from the State: Economic Opportunity Tax Credit Eligibility Manufacturing Investment Tax Credit Eligibility Sales Tax Exemption for Materials/Process Equipment/Construction $2.5 million loan for start-up costs $15 million equipment loan West Virginia Economic Development Authority holding title to certain equipment Up to $800,000 in State Job Training Assistance (GGWFP) City of South Charleston 20-year discount tax program Partnered with Kanawha Valley Community & Technical College to established a Technology Training Program

15 MAJOR WIN Hino Motors Manufacturing U.S.A. announced an expansion of its truck manufacturing and assembly operations in West Virginia. The company will relocate its operations from its current site in Williamstown to the former Coldwater Creek facility in Mineral Wells. The new plant, planned to be operational in early 2019, will also house cab assembly, an operation currently conducted in Japan. The $100 million investment will create an estimated 250 new jobs. Assistance from the State & Its Partners from Wood County: Economic Opportunity Tax Credit Eligibility Manufacturing Investment Tax Credit Eligibility Sales Tax Exemption for Materials/Process Equipment/Construction Up to $3.1 million for building acquisition and renovation Up to $500,000 in State Job Training Assistance (GGWFP)

16 PROJECT PROGRESS Continue support for pipeline storage and downstream opportunities Avoid takeaway Less jobs; not happy with just short term construction jobs Other investments are happening US Methanol NG fired power plants Financing large capital outlays Federal State Private

17 PROJECT PROGRESS Continue support for pipeline storage and downstream opportunities Looking at policies to help grow and locate Property needs preparing sites Pre-certifications Pre-permitting Aggressively recruiting new businesses Actively supporting existing business expansions Off take solutions for brine in salt storage Looking for new companies Looking for innovative solutions Helping existing consumers grow their demand so they can take more brine

18 FUTURE PLANS Continue development of aerospace industry

19 FUTURE PLANS Expand initiatives with WV Forward Business Climate: Rebrand WV s business climate Establish action plan to combat rising utility costs Ease administration of TPP Infrastructure: Launch site certification program Innovation and Business Development: Set up Innovation Council Change mix of incentive types Expand role of the WV Development Office

20 FUTURE PLANS Expand tech industry opportunities to retain talent

21 Todd Hooker Deputy Director, Business & Industry Development West Virginia Department of Commerce (304)