Taxes/Incentives

Existing businesses have the same financial assistance available to them as any new company looking to locate in the Cedar Rapids area. The Iowa City Area Development Group and Priority One have created the necessary partnerships to assist companies in any expansion project.
 
Local economic development groups and State of Iowa have developed a powerful series of tools to help create new opportunities for existing industry. The list of tools include forgivable and low interest, short-term loans, property tax exemptions and rebates, corporate tax credits, sales tax refunds, and infrastructure improvements programs. Our economic development organizations are skilled at bundling several of these tools into a meaningful package for a company.

Iowa City Area Development Group
325 East Washington Street Suite101
Iowa City, IA 52240
319.354.3939

Priority One
424 First Ave NE
Cedar Rapids, IA 52401
319.730.1420 

Iowa Values Fund

This newly adopted Iowa Values Fund was established by the state this year. The goal of the fund is to expand and stimulate the economy, increase the wealth of Iowans, and increase the population of the state. The Iowa Values Fund is comprised of five main components: Business Development and Assistance, University Research and Development, Workforce Training, Quality of Life, and School Infrastructure.

• The guidelines in place provide a basis for the types of projects considered.
• Applications from businesses receiving a higher priority must be from one of the industry clusters of:
• life sciences
• advanced manufacturing
• information solutions
  

• “All applications must meet the high wage, high skill job, and education requirements in the Grow Iowa Values Fund.”
  

• Other factors important to the types of project to receive Iowa Values Fund include (but are not limited to) the wage growth potential, the type of job, turnover rates, career-type jobs, health insurance and other benefits, and industry trends.
  

• The Iowa Values Fund is overseen by an 11 member board, and four ex officio members.
  

New Jobs and Income Program (NJIP)

The Iowa New Jobs and Income Program provides a package of corporate tax credits, property tax exemptions, and sales tax refunds to businesses making a substantial capital investment and creating high quality jobs.
Qualifying businesses participating in NJIP receive substantial benefits, including: 

• An investment tax credit of up to 10 percent for use against Iowa's corporate income tax. The credit, based on machinery, equipment, land, buildings, and improvements, can be carried forward for seven years from the point the assets are placed into service.
• A 13 percent research and development activity corporate tax credit may be carried forward or refunded.
• A refund of Iowa sales, service or use taxes paid to contractors or subcontractors and for construction materials during the construction phase of the project.
• The community may exempt property taxes on improvements to land and buildings for a period not to exceed 20 years. These exemptions can cover all or a portion of the value added by the improvements. 
  

Enterprise Zone Program (EZ)

The Enterprise Zone is designed to revitalize distressed areas within the communities. Businesses locating or expanding in an Enterprise Zone may receive the following tax benefits:

• The city may exempt all or a portion of the property taxes for up to 10 years on the value added to the property.
• Additional funding for training new employees. If applicable, these funds would be in addition to those authorized under the Iowa New Jobs Training Program.
• A refund of state sales, service, or use taxes paid to contractors or subcontractors and for construction materials during construction.
• An investment tax credit of up to a maximum of 10% of the new investment in machinery and equipment, land, buildings, and improvements to existing buildings. This Iowa tax credit may be carried forward for up to seven years or until depleted from the point the assets are placed into service.
• An additional research and development tax credit of up to 6.5%, which may be refundable. This Iowa tax credit is based on increasing research activities within the state and is available while the business is participating in the program for up to 10 years.
  

New Capital Investment Program (NCIP):

The New Capital Investment Program provides a package of corporate tax credits and sales tax refunds to businesses creating high quality jobs. Assistance includes:

• Corporate tax credits up to 5% of the capital investment based upon the number and quality of jobs being created.
• A refund of state sales, service, and use taxes paid to contractors and subcontractors and for construction materials.
• An additional research and development tax credit, which may be refundable. This tax credit is based upon the incremental increase in qualifying research activities conducted within the state while the company is participating in the NCIP.
  

Community Economic Betterment Account (CEBA) 

The CEBA program provides financial assistance to companies that create new employment opportunities and/or retain existing jobs, and make new capital investment in Iowa. The amount of funding is based, in part, on the number of jobs to be created/retained, the quality of those jobs, and the total capital investment.

CEBA investments do not exceed 25% of the total financial package, thus the program leverages other financial support such as bank financing and private investment. The CEBA program can provide assistance up to $500,000, and under certain circumstances, up to $1 million. As an alternative, non-traditional, short-term float loans or interim loans greater than $1 million may be available.

The CEBA program also contains a "Venture Project" component specifically designed for early-stage and start-up businesses. Financial assistance is provided in forms conducive to the company's stage of maturity. The "Venture Project" component allows for longer-term job creation and investment performance periods than otherwise offered through CEBA. The funding level for start-up companies varies depending upon employee wage rates. Assistance through CEBA's "Venture Project" component is provided as an "equity-like" investment, with a maximum award of $250,000.

Tax Increment Financing (TIF)

City councils or county boards of supervisors may use the property taxes resulting from the increase in taxable valuation caused by the construction of new industrial or commercial facilities to provide economic development incentives to a business or industry. Tax Increment Financing may be used to offset the cost of public improvements and utilities that will serve the new private development, to finance direct grants or loans to a company, or to provide the local match for federal or state economic development assistance programs.

Urban Revitalization Property Tax Exemption

For qualifying businesses/projects, an urban revitalization property tax exemption is available. Depending on the scope of the project, number and quality of jobs being created and the wage levels associated with those positions, one of the following may be available:

100 percent exemption for a period of three years; or

10 year graduated schedule as follows:

• Year 1: 80%
• Year 2: 70%
• Year 3: 60%
• Year 4: 50%
• Years 5 & 6: 40%
• Years 7 & 8: 30%
• Years 9 & 10: 20%
  

Industrial Property Tax Exemption:

For qualifying businesses/projects, an industrial property tax exemption is available on the value added to real estate through new construction and renovation. The exemption is automatically applied once the qualifying business has filed a one-page application at the proper time. The exemption schedule is as follows:

• Year 1: 75%
• Year 2: 60%
• Year 3: 45%
• Year 4: 30%
• Year 5: 15% 
  

Iowa Industrial New Jobs Training Program:

Administered by Kirkwood Community College, the Iowa Industrial New Jobs Training Program provides funding for on-the-job and customized training to qualifying businesses creating new jobs.Up to 50% of the training fund can be used for on-the-job training. The customized training is dictated by the company and can include, but is not limited to, reasonable travel expenses, tuition and related expenses to send employees filling new positions to specialized training where the training is conducted, to another of the company’s plants, to train an internal trainer, to pay the expenses of having the customized training delivered in the business’ new facilities. The business hires whom its wishes – it does not have to hire from some sort of pre-qualified pool of individuals.To generate the funds, once per year Kirkwood Community College sells bonds that are paid through the diversion of state personal income taxes from the new positions. The funding available is therefore dependent upon the wages paid and number of new jobs created.

Iowa New Jobs Tax Credit

Businesses with contracts in place for the Iowa Industrial New Jobs Training Program and who are increasing their Iowa employment by at least 10% are eligible for a credit against its Iowa corporate tax liability. This credit may be carried forward for up to 10 years. The credit changes each calendar year, however, for 2003 the credit equals $1,152 per new job created.

Revitalize Iowa's Sound Economy (RISE):

This program is administered by the Iowa Department of Transportation. The RISE Program can pay up to 80% of the costs of public road improvements for providing access to new and/or expanding businesses creating high quality jobs.

Economic Development Set-Aside (EDSA):

The EDSA program provides financial assistance to companies that create new employment opportunities and/or retain existing jobs, and make new capital investment in Iowa. The amount of funding is based, in part, on the number of jobs to be created/retained, the quality of those jobs, and the total capital investment. EDSA investments do not exceed 25% of the total financial package, thus the program leverages other financial support such as bank financing and private investment.

The EDSA program assistance is targeted toward business projects located in communities of less than 50,000 people. At least 51 percent of the created/retained employment opportunities must be made available to individuals presently earning wages defined as low-and-moderate income. To best understand how the community and state’s incentives can fit your companies needs please contact our economic development groups. Our expert staff is knowledgeable in identifying all possible financial assistance programs and incentives available to your company. We are willing to work with you, on a confidential basis, and serve as a liaison with the appropriate groups.