Jefferson County, Montana
Business Attraction Incentives
Tax Increment Financing Industrial District
The Tax
Increment Financing Industrial District (TIFID) program directs new tax
dollars which accrue from new development within the boundaries of a
designated industrial district to assist further development within the
district. These new tax dollars or "tax increments" are determined by
measuring increased taxable valuation against a base taxable value.
Montana law enables local governments to utilize a portion of the
resulting tax revenue for development and redevelopment activities within
the district. To make this tax break available, the affected industry must
be located within the boundaries of a TIFID District.
Job Adjustment Credit (JAC) Loan/Grant
State infrastructure
financing is a loan made to the local government. The loan proceeds are
used to construct public infrastructure in support of a project. The loan,
though it is made to the local government, is secured by a company, which
pays a user fee for the infrastructure loan. The user fee is equivalent to
the principal and interest payments necessary to retire the loan to the
local government. The term of the loan will be set by a mutual agreement
between the company, the local government, and the State of
Montana.
The full amount of the user fee paid by a company, which
represents the principal and interest to retire the loan to the local
government, is eligible for a 100% corporate income tax credit --
dollar-for-dollar. Thus, once a company begins to owe corporate income
taxes, it can reduce that tax liability by the full amount of the P&I
equivalent paid. The tax credit can be carried forward for seven years,
insuring that a company can make full use of the tax credit.
Property Tax Incentives (other than TIFID)
Corporate Income Tax Incentive
New manufacturing operations in Montana receive a corporate
income tax credit equal to 1% of the wages paid during each of the first
three years of operation. If a company qualifies as a research and
development firm, that company could receive an exemption from corporate
income taxes during its first five taxable years of activity in
Montana.
Corporate Property Tax Incentive for Research and
Development
Business equipment belonging to a qualified
research and development company may be taxed at approximately 1% of
market value in perpetuity.
Property Tax Incentive
Detail
There are several programs, both at the local and state
level, that are currently in place that can significantly reduce property
tax liability. These programs either reduce the taxable value of property
or apply a reduced tax rate to the property's assessed value.
New or Expanding Industries Property Tax
Incentive (Jefferson County Determined)
A new or expanding industries option is available
at the local government level. If approved by the local governing body
(Jefferson County), property used by certain new or expanding industries
is eligible for a reduced taxable valuation (up to 50% of its taxable
valuation for the first five years) during the first nine years after
construction or expansion. This incentive only applies to the number of
mills levied and assessed for the local high school district and
elementary school district and to the number of mills levied and assessed
by the governing body approving such benefit. In effect, this tax break
extends over a longer period of time, but is at a lesser amount per year
than the previous tax break.
This incentive would result in a .986%
effective tax rate of the market value of the real property for the first
five years of operations, and would also result in an effective tax rate
of 1.53% of the business equipment for the first five years of operations.
In operational years six through nine, the effective tax rate for real
property would rise incrementally from a range of 1.098% in year six to
1.43% in year nine. The tax on business equipment for operational years
six through nine would rise incrementally from a range of 1.70% in year
six to 2.225% in year nine. Beginning the tenth year of operations, all
property would be taxed at the regular effective tax rate of 1.54% for
real property and 2.39% for business equipment. It should be noted that
these figures do not account for depreciation of buildings and equipment.
These calculations assume a fixed value of property and a fixed property
tax millage level.
This local tax break cannot be used in
conjunction with the previous State-approved tax break. Likewise, this tax
break is not compatible with use with the TIFID incentives described
above.
Financing Assistance
Montana Board of Investments (BOI) Programs
A domestic financial institution (which could be an
institution connected to an overseas financial institution) could utilize
the Montana Board of Investments' bank participation program to reduce
interest rates on a debt package.
Value Added Loan Program.
This newly enacted BOI program creates up to $6.4 million of financing at
4% for businesses creating between 10 and 14 full-time-equivalent jobs and
2% for those creating 15 or more jobs. This rate is for the first 5 years,
followed by 6% for the second five years and the BOI rate (currently ~10%)
for the third five years, if applicable. There are other requirements of
the program including the need for a bank's participation in the loan for
25% of the loan amount.
Financial Assistance through Infrastructure Financing
Infrastructure proposed to be financed is considered
"public" by Montana statute and is thus eligible for this kind of
financing (see above). Financing of infrastructure by this methodology
eliminates the need to cover the capital cost of the infrastructure as
part of the project.
Jefferson County Metal Mine Disbursement Revolving Loan Fund
Gap
financing program with flexible terms that can be used for working
capital, machinery & equipment or real estate. Low interest rates can
be negotiated with the County Commissioners as incentive to locate within
Jefferson County
Headwaters RC & D Area, Inc. Revolving Loan Funds
Several
programs available to Jefferson County businesses to meet various
financing needs. Some involve significant interest rate reductions.
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