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Clovis
and Curry County have a distinct advantage in New Mexico because the city
and county governments can offer carefully controlled land, buildings or
infrastructure incentive packages to qualified companies. The qualified business
must be involved in manufacturing, distribution, or value-added processing
to qualify for these incentives. Incentives are available locally, from the state and from the federal
government. Below are some of the incentives available. New incentives
become available frequently. Please call the CIDC office for help
in customizing a plan with the most possible incentives for your
business.
Land/Industrial Park
The City of Clovis has recently acquired 240 acres for an Industrial Development
Park. Planning and infrastructure development is currently in progress. An
appropriate size lot is offered as an incentive for qualified businesses.
In addition, the City of Clovis and Curry County offer land in other areas
of our community.
Buildings
The City of Clovis and Curry County can offer buildings as an incentive for
qualified economic development projects. In addition, the Clovis Industrial
Development Corporation has a comprehensive build-to-suit program.
Clovis Industrial Development Corporation (CIDC)
The Clovis Industrial Development Corporation is a private, nonprofit organization
that works with qualified businesses on an individual basis to provide land,
buildings, and financial incentives for industrial development.
Industrial Revenue Bonds
The City of Clovis and Curry County can issue Industrial Revenue Bonds (IRB)
for the expansion and relocation of commercial and industrial projects. IRB
financing is available for land, buildings and equipment for headquarter
office buildings, warehouses, manufacturing facilities and service-oriented
facilities not primarily engaged in the sale of goods and commodities at
retail. IRB financed projects are exempt from ad valorem tax for as long
as the bonds are outstanding and title to the project is held by the issuing
agency.
Bonds may be issued in different series with variable principal
amounts, interest rates and maturities to accommodate the acquisition
of assets with different useful lives.
Property Tax Abatement
New Mexico communities can choose to abate all property taxes on a plant location
or expansion up to 30 years, subject to the discretion of the local community.
This is not a tax freeze but a true abatement on building, land and equipment.
While state law allows this incentive, each city or county government controls
this tool. At the end of the abatement period, the company will be faced
with paying relatively low property taxes as New Mexico property taxes are
the 49th lowest in the nation.
Gross Receipts Tax Incentive
The City of Clovis has a 1/8 gross receipt tax, the proceeds of which are used
for economic development incentives, including infrastructure development.
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Business Incentives
The Clovis area and the State of New Mexico provide aggressive
incentives to reduce the overall cost of business. Some of the
most significant incentive programs include:
Double Weighted Sales Option
Technology Jos Tax Credit
Manufacturing Investment Tax Credit
Gross Receipts Tax Exemptions (IRB's)
Property Tax Abatements (IRB's)
High Wage Jobs Tax Credit
Job Training Incentive Program
Interstate WATS Tax Exemption
Out-of-State Tuition Waiver/Lottery Scholarships
Double Weighted Sales
Companies can elect to double weight the sales, in which a
corporation takes the New Mexico portion of plant, payroll, sales
and sales (counting the sales twice) and uses a divisor of four. Technology Jobs Tax Credit
Qualified New Mexico facilities may take a credit equal to
4% (8% in rural areas) of expenditures related to qualified research
for land, buildings, equipment, computer software and upgrades,
consultants, technical books and manuals, test materials, costs
associated with patents, payroll, and labor. The credit may be
taken against gross receipts tax, compensating tax or state payroll
tax, and may be carried forward. An additional 4% (8% total urban, 16% total rural) may be applied
against state income tax if base payroll expenses increase by at
least $75,000 per $1,000,000 of expenditures claimed. The credit
may be carried forward. Assume a company plans to spend $10,000,000 in qualified
expenditures:
| Technology Jobs Tax Credit |
Calculation |
Value |
| If payroll is less than $750,000, tax credit is 4% |
$10,000,000 x 0.04 |
400,000 |
| If payroll is over $750,000, tax credit is 8% |
$10,000,000 x 0.08 |
800,000 |
*Expenditures may include land, buildings, equipment, computer software
and upgrades, consultants, technical books and manuals, test materials,
costs associated with patents, payroll, and labor. Manufacturing Investment Tax Credit
New Mexico tax law provides for a credit equal to five percent
of the value of qualified equipment and other property used directly
and exclusively in a manufacturing operation. The credit can be
applied against compensating or gross receipts tax or withholding
tax due. Gross receipts tax acts very much like a sales tax; the
city rate is 6.0625 percent. Compensating, or use, tax applies
to purchases made out of state and totals 5.0 percent. The credit is limited to 85% of the sum of the taxpayer's gross
receipts tax, compensating tax, and withholding tax due for the reporting
period. Any remaining available credit may be claimed in subsequent
operating periods.
Criteria
Must meet criteria for new jobs added:
For Claims $0 - $30,000,000: 1 new worker employed for each $500,000
in qualified equipment
For Claims Over $30,000,000: 1 new worker employed for each $1 million
in qualified equipment
Credit is available through 6/30/2011.
Industrial Revenue Bonds
Significant property tax and compensating tax exemptions can
occur through the use of an Industrial Revenue Bond (IRB). An IRB
is a loan from the bond purchaser to a company where the loan proceeds
and repayment flows through a governmental issuer. Instead of purchasing
a facility directly, companies can enter into a lease with the issuer,
provided the company will lease the facility from the issuer and,
at end of lease, purchase the facility from the issuer for a nominal
amount. In Albuquerque, the maximum life of an IRB is 20 years.
IRB's can also be used when a developer is involved. A separate
series of bonds is issued to finance the developer's real estate
and building costs, and the tax savings of the IRB can flow through
to the ultimate user through a sublease. The benefit of remaining property tax exemptions can be passed on
to the new owner or flow though a lease in event of a sale or lease
to a new user, under certain qualifying conditions. City council
must vote to induce an IRB, and the community does not lend its credit
to an IRB. The company must secure its own purchaser of IRBs or the
company can purchase its own IRB. Assume company invests $10,000,000 in Clovis: $5,000,000 in
land and building, and $5,000,000 in equipment purchased
out of state:
| Tax Exemption |
Calculation |
Value |
| Property Tax Exemption on Land and Building |
($5,000,000/3) x 0.045951 |
$76,585 |
| Nominal value for 20 years: |
$76,585 x 20 years |
$1,531,700 |
| Property Tax Exemption on Equipment (first year) |
($5,000,000/3) x 0.045951 |
$76,585 |
| Nominal value for 7 years |
(Depreciated value/3) x 0.045951 |
$306,340 |
| Tax Exemption on Equipment |
$5,000,000 x 0.05 |
$250,000 |
High Wage Job Tax Credit
T he High Wage Jobs Tax Credit provides businesses with
a tax credit equal to ten percent of the combined value of
salaries and benefits for each net new job paying a salary
of at east $40,000 per year in the Albuquerque metropolitan
area and other communities larger than 40,000 in population.
The value of the credit cannot exceed $12,000 per job. Qualified
employers can take the credit for four years. The credit can
be applied against the modified combined tax liability of a
taxpayer, including the state portion of gross receipts tax,
compensating tax and withholding tax. Any excess credit will
be refunded to the taxpayer.
Eligible jobs are those created by qualifed employers after
July 1, 2004 and prior to July 1, 2009.
In New Mexico, companies located in communities smaller than
40,000 persons, are eligible for a tax credit equal to ten
percent of the wages and benefits paid for each new job created
paying at least $28,000 annually.
Job Training Incentive Program
The New Mexico Job Training Incentive Program is a highly
flexible state program to provide pre-employment (classroom)
and on-the-job training. Customized training may be provided
by post-secondary educational institutions, company trainers,
or outside trainers.
The state will reimburse
 Up to
50% of trainees' wages up to 1,040 hours in urban areas
100%
of classroom training costs provided by New Mexico post-secondary
education institutions (e.g. Albuquerque Technical
Vocational Institute)
50%
of trainees' travel and per diem for out-of-state training
50%
of company or outside trainers' travel and per diem when
using out-of-state trainers
Conditions
Maximum
wage reimbursement is tied to hours required to learn the
job and the hourly wage
Applicants
must be New Mexico residents for one year
Trainees
must be guaranteed full-time year-round employment upon
successful completion of training
"
Hands-on" or production jobs qualify; supervisory,
salaried or professional jobs do not
Re-training
does not qualify for assistance
Companies
can apply for subsequent assistance if they have maintained
hiring levels that exceed the peak employment
as established by the initial application
Reimbursement
is subject to availability of funds and approval by the
Industrial Development Board
Assume
a company hires three types of workers at different
wage rates and different training time
schedules.
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