j. An estimate of the number of jobs that will be created by the new or expanding business.
k. The person's estimate of the capital required to complete the early planning project.
l. The person's estimate of the profit that will be generated by the new or expanding business over a period specified by the Department.
m. Potential sources of financing for the early planning project.
n. Any other information requested by the Department.
The maximum grant that could be awarded to any one person would be $15,000 in a biennium. Grant recipients would be required to provide a cash match that equaled at least 25% of the total cost of the project. Grant proceeds could only be used to: (a) perform a business feasibility study; (b) prepare a detailed marketing plan; and (c) prepare a detailed business plan. The maximum total amount of urban early planning grants that could be awarded would be $250,000 in a biennium. Funding for urban early planning grants would be from the WDF.
Under current law, early planning grants may be made to eligible applicants under both the Minority Business Development Finance (MBDF) and Rural Economic Development (RED) programs, which are administered by Commerce. Under MBDF, eligible applicants are minority group members or minority-owned businesses. RED early planning grants may be awarded to small businesses that are located in a city, village or town with a population of 6,000 or less or located in a county with a population density of less than 150 persons per square mile.
[Act 9 Sections: 196, 204 and 2956]
12. STATE OPERATIONS BASE LEVEL FUNDING REDUCTION
GPR - $71,800
Governor/Legislature: Delete $35,900 GPR annually in base level supplies from the Commerce state operations appropriation to make permanent a lapse required in the 1997-99 biennial budget.
13. DEVELOPMENT AND ENTERPRISE DEVELOPMENT ZONE PROGRAM AND TAX CREDIT MODIFICATIONS [LFB Paper 115]
Governor: Modify the development and enterprise development zones programs and tax credits as follows:
a. Limit on Total Tax Credits. The current limit on the total amount of tax credits that can be claimed under the development zone program of $33.2 million would be eliminated. Instead, a maximum limit on the total amount of tax credits that could be claimed under both the development and enterprise development zone programs would be established at $300 million. The enterprise development zone program currently has no overall cap, though each zone is limited to no more than $3 million in tax credits.
b. Enterprise Development Zones. Commerce would be authorized to designate up to 100 enterprise development zones. The current requirement that the Department obtain approval from the Joint Committee on Finance to designate more than 50 zones would be eliminated (64 are currently authorized).
In addition, the Department would be authorized to designate enterprise development zones for environmental remediation projects. Environmental remediation would be defined as removal or containment of environmental pollution and restoration of soil or groundwater that is affected by environmental pollution in a brownfield if that removal, containment or restoration began after the area that contains the site was designated as an enterprise development zone. The Department would be required to determine that the project would likely provide for significant environmental remediation and that other current law criteria were met. Of the total number of enterprise development zones designated, at least 10 enterprise development zones would have to be designated for environmental remediation projects.
c. Development Zones Tax Credit -- Jobs Component. The full-time jobs component of the development zones tax credit would be modified to: (1) increase from $6,500 to $8,000 the maximum credit that could be claimed for each a full-time job that was created and filled by a member of a targeted group; (2) eliminate the credit for retaining a job that is filled by a member of a targeted group; (3) provide a maximum tax credit of $8,000 for retaining a full-time job in an enterprise development zone if Commerce determines that a significant capital investment was made to retain the full time job; (4) increase from $4,000 to $6,000 the maximum tax credit that could be claimed for each full-time job created or retained and filled by an individual who is not a member of a targeted group. In addition, at least one-third of job creation credits claimed would have to be based on jobs created and filled by members of a targeted group. Currently, the credits must be based on jobs created or retained for targeted group members. These modifications would first apply to tax years beginning on January 1, 2000.
d. Administrative Provisions. The requirement that targeted group members for whom tax credits are claimed must be certified within 90 days after the first day of employment would be eliminated. Commerce would be also authorized to specify by rule the circumstances under which an exception could be established from the requirement that the development zones tax credit must be based on regular, full-time nonseasonal jobs that are created or retained.
The bill does not include a fiscal effect to this item.
Wisconsin has two programs which provide tax credits to businesses as incentives to expand and locate in designated economically distressed areas -- development zones (currently 20 are designated) and enterprise development zones (currently 42 are designated). The programs are designed to promote economic growth through job creation and investment in the distressed areas. Designation criteria target areas with high unemployment, low incomes and decreasing property values. Businesses which locate or expand in the different zones are eligible to receive various tax credits.
Joint Finance: Delete provisions that would: (a) eliminate the current limit on the total amount of tax credits that can be claimed under the development zone program of $33,155,000 and establish a maximum limit on the total amount of tax credits that could be claimed under both the development and enterprise development zone programs of $300,000,000; and (b) authorize the Department of Commerce to designate up to 100 enterprise development zones.
Instead, the following modifications would be made: (a) increase the maximum amount of tax credits that can be claimed under the development zones program by $5 million, from $33.155 million to $38.155 million; (b) authorize Commerce to create an additional 15 enterprise development zones to make the total number of zones authorized 79 (up to 100 could be designated with Joint Committee on Finance approval), including at least 10 of which would be for environmental remediation; (c) specify that development zone credits could only be used to offset income from the claimant's business activities in the development or enterprise zone; and (d) delete the requirement that 25% of all development zone tax credits claimed must be based on creating or retaining full-time jobs for development zone environmental remediation tax credits and provide that environmental remediation tax credits claimed in development and enterprise development zones would not have to be based on activities that created or caused to create jobs.
Conference Committee/Legislature: Include Joint Finance provisions and, in addition, designate an area in the City of Kenosha as a development opportunity zone. The Kenosha development opportunity zone would exist for seven years. Any corporation that conducted economic activity in the zone and that, in conjunction with the local governing body of the City of Kenosha, submitted a project plan by July 1, 2000 would be eligible to claim the development zone credit and a development zone investment credit. The maximum amount of tax credits that could be claimed by businesses in the Kenosha development opportunity zone would be $7 million. (This provision is designed to provide assistance to Daimler Chrysler Company for expansion of its Kenosha engine plant.)
As noted, a corporation that conducts economic activity in the Kenosha development opportunity zone must submit a project plan to Commerce, in conjunction with the city's governing body. The project plan would be required to include:
a. The name and address of the corporation's business for which the tax benefits will be claimed.
b. The Wisconsin tax identification number of the business.
c. The names and addresses of other locations outside of the development opportunity zone where the corporation conducts business and a description of the business activities at those locations.
d. The amount the corporation proposes to invest in a business, or spend on the construction, rehabilitation, repair or remodeling of a building located in the development opportunity zone.
e. The estimated total investment of the corporation in the development opportunity zone.
f. The number of full-time jobs that will be created, retained or substantially upgraded as a result of the corporation's economic activity in relation to the amount of tax benefits estimated for the corporation.
g. The corporation's plan to make reasonable attempts to hire employes from the targeted population.
h. A description of the commitment of the local governing body of the city to the corporation's project.
i. Any other information required by Commerce or the Department of Revenue (DOR).
Commerce would be authorized to revoke the entitlement for tax credits of a corporation that: (a) supplied false or misleading information to obtain the tax benefits; (b) left the zone to conduct substantially the same business outside the development opportunity zone; and (c) ceased operations in the zone and did not renew the same or similar operations within 12 months.
Annually, Commerce would be required to estimate the amount of revenue that would be forgone due to tax credits claimed by businesses in the development opportunity zone. The zone would expire 90 days after the day on which Commerce determined that the amount of forgone revenue equaled or exceeded the tax credit limit. Commerce would be required to notify the local governing body of Kenosha of any change in the expiration date. Commerce would also be required to notify DOR of the corporations entitled to claim the tax credits and to verify information submitted by claimants.
Businesses in the Kenosha development opportunity zone would be eligible to claim a development zone investment credit and the development zone credit provided under current law.
Investment Tax Credit. Eligible corporations could claim a credit against income taxes due of 2.5% of the purchase price of depreciable tangible personal property or 1.75% of the purchase price of depreciable tangible personal property that was expensed under section 179 of the Internal Revenue Code (IRC). Only taxes due on income generated by or directly related to business activities in the development zone could be offset by the credit. The credit would not be refundable but unused credit amounts could be carried forward fifteen years to offset future tax liabilities on income generated by activities in the development zone. However, if the corporation ceased business operations in the development zone, unused credit amounts could not be carried forward.
Development Zone Tax Credit. A consolidated development zone tax credit can be claimed by businesses in development and enterprise development zones, under both the individual and corporate income and franchise taxes. The credit is based on amounts spent on environmental remediation and the number of full-time jobs created or retained. (See General Fund Taxes -- Individual and Corporate Taxes.)
Veto by Governor [B-25]: Change the effective date of the provision related to certification of target group members from January 1, 2000, to January 1, 1999.
[Act 9 Sections: 1707g, 1707h, 1707j, 1707k, 1707L, 1707m, 1708, 1708g, 1709, 1709b, 1709bb, 1741n, 1741o, 1741p, 1741pm, 1741pn, 1741pp, 1742, 1742g, 1743, 1743b, 1743bb, 1754g, 1754h, 1754j, 1754k, 1754L, 1754m, 1755, 1755g, 1756, 1756d, 1756e, 2998g, 2999, 3000, 3000n, 3001 thru 3004, 3004m, 3005, 3005m, 3006, 3006h, 3006j, 3006L, 3006n, 3006p, 3008, 3009, 3010, 3011, 3012, 3013, 9310(1)&(2) and 9343(1g)(a)&(b)&(22d)]
[Act 9 Vetoed Section: 9343(2)]
14. JOBS SPECIALIST POSITION
Positions
GPR 0.05
Governor/Legislature: Provide 0.05 jobs specialist position in the Bureau of Enterprise Development to increase the Bureau's 0.95 jobs specialist position to full-time. The person works with businesses in development and enterprise development zones to increase the number of target group members hired by businesses in the zones.
15. CONSOLIDATION OF GPR APPROPRIATIONS [LFB Paper 288]
Governor: Delete the main street and technology-based economic development programs GPR appropriations and transfer $659,000 GPR in 1999-00 and $659,700 GPR in 2000-01 and 6.5 GPR positions each year to consolidate the funding and position authority in the economic and community development general program operations appropriation. The amounts transferred would be as follows: (a) main street program--$460,700 in 1999-00, $461,400 in 2000-01 and 4.5 positions annually; (b) technology-based economic development--$198,300 and 2.0 positions annually.
Joint Finance/Legislature: Delete provision. The separate Main Street and technology-based economic development appropriations would be maintained.
16. SAFETY PROGRAM FUNDING TRANSFER
Governor/Legislature: Transfer the funding and position authority ($484,400 FED and 7.5 FED positions) from the Division of Safety and Buildings to the Division of Marketing, Advocacy and Technology to align the funding and positions for the WiSCon safety consultation program with the division that has administrative responsibility for the program.
17. MAIN STREET PROGRAM -- FEES FOR SERVICES
Governor/Legislature: Authorize the Department to charge reasonable fees for services and information provided to communities that are not participants in the Main Street Program.
The Wisconsin Main Street program provides technical assistance to help communities plan, manage and implement programs to revitalize their downtown business areas through comprehensive economic redevelopment and historic preservation. Up to five municipalities are selected annually for the program based on review and ranking of applications. Municipalities include cities, villages and towns. Commerce staff provide and coordinate intensive training workshops, and on-site consulting related to downtown revitalization and historical preservation to local programs. Commerce also contracts with the National Main Street Center for business area revitalization services and coordinates state and local participation in the programs offered by the National Center.
Commerce provides technical assistance and information on the revitalization of business areas to municipalities not participating in the program. Limited training is provided through an annual, two-day statewide conference and occasional on-site visits to communities. This provision would permit the Department to charge reasonable fees for these services.
[Act 9 Section: 2937]
18. COMMUNITY-BASED ECONOMIC DEVELOPMENT PROGRAM -- REGIONAL ECONOMIC DEVELOPMENT GRANTS
Governor: Eliminate the requirement, under the community-based economic development (CBED) program, that the Department may not award more than the greater of $100,000 or 10% of the total amount of funding appropriated for CBED grants for regional economic development.
The CBED program provides the following types of financial assistance:
a. Grants to community-based organizations to conduct local development projects. (Community-based organizations are organizations involved in economic development that assist businesses likely to employe persons.)
b. Grants to community-based organizations that use the funds to provide management services to small businesses planning a start-up or expansion project.
c. Grants to political subdivisions to develop economic development or diversification plans.
d. Grants to community-based organizations that use the grant monies to support business incubators or technology-based incubators.
e. Grants to community-based organizations that join with political subdivisions to conduct regional economic development projects that are unique to the area and will stimulate the economy or create or retain jobs.
f. Grants to community-based organizations to support small business local revolving loan funds.
g. Grants to private nonprofit organizations for entrepreneurship training for disadvantaged and at-risk children.
h. Grants to community-based organizations or private nonprofit organizations to conduct venture capital development conferences.
Base level funding for the CBED program is $762,100 GPR.
Assembly: Delete the Joint Finance provision that would authorize Commerce to make a grant of $100,000 in 1999-00 for pedestrian enhancements in the City of Menasha from the Wisconsin Development Fund and instead authorize the Department to make the grant from the Community-Based Economic Development program (CBED) (see Commerce, Departmentwide and Economic Development #8).
Senate: Require Commerce to provide $25,000 in each year of the biennium to CAP Services, Inc. from the Community-Based Economic Development (CBED) program. Within six months after spending the full amount of each grant, CAP Services, Inc., would be required to submit a report to Commerce detailing how the grant proceeds were used. Prior to 1999 CAP services received an annual CBED grant of $25,000. In 1999 the grant was $12,500. This provision would require the Department to increase the grant to CAP services back to the 1998 amount. CAP Services, Inc. provides technical assistance to small businesses.
Conference Committee/Legislature: Include both the Assembly and Senate provisions.
Veto by Governor [B-23]: Limit the $25,000 grant to CAP services to fiscal year 1999-2000.
[Act 9 Sections: 202g, 2954, 2955 and 9110(6c)&(7v)]
[Act 9 Vetoed Section: 9110(7v)]
19. MINORITY BUSINESS DEVELOPMENT FINANCE PROGRAM -- ELIGIBILITY OF LOCAL DEVELOPMENT CORPORATIONS [LFB Paper 289]
Governor: Authorize the Minority Business Development Board to award grants or loans to local development corporations to fund eligible development projects under the Minority Business Development Finance (MBDF) program. As a result, local development corporations could fund the following: (a) costs that are incurred in connection with the start-up, expansion or acquisition of a business that is or will be a minority business; or (b) costs incurred in the promotion of economic development and employment opportunities for minority group members or minority businesses.
The MBDF provides the following types of financial assistance:
a. Early planning grants to minority group members or minority businesses to fund projects that consist of the preliminary stages of considering and planning the start-up or expansion of a business that will be a minority business.
b. Business development grants and loans to minority group members or minority businesses to fund development projects involving the start-up, expansion or acquisition of minority businesses or the promotion of economic development and employment opportunities for minority group members or minority businesses.
c. Grants and loans to local development corporations to: (1) make grants or loans to minority group members or minority businesses for development projects; or (2) to create, expand or continue a revolving loan fund program operated by the local development corporation to provide assistance to minority group members or minority businesses.
d. Grants to nonprofit organizations and private financial institutions to fund microloans and education and training programs for minority group members and minority businesses.
e. Grants to nonprofit corporations, nonprofit organizations or business incubators to build or rehabilitate business incubators that benefit minority group members or minority businesses.
Annual base level funding for the MBDF is $429,200 GPR and $167,200 PR from loan repayments.
Joint Finance/Legislature: Include provision and, in addition, decrease the MBDF GPR appropriation by $100,000 annually and increase annual expenditure authority for the repayments appropriation by $100,000 PR. As a result, total annual funding for the MDBF would be $329,200 GPR and $267,200 PR.
