Incentives

KANSAS BUSINESS DEVELOPMENT PROGRAMS AND INCENTIVES

KANSAS ENTERPRISE ZONE ACT:
An act that allows for statewide business development incentives.  Tax credits earned under the program may be used to offset 100% of the business’ annual state income tax liability.  Unused credits may be carried forward indefinitely and applied to subsequent tax years until used.

Eligibility:

• Manufacturing business must create two net new jobs.
• Non-manufacturing, non-retail businesses must create five net new jobs.
• National headquarters and ancillary operations must create 20 net new jobs.
• Retail business located in city of population less than 2500 or county less than
• 10,000 and creating two net new jobs may claim sales tax exemption only.

Benefits:

• Statewide: a) a one-time job creation tax credit of $1,500 per net new job:
• b) an investment tax credit of $1,000 per $100,000 qualified business facility investment;
• c) sales tax exemption on the purchase of personal property or services purchased for the purpose of constructing, reconstructing, enlarging, remodeling, or equipping a qualified business facility.
• Enhanced non-metropolitan regions: Non-metropolitan counties may be certified to allow for a regional business program, which will provide business expansion and development incentives.  Businesses may receive an enhanced credit of $2,500 per net new job.

WORK FORCE TRAINING:
The KIT and KIR programs can pay for the costs of training new employees or retraining existing workers.  Instructors may come from your supervisory staff, community colleges, area technical schools, consultants, vendors, or other sources.  Training may take place at your business, a local school or temporary rental facility.  Eligible costs include:  instructors salaries, curriculum planning and development, travel expenses, materials and supplies, training aids, minor equipment, and certain training facilities.

Programs focus on firms involved in manufacturing, distribution, regional or national service, agriculture, mining, research and development, interstate transportation, and tourism activities primarily aimed at attracting out-of-state tourists.

Kansas Industrial Training (KIT):
The KIT program is designed to help new and expanding companies offset the costs of training workers for new jobs.  Training funds can be used to reimburse negotiated costs for pre-employment, on-the-job and classroom training.

Eligibility:

• Creation of one new job that pays an average wage of at least $9.50 per hour.

Benefits:

• Up to 100 percent training costs. Maximum $2,000 per employee.

Kansas Industrial Retraining (KIR):
For restructuring companies whose employees are likely to be displaced to obsolete or inadequate job skills or knowledge.  The program will provide assistance for retraining existing employees.

Eligibility:

• Companies restructuring their operations through incorporation of existing technology, development and incorporation of new technology, diversification of production or the development and implementation of new production activities.
• Positions being retrained must be paid a minimum average wage of at least $9.50 per hour

Benefits:

• Company must provide dollar-for-dollar match. Maximum $2,000 per employee

Community Development Block Grant Economic Development (CDBG ED):
The purpose of the CDBG ED program is to enhance the Kansas economic base by creating or retaining permanent jobs, which will be filled principally by persons of low- and moderate-income.  The CDBG program is funded by an annual Congressional appropriation through the U.S. Department of Housing and Urban Development (HUD).  The program has three financial mechanisms available:  business finance and infrastructure assistance (regular program).

Eligibility:

• a) Applicant – A non-entitlement city or county government must be the legal applicant/grantee for the funds. The city or county applies on behalf of a participating private for-profit business located in their community.

Eligible Businesses
Private for-profit businesses are eligible to participate in the program if they can demonstrate a need for CDBG financing, the ability to create or retain permanent jobs, and have the ability to service all debt involved in the project.

Applicant Eligibility
The applicant must have completed all other CDBG grants awarded two years prior and all CDBG-ED grants awarded three years prior to the current year.  The applicant must also retain a state-certified grant administrator.

National Objective
Projects must create or retain permanent jobs within the grant performance period.  At least 51 percent of the persons hired must have prior family incomes that meet HUD’s low- and moderate-income (LMI) standard.

Job Creation
Job creation refers to the business entity’s net increase in its labor force in Kansas on a full-time equivalent (FTE) basis.  Moving existing jobs from one Kansas community to another, or from one company to another, does not qualify as job creation.

Job Retention
Retained jobs refer to those jobs that would be lost if the business fails to receive CDBG assistance.  During the application process, the employer must notify those jobholders whose positions are at risk.

Funding Ceiling
The applicant may request up to $35,000 per job created or retained.  The maximum limit is $750,000 for the regular program.  Use of Funds – CDBG funds may be used for infrastructure improvements, land, buildings, machinery and equipment, inventory, payroll, and other working capital items.

Match Requirements for Regular Assistance
CDBG funding in excess of $500,000 requires a $1 for $1 match; $500,000 or less requires a $0.50 for $1 match.  Match can come from private or public sources.  To qualify as match, the injection must take place after the award date.

Application Deadlines
The regular program has twelve monthly competitive rounds per year.  Award announcements for the regular program are usually made within 45 days of the deadline.

Terms & Benefits:

• a) Business Finance – The term of the loan varies with the type of assets being financed:  working capital, one to five years; machinery/equipment, one to ten years; land and building, one to 15 years.  Combined projects will receive a term based on a blended average.  The interest rate offered will normally be not less than 3.5 percent below prime rate with a minimum of four percent.

Infrastructure
Infrastructure projects will be funded as a half-grant/half loan with the loan portion having a ten-year term at a rate of two percent.

Kansas Economic Opportunity Initiative Fund (KEOIF):
This financial aid is used to secure economic benefits and to avoid or remedy economic losses.  Forgivable loans are available by application only and are dependent on the size of the project and level of local commitment.   The city or county on behalf of the qualified business must submit the application.

Eligibility:

• Companies wishing to use these funds are required to commit to specific employment and payroll performance levels.  Awards are based on established criteria related to the project including:
• a)  A major expansion of an existing commercial enterprise; or
• b)  The potential location of a major employer in Kansas; or
• c)  As a matching requirement for significant federal or private grants; or
• d)  The departure or substantial reduction of operations of a major employer; or
• e)  The closure of a major state or federal facility.

Rate/Term: Funds may be provided as zero percent interest loans or low interest loans.  Zero interest loans may be “forgiven” based on performance criteria.  Loan term is generally five years.

COMMERCIAL & INDUSTRIAL PROPERTY TAX EXEMPTION:
All commercial and industrial, telecommunications and railroad machinery and equipment acquired by qualified purchase or lease made or entered into after June 30, 2006 as a result of a bona fide transaction not consummated for the purpose of avoiding taxation transported into Kansas after June 30, 2006 for the purpose of expanding an existing business or the creation of a new business shall be exempt from personal property tax.

CHILD DAY CARE ASSISTANCE TAX CREDIT:
K.S.A. 79-32,190 provides an income or privilege tax credit if, during the taxable year, the taxpayer:  1)pays for child day care services for its employees, or 2) locates child day care services for its employees and/or 3) provides facilities and necessary equipment for child day care services to its employees.  (Use Schedule K-56)  Tax credits are offered against Kansas Income tax liability for businesses providing child day care services to employees.  These credits apply to taxpayers who pay for or provide child day care services for their employees or that provide facilities and necessary equipment for child day care services. (K.S.A. 79-32,190.)

Eligibility:

• Day care facilities must be licensed or registered pursuant to Kansas law.

Benefits:

• The amount of credit is based on the amount spent by the taxpayer less any contribution from its employees or any other source(s). Not to exceed $50,000 for the first year a facility is established or $30,000 for subsequent years. Any approved credit that exceeds the taxpayer’s tax liability for the tax year will be refunded. The amount of allowable credit is as follows:

Taxpayer provides facilities and necessary equipment for child day care services  (initial year): 50 percent of the net amount spent by the taxpayer or by the taxpayer in conjunction with other taxpayers during the initial tax year in which a facility providing child day care services is established and operated by those taxpayers in Kansas for use primarily by the dependent children of the taxpayer’s employees.  The amount of credit in the initial year may not exceed $45,000 for any taxpayer.

Taxpayer pays for or locates child day care services: 30 percent of the net amount spent by the taxpayer during the tax year for child day care services purchased in Kansas to provide care for the dependent children or for the service of locating child day care services for the taxpayer’s employees.  The credit may not exceed $30,000 for any taxpayer during any taxable year.

Taxpayer provides the facility and necessary equipment for child day care services (subsequent years): 30 percent of the net amount spent by the taxpayer or by the taxpayer in conjunction with other taxpayers during the years subsequent to the initial year in which a facility providing child care services was established and operated by those taxpayers in Kansas for use primarily by the dependent children of the taxpayer’s employees.  The credit in years subsequent to the initial year may not exceed $30,000for any taxpayer during any taxable year.

EMPLOYER HEALTH INSURANCE CONTRIBUTION TAX CREDIT:
An income tax credit is allowed to an employer for amounts paid during the taxable year on behalf of an eligible employee to provide health insurance or care.  Contributions to a health savings account of an eligible employee after 12/31/04 shall also qualify for a credit.  (Use Schedule K-57)

Eligibility:

• Any small business, association or trust that has between two and 50 employees and has not provided health insurance as a benefit in the previous two years is eligible.  Employees must work an average minimum of 30 hours per week.  New businesses can also take advantage of the program.  Qualified businesses desiring to organize and maintain a health benefit plan must receive approval from the Commissioner of Insurance.

Benefits:

• a) The credit is $70 per month per eligible employee for the first 12 months of participation;
• b) $50 per month per eligible employee for the next 12 months of participation;
• c) $35 per month per eligible employee for the next 12 months of participation.

WORK OPPORTUNITY TAX CREDITS:
The Work Opportunity Tax Credit (WOTC) and Welfare-to-Work tax credit are federal income tax credits that encourage employers to hire job seekers who face the greatest barriers to employment.

Eligibility:

• Private-for-profit employers.  Hires not eligible for certification:  relatives, non-related dependents, self-employed individuals, non-qualifying re-hires, majority stockholders, members of partnerships and Sub-Chapter S shareholders.  Contact program manager for listing eligible target groups.

Benefits:

• Federal tax credit up to $2400 per qualified hire.