Local Financing and Incentives

Local Financing and Incentives

Economic Development Funds

• City sales tax and County Mill levy provide funds to primary sector businesses.
• Can be used for equipment, real estate, working capital, job training costs and other specific needs.

Property Tax Exemption

• Up to 100 percent property tax exemption (except land) for a maximum of 5 years.
• Production of agricultural commodities are eligible for an extended property tax exemption of up to 100 percent for up to 5 additional years. 

PILOT (Payment in Lieu of Taxes)

• Program can be used in addition to, or in place of, the property tax exemption. 
• Project operator and municipality negotiate the amount of payment and the period of time which the payments will be made
• Maximum benefit not to exceed twenty (20) years from the date project operations begin

Renaissance Zone

• Qualified projects can receive property and income tax exemptions of 100 percent for five years if investors develop or enhance properties in the Renaissance Zone. 
• Tax credit is allowed for income tax purposes or financial institution tax purposes for making an investment in the preservation or renovation of zone project property consisting of historic property and for investment in a Renaissance Fund Corporation. 
• • Credit is equal to 50 percent of the amount invested during the tax year.  If the credit exceeds the taxpayer’s tax liability for the tax year in which the investment is made, the amount of the credit in excess of the tax liability may be carried forward and used in the five tax years following the tax year in which the investment is made.

Tax Increment Financing

• Future additional property taxes generated by improved property are used to finance the cost of land acquisition and improvements including infrastructure and site preparation.

State Small Business Credit Initiative (SSBCI):

• Creates jobs by helping small businesses access capital.
• Consists of a coalition of 36 North Dakota municipalities to bring capital resources to communities.
• Can be used as Collateral Support or Angel Funds

Industrial Development Bonds

• Allows qualified manufacturers the opportunity to finance fixed assets, such as buildings and equipment, with tax-exempt, long-term fixed interest rates.
• North Dakota Public Finance Authority makes loans to manufacturers that qualify as small issue manufacturers.
• A small issue manufacturer is defined by Internal Revenue Code as “Any facility which is used in the manufacturing or production of tangible personal property including the process resulting in a change in the condition of such property.”
• Qualifying organizations must also meet a capital spending requirement.
• Public Finance Authority is limited to $2,000,000 per project and $20,000,000 cumulative for the IDB program.
• A qualifying manufacturer pays interest rates at a market rate set through a competitive bid process when the Authority issues and sells its program bonds to fund the loan.

Industrial Revenue Bonds

• Communities may participate in an industrial development project by lending their name to sell Municipal Industrial Revenue Bonds (IRBs) to finance a project.
• Qualifying projects include the purchase of real property, buildings, equipment and personal property; improvements to real property or buildings; and working capital.
• There are two types available:
  • Tax-exempt IRBs are issued to finance land and depreciable property for manufacturing facilities. Because the interest earned is exempt from federal income tax, the bonds are sold at a lower interest rate, which in turn lowers the cost of capital to finance the project. The maximum bond amount is $10,000,000.
  • Taxable IRB’s typically have higher interest rates than tax-exempt bonds. There are no restrictions on the use or issued amount on taxable IRBs.