facebooktwitterRSS
- Advertisement -
  • Most Commentedmost commented up
  • Most Emailedmost emailed up
  • Popularmost popular up

- Advertisement -
 

« News Home

Tax breaks expected to lure businesses



Published: Mon, January 28, 2002 @ 12:00 a.m.



By ROGER G. SMITH

CITY HALL REPORTER

YOUNGSTOWN -- Marketing, marketing and more marketing.

That's a top priority now that big tax credits are available to business with the city's new status as a federal renewal community.

A system inside city hall to manage the expected interest is another main step to be taken in the coming months.

Companies of all stripes will be interested, with downtown technology companies ready for expansion focusing particularly on a couple of tax credits, area business officials say.

A 30-page plan to translate the tax breaks into jobs and other development was key to the winning designation, said Bill D'Avignon, city deputy director of planning. The plan leaves the city ready to move ahead, he said.

Last week, the federal government designated Youngstown one of 40 renewal communities.

Businesses operating or locating downtown, on the North Side between Belmont Avenue and U.S. Route 422 and in the Smoky Hollow neighborhood, are eligible for major tax credits, deductions, capital gains benefits and other incentives.

Soon, the city likely will ask that the nearby Ohio Works Industrial Park be added to the list. The park wasn't originally eligible under federal guidelines. Companies that locate at the Ohio Works -- and by virtue the city -- will gain considerably if the area is put into the renewal zone.

What city must do: First, the city must decide which office will be in charge of the renewal community program. That likely will be the city's economic development department, a natural fit, D'Avignon said.

Next comes picking a tax ombudsman to help companies understand and use the program. A person could be hired for the city development office or the service could be contracted out, D'Avignon said.

A promotions plan, such as advertising the city's renewal status nationwide, also must be crafted. Businesses need to know what's available to take part.

Jeffrey L. Chagnot, city development director, said last week that his office was reworking information packages listing city incentives. The new packages now will feature the renewal zone's benefits.

The city must send the federal government a preliminary plan within six months outlining the above steps. A final plan is due in a year.

Ready and waiting: Downtown technology companies will be waiting when the city is ready, said Jim Cossler, director of the Youngstown Business Incubator.

The incubator fosters about a dozen developing technology-related companies. The incubator's goal is developing small companies so they can leave and succeed on their own.

Two incentives jump out at him as having big potential benefits for incubator tenants:

* A small-business write-off of $35,000 in equipment costs in one year, instead of over several years, which reduces federal tax.

Computers, servers and other equipment are central to such technology companies.

"That's an expensive ticket," Cossler said.

* Zero capital gains tax on profits from selling an existing or relocated company that is in the zone for five years before the sale. Otherwise, the profit would face a 20 percent tax.

Cossler has a few companies that could spin off some of their work into a new business. That spinoff business could be sold after five years with no tax on the profit. That's a big incentive to locate in the zone, Cossler said.

Housing tax credits: His tenants also would be good candidates to be part of another renewal incentive: housing tax credits.

Most workers at incubator-based companies are young, many of them Youngstown State University graduates. They would love to live in new or renovated housing in the YSU-downtown area, he said.

"They like the urban environment. Those kids would be living in the renewal zone," he said. "I wish some developers would take a chance."

Persuading private business to make such moves is what the renewal program's tax incentives are all about.

Other businesses: Technology companies aren't the only ones with a keen interest in the program.

Almost any company is interested in the tax breaks offered, said Jim Rosa. He is a principal in the tax department at the Boardman office of Hill, Barth & amp; King, an accounting and business consulting firm.

For example, $5 million in a building investment that can be written off the first year is a very attractive feature, he said. A building can shelter a lot of income, Rosa said.

Zero capital gains tax is another big factor in investment, he said.

His company already is learning about the renewal tax breaks so its clients can take part. Some HBK clients within the zone, especially downtown, have been waiting on expansion to see if the renewal zone would happen. Now that it has, he expects to see spending.

rgsmith@vindy.com




Comments

Use the comment form below to begin a discussion about this content.


News
Opinion
Entertainment
Sports
Marketplace
Classifieds
Records
Discussions
Community
Help
Forms
Neighbors

HomeTerms of UsePrivacy StatementAdvertiseStaff DirectoryHelp
© 2014 Vindy.com. All rights reserved. A service of The Vindicator.
107 Vindicator Square. Youngstown, OH 44503

Phone Main: 330.747.1471 • Interactive Advertising: 330.740.2955 • Classified Advertising: 330.746.6565
Sponsored Links: Vindy Wheels | Vindy Jobs | Vindy Homes | Pittsburgh International Airport