1. ECONOMIC INCENTIVES FOR AIRPORTS IN MISSISSIPPI

2. 2 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Introduction ECONOMIC INCENTIVES FOR AIRPORTS Incentives to Develop Air Service Incentives to Develop Property Incentives to Hire Additional Employees

3. 3 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Air Service Development Mississippi Air Service Development Program, M ISS. C ODE A NN. §57-1-141 et seq. Administered by the Mississippi Development Authority (MDA) Funds may be used for "marketing and advertising of new service and routes and additional frequencies, as well as other risk abatement plans; however, use of grant funds to purchase airline passenger seats is prohibited" Airline grant recipients must be scheduled air carriers that hold a Federal Aviation Administration (FAA) Part 121 Certificate and provide scheduled air service at Mississippi airports that maintain FAA Part 139 Certification

4. 4 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Air Service Development Eligible projects include: Adding air service to a new destination Adding frequencies to current air service Lowering fares/introducing new competitive service Upgauging aircraft Adding a new Federal Aviation Administration (FAA) Part 121 commercial air carrier. Grant amount is calculated on a "$10 per seat per day" basis

5. 5 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Air Service Development Requires a 40% local match One-half of the match may be from in-kind sources Cash match includes discounts of standard airport fees (e.g., landing fees) made directly in connection with the new air service or carrier In-kind matches may be from third-party private or public sources; must be "verifiable and necessary and reasonable for proper and efficient recruitment of the new air service or carrier."

6. 6 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Air Service Development Grant funds are disbursed over a 12-month period as follows: 35% at the end of the first 3 months of service 25% at the end of the second 3 months of service 25% at the end of the third 3 months of service, and 15% at the end of the fourth 3 months of service

7. 7 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Air Service Development Small Community Air Service Development Program, 49 U.S.C. § 41743 Administered by the United States Department of Transportation (USDOT) Grants are awarded on a competitive basis following published Solicitation for Grant Proposals No set size for grants or amount of grant funds available in any year USDOT expects to award $5 million in SCASD grants in 2016 Previous grants have been as small as $20,000 and as large as $1.5 million

8. 8 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Air Service Development Eligible applicants: Must either (a) not be larger than a small hub airport on the date of the solicitation or (b) not be larger than a small hub airport as of calendar year 1997 Must have insufficient air carrier service or unreasonably high air fares; and The airport serving the community "presents characteristics, such as geographic diversity or unique circumstances that demonstrate the need for, and feasibility of, grant assistance" under SCASD Airports receiving Essential Air Service assistance may participate, but may not use SCASD funding for new, competing air service

9. 9 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Air Service Development Eligible activities/programs: Subsidies to a U.S. air carrier for service to and from an underserved airport for a period not to exceed 3 years Subsidies to an underserved airport to obtain service to and from the underserved airport Any other measures of an underserved airport that USDOT considers appropriate to improve air service both in terms of the cost of such service to consumers and the availability of such service, including improving air service through marketing and promotion of air service and enhanced utilization of airport facilities.

10. 10 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Air Service Development Airport Cargo Charges Tax Credit, M ISS. C ODE A NN. § 27-7-22.25 Available to any business that: Utilizes airport facilities established the Mississippi Airport Authorities Law or the Mississippi Municipal Airport Law Locates its United States headquarters in the state and employs at least 5 new, permanent, full-time employees at the headquarters The amount of the credit is equal to the charges on the import or export of cargo paid by the business for aircraft handling fees and aircraft landing fees

11. 11 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Air Service Development The maximum cumulative credit that may be claimed is: $1,000,000 for a business with 5 to 25 employees $2,000,000 for a business with 26 to 100 employees $3,000,000 for a business with 101 to 200 employees $4,000,000 for a business with more than 200 employees NOTE: This is a credit against tax liability and not a deduction for determining taxable income

12. 12 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Air Service Development Aviation Fuel Tax Exemption Relating to New Interstate Air Service, M ISS. C ODE A NN. §27-55-527(m) Sales of aviation fuels to commercial carriers are tax exempt for sales relating to: New interstate air service offered by a new carrier in the market Interstate service to a new destination by an existing carrier Additional interstate service to an existing destination Exemption is good for 12 months after commencement of the new service.

13. 13 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Property Development Airport Ad Valorem Tax Exemption, M ISS. C ODE A NN. §§61-3-21 and 61-5- 11. These statutes exempt all leases of airport property and all structures, improvements and all personal property located on leased property from all ad valorem taxes "Airport" is broadly defined to include "buffer areas" for airport compatible development Exemptions are self-actuating Exemptions have no time limit

14. 14 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Property Development Airport Revenue Bonds, M ISS. C ODE A NN. §61-3-27 et seq. Authorizes an airport authority to issue bonds to help fulfill any of its statutory purposes, including: development, construction and operation of airport buildings, equipment for servicing of aircraft or for the comfort and accommodation of air travelers or for any other purpose deemed by the authority to be necessary to carry out its duties; development, construction and operation of intermodal facilities to serve air and surface cargo and multimodal facilities to serve highway and rail passenger transportation needs to ensure interface and interaction between modes for cargo and passengers

15. 15 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Property Development Mississippi Port Revitalization Revolving Loan Program, M ISS. C ODE A NN. §57-61-41 Administered by the Mississippi Development Authority Loans may be for up to $750,000 and have a term of up to 10 years Eligible projects include construction, repair and improvement of: Airport buildings Equipment necessary for airport operation Land improvements, including drainage systems Water supply and sewer systems Roads, bridges, rail spurs and runways

16. 16 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Property Development Mississippi Business Investment Act, M ISS. C ODE A NN. §57-61-1 et seq. Administered by the Mississippi Development Authority Purpose is to: "install and effect specific improvements and projects necessary to complement industrial investment by private companies, the federal government or municipalities which increase Mississippi's share of domestic, international and foreign commerce to create and maintain new full-time jobs" Loans are limited to $15,000 per new job created Private match of $3 required for each $1 of MBIA loan funds

17. 17 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Property Development Mississippi Major Economic Impact Act, M ISS. C ODE A NN. §57-75-1 et seq. Administered by the Mississippi Major Economic Impact Authority (Mississippi Development Authority) Provides wide range of economic incentives for large economic development projects Initial investment of not less than $300 million Initial investment of not less than $150 million and not less than 1,000 new jobs 1,000 new jobs at not less than 125% of the average annual wage in the state

18. 18 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Property Development Mississippi Industrial Development Revenue Bond Program, M ISS. C ODE A NN. §57-10-1 et seq. Administered by the Mississippi Business Finance Corporation Authorizes loans to business for development through issuance of taxable and tax-exempt bonds Manufacturing and processing operations qualify for tax exempt financing Taxable bonds may be issued to assist: Businesses that store, warehouse, assemble or distribute agricultural, mining or industrial products; Research and development enterprises engaged in developing or improving new or existing products or processes; and Hotels, offices, shopping centers and other commercial operations

19. 19 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Property Development Mississippi Small Enterprise Development Finance Program Administered by Mississippi Business Finance Corporation Provides tax-exempt loans of up to $4 million to manufacturing and processing businesses Loan requirements: Borrower must commit that the proposed project will create a minimum of 10 net new, full-time jobs Loans may not be made in excess of 90% of the market value of the financed assets Loans may not be made to refinance existing debt

20. 20 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Property Development New Market Tax Credits, 26 U.S.C. §45, M ISS. C ODE A NN. §57-105-1 Both federal and state income tax credits available Federal credits are allocated by the Community Development Financial Institutions Fund of the US Treasury State credits are allocated by the Mississippi Development Authority The amount of the credits that may be claimed are based on the amount of a Qualified Equity Investment (QEI) made in a Community Development Entity (CDE) that has received an allocation of credits and, in turn, makes one or more Qualified Low Income Community Investments (QLICI) in one or more Qualified Active Low Income Businesses (QALICB)

21. 21 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Property Development Credits flow to the owner of the property improved through the QLICI federal credit is 39% of the QEI over a 7-year period state credit is 24% of the QEI over a 3-year period Public entities are authorized to create "public benefit corporations" to facilitate New Market Tax Credit Transactions, including transferring property to and from such corporations

22. 22 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Property Development United States Economic Development Administration Operating administration of the United States Department of Commerce Policy is to: "to establish a foundation for sustainable job growth and the building of durable regional economies throughout the United States. This foundation builds upon two key economic drivers - innovation and regional collaboration" Funding opportunities are issued annually with grants awarded on competitive basis Funding opportunities are targeted at EDA's current initiatives

23. 23 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Other Miscellaneous Incentives Income Tax Credits Jobs Tax Credit (M ISS. C ODE A NN. § 57-73-21) Available to, among others, companies involved in distribution, warehousing and air transportation maintenance facilities Amount of credit is a percentage of eligible payroll (2.5% - 10%), based on the classification of the county where the business is located Rural Economic Development Tax Credit (M ISS. C ODE A NN. § 27-7- 22.3) Provides income tax credit in the amount of debt service paid on bonds issued by MBFC Eligible companies include companies involved in distribution and warehousing

24. 24 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Other Miscellaneous Incentives Income Tax Credits (cont'd) Skills Training Tax Credit (M ISS. C ODE A NN. § 57-73-25) Income tax credit of 50% of costs of employer-sponsored training Training must be offered or approved by the community college in the area where the business is located Eligible taxpayers include companies involved in distribution, warehousing, and air transportation maintenance

25. 25 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Other Miscellaneous Incentives Sales Tax Credits Sales and Use Tax Exemption for Construction or Expansion (M ISS. C ODE A NN. §§ 27-65-101 and 57-73-21) Provides exemption from sales and use taxes sales for eligible machinery and equipment purchases related to a new or expanded facility Amount of exemption (50% or 100%) is based on the classification of the county where the business is located Sales and Use Tax Exemption for Bond Financing (M ISS. C ODE A NN. §§ 27-65-111 and 57-61-14) Eligible purchases (including machinery, equipment and component building materials) made with industrial revenue bonds issued by the Mississippi Business Finance Corporation

26. 26 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Other Miscellaneous Incentives Advantage Jobs Incentive Program (M ISS. C ODE A NN. § 57-62-1 et seq.) Administered by the Mississippi Development Authority Provides a rebate of a percentage of Mississippi payroll to qualified employers for a period of up to 10 years Eligible employers include: Any business that provides an average annual wage of 110% of the lesser of the average county or state wage and creates a minimum of 25 new jobs Must enter into a performance agreement with MDA

27. 27 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Other Miscellaneous Incentives Foreign Trade Zones Helps improve U.S. competitiveness by reducing the costs of U.S. operations. Helps encourage activity and value-adding at U.S. facilities in competition with foreign alternatives by allowing delayed or reduced duty payments on foreign merchandise, as well as other savings. FTZ benefits include: No duties on imported goods that are later re-exported Production-specific benefits – with case-by-case approval by the FTZ Board Elimination of duties on waste, scrap and rejected or defective parts Customs efficiencies including direct delivery and weekly entry

28. 28 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Other Miscellaneous Incentives Currently Four Foreign Trade Zones in Mississippi: FTZ 092 (Mississippi Coast Foreign Trade Zone) FTZ 158 (Greater Mississippi Foreign Trade Zone) FTZ 262 (Northern Mississippi Foreign Trade Zone) FTZ 287 (Tunica County, Mississippi) Additional areas can be added as "subzones"

29. 29 www.bakerdonelson.com © 2016 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC D. Jeffrey Wagner Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. One Eastover Center 100 Vision Drive, Suite 400 Jackson, MS 39211 Telephone: (601) 973-3610 Facsimile: (601) 714-9910 Email: jwagner@bakerdonelson.com