1. Great Plains Government Finance Officers Association – 15 May 2014

2. Roadmap
Greater Omaha Economic Development Partnership Nebraska Advantage Tax Incentive Program Incentive Calculation – Tier 1 Project, Metal Fab Sales Tax Refund Economic and Fiscal Impact – Tier 1 Project, Metal Fab
Raising their own funds can be a problem for each Partner, more so for Sarpy County which is the contiguous urban county to Omaha. Less so for the counties that are more physically separated.

3. Greater Omaha Economic Development Partnership

4. Advance Southwest Iowa
Who Are the Partners?
Advance Southwest Iowa
Mike Dellinger
Executive Director
Randy Thelen
Senior Vice President
Economic Development
Lisa Scheve
Executive Director
Sean Johnson
Executive Director
Toby Churchill
Executive Director
Cecilia Harry
Economic Development Manager

5. Greater Omaha Combined Statistical Area
Nine-county combined statistical area – 925,709
Projected population in 2018 – 984,634
Nearly 1.3 million people within a 60-minute drive 5

6. Partnership History Funding
Sarpy County Co-Located – 1991
(pop. 165,853)
Washington County/Gateway Co-Located – 2002
(pop. 20,252)
Cass County EDC Co-Located – 2008
(pop. 25,133)
Greater Fremont Development Council – 2013
(pop. 36,427)
Advance Southwest Omaha
--Council Bluffs/Pottawattamie County
(pop. 92,913)
--Other Iowa Counties Expressing Interest
Target Omaha (Phase I & II)
1994 – 2003
GO! Phase I & II
2004 – 2013
Prosper Omaha Phase I

7. How Does the Partnership Operate?
Each partner:
– Retains its own board of directors
– Maintains their own annual program of work priorities (in addition to Partnership POW)
– Raise their own funds for staff and operations
Each partner board chairman holds a position on the Partnership’s Economic Development Council and an ex-officio position on the Greater Omaha Chamber’s board of directors.
Raising their own funds can be a problem for each Partner, more so for Sarpy County which is the contiguous urban county to Omaha. Less so for the counties that are more physically separated.

8. Partnership Funding and Successes
Greater Omaha Economic Development Partnership operations funded by the fundraising arm - GO!
Since 2004, contributions from more than 300 businesses, foundations and City of Omaha
Landed 391 projects
Created or retained 22,235 jobs
More than $4.1 billion in capital investment

9. Nebraska Advantage Program

10. Nebraska Advantage Program
Rewards companies through performance based short and long-term benefits Flexible, six-tier investment and job creation schedule Compensation credits reduce or eliminate employee withholding tax liability Investment credits reduce or eliminate both sales and income tax liability Level of benefits increases with increasing employment and investment

11. Nebraska Advantage Program
Companies have 5 to 7 years to attain necessary job and investment creation levels Credits can be used through entitlement (earn and use) and carry- over periods for up to a total of years Program can reduce or eliminate a company’s income, sales, payroll, withholding and certain classes of personal property taxes for up to years

12. Nebraska Advantage Program Six Tier Performance Thresholds
Tier 1: $1 million of new investment and 10 new jobs
Tier 2: $3 million of new investment and 30 new jobs
Large Data Center = $201 million of new investment and 30 new jobs
Tier 3: New job creation only - 30 new jobs
Tier 4: $12 million of new investment and 100 new jobs
Tier 5: New investment only - $37 million
Tier5: Renewable Energy - $20 million
Tier 6: $11 million investment with 75 new high paying jobs or $110 million investment and 50 new high paying jobs

13. Nebraska Advantage Program Qualified types of businesses:
R & D (1)
Data processing
Telecommunications
Insurance
Financial services
Manufacturing (1)
Distribution
Headquarters (2)
Exportable services (1)(3)
Internet Access
Cloud Computing
Customer Service Centers
Data Centers
Satellite Group Centers
Financial services
Telemarketing
Web Portals
Retail Sales of Tangible Personal Property (4)
“Telecommunications services” was expanded to include: 800 and 900 service; Coin-operated telephone services; Conference bridging; fixed and Mobile Wireless; Paging; Prepaid Wireless services; Residential
Businesses that qualify for incentives under LB 312 would be expanded to include:
Internet access
Satellite ground centers
Data centers
Customer Service Centers
Telemarketing
(1) Tier one
(2) Administrative operations
(3) Software development, computer systems design, product testing guidance or surveillance systems design and technology licensing).
(4) If 20 percent is at wholesale, manufactured or to another qualified business.

14. Nebraska Advantage Program Tier 1 Project Potential Benefits
Tier 1: $1 million of new investment and 10 new Jobs
Sliding scale compensation tax credit each year for 7 years
3% investment tax credit for 7 years
50% sales & use tax refunds on depreciable property

15. Nebraska Advantage Program Tier 2 Project Potential Benefits
Tier 2: $3 million of new investment and 30 new jobs
Sliding scale compensation tax credit each year for 7 years
10% investment tax credit for 7 years
100% sales & use tax refunds on capital purchases
Personal property tax exemption up to 10 years for the following:
Computer systems and certain peripherals – data center
Tier 2 Large Data Center: $201 million and 30 new jobs
10 year exemption on all personal property on site
Use credits for real property tax rebates from state
Sign sequential Tier 5 application at same time

16. Nebraska Advantage Program Tier 3 Project Potential Benefits
Tier 3: 30 new jobs and no new investment
Sliding scale compensation tax credit each year for 7 years

17. Nebraska Advantage Program Tier 4 Project Potential Benefits
Tier 4: $12 million of new investment and 100 new Jobs
Sliding scale compensation tax credit each year for 7 years
10% investment tax credit for 7 years
100% sales & use tax refunds on depreciable property
Personal property tax exemption up to 10 years for the following:
Turbine powered aircraft
Computer systems and certain peripherals
Agricultural processing machinery
Personal property used in distribution facilities

18. Nebraska Advantage Program Tier 5 Project Potential Benefits
Tier 5: $37 million of new investment and maintain jobs
100% sales & use tax refunds on project’s capital purchases
Personal property tax exemption up to 10 years for the following:
Computer systems and peripherals

19. Nebraska Advantage Program Tier 6 Project Potential Benefits
Tier 6: $11 million of new investment and 75 new jobs or
$110 million of new investment and 50 new jobs
10% compensation tax credit each year for 10 years*
15% investment tax credit for 10 years
100% sales & use tax refunds on depreciable property
Personal property tax exemption up to 10 years for all taxable personal property
Ability to use credits for Real Property Tax
* If wage is either 200% of the average county wage or 150% of the average state wage (whichever is higher).

20. Nebraska Advantage Program Compensation Credit Scale
Job Tax Credit
Percentage of Nebraska Average Wage*
Threshold (per hour)
Threshold
(annual salary) 3%
60%
$11.33
$23,561 4%
75%
$14.16
$29,451 5%
100%
$18.88
$39,268 6%
125%
$23.60
$49,085
10%
200%
$28.32**
$58,902**
* Nebraska average wage fixed by date of application.
** State-wide average hourly and annual wage thresholds for Tier 6.

21. Nebraska Advantage Program Use of Compensation Credits
Use of Credits
Credit
Use
Compensation Credit
Employee Withholding
Income Tax
Sales Tax
Real Property Tax (Tier 6 only)
Investment Credits

22. Nebraska Advantage Program Incentive Calculation

23. Nebraska Advantage Program Useful Sites for Incentive Calculation
Nebraska Department of Revenue:
List of Nebraska Advantage Act Applications
Wage Requirements; Statutes and Rulings; Application Guide
Effective Income Tax Rates
Nebraska Department of Economic Development:
Incentive Calculator
U.S. Bureau of Labor Statistics:
Wage estimates
Nebraska Department of Labor:
Or Call Me at

24. Nebraska Advantage Program Tier 1 Example
Location: Omaha CSA
Inside City Limits: Yes, combined state and local sales tax - 7%
Model Geography: Omaha CSA
Industry: Manufacturing – Metal Fabrication
Investment: $1.5 million
Employment: 10
U.S. BLS median wage production occupations: $14.38/hour (initial 4% compensation credit)

25. Nebraska Advantage Program Tier 1 Example Compensation Credit
Compensation Credit - 4% of annual compensation.
Potential
Credits A.
Assumptions are as follows -
Number of New Employees in Year 1: 10
Average Annual Salary (year 1):
$29,910
Assumes initial payroll of :
Also assumes 3% COLA increases each year thereafter.
Employees
Payroll
Average Wage
Year 1
$299,104
Entitlement
Year 2
$308,077
$30,808
Year 3
$317,319
$31,732
Year 4
$326,839
$32,684
Year 5
$336,644
$33,664
Year 6
$346,744
$34,674
Year 7
$357,146
$35,715
Total
$2,291,873 B.
Calculation of Compensation Credit*:
Total Compensation Credit =
x 0.04 =
$91,675

26. Nebraska Advantage Program Tier 1 Example Sales Tax Refund
Sales Tax Refund - Based on purchases of materials
Potential
going into project. (50% of purchase price of new
Credits
building and building improvements X sales tax rate.
Combined state and local sales tax equals 7.0%) 1.
Building
$500,000
x 0.07 x 0.5 x 0.5 =
$8,750 2.
Non-Manufacturing Furniture, Fixtures and Equipment
$100,000
x 0.07 x 0.5 =
$3,500 3.
Additional Investment (estimate)
TBD
Total Sales Tax Refund:
$12,250

27. Nebraska Advantage Program Tier 1 Example Investment Tax Credit
Investment Credit: 3% of investment in qualified
property during 6-7 year entitlement period.
Includes all investment in building, equipment and
components. For leased space, investment is equal
to annual lease rate times term of lease for up to
10 years. This credit may be applied to state
corporate income tax liability or sales and use tax
liabilities.
$1,500,000
x 0.03 =
$45,000

28. Nebraska Advantage Program Tier 1 Example Total Tax Refunds and Credits
Compensation Credit: $91,675
Sales Tax Refund: $12,250
Investment Tax Credit: $45,000
TOTAL: $148,925
(about $21,275 per entitlement year)

29. Nebraska Advantage Program Key Features
Apply by the project and not by the company
Under contract with the state
Used equipment brought into Nebraska at original purchase price
1/2 contract price of building considered components
Ability to use F.T.E. for new employment counts*
Credits earned may be used for refunds of sales tax paid on consumables
* F.T.E. is based on 2,080 hours (40 hours per week x 52 weeks)

30. Nebraska Advantage Program Sales Tax Refund

31. Nebraska Advantage Program Sales Tax Refunds Issues and Ideas
Compensation Credit and Investment Tax Credit
Effective rate versus earned compensation credit
ITC leftover
Identify when irregular expenditure occurs
X12 Seasonal Adjustment Techniques
Nebraska Advantage List and Company Relationships

32. Nebraska Advantage Program Sales Tax Refunds Issues and Ideas

33. Nebraska Advantage Program Economic and Fiscal Impact Metal Fab Project (tier 1)

34. Support the activities of an additional 13 workers
Nebraska Advantage Program Tier 1 Example Regional Economic Impact – Annual Estimate Using IMPLAN
10 Metal Fab Jobs
Support the activities of an additional 13 workers
Provides a $2.3 million incremental boost to the regional economy
Top Sectors with an Increase in Output:
Wholesale Trade
Real Estate (owner-occupied dwellings)
Management of Companies and Enterprises
Food and Drinking Places
Hospitals and Physicians
Insurance Carriers
Financial Activities (credit intermediation)
Plus 18k to 20k per year property tax
62,250 personal 7-year schedule

35. (Direct + Indirect + Induced)
Annual Economic/Fiscal Impact Summary
Metal Fab Project
Based on Jobs/Payroll Only
(Excludes property, income and sales taxes paid by company itself, and taxes paid by trailing suppliers, etc.)
Total*
(Direct + Indirect + Induced)
Total Annual Payroll
$746,088
Total Annual Taxable Retail Sales
$221,961
Total Annual State and Local Tax Revenue:
$72,935
Sales Tax:
$11,063
@5.5% state sales tax
$8,692
@1.5% local option sales tax
$2,371
Property Tax:
$35,759
Individual Income Tax
$26,113
Nebraska Advantage Program Tier 1 Example State and Local Fiscal Impact – Annual Estimate Using IMPLAN
Plus 18k to 20k per year property tax
62,250 personal 7-year schedule

36. Q&A
Scott Strain, Senior Director – Research; Economist in Residence
Greater Omaha Chamber 36 36