Federal, state, and local incentive programs and are based on three (3) types of incentives:
Economic Development Incentive Plan
The Hanover County Board of Supervisors, at the recommendation and support of the Department of Economic Development, has allocated funding to assist with infrastructure improvements for priority economic development projects. The funding availability is subject to certain criteria, with a primary emphasis on tax revenues, jobs created and salaries, and the county’s target sectors. Funds are typically used for water and sewer improvements and capacity fee payments, road improvements, traffic signals, stormwater management improvement or fees, or other improvements authorized by the Board of Supervisors. These incentive funds are not issued for retail businesses and cannot be used if a Commonwealth Opportunity Fund (COF) Grant is requested. Funds can be used to match up to 50 percent of the cost of eligible improvements.
Fast Track Designation
For priority economic development projects, Hanover County will assign the project a fast track designation. Hanover County staff will review the site plan and provide written comments in not more than seven working days. County staff will arrange a meeting with the applicant and project engineer to discuss any comments and identify changes to the plans required for site plan approval. The building permit review process may run concurrently with the site plan review and is also eligible for fast track status.
Commonwealth’s Opportunity Fund
The Commonwealth’s Opportunity Fund supports industrial development projects that create new jobs and investment in Virginia in accordance with criteria established by state legislation. Grant requests are made by the locality when a project meets specific criteria as outlined by the GOF legislation. Funds can be used for site acquisition and development, transportation access, training, construction or build-out of publicly owned buildings, or grants or loans to industrial development authorities.
Virginia Investment Partnership Grant Fund and Major Eligible Employer Grant
The Virginia Investment Partnership (VIP) Grant and the Major Eligible Employer Grant (MEE) are discretionary performance incentives designed to encourage continued capital investment by Virginia companies, resulting in added capacity, modernization, increased productivity, or the creation, development and utilization of
advanced technology. The program is targeted at companies that have operated in Virginia for at least five years and propose projects that fall into one of the following two categories:
- VIP: A Virginia manufacturer, or research and development service supporting manufacturing, that makes a capitalized investment of at least $25 million while at least maintaining stable employment levels.
- MEE: A Virginia major basic employers that make a capitalized investment of at least $100 million and create at least 1,000 new jobs (a minimum of 400 jobs, if average pay is at least twice the area’s prevailing average wage).
The amount of each VIP and MEE grant is determined by the Secretary of Commerce and Trade, based in part on the Virginia Economic Development Partnership’s return on investment analysis and recommendation, and is subject to the approval of the Governor. The program, administered by the Virginia Economic Development Partnership, is a competitive grant fund and is performance based. Additional conditions for eligibility may apply.
Virginia Economic Development Incentive Grant
The Virginia Economic Development Incentive Grant (VEDIG) is a discretionary performance incentive, designed to assist and encourage companies to invest and create new employment opportunities by locating significant headquarters, administrative or service sector operations in Virginia. Selected companies must meet the following eligibility requirements:
- A company locating in a Metropolitan Statistical Area with a population of 300,000 or more in the 2010 Census must: create 400 new full-time jobs with average salaries at least 50 percent greater than the local prevailing average wage; or create 300 new full-time jobs with average salaries at least 100 percent greater than the local prevailing average wage; and make a capital investment of at least $5 million or $6,500 per job, whichever is greater.
- A company locating elsewhere in Virginia must: create 200 new full-time jobs with average salaries at least 50 percent greater than the local prevailing average wage; and make a capital investment of at least $6,500 per job; and the company is not currently participating in another Virginia performance grant program.
The amount of each VIP, MEE and VEDIG grant is determined by the Secretary of Commerce and Trade, based in part on the Virginia Economic Development Partnership’s return on investment analysis and recommendation, and is subject to the approval of the Governor. The program, administered by the Virginia Economic Development Partnership, is a competitive grant fund and is performance based. Additional conditions for eligibility may apply.
Rail Industrial Access Program
The Industrial Access Rail Program provides funds to construct railroad tracks to new or expanding industrial and commercial projects in Virginia. Funds may be used to construct, reconstruct, or improve part or all of the necessary tracks and related facilities on public or private property. Each application must be accompanied by a resolution from the local governing body requesting the allocation of the funds. Financial assistance to any one county, city or town is limited to $450,000 in any one fiscal year. A maximum of $300,000 of unmatched funds and an additional $150,000 on a dollar for dollar matching basis is available per project. Funds may not be used for right-of-way acquisition or adjustment of utilities.
Economic Development Access Program
The Virginia Department of Transportation (VDOT) administers a program to assist in constructing industrial access roads to provide adequate access to new and expanding manufacturing or processing companies. The program may be used to:
- Improve existing roads to handle additional traffic generated by either an industrial expansion or a new plant location
- Construct a new road from a publicly maintained road to the property line of the new industry when no road exists
The amount of the award is based on the eligible capital investment of the company.
A resolution from the local governing body requesting the allocation of access road funds must be submitted to VDOT. This resolution must address the commitment of right-of-way and any adjustments to utilities (at no cost to the program). It also must describe the extent of private investment made by the industry.
The maximum award for an industrial access road is $500,000. However, the state will fund an additional $150,000 if the amount is matched on a dollar-to-dollar basis from public and private sources other than VDOT.
Development Revenue Bonds
Tax-exempt Industrial Revenue Bonds (IRBs) are issued through Hanover County’s Economic Development Authority and the Virginia Small Business Financing Authority (VSBFA). IRBs can be used to assist businesses in acquiring land, constructing or expanding buildings and purchasing equipment. Additionally, the bonds are designed to provide capital for new or expanding manufacturing facilities and exempt projects such as solid waste disposal facilities. Through IRBs, creditworthy businesses can obtain long term financing at favorable interest rates for up to 100 percent of the cost of acquiring, constructing and equipping a facility, including site preparation. The bonds may also be used to lease facilities and equipment at tax-exempt rates.
All projects financed with IRBs must meet federal tax code requirements for eligibility. Tax exempt financing may be used for projects within a single political jurisdiction with a total capital investment value of less than $10 million.
Foreign Trade Zone
A Foreign Trade Zone (FTZ) is a secure or restricted-access site in or near a United States port of entry and is authorized by the U.S. Foreign-Trade Zones Board and operated under the supervision of the United States Customs Service.
Operating as an international airport expansion into Hanover County, RIC handles freight and customs clearances with efficiency and speed. A major business advantage sponsored by the airport is Richmond’s Foreign Trade Zone (FTZ) #207.
Foreign Trade Zone Benefits include:
- No duty is paid on re-exported merchandise.
- If foreign merchandise is sold domestically, no duty is paid until it leaves the zone or zones.
- If foreign merchandise is manufactured into a product with a lower duty rate, the lower duty rate applies on the foreign content when duty is paid.
- Merchandise in a zone may be stored, repackaged, manufactured, manipulated, destroyed, altered or changed.
- No duty is charged on most waste and scrap from production in an FTZ.
Hanover County has a Foreign Trade sub-zone located in the Lewistown Road Economic Development Zone.
Industrial Development Revenue Bonds
Tax-exempt Industrial Revenue Bonds (IRB) are issued through Hanover County’s Industrial Development Authority and can be used to assist businesses in acquiring land, constructing or expanding buildings and purchasing equipment. The bonds may also be used to lease facilities and equipment at tax-exempt rates. All projects financed with IRBs must meet federal tax code requirements for eligibility. Tax exempt financing may be used for projects within a single political jurisdiction with a total capital investment value of less than $10 million.
The Virginia Department of Business Assistance (DBA) Financial Services Division administers the programs of the Virginia Small Business Financing Authority (VSBFA), which is a statewide conduit issuer of industrial development bonds and is the vehicle through which DBA provides financial assistance to Virginia businesses. DBA staff work with businesses, bankers and other state agencies to provide direct funding and credit enhancements through a variety of financing programs for the benefit of eligible new and expanding businesses.
Loan Guaranty Program
Through the Loan Guaranty Program (LGP), the Virginia Small Business Financing Authority will guarantee a portion of a loan or line of credit extended by a commercial bank to a qualified Virginia business. The maximum guaranty under the program is 75% of the loan or line of credit up to a maximum guaranty of $500,000. The program can be used to provide a guaranty for a short-term line of credit or a term loan of up to five years in duration.
To qualify as an applicant under the program, the Virginia business must meet the VSBFA criteria for an eligible business-either annual sales less than $10 million, net worth less than $2 million, or less than 250 employees.
Economic Development Loan Fund (EDLF)
With funding from the federal Economic Development Administration, the Economic Development Loan Fund (EDLF) is designed to fill the financing gap between private debt financing and private equity. Funds are available to economic development authorities and qualifying new and expanding businesses that are creating new jobs or saving “at risk” jobs. Businesses in designated economically distressed areas may qualify for higher loan amounts. Funds are also available to Virginia businesses which derive 15% or more of their revenues from defense-dependent activities and can demonstrate economic hardship related to defense downsizing.
Virginia Capital Access Program (VCAP)
The Virginia Small Business Financing Authority’s (VSBFA) Virginia Capital Access Program (VCAP) provides access to capital for Virginia businesses by encouraging banks in Virginia to make loans that they would otherwise not make due to a borrowers riskier profile. Unlike government guaranty programs which provide a guaranty of a specific loan, VCAP utilizes an insurance concept on a portfolio of loans. The Program establishes a loan loss reserve at each participating bank which is funded by enrollment premiums paid by the Borrower/Bank and VSBFA.
Once the bank has approved the financing for enrollment in VCAP, the bank determines the premium amount to be paid by the borrower based on the banks perceived level of risk. Enrollment premiums paid by the borrower typically range between 3% and 7% of the loan amount and are non-refundable. VSBFA contributes a matching premium.
Childcare Financing Program
Eligible Borrowers are any regulated child care center licensed by the Virginia Department of Social Services (DSS) or filed as religious-exempt with DSS; and Family Home Providers licensed by the Virginia DSS, registered through the Voluntary Registration Program, part of a Licensed Family Day Care System, or participating in the USDA Food Program. Eligible uses include quality enhancement projects or renovations and repairs necessary to comply with health and safety standards required by DSS; playground equipment and learning aids; and fixed assets that directly impact the health, safety and welfare of the children.
Loans of up to $150,000 per location for Child Care Centers and up to $10,000 for Family Home Providers can be available for eligible providers with terms up to 7-years. The interest rate is Prime minus 3% fixed with a floor of 4%, and the application fees are $100 for Centers and $15 for Home Providers.
State Tax Programs
Major Business Facility Job Tax Credit
Qualifying companies locating or expanding in Virginia receive a $1,000 corporate income tax credit for each new, full-time job created over a threshold number of jobs, which are 100 new jobs in Hanover County. The credit is available for each job in excess of the threshold and is taken in equal installments over two years. Unused credits may be carried over up to 10 years.
Worker Retraining Tax Credit
Virginia businesses may be eligible to receive an income tax credit equal to 30 percent of all expenditures made by the employer for worker retraining. The credit has a spending cap of $2.5 million in any taxable year. Eligible worker retraining consists of courses at Virginia community colleges and private schools, certified by the Department of Business Assistance, or retraining programs through apprenticeship agreements approved by the Virginia Apprenticeship Council.
Day Care Facility Investment Tax Credit
Businesses may claim a tax credit equal to 25 percent of all expenditures incurred in the construction, renovation, planning, or acquisition of facilities for the purpose of providing day care for children of company employees. Any credit not usable for the taxable year may be carried over to the extent usable for the next three taxable years. The maximum credit is $25,000. The Virginia Tax Commissioner at the Department of Taxation approves applications for this program.
Recyclable Materials Processing Equipment Tax Credit
An income tax credit is available to manufacturers for the purchase of certified machinery and equipment for processing recyclable materials in taxable years before January 1, 2020. The credit is equal to 20 percent of the original total capitalized cost of the equipment. In any taxable year, the amount of credit cannot exceed 40 percent of the company’s Virginia income tax liability before the credit. The unused amount of the credit may be carried over for up to 10 years.
Local Tax Programs
Land Use Program
The Land Use Program which encourages the conservation of land devoted to agricultural, horticultural, forest and open space uses, has been expanded to encourage property owners — with land located inside the Suburban Services Area and which is designated for specific commercial uses on the County’s General Land Use Plan Map — to rezone to certain uses without requiring them to immediately leave the land use taxation program.
The Land Use Program allows qualified land to be taxed on a deferred basis. Five years of qualifying real estate taxes can be deferred (with accruing interest) until there is a change to a disqualifying use. Previously, if the parcel was rezoned to anything other than its qualified agricultural use, the deferred taxes (and accrued interest) would have been due at the time of rezoning from its qualified agricultural use.
It enables property, enrolled in the Land Use Program, to remain eligible –and not be immediately subject to roll-back taxes—when it is rezoned from agricultural use to specific commercial and industrial uses. The qualified uses permitted include Manufacturing, Transportation and Warehousing, Professional, Scientific and Technical Services, Hotels and Motels and Professional Offices, as described in the North American Industrial Classification System (NAICS). To increase the odds of a successful rezoning application, the land should be designated for such uses on the County’s adopted Land Use Plan map and located inside the Suburban Service Area.
With this expanded program, five years of deferred real estate taxes (and accrued interest) for the rezoned property would not be required until the issuance of a building permit or when the physical attributes of the property are modified. Hanover County’s Office of the Commissioner of Revenue administers the Land Use Program and makes determinations of eligibility.
Rehabilitation Tax Exemption Program
The Hanover County Board of Supervisors. The purpose of the program for certain rehabilitated residential, industrial and commercial real estate is to encourage and provide incentives to Hanover County property owners to invest in improvements to existing structures. The tax exemption incentives are available for residential, commercial and industrial use properties.
Tangible Personal Property Reduced Tax Rate
Hanover County taxes the following tangible personal property at a reduced rate: