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Dothan Area Development Incentives

The Advantage of Dothan Alabama

The best way to describe Dothan’s approach to business? Professional southern hospitality. We welcome companies from all around the globe with business incentives and custom tax packages, a peerless workforce, prime real estate—and a welcoming attitude.

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ALABAMA REINVESTMENT & ABATEMENTS ACT

NEW FACILITY AND EXPANSION

SECTION 40-98 OF THE CODE OF ALABAMA

Benefits

  • Sales & Use Tax Abatement of non-educational portion of sales and use taxes on construction materials, equipment and other capitalized costs.
  • Property Tax Abatement for up to 20 years of the non-educational portion of property tax.

REQUIREMENTS

  • Projects must have a qualifying business activity (Section 40-9B-3(a)(10) of the Code of Alabama, 1975).
  • No job creation requirement (exceptions: data centers must create 20 net new jobs; headquarters must create 50 net new jobs).
  • For property tax abatements for years 1 to 10, all property tax is abated at the local level. For years 11 to 20, cities abate city non-educational property taxes, counties abate county non-educational property taxes, and the Governor abates State non-educational property taxes.

EXISTING FACILITY

SECTION 40-98 OF THE CODE OF ALABAMA
(REFURBISHMENTS, UPGRADES OR PLACED BACK IN SERVICE)

 

Benefits

  • Sales & Use Tax Abatement of non-educational portion of sales and use taxes on construction materials, equipment and other capitalized costs.
  • Property Tax Abatement for up to 20 years of the non-educational portion of property tax.
  • Utility Tax Abatement for increased utility services for up to 10 years.

Requirements

  • Projects must have a qualifying business activity (Section 40-9B-3(a)(10) of the Code of Alabama, 1975).
  • No job creation requirement (exceptions: data centers must create 20 net new jobs; headquarters must create 50 net new jobs).
  • For property tax abatements for all years, cities abate city non-education property taxes, counties abate county non-educational property taxes, and the Governor abates State non-educational property taxes.
  • A project receiving benefits under 40-9G cannot also receive benefits under the Alabama Jobs Act.

POLLUTION CONTROL EQUIPMENT EXEMPTION

Any pollution control equipment and materials purchased for the control, reduction, or elimination of air or water pollution are exempt from state sales and use tax. Likewise, any pollution control equipment and materials purchased for the control, reduction, or elimination of air or water pollution are exempt from property tax.

ALABAMA VETERANS INCENTIVE

For new and expanding corporations that employ a workforce of at least 12% of which is veterans, an additional 0.5% jobs credit is available in addition to the incentives under the Alabama Jobs Act.

The Governor has the final authority to increase or decrease the amount of credit for a qualifying project. Once a completed application is received, the Alabama Department of Commerce can normally have a letter of commitment on the Alabama Jobs Act incentives within 30 days.

AIDT

AIDT is a state workforce development training program that is offered to qualifying businesses that are looking to locate or expand in Alabama by recruiting and training potential employees. There are many customized programs offered by AIDT to meet specific, qualified company needs. Some customized programs include:

  • comprehensive pre-employment selection and training
  • leadership development
  • on-the-job training

AIDT is consistently ranked as one of the top workforce development training programs in the nation.

FOREIGN TRADE ZONE PROGRAM

Dothan-Houston County Foregin Trade Zone iN.c – Number 233

The Dothan metropolitan area is also one of six sites in the state of Alabama designated as a General Purpose Foreign Trade Zone area. It is the intent of the U.S. FTZ program to stimulate economic growth and development in the United States. In an expanding global economy there is increased competition among nations for jobs, industry and capital. The FTZ program was designed to promote American competitiveness by encouraging companies to maintain and expand their operations in the United States.

The FTZ program encourages U.S. based operations by removing certain disincentives associated with manufacturing in the United States. The duty on a product manufactured abroad and imported into the U.S. is paid at the rate of the finished product rather than that of the individual parts, materials or components of the product. A U.S. based company finds itself at a disadvantage against its foreign competitor when it must pay the higher rate on parts, materials or components imported for use in the manufacturing process. The FTZ program corrects this imbalance by treating a product made in a U.S. foreign-trade zone, for purposes of tariff assessment, as if it were produced abroad.

The Dothan-Houston County General Purpose Foreign Trade Zone Number 233 offers a number of benefits to businesses:

  • Benefits for Business – For U.S. based companies involved in international trade, the FTZ program provides a means of improving their competitive position against their counterparts abroad. The fundamental benefit offered by the FTZ program to U.S. based companies is the ability to defer, reduce or even eliminate Customs duties on products admitted to the zone.
  • Deferral of Duties – Customs duties are paid only when and if merchandise is transferred into U.S. Customs territory. This benefit equates to a cash flow savings that allows companies to keep critical funds accessible for their operating needs while the merchandise remains in the zone. There is no time limit on the length of time that merchandise can remain in a zone.
  • Reduction of Duties – In a foreign-trade zone, with the permission of the Foreign-Trade Zones Board, users are allowed to elect a zone status on merchandise admitted to the zone. This zone status determines the duty rate that will be applied to foreign merchandise if it is eventually entered into U.S. commerce from the FTZ. This process allows users to elect the lower duty rate of that applicable to either the foreign inputs or the finished product manufactured in the zone. If the rate on the foreign inputs admitted to the zone is higher than the rate applied to the finished product, the FTZ user may choose the finished product rate, thereby reducing the amount of Customs duty owed.
  • Elimination of Duties – No Customs duties are paid on merchandise exported from a FTZ. Therefore, duty is eliminated on foreign merchandise admitted to the zone but eventually exported from the FTZ. Generally, Customs duties are also eliminated for merchandise that is scrapped, wasted, destroyed or consumed in a zone.
  • Miscellaneous Benefits – Elimination of Drawback: In some instances, Customs duties previously paid on exported merchandise may be refunded through a process called drawback. The drawback law has become increasingly complex and expensive to administer. Through the use of a FTZ, the need for drawback may be eliminated allowing these funds to remain in the operating capital of the company.
  • Labor, Overhead and Profit – In calculating the dutiable value on foreign merchandise removed from a zone, zone users are authorized to exclude zone costs of processing or fabrication, general expenses and profit. Therefore, Customs duties are not owed on labor, overhead and profit attributed to production in a FTZ.
  • Taxes – By federal statute, tangible personal property imported from outside the U.S. and held in a zone, as well as that produced in the U.S. and held in a zone for exportation, are not subject to state and local ad valorem taxes.
  • Quotas – U.S. quota restrictions do not apply to merchandise admitted to zones, although quotas will apply if and when the merchandise is subsequently entered into U.S. commerce. Merchandise subject to quota, with the permission of the Foreign-Trade Zones Board, may be substantially transformed in a FTZ to a non-quota article that may then be entered into U.S. Customs territory, free of quota restrictions. Quota merchandise may be stored in a FTZ so that when the quota opens, the merchandise may be immediately shipped into U.S. Customs territory.
  • Zone-to-Zone Transfer – An increasing number of firms are making use of the ability to transfer merchandise from one zone to another. Because the merchandise is transported in-bond, Customs duty may be deferred until the product is removed from the final zone for entry into the U.S. Customs territory.
  • Other – Additional benefits, sometimes referred to as intangible benefits, have begun to play a greater role in a company’s evaluation of the FTZ program. Many companies in FTZ’s find that their inventory control systems run more efficiently, increasing their competitiveness. FTZ users also find that in meeting their FTZ reporting responsibilities to the U.S. government, they are eligible to take advantage of special Customs procedures such as direct delivery and weekly entry. These procedures expedite the movement of cargo, thereby supporting just-in-time inventory methodologies.

INVENTORY AND RAW MATERIAL EXEMPTION

Unlike many other states, the state of Alabama does not have a property tax on inventory of goods, wares, and merchandise that is offered for sale. Raw materials that are to be used in the manufacturing process and are stocked at facilities for manufacturing purposes are also exempt from any property taxes. Likewise, raw materials that are to be used in the manufacturing process are exempt from sales and use taxes.

ALABAMA JOBS ACT

INVESTMENT CREDIT

Benefits

  • Tax credit of up to 1.5% annually of the qualified capital investment for a qualifying project for up to 10 years.
  • Credit against Alabama income tax liability and/or utility tax liability.
  • Credit can be carried forward for 5 years.
  • Credit may be transferred, or sold, at 85% or more of face value for the first 3 years. Transferability is at the discretion of the Governor.

REQUIREMENTS

  • Projects must have a qualifying business activity (Section 40-9B-3(a)(10) of the Code of Alabama, 1975).
  • Projects must create at least 50 net new jobs (exceptions noted below).
  • Projects in the following industries are required to create net new jobs, but are not subject to the minimum job creation requirements of the Jobs Act: chemical manufacturing, data centers, engineering, design, or research, and metal/machining technology or tool making.

Jobs Credit

Benefits

  • Cash rebate of up to 3% annually of the previous year’s gross payroll (not including fringe benefits) for eligible employees for up to 10 years.
  • Up to an additional 0.5% rebate on the wages of veterans for companies employing at least 12% veterans in their eligible workforce.

ALABAMA RENEWAL ACT

PORT CREDIT

Benefits

  • One-time tax credit of up to $50 per TEU, $3 per net ton of bulk cargo or $0.04 per new kilogram for air cargo.
  • Credit against Alabama income tax liability.
  • Credit can be carried forward for 5 years.
  • New distribution or warehouse shippers investing at least $20 million and creating at least 75 net new jobs are eligible to receive up to $100 per TEU over a 3-year period if entering into a project agreement with the state.

REQUIREMENTS

  • Shipper must use Alabama public port.
  • Shipper must be engaged in manufacturing, warehousing or distribution of goods.
  • Shipper must increase cargo by at least 5% over the prior year.
  • Credit must be approved by the Renewal of Alabama Commission.

Growing Alabama Credit

Benefits

  • Approved projects are funded when taxpayers make contributions to a local economic development organizations.
  • Taxpayers receive a tax credit equal to their contributions. The tax credit may offset up to 50% of the taxpayer’s income tax liability.
  • Credit can be carried forward for 5 years.

REQUIREMENTS

  • An eligible site must have a deficiency in site preparation or public infrastructure.
  • An eligible site must have either (1) a potential project, or (2) an identifiable reason that an industrial prospect did not select the site in the past.
  • An eligible site must be owned by a local economic development organization, such as an IDA, IDB, chamber of commerce or other non-profit economic development organization.
  • Projects must be approved by Commerce and the Renewal of Alabama Commission.

ALABAMA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT

The Alabama Department of Environmental Management (ADEM) is the state arm of the Environmental Protection Agency (EPA). ADEM is truly a “one-stop” permitting agency that administers all major federal environmental laws, including the Clean Air, Clean Water and Safe Drinking Water Acts and federal solid and hazardous waste laws.

Most air and water permits are typically issued by ADEM within 60 days. Construction storm water permits, which are needed before construction begins, are regularly issued within two to three days. Even PSD (Prevention of Significant Deterioration) analysis for air permitting applications can be completed in 120 days for most projects.

Since air permits are also needed before construction begins, this timely processing can assist during even the most aggressive construction schedules.

Finance Programs

Industrial Revenue Bonds

Long-term, low-interest financing, federally tax-exempt or taxable, for fixed assets and soft costs secured by a bank letter of credit. May finance up to 100 percent of the cost of a project with minimum amount of $1,000,000. Tax-exempt bonds are exempt from federal income taxes and limited to manufacturing projects, and must be issued by local industrial boards. Taxable bond interest rates are higher, but are not limited to manufacturing, and do not require a local industrial development board issue.

USDA B&I Loan

Guarantee loans by eligible local lenders. The primary purpose of this loan is to create and maintain employment and improve the economic climate in rural communities. Any legal entity may borrow and there is no size restriction. Eligible loan purposes are: business and acquisitions, constructions, expansion, repair, modernization, developing costs, working capital and start-up costs. Loan guarantees are limited to a maximum of $10 million per borrower.

HUD 108 Loan

Long-term, federal, low-interest financing which can be used for the acquisition of real property, rehabilitation of publicly owned real property, relocation, clearance and site improvements. Eligible activities include manufacturing, major warehousing/distribution and other activities that have a significant economic impact. Terms are 10 to 20 years.

CDBG Float Loans

Short-term, federal, low-interest loans ranging from $1 million to $10 million. Terms are up to two years for fixed assets. Eligible activities include manufacturing and distribution. Of the jobs created (or retained), at least 51 percent must be occupied by or made available to low and moderate income families.

Airport Revenue Bonds

Allows companies to finance, on a tax exempt basis, certain aviation projects related to improvements at local airports. The Airport Authority issues the tax-exempt bonds with the proceeds being used to make the desired improvements (i.e. construct new hangers, etc.). The authority would own the facility and lease it to the FBO and pledge the revenues from the lease as security for the bonds. The company may be able to deduct the entire amount of the lease payments for tax purposes.

SBA 504

Fixed-rate, long-term financing below conventional market rates for real estate acquisition, construction, expansion, renovation and equipment. Source of funds is 50 percent bank loan, 40 percent SBA and 10 to 20 percent cash or equity from the company. Terms are from 10 to 15 years from bank and 15 to 20 years from the SBA portion. Limited to $750,000 participation by SBA and based on job creation of one job per $35,000 of SBA funding.

SBA 7A

Long term financing for fixed assets, inventory and working capital by guarantee or direct loan. Terms range from 10 years for equipment, 25 years on real estate and buildings, and seven years on inventory and working capital. Guarantee is limited to 75 percent up to a maximum loan amount of $1.5 million.

USDA Rural Utility Service

Zero Interest Loans: Federal, low interest loans made through Wiregrass Electric Cooperative for project feasibility studies, start-up costs, incubator projects and other reasonable expenses. Amount for loans ranges from $10,000 to $400,000. Loan requires a letter of credit from the borrowing company. Terms are up to 10 years and deferrals of payments are possible. Selection of recipients is based on job creation, unemployment rates and other factors.

AMEA Capital Fund

Zero percent interest, short-term loans to public and nonprofit organizations through Alabama Municipal Electrical Authority (City) Member Systems. Funds can be used for fixed assets, utilities, design and construction of industrial parks and shell buildings. Source of funds is AMEA and is limited to $200,000 and/or 75 percent of project costs. Repayment term is five years. Limited to geographic areas served by AMEA member cities.

LINKED DEPOSITS PROGRAM

The Linked Deposit Program allows the Treasurer to deposit state funds with any state depositary which in turn funds a reduced rate loan in the full amount of the deposit to an eligible borrower.  An eligible borrower is an agricultural, emergency or small business borrower that meets the definition and criteria to participate in the program.

The initial linked deposit has a maturity of two years at a rate two percent below the Two-Year Constant Maturity Treasury rate and may be renewed for three additional two-year terms.  The minimum linked deposit rate is one percent.

The program is offered at the discretion of the Treasurer.  Section 41-15-50, et al, Code of Alabama, as amended.

Southeast Alabama Regional Planning & Development Commission

Revolving Loan Fund

Loans to small businesses and industries that are financially healthy and growing, but need gap financing. The loan’s primary goal is to create jobs. The loan amount range between $10,000 and $125,000, but limited to 33 percent of project and $10,000 per job. Funds can be used for purchase and development of land and facilities, construction of new buildings or renovation of existing buildings, purchasing equipment, and working capital needs. No more than 30 percent of a loan may be for working capital. For more information, click here.

Southeast Alabama Regional Planning & Development Commission

Dothan-Houston County Microloan Program

Through partnerships with the Southeast Alabama Regional Planning and Development Commission, area banks, City of Dothan, Houston County Commission, and Dothan Area Chamber of Commerce, the microloan fund was created. The Dothan-Houston County Microloan Program will provide direct and gap financing to businesses and individuals that are sound and growing, but cannot obtain adequate financing to carry out a new or expanding project. Loans will be available from $4,000 to $20,000, or up to a maximum of 90 percent of the project cost. Working capital loans will be limited to 50 percent of the Microloan portfolio, and must be repaid within five years. For more information, click here.

Southeast Alabama Regional Planning & Development Commission

Intermediary Relending Program – The SEARP&DC Intermediary Relending Program (IRP) is a business financing program providing below market fixed rate loans for development projects in rural areas of Barbour, Coffee, Covington, Dale, Geneva, Henry and Houston Counties. Development projects within the city limits of the City of Dothan are not eligible. Program funding originated through USDA/Rural Development, and their loan guidelines and environmental regulations apply. Fixed asset financing (land, building construction/renovation, purchase of land and buildings, machinery and equipment). Any existing or proposed business regardless of size. Must be “for profit”. Must be located in eligible rural area of Southeast Alabama. For more information, click here.

SMALL BUSINESS TOOL KIT

If you are starting a new business or expanding, the Small Business Tool Kit for Southeast Alabama is available to assist you and give you contacts and resources to assist. This Took Kit is a united information tool developed by Troy University Small Business Development Center, the Dothan Area Chamber of Commerce, and the Southeast Alabama Regional Planning and Development Commission. Please review and contact us at the Dothan Area Chamber of Commerce and we will assist and connect you to help you get the answers and assistance you need to grow your business.