Recently, the Utah Governor’s Office of Economic Development (GOED) agreed to provide BioFire Diagnostics, Inc., a clinical diagnostics company, with approximately $25 million in tax credits under the State Economic Development Tax Increment Financing (EDTIF) program for the company to expand its operations and create more than 650 new jobs.
Utah has widely used the EDTIF program, authorized by the Economic Development Incentives Act, in the past several years both to attract new businesses and to incentivize the expansion of existing businesses. According to GOED annual reports, more than 70 projects have been awarded a total of approximately $570 million in assistance between fiscal years 2008 and 2012 under the EDTIF program.
The EDTIF program allows the GOED to grant tax credits for corporate and individual income taxes in an amount up to 30% of the total incremental State sales taxes, corporate income taxes and individual income taxes generated by a project over a 20 year period. However, in any year, the tax credits distributed may not exceed 50% of the tax increment generated by the project in that year. Typically, projects receive assistance over a 5 to 10 year period.
In order to be eligible for EDTIF assistance, a project must be in an economic development zone and meet the following criteria:
- Receive local incentives from the municipality where the project is located;
- Enter into an incentive agreement with the GOED;
- Create at least 50 jobs;
- Pay at least 125% of county average wages if the project is located in an urban county and pay at least 100% of county average wages if the project is located in a rural county; and
- Make significant capital investment directly in the economic development zone and make purchases from Utah vendors.
EDTIF assistance is typically given to life science, technology, financial and military industries. The law specifies that EDTIF assistance is not available for retail projects.