Nov. 6, 2006
Development in JOBZ means tax relief in rural Minnesota
By Roz Kohls
Farm-Rite Equipment of Dassel is in a JOBZ initiative program, one of 300 in the state.
JOBZ is a Job Opportunity Building Zone, a rural economic development stimulus program.
The word JOBZ stands for Job Opportunity Building Zones, which is designed to stimulate economic development in greater Minnesota by providing local and state tax exemptions to new and expanding businesses.
It allows for the following:
• no property tax on new development,
• no sales tax on goods and services and
• no corporate income tax or individual income tax on investments,
• and provides for a state corporate income tax credit or rebate for higher-paying jobs, according to the Minnesota Department of Employment and Economic Development.
There are 10 zones statewide, not including the seven Twin Cities metropolitan counties. Meeker County is eligible, but Wright County is not.
Farm-Rite Equipment is central Minnesota’s largest Bobcat dealership. The company also has excavators, provides parts and rental units, compact equipment, sales and service. Farm-Rite received the JOBZ designation in 2005, according to president, Tim Cox.
It is working towards the construction of a new 20,000-square-foot facility at the site at the intersection of Highways 12 and 15 in Dassel. The first half of the building was moved Oct. 18 from Renville to Dassel. Farm-Rite has until Sept. 30, 2007 for the project to be completed. The new building is currently in four sections.
Besides targeting areas hit by economic distress, the program aims to promote development in places that are already poised for business growth and have adequate infrastructure in place. It also seeks out places where favorable conditions exist for restoring productivity to under-used and unproductive properties through development.
Qualified businesses, which do not include retail, receive several tax exemptions, but not all. The tax savings depend on the exact nature of the business expansion. Farm-Rite will be getting an exemption on sales tax on goods and services used in the zone if the goods and services were purchased during the duration of the zone. Farm-Rite also will receive a property tax exemption on commercial and industrial improvements, but not on land, according to Cox.
Other exemptions are:
• corporate franchise tax;
• income tax for operators or investors, including capital gains tax;
• wind energy production tax;
• employment tax credit for high paying jobs.
Farm-Rite also has job creation goals, according to Myles McGrath, city administrator, at the Oct. 16 city council meeting.
There is a required wage amount that must be paid to employees who work in a JOBZ program, for example. A qualifying business must pay each employee compensation including benefits not mandated by law at least equal to 110 percent of the federal poverty rate for a family of four.
Also, the rate must be adjusted annually on July 1 of each year, according to the Minnesota Department of Employment and Economic Development.
In addition, Farm-Rite is still subject to the tax on the value of land, voter approved school operating levies approved before Jan. 1, 2004, general obligation bond review, and the non-commercial/industrial portion of mixed use properties or for buildings not occupied by a qualified business.
The City of Dassel can still charge water and sanitary sewer fees. Fees are not exempted.
If Farm-Rite ceases to meet the definition of a qualified business or fails to meet its goals, the taxes will have to be repaid.