By Allain C. Andry
Robinson Bradshaw & Hinson, P.A.
Allain Andry
The North Carolina Biotechnology Center, together with other partners, recently released a BioPharma Manufacturing Labor Market Analysis for the greater Charlotte, NC region. The study concludes that the people and skills in the regional labor force can support a major biomanufacturing facility. And the Charlotte region is already recognized for its existing transportation, distribution and energy infrastructure.
So, if a company is considering building a new biomanufacturing facility in the Charlotte region or anywhere else in NC, what economic incentives might be available?
North Carolina Programs. The three major North Carolina state-level programs are the Job Development Investment Grants (JDIG), One North Carolina Fund grants and Article 3J Tax Credits.
JDIG awards are annual grants equal to 10 percent to 75 percent of withholding taxes paid by a business for employees in newly created positions. JDIG awards are typically reserved for projects involving substantial capital expenditures and creating hundreds of jobs.
One North Carolina Fund awards consist of a cash grant to be used for new equipment; improvements or renovations to existing buildings; and construction or improvements of water, sewer, gas or electric distribution lines or equipment. North Carolina also offers funds for the improvement of road and rail access to industrial facilities.
Article 3J Tax Credits are available for the creation of new jobs or substantial investments, and may be used to offset up to 50 percent of a business’s state income and franchise tax liability.
The amount of credit for qualifying investments is based on the county in which the investments occur, with enhanced credits available for North Carolina’s least prosperous areas. Other state tax credits are available for purchasing and using renewable energy equipment and for using North Carolina’s ports to ship products.
Local Incentive Programs. Local governments typically offer economic incentives in the form of tax rebates tied to the increased tax value of a company’s real and personal property in the jurisdiction. Duke Energy, Progress Energy and Piedmont Natural Gas often offer special rates to expanding or relocating businesses. North Carolina’s Community College System is well known for its worker training programs, which can be used to obtain company-tailored training for new employees. As an example, Rowan-Cabarrus Community College has built a new facility at the North Carolina Research Campus in Kannapolis, N.C., which will offer associate degrees in biotech-related fields.
Research and Development Incentives. North Carolina offers a research and development tax credit equal to a percentage (1.25-3.25 percent) of qualified North Carolina research expenses, with an enhanced credit of 20 percent for expenses related to research conducted with a North Carolina university. The North Carolina Biotechnology Center, a government-sponsored organization, offers low interest loans to early-stage North Carolina biotechnology companies. Finally, the North Carolina SBIR/STTR Phase I Incentives Program provides funds that can be used to pay for the costs of preparing and submitting Phase I proposals for the federal SBIR/STTR grant programs. North Carolina also offers matching funds to small businesses that have received an SBIR or STTR Phase I award.
This article is the first in a four-part series that examines the emerging biotechnology and life sciences industries in the Southeast. The next entry will focus on the variety of life sciences research centers that are emerging in the region.
Allain C. Andry serves as chair of the Life Sciences Practice Group at Robinson Bradshaw & Hinson, a corporate and commercial law firm with more than 125 attorneys. The firm has offices in Charlotte, the Research Triangle and Rock Hill, South Carolina. He can be reached at aandry@rbh.com. On the Web at www.rbh.com.
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Tags: Article 3J Tax Credits, JDIG, NC Biotech Center, NC economic incentives for life sciences manufacturers, One North Carolina Fund
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