The purpose of the establishment of Enterprise Zones (EZ) in the City of Mason City is to promote new economic development in economically distressed areas. Eligible businesses that plan to locate within, or existing businesses that plan to expand in, an EZ are authorized under this program to receive certain tax incentives and assistance. The intent of the program is to encourage communities to target resources in ways that attract productive private investment in economically distressed areas within a county or city. There are five Enterprise Zones in Mason City covering part of Mason City's downtown area, Federal Avenue core and industrial areas in Mason City. Maps and information are available at the Growth Development & Planning Department in City Hall.
Requirements
Business and industry can qualify for EZ benefits if the business has not had significant downsizing or closures at another location in the state. Businesses must meet the following requirements:
o The business is not a retail operation.
o Pay employees on average 90% of the county wage or 90% of the regional wage (as defined by IDED), whichever is lower. Average regional wage is defined annually by IDED and the Mason City Enterprise Zone Commission shall annually certify the average wage as defined by the State of Iowa.
o Pay at least 80% of employees medical and dental insurance.
o Create at least 10 full-time jobs and retain them for 10 years.
o Make a capital investment of at least $500,000.
Benefits
Business and industry which meet the above listed eligibility criteria can utilize the following incentives and assistance:
Tax Abatement – The City of Mason City will exempt for a period of ten (10) years, a partial exemption of value added to the property upon which an eligible business locates or expands in an EZ and which is used in the operation of the eligible business. The amount of the partial exemption is equal to a percent of the actual value added by the improvements, determined as follows:
Year 1 80%
Year 2 70%
Year 3 60%
Year 4 50%
Year 5 40%
Year 6 30%
Year 7 30%
Year 8 30%
Year 9 20%
Year 10 20%
A qualified business may have the option to select a three-year 100% exemption on value-added property taxes in place of the partial exemption schedule illustrated above.
Investment Tax Credit – A business may claim an investment tax credit for up to a maximum of 10 percent of the new investment, which is directly related to new jobs created by the location or expansion of the business in the EZ. If the business is a partnership, sub chapter S corporation, limited liability company, or an estate or trust electing to have the income taxed directly to the individual, an individual may claim the tax credit allowed. Any credit in excess of tax liability for the tax year may be credited to the tax liability for the following seven years or until depleted, whichever occurs first. The capital expenditures eligible for the investment tax credit under the EZ are the cost of the machinery and equipment used in the operation of the eligible business and the cost of improvements to real property which is used in the operation of the business and which receives a partial property tax exemption for the value added.
Research Activities Credit – A business is eligible to claim a research activities credit. This benefit is a corporate tax credit for increasing research activities in the state during the period the business is participating in the program. For purposes of claiming this credit, a business is considered to be “participating in the program” for a period of ten years from the date the business application was approved by the IDED. This credit equals 6.5 percent of the state's apportioned share of the qualifying expenditures for increasing research activities. The State's apportioned share of the qualifying expenditures for increasing research activities is a percent equal to the ratio of qualified research expenditures in this State to total qualified research expenditures. If the business is a partnership, sub chapter S corporation, limited liability company, or an estate or trust electing to have the income taxed directly to the individual, an individual may claim the tax credit allowed. Any tax credit in excess of the tax liability shall be refunded to the eligible business with interest computed. In lieu of claiming a refund, the eligible business may elect to have the overpayment credited to its tax liability for the following year.
Refund of Sales, Service, and Use Taxes – A business is eligible for a refund of sales, service and use taxes paid to contractors and subcontractors. An eligible business may apply for a refund of the sales and use taxes paid under Iowa Code Chapters 422 and 423 for gas; electricity; water or sewer utility services; goods; wares or merchandise; or on services rendered, furnished, or performed by a contractor or subcontractor and used in the fulfillment of a written contract relating to the construction or equipping of a facility within the EZ. Taxes attributed to intangible property, furniture, and furnishing shall not be refunded. To receive a refund of the sales, service, and use taxes paid to contractors or subcontractors, the eligible business must make an application to the Iowa Department of Revenue and Finance within six months after project completion.
New Jobs Training Supplemental Credit – A supplemental new jobs credit from withholding in an amount equal to 1.5 percent of the gross wages paid by the business is available. The supplemental new jobs credit is in addition to, and not in lieu of, the program and withholding credit of 1.5 percent authorized under the Iowa New Jobs Training Program administered by NIACC.