Incentives Programs and Resources
The SCVEDC is your primary point of contact to access local, state and federal incentives. Our team will help you navigate the regulatory and administrative hurdles required to apply to all available programs. Below is a brief summary of each incentive program.
California Partial Sales Tax Exemption for Manufacturing and R&D Equipment: A tax exemption reduces the amount of tax paid at the time of purchase. This sales tax exemption applies to the state portion of sales tax currently at 3.9375%, reducing the total sales tax paid in SCV from 8.75% to 4.8125% on qualified property. According to the Board of Equalization (BOE), a SCV manufacturer must meet specific criteria to be eligible for the tax exemption, and should provide a partial exemption certificate (or equivalent information) to the vendor at time of purchase: https://www.boe.ca.gov/pdf/boe230m.pdf
California Partial Sales Tax Exemption for Construction and Tenant Improvements: Qualified purchases made under construction contracts for tenant or infrastructure improvements are also eligible for the same partial sales tax exemption of 3.9375%. For example, qualified purchases include special purpose buildings and foundations used as an integral part of the manufacturing, processing, refining, fabricating, or recycling process, or that constitute a research or storage facility used during those processes, and qualified materials and fixtures. When doing tenant or infrastructure improvements, Construction Contractors will use BOE FORM 230-MC (http://www.boe.ca.gov/pdf/boe230mc.pdf).
City of Santa Clarita Use Tax Rebate Program: When businesses pay California Sales and Use Tax to a lessor or an out-of-state vendor, Santa Clarita receives only a small amount of the 1% local share. However, using a Direct Payment Permit system, Santa Clarita would receive the entire 1% local share back, benefiting Santa Clarita’s general fund. This incentive program provides businesses with either a cash rebate of 25 percent on the additional State collected use tax remitted to the City as a result of the business entering the State’s Use Tax Direct Payment Permit program, or a 45 percent rebate to be used on business expansion City permit credits. Currently, the SCVEDC is working with a large employer in the City of Santa Clarita on qualifying for this rebate program.
California Competes Tax Credit: The California Competes Tax Credit is an income tax credit available to businesses that want to come to California or stay and grow in California. This tax credit is a negotiated credit, meaning the State, economic developers and private sector businesses will submit an application that assess the costs and benefits of each business expansion. There will be an estimated 200 million of tax credits available per year to assist in creating and maintaining jobs in California. The SCVEDC staff can help you submit the online application.
Research and Development (R&D) Tax Credits: Federal and State
Each year, more than 12 billion dollars in Research & Development Tax Credits are funneled back to US businesses at the federal level, and the tax credits are also available in California. Companies across numerous industries can qualify for the R&D incentive as long as the companies have engaged in activities that result in a new/ improved product (quality, reliability, performance, feature sets, etc.), or in a new/improved process.
Southern CA Edison Economic Development Rate: Large power users (200 kW peak use) can apply for a 12 percent reduction in their electrical rate. Businesses must be able to state that, if not but for, this cost savings they would have to close the facility or locate elsewhere. A business case and financial projections are required in the application process.
California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA): The CAEATFA is providing a sales and use tax exclusion (full rate, including local and district taxes) on qualifying property that is used in the design, manufacture, production, or assembly of “advanced transportation technologies or alternative energy source products, components, or systems,” or “clean technology”. The tax exemption takes place at the time of the qualified equipment purchase. Before one is able to make tax exempt purchases of clean-tech qualifying equipment, they must get their application approved by the CAEATFA.
California Employment Hiring Credit: This program replaced the CA Enterprise Zone Tax Credit. It is not as robust as the Enterprise Zone program, but is worth considering. Eligible businesses could generate up to $112,000 in tax credits per year from this program by hiring 10 new qualified employees.
Foreign Trade Zone: Serving qualified sites within the Santa Clarita Valley, this extension of the U.S. Foreign-Trade Zone (FTZ) program offers international traders, importers and exporters outstanding opportunities to take advantage of special customs privileges. These incentives can lower barriers to trade, improve cash flow and enhance your company's profits while giving you a competitive edge in the global marketplace.
Recycling Market Development Zone: The Recycling Market Development Zone (RMDZ) is a California state program aimed to simultaneously reduce landfill waste and encourage manufacturing. Santa Clarita is one of several designated RMDZs in the state of California, and as a result, Santa Clarita businesses that can demonstrate that they are recycling paper, plastic, glass and/or organic material are eligible for low-interest loans and technical assistance
America’s Job Center at the College of the Canyons: The America’s Job Center (AJC) works with local with local businesses offering a variety of services from pre-screening candidates to offering interview facilities and tips for job seekers. All services at the AJC are offered to businesses and job seekers FREE of charge. Participation in these workforce development programs can mean a significant return to your business, and the SCVEDC is happy to introduce local companies to the center.
Work Opportunity Tax Credit (WOTC): WOTC is a federal tax credit for companies who hire new employees from certain target groups who have consistently faced significant barriers to employment. The maximum tax credit ranges from $1,200 to $9,600, depending on the employee hired. The Veteran Opportunity to Work (VOW) to Hire Heroes Act of 2011 extended and expanded the WOTC Qualified Veterans target group.
Employee Training & Workforce Development: Employee Training Institute (ETI) , located at SCV’s College of the Canyons, provides on-site, customized training in most technical skills and business topics. The SCV’s Centers for Applied Competitive Technologies (CACT) works to advance the global competitiveness and innovation for advanced technology companies through responsive workforce training and technical consulting services. They offer free or low-cost training for your employees using Employment Training Panel (ETP) funds. Click here to learn more about ETI.