Tax credit bill awaits Walker's signature
JANESVILLE—The way Jeff Helgesen sees it, a two-year delay in enacting a statewide tax credit portability bill cost Janesville several hundred good-paying jobs.
But the Janesville developer said the Legislature's recent passage of the bill bodes well for future economic development projects.
“It all worked out in the end, and from a go-forward standpoint, I applaud the Legislature for getting it done,” Helgesen said.
On unanimous votes, both the Assembly and Senate passed the bill that would allow a transfer of tax credits between companies. The bill awaits Gov. Scott Walker's signature.
As part of its economic development toolbox, the state for years has provided income tax credits if companies meet benchmarks spelled out in economic development contracts.
Forward Janesville has long maintained the income tax credits are of little value to many companies because they don't generate enough income to make the credits meaningful. The group has argued that companies involved in the transfer of tax credits would have a relationship that creates jobs and fosters investment on the local level.
The original bill stemmed directly from a Helgesen project.
A Rockford company that makes highly engineered chassis and suspension components wanted to lease more than 500,000 square feet of space in a building Helgesen owned at 2929 Venture Drive on the city's south side.
Helgesen said the company wanted to move about $8 million worth of heavy stamping equipment from North Carolina to Janesville. As he recalls, the operation could have employed up to 400 people.
“They were going to get this great deal in the form of income tax credits from the state of Wisconsin to move from Illinois to Wisconsin,” Helgesen said. “The problem was that they weren't going to be generating any income here for several years, so the tax credits were useless.”
Helgesen said the move to Janesville would cost the company about $5 million.
“Neither the state nor the Wisconsin Economic Development Corp. had the money, so we were going to extend the company a loan with the tax credits as collateral,” Helgesen said, adding that when the company eventually was eligible for the tax credits, it would transfer them to Helgesen to pay off the loan.
But the bill never went anywhere, and the Rockford company dropped its plans for Janesville, said Helgesen, who subsequently leased the entire building to two other tenants.
The bill stalled because Sen. Tim Cullen, D-Janesville, and other lawmakers believed its language did not specifically hold a company accountable for job creation and capital investment benchmarks.
Changing the language took nearly two years, and the Senate and Assembly approved it earlier this year.
In the Senate, Cullen voted for the revised bill. He said he never had a problem with the issuance of tax credits, only that he was concerned the credits could be transferred with no assurance that they paid any dividends, such as new jobs or new capital investment, to Wisconsin taxpayers.
Rep. Amy Loudenbeck, R-Clinton, authored the revised Assembly bill that allows for up to $15 million of economic development tax credits to be re-assigned over a three-year period under regulation from the state Department of Revenue and the Wisconsin Economic Development Corp.
It would allow the transfer of tax credits if the original recipient is a company that either is headquartered in Wisconsin or plans to move to the state and base the majority of its employees here. It further mandates that the original recipient increase its Wisconsin workforce by 10 percent or make a significant capital investment in its Wisconsin operation.
The last two conditions were missing from the original Senate and Assembly bills.
Loudenbeck said tax credits are one of the state's primary economic development tools. They help facilitate entrepreneurial endeavors, promote existing business expansion and retention efforts and secure new business development investments, she said.
“Providing for the limited transfer of tax credits within the existing vendor or supplier network of a project will allow qualified applicants with no income tax liability to move forward with economic development projects, thus providing the missing value that is unavailable under current law,” she said.
Helgesen is pleased the bill passed and hopes Walker signs it.
Helgesen recently sold the big property on Venture Drive and plans to use the proceeds to build several other buildings in the Janesville area.
The new law, he said, would be another tool to help him and others create jobs in Wisconsin.