What is SWEDA?
SWEDA was formed in the late 1990’s, after community leaders realized having a part-time development authority wouldn’t attract the industry Springfield/Washington County needed to stay vital, much less grow.
“We had a volunteer board with no special training and no experience except the school of hard knocks,” said Chuck Polin, chairman of SWEDA and long-time director of its predecessor. “We realized that if we really wanted to make a splash, we had to have a full-time economic development director.”
That required bringing Washington County into the fold, for the original board was just for the city of Springfield. The county leaped at the chance, and SWEDA was born.
Polin said the effort has paid off. “For years, we took everything for granted,” he said. “Now, we’re a town of about 3000 people, and we have 1,100 manufacturing jobs. Very few counties, if any, of comparable size in Kentucky can say that.”
Hal Goode, SWEDA’s executive director, said the agency has three main tasks: recruit new industry, retain existing industry, and provide workforce development. In the past 10 years, he said, the community’s industrial base has diversified. That’s an effort that will continue.
We’re trying to bring in high-skilled jobs, technical jobs,” he said. “In the next 10 years, we’ll continue the emphasis on automotive suppliers, but also diversify into wood products, biotechnology, and plastic injection molding.”
What it means, he added, is that Springfield/Washington County “wants to find that perfect fit for a manufacturer.”
What incentives are available to business and industry in Springfield and Washington County?
- Bluegrass State Skills Corporation (BSSC) - BSSC offers a Grant and a Tax Credit Program. To learn more about these programs, visit the Kentucky Cabinet for Economic Development.
- Kentucky Jobs Development Act (KJDA) - KJDA provides tax incentives to new or
expanding service and technology-based companies that earn at least 75% of their
revenues from outside the state, employ at least 15 new full-time Kentucky residents and
meet certain salary requirements.
This tax credit program enables the company to recoup 50% of annual occupancy costs
(or fair-market-value equivalent if owned) of the facility for up to 10 years and 50% of
eligible start-up cost expenditures up to $20,000 per job created (maximum start-up
credits of $10,000 per job).
Benefits include:
• A 100% credit against the state corporate income tax arising from the project.
• The retention up to 5% of the gross wages of the new employment generated by the
project as a credit against state and local occupational taxes.
- Kentucky Enterprise Initiative Act (KEIA) - Approved companies are eligible to receive a refund of sales and use tax paid on construction materials and building fixtures.
- Lincoln Trail Career Center - Local employment office that provides application, hiring, recruitment, and skills training services to local employers, and offers detailed labor market information. For more information, visit the Lincoln Trail Career Center Web site.
- Property Tax Abatement - Local property tax abatement for qualified projects for five (5) years.
- Incumbent Worker Training (IWT) Program - IWT offers a 50% reimbursement for skills upgrade training of current employees for eligible business and industry.
- Kentucky Workforce Investment Network System (KY WINS) - Provides funding assistance (75% of project costs) for advanced courses that are part of a complete training package or lead to certification.
The process for applying for these benefits is a simple, straightforward process, and SWEDA's economic development staff will assist you in every step.
What are Industrial Revenue Bonds?
Industrial Revenue Bonds (IRBs) are financing instruments issued by designated local industrial development boards (IDBs) or other issuers authorized by state law. Since 1949, IRBs have been a preferred method of financing used by industries locating to and expanding in Kentucky. Often, financial institutions and other intermediaries participate by providing letters of credit backing the bonds. Thus, the company seeking the bonds must be considered creditworthy by the financial institution.
IRBs provide financing for land, building and equipment for new and expanding manufacturing plants. Certain expenses such as architectural, engineering, legal and administrative fees associated with the sale of the bonds can be paid from the bond proceeds (subject to the limitations of Internal Revenue Service regulations).
The political subdivision issuing the IRB retains ownership of the bond-financed facility and leases it back to the company at a rate sufficient to pay the principal and interest on the bonds as they mature. When the user leases the property back, there may be several tax advantages such as exemption from sales tax on construction materials, use tax on the purchase of equipment, as well as mortgage deed tax and ad valorem tax for the term limited to ten years. Local sales and use taxes and all ad valorem taxes which are levied for school purposes are not eligible for exemption.
Taxable IRBs will continue as one of the mainstays of industrial finance because they may be issued with fewer restrictions and in unlimited amounts while the user maintains tax savings. The company may buy its own bonds and still be eligible for significant tax savings. Interest rates are generally higher than on tax-exempt bonds.
