Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...
By Tripp Baltz
Colorado hooked the global headquarters of a major outdoor recreation employer with the help of a job creation package that could lead to $27 million in income tax credits for the company.
The package, the second-highest approved under Colorado’s Job Growth Incentive Tax Credit Program, was among the primary reasons VF Corp. is moving its headquarters to Denver and creating an estimated 800 high-paying jobs, Michelle Hadwiger, deputy director of the Colorado Office of Economic Development and International Trade (OIEDT), told Bloomberg Tax Aug. 15. VF is the parent company of The North Face Inc., JanSport and Smartwool.
VF also cited Denver’s talent pool and its culture of support for the “outdoor recreation ecosystem” as the main reasons for the move from Greensboro, N.C., Hadwiger said.
The incentive program, which awards state income tax credits only after new jobs have been created and new employees have begun paying sales and income taxes, launched in 2009, with the five largest company packages coming in the last three years.
“We are thrilled to welcome a new partner that embodies the values that define Colorado,” Gov. John Hickenlooper (D) said of the VF Corp. announcement on Aug. 13. “VF’s move underscores the critical driver that the outdoor recreation industry plays in our economy where business meets lifestyle.”
VF is one of the largest outdoor footwear, apparel, and accessories companies in the country, with a market value of $36.7 billion at the close of business Aug. 15.
The effort to bring VF to Colorado, dubbed “Project Cardinal” by OEDIT, will involve the performance-based tax credits over eight years—the state pays nothing up front, Hadwiger said. Colorado only offers a tax credit package when it is engaged in a competitive, multistate process and is competing against states with direct incentives and aggressive tax credits, according to the program.
Businesses need to create at least 20 new jobs in Colorado, with an average annual wage of at least 100 percent of the county average wage rate based on where the business is located. A business in an Enhanced Rural Enterprise Zone has to create at least five new jobs in Colorado, with an average yearly wage of at least 100 percent of the county average wage. All new jobs must be maintained for at least one year after the positions are hired to qualify.
Just communicating that the credit exists helps the state lure businesses, she said. “Oftentimes we don’t get the time to talk to a company directly,” she said. “They create a list of states with incentives, and you don’t have one with the right return-on-investment, you fall off the list. This gets us more at-bats.”
Hadwiger said VF made it clear that the tax credits weren’t the only reason it is coming to Colorado.
“Colorado is an area with an unrivaled heritage and culture of outdoor and activity-based lifestyles, as well as a thriving business environment,” said Steve Rendle, VF’s chairman, president and CEO. “We believe that the creation of our new headquarters in the area will help us to unlock collaboration across our outdoor brands, attract and retain talent, and accelerate innovation.”
Rendle said the company has promised to match every tax credit dollar it receives with donations to its foundation to support local charitable causes.
Hadwiger said she has never seen a company pledge to give every dollar of its tax credit to charity.
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