State OKs tax credits to support Zoetis expansion

By Bob Steenson, bsteenson@charlescitypress.com

Zoetis Inc. in Charles City has received approval from the state for a tax credit as an economic incentive to support a major expansion project.

The Iowa Economic Development Authority on Friday approved a tax credit on materials purchased as part of a $55 million Zoetis expansion. The company wouldn’t pay state sales taxes on the purchase of materials for the project.

Zoetis is considering expanding its operating facilities either in Charles City or in Lincoln, Nebraska, according to information from the city.

The Zoetis project would add six jobs at the Charles City site, at a minimum starting wage of $16.83 per hour. That is the minimum required to meet the state economic incentive guidelines; actual wages could be higher than that.

The Charles City Council last week approved a resolution setting a public hearing to amend the city’s urban renewal plan to support the Zoetis expansion with tax increment financing (TIF).

As part of that resolution the city expressed its intent to approve an economic development package with Zoetis in the form of an eight-year 90 percent property tax rebate through the Southwest Bypass TIF District. The total value of the local incentive package including a city forgivable loan would be $1.85 million.

The state package being sought includes $1.62 million in Iowa tax credits, $864,000 in sales tax credits (approved Friday), $15,000 in Research Activities Credits and $20,000 in job training funds, according to the staff recommendation accompanying the City Council resolution passed last Monday.

The City Council public hearing on the urban renewal plan amendment will be Nov. 20.

The Zoetis project includes $21.9 million in new building construction, $6.9 million in remodeling and $35.2 million in machinery and equipment.

The IEDA made the decision on state sales tax credits as part of its regular meeting Friday where it awarded economic incentive packages to support a total of $74 million investment by five Iowa businesses. The awards all include tax credits through the state’s High Quality Jobs Program and would support the creation or retention of 50 jobs, including the jobs at Zoetis.

Other awards went to BCL Hawkeye Division in Cedar Falls, Cottingham & Butler Insurance Services of Dubuque, Frontier Natural Products Co-op in Norway and K2W Precision in Orange City. The Dubuque project also includes a forgivable loan from the IEDA.