Anyone who questions the wisdom of tax breaks to encourage business development might want to chat with Jeff Perkins and Britt Ham.
Perkins works with a
company that relocated from North Carolina to an area near the Colorado
Springs Airport, in part because of tax breaks approved by city, county
and state officials to encourage economic development at or near the
Ham is president and CEO of a company near the airport that is expanding, thanks to the tax breaks.
the companies employ more than 40 people, and they're planning to add
another 75 employees - the bottom-line goal of the tax breaks.
tax breaks are a "huge incentive" for Trine Aerospace LLC to expand in
the Springs, Ham said. Trine, which moved to Colorado Springs from
Chatsworth, Calif., last year, has grown from about a dozen employees to
20 and has up to eight contract workers.
"It gives us an
advantage over other companies," Ham said of the incentives. "The
benefit is to lower our cost and allow us to bring business to Colorado
Springs. We have to compete for business and, as a new business, that
competition is often based on price. We are a quality vendor at a
significantly lower price."
Trine plans to expand to 50 employees
by the end of 2016, and company officials are studying whether to
consolidate space in five hangars at the airport into a single
60,000-square-foot hangar they would build nearby, Ham said.
vice president of business management for Rampart Aviation LLC, said
the tax breaks were one of several factors that prompted owner Tony
Porterfield to move the company from the Raleigh, N.C., area to the
Springs. The company specializes in providing flight services, aircraft
maintenance and aviation training support mostly for military units for
parachute drops. It has 20 local employees and plans to add another 25
in the next year, Perkins said.
Deals hinged on tax breaks
companies came to the Springs as Mayor Steve Bach and airport officials
were developing a series of tax breaks to lure aviation and aerospace
companies to the airport to provide jobs for local residents and
generate income for the facility. Any income the airport generates from
leasing existing hangars or from land for new hangars helps pay its
operating expenses and cuts the amount that airlines pay in landing fees
- a potential way to lure more flights to a facility that has seen
traffic drop dramatically.
Besides the expansions by Rampart and
Trine, the airport also has leased two long-vacant facilities - one that
will house a vintage aircraft collection and the other that will be
used by a company that plans to convert aircraft once used by airlines
for military use, bringing at least 20 more jobs to the airport.
Gallagher, the airport's director, said all four deals depended on the
tax breaks, which include city and county exemptions or credits for
sales and use taxes paid by businesses that lease, sell, repair or
Gallagher said at least two other companies
are showing interest, as a result of the tax breaks, in 200 acres on the
airport's west side for potential sites of hangars they would build for
aircraft modification and conversion that could eventually employ
thousands of workers.
"Our future appears to be aircraft
integration, or bringing older planes to today's navigational and
technical standards, including engine modifications and winglets to make
the aircraft more fuel efficient," Gallagher said. "We have a great
opportunity to take advantage of this developing industry and we have
enough land available to create thousands of additional jobs" in that
Aviation and aerospace manufacturers also have shown
increased interest because of the tax breaks in building plants or other
facilities in the airport's 900-acre Cresterra business park that has
long been envisioned by local officials as an economic hub for the
The tax breaks aren't the airport's only recruiting tool.
Parts of both the business park and the west side of the airport, which
is home to a series of hangars for private and corporate aircraft, are
designated as a foreign trade zone. Such zones allow businesses to
delay, reduce or even avoid U.S. Customs duties, which are imposed on
imported raw materials, parts and equipment brought into the zone,
lowering operating costs for any businesses located in a zone.
But the tax breaks are considered a bigger draw.
began pushing for tax breaks at the airport shortly after Gallagher was
named interim airport director early last year as a way to help turn
around declining airline service by finding other revenue sources that
would lower costs for carriers at the airport. He said attracting
businesses and jobs to the airport could help jump-start economic
development in all of southeast Colorado Springs, the city's most
economically struggling area.
"Companies in aviation and
aerospace-related industries won't come to our airport unless we can
give them some kind of targeted incentive to help them get started
here," Bach said.
"We are using performance-based incentives to attract and retain employers at this airport."
Aircraft owners fled airport
for the tax breaks grew out of an exodus of aircraft from the Springs
airport that began when the city started charging sales and use tax on
aircraft, parts and related equipment.
Owners moved more than 60
aircraft to Meadow Lake Airport near Falcon, Centennial Airport in
Englewood and others along the Front Range. Most other cities with
airports specializing in private and corporate aviation had waived or
rebated such taxes, putting the Springs airport at a disadvantage.
Colorado Springs City Council voted 7-2 in April to create a commercial
aeronautical zone that allows businesses in and around the airport that
lease, sell, repair or maintain aircraft to be exempt from most city
sales and use taxes.
El Paso County commissioners in August
unanimously approved the zone in the same areas to give credits for
sales tax paid by businesses on equipment and supplies used in
maintaining, retrofitting and upgrading aircraft.
Office of Economic Development & International Trade in September
designated the airport as a aviation development zone, which makes
aviation and aerospace businesses at the airport eligible for a state
income tax credit of $1,200 for each newly hired employee.
officials also have asked the Pikes Peak Rural Transportation Authority
to exclude 1,023.6 acres on the airport's west side and in the business
park from its borders so airport businesses won't have to pay the
authority's 1 percent sales tax.
The authority has scheduled a public hearing Dec. 10 on the request.
COMMERCIAL AERONAUTICAL ZONE TIMELINE
City of Colorado Springs begins charging aircraft owners a 2.5 percent
sales tax on the value of aircraft based at the Colorado Springs
2008-13: Owners of 62 aircraft, about 20 percent of the
292 aircraft based at the airport, move them to Meadow Lake Airport near
Falcon, Centennial Airport in Englewood and other airports along the
March 2013: Mayor Steve Bach appoints Dan Gallagher
as interim director of the Colorado Springs Airport following the
resignation of Mark Earle and begins discussions about offering tax
breaks to lure aircraft owners and aviation-
related businesses back to
April: Colorado Springs City Council votes 7-2 to
create a commercial aeronautical zone in and around the airport that
allows businesses selling, repairing or maintaining aircraft to be
exempt from most city sales and use taxes.
August: El Paso County
commissioners unanimously approve a similar zone offering sales tax
credits for equipment and supplies used in maintaining, retrofitting and
September: Colorado Office of Economic
Development & International Trade approves Colorado Springs Airport
as an aviation development zone where aviation and aerospace businesses
can get a $1,200 state income tax credit for each new employee.
10: Pikes Peak Rural Transportation Authority will hold a public
hearing and vote whether to exclude 1,023.6 acres on the airport's west
side and in its business park from its borders so businesses in those
areas won't have to pay its 1 percent sales tax.
Story, Photos and Video: http://gazette.com