Colorado Springs companies get $13.3M in state's new tax incentive program – The Business Journals
Listen to this article 3 min
The projects are expected to create hundreds more jobs in the area.
Two Colorado Springs companies on Thursday became the first in the state to take advantage of a new incentive program created especially for businesses in the semiconductor and advanced manufacturing space.
The unnamed companies secured a total of $13.3 million in the form of tax refund certificates, which should allow them to take better advantage of existing tax incentive programs, according to Dan Salvetti, strategy and analytics manager for the Colorado Office of Economic Development and Trade (OEDIT).
The program is the result of state legislation passed earlier this year that allocates $75 million over the next five years to attract and retain semiconductor and advanced manufacturing businesses, with priority given to those pursuing funding from the Chips Act or the American Rescue Plan Act.
Companies seeking those federal funds also need a local match. This program seeks to help with that requirement and bridge the industry into existing tax incentive programs with some modifications and new incentives for local investments, job creation or expenditures on research and experimental activities.
For example, Salvetti told members of the state’s Economic Development Commission on Thursday that one of the companies doesn’t expect a high tax bill in the near term, making its $22.6 million in Enterprise Zone tax credits less useful for a planned $869 million capital project.
“Project Hydrogen” is a planned expansion of a manufacturing plant in Colorado Springs that produces semiconductors for use in automotive, consumer aerospace and defense communications and computing markets, according to OEDIT.
“It’s one of the largest known planned investments in terms of CapEx jobs and wage impact in the state to date,” Salvetti told commissioners.
The company currently employs about 1,000 people in Colorado and expects to create 371 local jobs with a multi-facility expansion and modernization at its Colorado Springs plant. The project would increase manufacturing output between product lines by a factor of three to seven, OEDIT staff members said.
Project Hydrogen was offered a $10 million refund certificate by commissioners, translating to an $8 million cash value to the company.
Once the company earns its enterprise tax credits, it first can use those credits to pay its taxes. Then, the refund certificate can be used for an 80% cash refund, Salvetti said.
“Project Helium” was the second company to get an offer of a refund certificate at $3.3 million.
That company is working on the construction of a $724 million, 680,000-square-foot manufacturing plant on a greenfield site in Colorado Springs that would add 600 jobs to the area. It currently has about 300 employees in Colorado who work on manufacturing equipment and advanced materials used in semiconductor, life sciences and other high-tech industries.
Phase one of the project has already begun and is expected to reach commercial operation in early 2025, OEDIT said. Phase two is expected to begin construction in 2025 or 2026.
Project Helium was approved for $3.8 million from OEDIT’s Strategic Fund last year and is expecting $10.7 million in Enterprise Zone tax credits over the next eight years, Salvetti said.
He said both offerings are expected to have a major return on investment in terms of helping those companies draw down federal funds. For Project Hydrogen, he said $1 of the program funding has the potential to leverage $16 in federal money.
Total Denver-area employees
© 2024 American City Business Journals. All rights reserved. Use of and/or registration on any portion of this site constitutes acceptance of our User Agreement (updated April 19, 2024) and Privacy Policy (updated December 19, 2023). The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of American City Business Journals.