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The Advantages of Doing Business in the Oskaloosa and Mahaska County Area

The Oskaloosa and Mahaska County area of Iowa has many assets to offer quality companies who want productive workers, a friendly business climate and a community willing to help offset startup and relocation costs. Below is a synopsis of some key factors which help make Iowa and the Oskaloosa area such a desirable and profitable site location. The Oskaloosa Area Chamber and Development Group can provide custom research services when very specific needs at identified.

The City of Oskaloosa and Mahaska County are both active participants in the economic development process. Both the City Council and the County Board of Supervisors are anxious to hear proposals from new industries and are receptive to assisting firm with such things as road improvements and water and sewer improvements. Oskaloosa has a professional community developer on staff that has considerable experience in speedily obtaining development permits and grants. Companies can be assured that there will be no development impact fees associated with a new facility in the county.

Corporate Income Taxes

Corporate tax is imposed on the net income received or earned during the income year after adjustment by subtracting 50 percent of federal income taxes.

Most importantly taxable net income is determined by single a single factor formula: State income tax is imposed only on the portion of net income reasonably attributable to the trade or business conducted within the state. Iowa taxes only that portion of total sales that were generated within the state.  

Property Taxes

The property tax rate in the Oskaloosa area is currently $15.6195 per $1,000 assessed valuation. Oskaloosa and Mahaska County can allow a partial exemption of the actual value added by a project for a period of ten years through our industrial tax abatement program.

The City of Oskaloosa also allows a partial exemption of property taxes for commercial projects. The percentage of taxes exempted each year under the commercial tax abatement program is as follows:

  • Year 1: 70%
  • Year 2: 50%
  • Year 3: 30%

Finally, the City of Oskaloosa also offers partial exemption of property taxes for residential projects. The percentage of taxes exempted each year under the residential tax abatement program is as follows:

  • Year 1: 80%
  • Year 2: 65%
  • Year 3: 50%
  • Year 4: 35%
  • Year 5: 25%

Other Tax Considerations

Oskaloosa

Oskaloosa does have a 1-cent local option sales tax.

State Taxes / Tax Credits

Corporate Income Tax

A number of features of Iowa’s corporate tax offer significant advantages when compared to other states’ corporate taxes.

  • Fifty percent deductibility of federal taxes from Iowa corporate income tax.
  • Single-factor, non-unitary tax.  Iowa’s tax is based only on the percentage of total sales income within the state.
  • Iowa corporate income tax may be reduced or eliminated by the New Jobs Tax Credit and the Enterprise Zone Tax Credit.

High Quality Job Creation Program (HQJCP)

The High Quality Job Creating Program provides qualifying businesses tax credits to off-set the cost incurred to locate, expand or modernize an Iowa facility.  To qualify for this very flexible assistance package that includes tax credits, exemptions and/or refunds, a business must be a non-retail or non-service business and meet at least four of the eligibility requirements.

Eligibility Requirements

  • Offer a pension of project sharing plan for all employees.
  • Produce value-added goods or be in one of 11 targeted industries.
  • Provide medical and dental insurance and pay 80% of the premiums.
  • Offer child care services
  • Invest at least 1% of pretax profits in research and development.
  • Invest at least 1% of pretax profits in worker training.
  • Have active productivity and worker safety improvement program(s).
  • Purchase and occupy a vacant building which is at least 20,000 square feet.
  • Must meet wage threshold requirements.

New Jobs Tax Credit

A business entering into an agreement under the Iowa New Jobs Training Program and increasing its Iowa workforces by at least 10 percent will qualify for this Iowa corporate income tax credit.  This tax credit is equal to up to 6 percent of the state’s unemployment insurance taxable wage base.  The maximum credit for 2006 is $1,320 per new position created.  The credit may be taken only once; however, unused credits can be carried forward for 10 years.  Please contact OACDG to determine eligibility or to obtain information specific to your needs.

Research & Development Tax Credit

A credit for increasing research activities is 6.5 percent of the company’s allotted share of qualifying research expenditures in Iowa.  A company must meet the qualifications of the federal research activities credit in order to be eligible for the credit on the Iowa return.

No Sales or Use Tax on Manufacturing Machinery and Equipment Purchases

The purchase of industrial machinery and computers assessed as real property and used for manufacturing or used to process data by insurance companies, and financial institutions is exempt from property tax.  Pollution control equipment is eligible for exemption from property tax.

No Property Tax on New Industrial Machinery and Equipment

Manufacturing machinery and equipment, as well as, computers used to process data by insurance companies and financial institutions is exempt from property tax.  Pollution control equipment is eligible for exemption from property tax.

No Personal Property (Inventory) Tax

Personal property is not assessed for tax purposes.  In Iowa, personal property includes corporate inventories of salable goods, raw materials and goods-in-process.

No Sales and Use Tax

No sales tax is due on purchase of electricity or natural gas used in the manufacturing process.

State of Iowa Incentives

Iowa is a Right-to-Work State

Under Iowa law an employee may not be required to join a union or pay dues or fees to any labor union, association or organization as a condition of employment.

Unemployment Insurance

Iowa has one of the lowest, new employer, unemployment insurance rates in the nation.  The rate for all non-construction businesses is 1% for a 3-year period.

Regulatory Assistance

The Regulatory Assistance Program enhances the range of services available to Iowa companies by advising and assisting companies in the preparation and submission of permit application with the Iowa Department of Natural Resources (DNR) and other Iowa regulatory agencies.  The mission of the Regulatory Assistance Program is to facilitate communication between the business and regulators and to expedite the permitting process.

State Incentive Programs

Iowa Values Fund (IVF)

The Iowa Values Fund is the state’s premier 10-year economic development program designed to transform Iowa’s economy by creating high-quality jobs through business development and expansion across Iowa.  With a $35 million dollar annual appropriation for business development and marketing, the IVF assists Iowa companies to expand, as well as attract new businesses to the state.  To be eligible, a business must provide a wage, plus benefits that is equivalent to 130 percent of the county average.  A business must also be in one of the state’s targeted industries, which include life sciences, information solutions/financial services, and advanced manufacturing.

Community Economic Betterment Account (CEBA)

The CEBA program provides financial assistance to businesses that plan a major capital investment that will create new job opportunities and/or retain existing jobs in Iowa.  Assistance may be provided to encourage new business start-ups, expand or retain existing businesses, or recruit out-of-state businesses to Iowa.  CEBA also contains a modernization project component, specifically designed for businesses making equipment and technology upgrades and employee-training investments to maintain their competitive advantage.

Assistance is provided in the form of loans and/or forgivable loans, up to a maximum award of $1 million, based in part on job creation, capital investment, the ability to meet certain regional/county wage standards, quality of employment, and economic benefits for the state and local community.  Applications are filed by cities, counties or community colleges on behalf of eligible businesses.  Please contact OACDG to determine eligibility or to obtain information specific to your needs.

Economic Development Set-Aside (EDSA)

EDSA provides assistance to businesses that plan to make a capital investment and create and/or retain quality employment opportunities for low-and moderate-income individuals.  Assistance may be provided to encourage business start-ups, the expansion or retention of existing businesses, or the recruitment of out-of-state businesses into Iowa.  EDSA funds business projects located in Iowa cities of less that 50,000 population.

Assistance is provided in the form of loans and/or forgivable loans.  The maximum award is $1 million per project.  Applications are filed by cities or counties on behalf of eligible businesses, which need to meet certain regional/county wage standards.  Please contact OACDG to determine eligibility or to obtain information specific to your needs.

Iowa Value-Added Agricultural Products and Processes Financial Assistance Program (VAAPFAP)

The VAAPFAP provides financial assistance to new or existing companies that utilize the state’s agricultural commodities to create new, innovative products or to produce renewable fuels (including soy diesel, ethanol and other renewable fuels).  VAAPFAP can also assist those companies engaged in organic processing, bio-mass and the creation of alternative energies.  Financial assistance is provided in the form of loans and forgivable loans.  Please contact OACDG to determine eligibility or to obtain information specific to your needs.

Revitalize Iowa’s Sound Economy (RISE)

This program is administered by the Iowa Department of Transportation (DOT) and provides funding for expenditures on city and county highways to help attract new development or to support growth with existing developments.  Projects are evaluated on economic potential and impact.  RISE funding may be used in conjunction with other sources of federal, state, local and private financing to improve area highways and specific access to roads.  Assistance is provided in the form of grants and/or loans.

Public Facilities Set-Aside Program (PFSA)

The PFSA program provides financial assistance to cities with less than 50,000 in population and to counties for public infrastructure improvements that enable businesses to create new job opportunities.  Projects that will create manufacturing jobs, add value to Iowa resources and/or increase out-of-state exports will be given priority.

Eligible projects include adding or improving sanitary sewer systems, water systems, streets, roads, and storm sewers.

Railroad Revolving Loan & Grant Program

The Railroad Revolving Loan & Grant Program (RRLGP) provides assistance to improve rail facilities that will spur economic development and job growth and provide assistance to railroads for the preservation and improvement of the rail transportation system.

The program can provide assistance as either loans or grants but grant funding is limited to 50% of the total funds available.  In the current round of funding, approximately $1 million will be available for assistance.  Industries railroads, local governments or local economic development agencies may apply for financial assistance for projects such as:

  • Building rail spurs to a new or expanding development;
  • Building or rebuilding sidings to accommodate growth;
  • Purchasing or rehabilitating existing rail infrastructure;
  • Rehabilitating existing rail lines to increase capacity; or
  • Other rail related developments.

Public benefits can be described in terms of new jobs created, transport costs, and capital investment.  Public costs can be described in terms of the funding requested.

Job Training Programs

Iowa Industrial New Jobs Training Program (260E)

Assist businesses, which are creating new positions, with new employee training.  Eligible businesses may be new to Iowa, expanding their Iowa workforce, or relocating to the state.  Employees qualifying for training services must be in newly created positions and pay Iowa withholding tax.  A business must be engaged in interstate or intrastate commerce for the purpose of manufacturing, processing, assembling products, warehousing, wholesaling, or conducting research and development.  A business, which provides services, must have customers outside of Iowa.  A business cannot have closed or substantially reduced its employment base at any of its other business sites in Iowa in order to relocate substantially the same operation to another area of the state.  The employees who will receive training must occupy job positions which did not exist during the 6 months prior to the date that the business and community college agree to pursue a training project.

Community College sells bonds to finance the cost of the established training.  Dollars available through the program are dependent upon the training and development needs and the projected tax revenue from the new positions created.  Business diverts 1 ½ % or 3% (depending on the wage paid) of the Iowa state withholding taxes generated by the new positions to the Community College to retire the bonds.  Technically the company received the training for free because the bonds are retired with dollars that would be paid to the state as withholding taxes.

Additionally, up to 50% of the annual gross payroll costs expended for on-the-job training can be reimbursed for up to one year of the new jobs.  A corporate tax credit is available to a company that has entered into a 260E agreement and has increased Iowa employment by at least 10%.

The 260E program is administered and operated by Iowa’s 15 Community Colleges.  Each community college works with eligible businesses to assess training needs, determine funds availability and provide training.  Contact your local Community College if you would like more information regarding the Iowa New Jobs Training Program (260E). 

Iowa Jobs Training Program (260F)

The Iowa Jobs Training Program (260F) provides job training services to current employees of eligible businesses that are located in Iowa.  Job training services are defined, as any training needed to enhance the performance of a business’ employee.  A business must be engaged in interstate or intrastate commerce for the purpose of manufacturing, processing, assembling products, warehousing, wholesaling or conducting research and development.  A business, which provides services, must have customers outside of Iowa.  Within the 36 month period prior to the date of applying for program services, a business cannot have closed or reduced its employment base by more that 20 percent of any of its other business sites in Iowa in order to relocated substantially the same operation to another area of the state.  Employees who will receive training must be currently employed by the business and the business must pay Iowa withholding tax for them.

Individual business sites are eligible for maximum awards of $25,000 per training project.  A business site is eligible for a maximum of $50,000 in program assistance during a three-year period.  Training projects costing $5,000 or more require a 25% cash match for the business.  Training projects costing less that $5,000 do not require a business cash match.

The 260F Program is administered by the Iowa Department of Economic Development and services are provided by Iowa’s 15 Community Colleges.  Each Community College works with eligible businesses to assess training needs, determine funds availability and provide training.  Contact your local Community College if you would like more information regarding the Iowa Job Training Program (260F). 

Local Incentives

Oskaloosa Area Chamber & Development Group (OACDG) Direct Investment Fund (DIF)

Providing direct cash incentives to new industries and businesses that locate in Mahaska County.

Creation of quality employment opportunities for area residents is a prime consideration for these funds. 

Providing matching funds for any state program used in a financial package.  OACDG does not make outright grants.

Mahaska County Revolving Loan Fund

Low-interest loan fund assisting industries and businesses that desire to locate, expand, or diversify their business in Mahaska County. 

Assists new projects focusing on job creation and preservation and bring a positive change to the local economy and community. 

Special consideration given to applications for a loan as a manufacturer or industrial type of business.

Loan amount not to exceed the funds on hand and can not fund more than 20% of the final projects. Loan amount limited to no more than $15,000 per job created or retained.

Rules regarding the RLF are at http://www.teammahaska.org/tminfo/development.html

Regional Economic Development Investments, INC. (REDI) Revolving Loan Fund (RLF) 

Supports business activities for which credit is not otherwise available.  “Gap financing” used for business startup, expansion, or retention of jobs.

3 to 5 year loan for working capital loans, 5 to 7 years for fixed asset loans.

Fixed, simple interest rates, ranging from 4% to 4 points below the prime lending rate.

Maximum $5,000 for each job created or retained, up to a maximum of $125,000 requiring $2 from other sources for every $1 from REDI funds.

Eligible activities include expansion or modernization of facilities, purchase of machinery, equipment, fixtures, and leasehold improvements, financing increased receivables and augmenting working capital, construction of new commercial buildings, purchasing existing land and/or buildings.

Oskaloosa's gas and electric utility is Mid-American Energy Company, the state's largest, investor-owned utility. Mid-American has a very experienced, professional economic development staff who will assist a company in putting together a very competitive natural gas and electric utility package. Contact information is listed below:
Deb Calvert, Economic Development Consultant
4299 NW Urbandale Drive
Urbandale, IA 50322-7298
Office: 515-281-2595
Cell: 515-979-1037
click to reveal@midamerican.com

Summary

Oskaloosa is a thriving community with a very positive business climate. Its' highway system and proximity to Des Moines provide easy access to raw materials and major markets. The State of Iowa has created numerous incentive programs which help reduce startup costs. The single factor income tax formula and deductibility of 50 percent of federal income tax keeps corporate tax liability very low. The Oskaloosa Chamber and Development Group have the resources to offer additional incentives whether a company needs sites, financing of other forms of assistance.
The affordability of labor in the area and the labor's work ethic and low turnover will also help boost company profitability. A company's workforce will benefit from and excellent school system, two four-year colleges and an abundance of cultural and recreational opportunities.

A good way to learn more about the Oskaloosa area is to visit with the leaders of some of its' local firms. Any one of the members of the OACDG's Economic Development Committee, visitation team or contact team can provide the kind of personal advice and encouragement to know why Oskaloosa, Iowa, is the right place for business.  The following contact information is listed below.

Mahaska Community Development Group
Miranda Johnson Director
Mahaska Community Development Group and Director of Mahaska County Agricultural and Rural Development Program
2074 Old Hwy 163
Oskaloosa, IA 52577
Office: 641-673-6385
Cell: 641-295-3776
(click to reveal)@mahaskacounty.org

Oskaloosa Area Chamber & Development Group
Jon Sullivan, Director
OACDG and Main Street
124 North Market Street
Oskaloosa, IA 52577
Office: 641-672-2591
Cell: 641-660-3190
(click to reveal)@oacdg.org