Claw Back Clauses

Cities and Counties all across the country are starting to use "claw back clauses" that have been built into recent economic development incentives. An Associated Press story hit wires on January 3rd explaining the problem businesses and communities are facing. You can read the details here.

Tax breaks or tax abatement's for businesses are often tied to "job creation". A business promises to create a certain number of jobs and in exchange they receive certain tax breaks.

In our many communities in our area communities consider the number of jobs created and the amount of investment being made in the community through construction and other capital improvements.

In tough economic times incentives must be considered very carefully by the taxing entities offering the incentive and the business accepting them.

Still in Mitchell County the incentive we have offered to spur growth and development is a tax rebate and not a tax abatement. This way the local taxing entities are not giving up any tax revenues they currently receive. Instead they are offering to rebate a portion of the increased tax revenues created by improvements made to a property. The rebate is only applied to the improvements and the taxing entities continue to receive the base tax that is paid on the property before improvements are made.

We certainly want to roll out the red carpet for any business that wishes to expand, relocate or start up new in Mitchell County. We want to do what is beneficial for our community and our businesses.