As published in Scotsman Guide's Commercial Edition, January 2006.
Property taxes, energy prices and transportation concerns continue to be among the most-prominent issues impacting the commercial real estate industry. Across the nation, these costly facts of life will play a leading role in influencing developers' and borrowers' decisions during the next 12 months and beyond. Regions that respond with solutions to these issues will be among the most-sought-after business-development locations in 2006.
In many areas, property taxes keep skyrocketing. As such, commercial investors are changing the ways they make decisions. Smart borrowers are looking at how their business locations can save them money.
One way that certain locations can save investors money is through programs such as the U.S. Department of Housing and Urban Development's (HUD) Community Renewal Initiative. The initiative provides tax-incentive packages to chosen rural and urban areas to attract businesses. Many states also have their own programs that provide similar benefits for businesses to operate in specific geographical areas or market sectors.
New Jersey's Economic Growth and Tourism Commission, for example, implemented its own community renewal initiative, called the Urban Enterprise Zone (UEZ) program. The 22-year-old program is designed to revitalize distressed urban communities by encouraging the creation of private-sector jobs and public or private investment. According to the commission, the state has 32 dedicated UEZs.
The incentives companies can receive for relocating to New Jersey can vary. Qualified retail businesses, for instance, can charge half of the state's sales tax on certain purchases. In addition, businesses enjoy a full sales-tax exemption for the purchase of certain materials and personal property. They also receive employee tax credits, priority financial assistance and more. In turn, New Jersey now houses 8,000 UEZ-located firms that employ more than 150,000 full-time workers.
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