Incentives & Financing

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SNAPSHOT:


Reducing the cost of business. Economic Development staff will coordinate with state and local partners to reduce bottom line costs associated with construction, equipment, and employment. We regularly implement new initiatives to improve the operating environment. Our toolbox includes:

Local Programs

 

Local Incentives

Development Fee Reduction

Merced Planning Division

Public facilities impact fees on commercial and residential development within the City of Merced have been reduced in an effort to attract development. There is a 25% fee reduction for all commercial development and an additional 28% fee reduction for commercial and residential development within the city's infill zone, totaling a 53% fee reduction within the infill zone. The infill zone is roughly bounded by Childs and Glen avenues; and X Street and Bear Creek.

WHO:

  • Developers

WHAT:

  • Fee reduction for commercial and residential development

Opportunity Zones

IRS (see Merced Opportunity Zones)

Merced's seven Opportunity Zones provide investment opportunities for individuals seeking to defer and reduce capital gains taxes through reinvestment. Residential, commercial and industrial projects are eligible for investment. Developers with projects in a zone and businesses located in a zone may find investors through an Eligible Opportunity Fund. 

Read more...

WHO:

  • Individual Investors

  • Developers 

  • Businesses seeking investment

WHAT:

  • Defers and reduces capital gains taxes for investors in the zones

  • Investment in residential, commercial, industrial projects

  • Merced has 7 zones
PG&E Economic Development Rate (EDR)

PG&E

PG&E is one of two electricity providers in Merced. Businesses using at least 200 kW may be eligible for PG&E's EDR Enhanced discount of 30% over 5 years.

WHO:

  • Businesses using at least 200kW

WHAT:

  • 30% discount for 5 years

Foreign Trade Zone

Merced County Community and Economic Development Department

A U.S. Foreign Trade Zone (FTZ) is a designated area which, for Customs purposes, is considered outside the U.S. Nearly any imported merchandise can be brought into a zone for almost any kind of manipulation, duty-free. The City of Merced is part of the Merced County Foreign Trade Zone. 

WHO:

  • Companies importing goods for sale or production

WHAT:

  • Duty deferral or elimination

Recycling Market Development Zone (RMDZ)

Merced County (Cal Recycle)

The Merced County RMDZ assists businesses that stimulate markets for recycled material, including plastics, glass, yard waste, compostable organics, inert materials, and waste tires. Assistance includes a recycling equipment tax credit, technical assistance, and local business incentives. In addition, the program provides low interest loans for 50% of the project, up to a maximum of $1 million. 

WHO:

  • Manufacturers who repurpose waste products

WHAT:

  • Low-interest loans and grants 

  • State tax credits

  • Technical assistance

  • Additional local incentives

Financing & Funding

 
Revolving Loan Fund (RLF)

Valley Sierra Small Business Development Center (SBDC)

The RLF is used for gap financing to supplement SBA or private financing.  Loans range from $5,000 to $375,000, and one permanent job must be created or retained per $10,000 RLF dollars loaned. The SBDC administers the fund in partnership with Merced County and assists businesses in becoming "loan ready."

WHO:

  • Businesses that create jobs

WHAT:

  • Gap financing to provide capital for job creating projects

UC Merced Venture Lab – Proof of Concept Fund

venturelab.ucmerced.edu/POC

The Proof of Concept Fund allows startups to close the gap between a technology's stage of development achieved at the university and the stage of development necessary for commercialization. 

Read more about UC Merced Venture Lab...

WHO:

  • Startups (members of Venture Lab)

WHAT:

  • Funding to license or option a UC Merced technology

FINANCING AND FUNDING PREPARATION
Valley Sierra SBDC

www.valleysierrasbdc.com

Clientele:

  • Existing businesses and startups

Financing-related Services:

  • Business Plans

  • Financial Analysis

  • Financing Preparation

  • Identification of Financing Sources
    (public and private)

UC Merced Venture Lab

venture lab.ucmerced.edu

Clientele:

  • Startups from UC Merced and businesses adapting UC Merced technologies

Funding-related Services

  • Mentoring

  • Pitch Sessions

  • Proof of Concept Fund

State Tax Credits

 
California Competes

www.business.ca.gov/Programs/CaliforniaCompetesTaxCredit

Cal Competes is a 5-year tax credit obtained through a competitive process during several open application periods throughout the year. The amount of the credit is approved by the California Competes Tax Credit Committee, based on a competitive ratio of aggregate jobs & investment created by the business. 

WHO:

  • Businesses that locate or expand in California

WHAT:

  • Tax credit for job creation, competitive wages, and investment (pre-negotiated)

California Research Credit

www.ftb.ca.gov 

Qualifying companies can receive 15 percent of excess research expenditures, plus 24% of the basic research payments for technological research resulting in a new or improved business component. 

WHO:

  • Businesses

WHAT:

  • Tax credit for technological research (e.g., physics, chemistry, biology)

Manufacturing and R&D Equipment Exemption

cdtfa.ca.gov

Partial exemption of sales and use tax on equipment for manufacturing and research and development. Current rate is 3.9375% plus applicable district taxes, not to exceed $200 million in purchases in a calendar year. Qualifying purchases and leases typically include:

  • Machinery and equipment

  • Property used in pollution control

  • Special purpose building

WHO:

  • Manufacturers

WHAT:

  • Partial sales tax exemption for equipment and property associated with manufacturing, R&D, and pollution control

Sales and Use Tax Exclusion (STE)

www.treasurer.ca.gov 

A full sales and use tax exclusion, up to $100 million per year, is available for manufacturers of alternative energy sources and advanced transportation, advanced manufacturing, recycling feedstock products, components or systems.

WHO:

  • Manufacturers (alternative energy and advanced transporation)

WHAT:

  • Tax credit for sales and use tax on components and systems

Hiring & Training Incentives

See Hiring & Training for additional employment resources for businesses.

 
New Employment Credit

www.ftb.ca.gov

The New Employment Credit (NEC) is available to employers in high unemployment and poverty areas that hire qualified full-time employees. Qualifying wages are those wages exceeding 150% but not more than 350% of the minimum wage.

WHO:

  • Businesses in qualifying census tracts (mapped on website)

WHAT:

  • Tax credit for hiring qualified workers at designated wage levels

Employment Training Panel (ETP)

www.etp.ca.gov Local Partner: Worknet of Merced County

ETP is a California program that provides a cash reimbursement for training costs incurred by employers for workers who successfully complete the program and are retained on the job for a set amount of time. Employers determine their training needs and can use their preferred providers, such as community colleges, to deliver the training.

WHO:

  • Priority industries (includes ag, biotech, manufacturing, transportation/logistics, technical services, and others)

WHAT:

  • Reimbursed employee training

SOURCES USED ON THIS PAGE:
  1. Websites of respective programs (July-Nov 2017).

VISIT

City of Merced

Office of Economic Development

678 W 18th St. Merced, CA 95340

City Site: www.cityofmerced.org

CALL

800-723-4788 Toll Free

209-385-6827 Phone

209-723-1780 Fax

CONTACT

Frank Quintero

Director of Economic Development

quinterof@cityofmerced.org

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