Select Committee on Business Incentives — Charleston, WV
Date: 2020-01-30
Time: 12:00

CITY OF CHARLESTON
 West Virginia
 Council Member – 15th WARD
 Sam Minardi Environment and Recycling Committee
 1526 Bedford Road Facilities Committee
 Charleston, West Virginia 25314
 304‐343‐4045
 sam.minardi@gmail.com




 AGENDA
 SELECT COMMITTEE ON BUSINESS INCENTIVES
 Thursday, January 30, 2020 at 12:00 PM
 City Hall – AV Room #308


1. Call to Order

2. Approval of Previous Minutes

 12‐12‐2019

3. Presentation of Incentives and Credits Currently in Operation in Other WV Municipalities

4. Discussion on Trending B&O Tax Collections in the City

5. Discussion on Next Steps and Formulating a Plan

6. Other Business

7. Adjournment




 *Meetings may be recorded and broadcast via internet https://charlestonwv.civicclerk.com




 City Council | 501 Virginia Street, East | Post Office Box 2749 | Charleston, West Virginia 25330
 www.charlestonwv.gov | 304.348.8179 | 304.348.8038 fax

CITY OF CHARLESTON
 West Virginia
 Council Member – 15th WARD
 Sam Minardi Environment and Recycling Committee
 1526 Bedford Road Facilities Committee
 Charleston, West Virginia 25314
 304‐343‐4045
 sam.minardi@gmail.com




 AGENDA
 SELECT COMMITTEE ON BUSINESS INCENTIVES
 Thursday, January 30, 2020 at 12:00 PM
 City Hall – AV Room #308


1. Call to Order

2. Approval of Previous Minutes

 12‐12‐2019

3. Presentation of Incentives and Credits Currently in Operation in Other WV Municipalities

4. Discussion on Trending B&O Tax Collections in the City

5. Discussion on Next Steps and Formulating a Plan

6. Other Business

7. Adjournment




 *Meetings may be recorded and broadcast via internet https://charlestonwv.civicclerk.com




 City Council | 501 Virginia Street, East | Post Office Box 2749 | Charleston, West Virginia 25330
 www.charlestonwv.gov | 304.348.8179 | 304.348.8038 fax

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 MINUTES
 SELECT COMMITTEE ON BUSINESS INCENTIVES MEETING

 2:00 P. M., DECEMBER 12, 2019

 AV ROOM

Sam Minardi called the meeting of the Select Committee on Business Incentives to
order at 2:00 p.m., DECEMBER 12, 2019, in the AV Room in City Hall.

Select Committee Members Present:
Sam Minardi (Chair)
Ben Adams
Jennifer Pharr
Bobby Reishman
Keeley Steele


 1. Committee Purpose – Councilmember Minardi invited City Manager, Jonathan
Storage to speak in regard to the purpose of the Select Committee. Storage stated that
the Mayor has been active in trying to come up with ways that the Administration can
incentivize business activity as well as streamline the process to make it more
welcoming and encouraging. They have received numerous requests for tax
abatements/relief, which is not permitted on an ad hoc basis under the City’s tax code.
The Administration’s goal is to create a process that is fair, efficient and easily
administered to incentivize business development and expansion. This will be the task
of the Select Committee. Storage suggested examining best practices of other
communities. Mayor Goodwin added that a lot of ideas have been passed around, and
now that certain internal structures and procedures have been cleared up, the
Administration has a clearer view of what they would like to see put in place.

 2. Overview of Current Business Incentives – Jonathan - Councilmember Reishman
stated that the B&O tax was first put in place during the construction of the interstate as
a “pyramiding tax” that which, which was simple to follow from the state at the time.
Councilmember Minardi confirmed that states without a B&O tax have sales tax. City
Collector, Lamont Moore, added that a lot of states have a corporate net income tax. He
presented the Select Committee with a handout which showed that 40% of the City’s
operating revenue fund comes from B&O taxes. He added that the biggest impediment
for any business incentive is the discrepancy between a physical and electronic
presence.

Storage added that City staff will be supplying the Select Committee with general
educational information, such as how B&O taxes are applies, the categories and the
limitations of the code. He asked the Select Committee to consider that:




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  any decision made are “revenue neutral” in the sense that it doesn’t
 impact current or anticipated revenues.
  the process is not administratively burdensome.
  the impact of new ordinances/changes be considered from a legal
 standpoint.

Moore informed the Select Committee some of the current incentives, some of which
are directed toward producers of natural gas, manufacturing and certain exemptions for
itinerant/street vendors. Assistant City Attorney, Joe Baldwin, pointed out that the
manufacturing incentive has not resulted in any increase in manufacturing businesses.
He mentioned the City of Hurricane’s retail incentive of a two-fold tax percentage.

Baldwin added that issues can arise in dealing with incentives, the biggest of which is
ensuring they are uniform and equal. In his opinion, a sound policy would be across-the-
board reductions for specific classifications.

 3. Discussion – Mayor Goodwin stated that incentives could also involve programs
such as façade/sign grants.

Councilmember Steele suggested an incentive that would apply to a business that had
been operating for more than five years, etc. Councilmember Minardi stated that his
interest in how incentives could make it easier for small businesses. Councilmember
Reishman suggested incentives for those new businesses that invest in something
(equipment or technology, for example). Councilmember Steele stressed the
importance of encouraging businesses that allows people to move into the City.

Councilmembers Steele and Pharr stated it would be beneficial to know the before and
after numbers of municipalities like Morgantown who have enacted business incentives.
Mayor Goodwin also suggested looking into giving the property owners of the numerous
empty storefronts in the City some sort of incentivization to rent out their space to
businesses, etc.

 4. Future Meetings – Councilmember Minardi suggested meeting monthly,
preferably during the work day. The members disused inviting certain banks, business
owners, etc. to their meetings to gather information.




With no further discussion, Councilmember Reishman motioned to adjourn. Meeting
adjourned.




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MINUTES
 SELECT COMMITTEE ON BUSINESS INCENTIVES MEETING

 12:00 P. M., JANUARY 30, 2020

 AV ROOM

Sam Minardi called the meeting of the Select Committee on Business Incentives to
order at 12:00 p.m., JANUARY 30, 2020, in the AV Room in City Hall.

Select Committee Members Present:
Sam Minardi (Chair)
Ben Adams
Jennifer Pharr
Keeley Steele


 1. Approval of Previous Minutes – Councilmember Adams asked for unanimous
consent to approve the minutes for the December 12, 2019 meeting as distributed.
There was no objection and the minutes were approved.

 2. Overview – Councilmember Minardi said that their first meeting on 12-12-2019
was beneficial, and the Select Committee discussed a lot of ideas. He would like the
Select Committee to focus their discussions on concepts around B&O taxes. Since this
is a temporary committee, the objective is to be efficient with their time, and to release
their proposal in April.

 3. Presentation of Incentives and Credits Currently in Operation in Other WV
 Municipalities – Councilmember Minardi introduced the Assistant City Attorney,
Joe Baldwin, who stated that after their last meeting he was asked to look at the effect
various incentives and plans have had on the economies of other cities. He reached out
to multiple cities, but hasn’t received a lot of actual revenue data because a lot of the
cities are operating on Revenue Tracking Systems (similar to the one Charleston uses)
that make it a very labor-intensive search to provide all of that complex data. They were
all able to provide finalized revenue, which is the total amount of that city’s gross; they
will provide him with more information as they get it. He was able to speak to the
individuals who administer the B&Os. Baldwin gave the Select Committee a packet
containing data from Wheeling, Fairmont, Morgantown, Beckley, etc. that summarizes
how they have structured their B&O taxes and tax incentives. The report also included
the various effect the incentives had on the municipality. One conclusion Baldwin made
is the “if you build it, they will come” approach does not work. As a whole, the State is
losing jobs. The Select Committee can analyze the data and decide which incentives
they would like more information on.
Baldwin added that Wheeling had introduced incentives to keep their industrial
businesses, one of which has increased jobs. While it hasn’t directly increased B&O
taxes for the City, it has increased them for other businesses, which has stimulated the
economy. The New and Existing Management Information Services Taxpayer Credit
has had an increase in revenue and jobs. They have also created a Downtown
Business District Enhancement Tax Credit that did not result in an increase in revenue,
but has resulted in more businesses coming into historic areas. Councilmember Steele
confirmed that the Year 4+ 50% tax credit would be the new tax base for that specific
zone. Baldwin added that the incentive is meant to fill in an area that is vital to the
community but would not be filled otherwise. Councilmember Steel asked how it would
have affected businesses already in that district. Baldwin replied that they would have
been considered existing and would have received the 50% tax credit. Councilmember
Adams confirmed that it encompasses all services, but Baldwin added he did not ask if
it was created to incentive a specific business.

Baldwin added that Fairmont has a Re-Occupancy of Vacant/Dilapidated Structures Tax
Credit that was used to fill vacant structures. While it is noted that there was no
noticeable change in tax revenue, it is a fairly new incentive. Additionally, the
Anniversary Tax Credit rewards longevity with tax credit milestones. Baldwin added that
while it doesn’t have a drastic impact on revenue, it also doesn’t hurt projections. It has
been well received, especially by smaller businesses. Minardi confirmed that the credit
is only for the year of the established anniversary. From the audience, Councilmember
Knauff asked if a business would be credited with established years if they moved out
and back into the City. Baldwin said the statute stated it would be continuous
occupation.

Baldwin added that it has been very difficult to get new businesses into West Virginia,
and the pre-requisites for the New and Expanding Tax Credits are so high, most
business would not qualify. If the Select Committee should want to explore that, the bar
cannot be set so high that no one will be able to qualify for it. Beckley is in the process
of phasing out a lot of their tax credits because of this. Councilmember Steele said that
new jobs only directly impact the City’s economy if the employees are either driving into
the City to work, or moving into the City to work. Baldwin added that, per the current
Revenue Tracking System for the City, any implemented credit will be labor intensive to
manage. The Select Committee can help drive an RTS for the City, because whatever
incentives they recommend can inform the best RTS product to purchase.

Baldwin continued that South Charleston rewards the retail/wholesale businesses
separately from services but under the same structure. They mainly target
expanding/new businesses. The City has confirmed that their tax credits have not done
what they were expected to do, with only 12 businesses qualifying. Baldwin pointed out
the importance that the City properly advertises whatever incentives it eventually
chooses.
Councilmember Steele added that businesses would be interested in knowing about the
various grants (façade, etc.) that could be obtained on top of any potential tax
incentives. From the audience, Councilmember Bays recommended an entrepreneurial
center where businesses could receive all of that information in one place. Baldwin
added that the Director of the City Collector’s Office, Lamont Moore, wants to create
YouTube videos to educate as one of the ways the City can actively solicit businesses.
Councilmember Knauff asked if that should be done by the Charleston Area Alliance.
Councilmember Minardi said that 20 years ago, it was common for cities and utility
companies to have Economic Development Directors. Councilmember Steele said that
no one calls the Chamber of Commerce, for example, to get information; it is all online.

From the audience, Councilmember Pharr said that during a recent trip to Nashville, her
phone instantly brought up activities in Nashville. She suggested there is an opportunity
to target businesses in this way. Councilmember Bays added that Chattanooga took
inventory of what they had in their different neighborhoods, and identified what was
lacking to make it successful (adding a pharmacy for example). They then would give
those identified lacking businesses additional incentives to locate in that area. Baldwin
added that taxes must be applied uniformly by classification per the Supreme Court.
Councilmember Steele added that the City could incentive in other ways that weren’t
related to taxes, such as façade or infrastructure grants. Baldwin recommended that the
Select Committee narrow its focus to one thing, and then move on to the supplemental
ideas that support it.

Baldwin added that Hurricane decided not to do any tax credits, but instead has a two
tier system of taxation in retail which protects smaller business and is uniform. They
have seen an increase in jobs and revenue. Parkersburg has four newer programs, one
of which is to incentivize individuals to invest in dwellings. Morgantown has added a
sunset provision to their incentives. Buckhannon has a $1 million threshold for retail and
manufacturing as well as Enterprise Zones, which would result in qualifying business to
receive full or partial tax rebates. Baldwin added he is currently collecting information
from Huntington.

 4. Discussion on Trending B&O Tax Collections in the City – Moore gave a handout
to the Select Committee for 2016-2018 that showed the number active accounts, gross
incomes for those classifications, tax rate for each classification, the gross tax for each
year and the percentage for each classification. He added that it gives a good overview
of each classification and revenue for a given year. Councilmember Bays confirmed that
the retail classification included restaurants. Councilmember Steele confirmed that
“Service and Other” would be for lawyers, doctors, plumbers, etc. Councilmember
Minardi stated that the bulk of the businesses fall under Retail, Contractors and
Services. He added that it looked like Contractors had the steepest decline. It was
confirmed the drop is due to the completion of a $100 million project. Baldwin added
that the number of Services accounts have declined significantly from 2016 to 2018.
Councilmember Steele added that Retail and Services/Other make up the bulk of the
percentage of B&O revenue, the majority of those likely being small businesses.
Councilmember Bays asked for a list of the stores in Southridge that would pay B&O
taxes to the City. Baldwin said he would get them a map, and pointed out that a lot of
those stores are striding the line between Charleston and South Charleston. The
previous Administration sought agreements with South Charleston over which stores
would pay taxes to which city. Kevin Baker, City Attorney, added that the short version
is: from Target to Men’s Warehouse is basically South Charleston, Kohls and that side
is Charleston; the other side is more complex with Buffalo Wild Wings and Sams Club
with Charleston, and South Charleston has Walmart.

Councilmember Knauff asked what happened in 2017 in regard to General Gross Sales
that didn’t happen the other years. Moore replied he wasn’t sure without pulling more
data. Councilmember Steele said it was disconcerting to see the total number of active
accounts going down every year. Councilmember Minardi confirmed that Amusements
were a variety of different things, like performances, that is a broad category (the City
does collect taxes on ticket sales and merchandising from concerts). Baldwin pointed
out that there is an exemption for musicians. Councilmember Bays added that the
exemption includes poets and performers but not visual artists.

Councilmember Adams confirmed that it would be difficult to pull information from
various incentives that the City might implement with the current RTS. Councilmember
Adams asked if it would be relatively easily for them to track businesses for the
Anniversary Tax Credit and project expected revenue, for example. Moore replied that
the information would have to be added manually; it would not be possibly to project
revenue with the current system. Baldwin added that the burden to submit for that credit
would be on the business. Baldwin continued that the RTS was custom built for the City
in the 80s, and was advanced for its time. Councilmember Bays asked if there was a
way to easily ask other City Collectors what software they use to get recommendations,
such as a conference. Moore replied that he wasn’t aware of one, but he will be
attending a training seminar soon.

 5. Discussion on Next Steps and Formulating a Plan – Councilmember Minardi said
that Opportunity Zones sounded interesting, but how the area is determined and tracked
would be involved. Councilmember Steele suggested targeting an area through
Economic Improvement Zones to understand the local economic impact from
incentivizing a grocery store, for example. Councilmember Pharr added that the General
Wholesale has increased each year, and suggested encouraging those businesses.

Councilmember Minardi suggested that the Select Committee digest the information
presented. Councilmember Pharr said she would be interested in seeing the information
Baldwin gathered form cities like Nashville, Columbus, etc.




With no further discussion, Councilmember Adams motioned to adjourn. Meeting
adjourned.