Although established more than a decade ago, LB775 has brought billions to Nebraska.
And no, it's not a secret code or an ATM entry number.
Some things, like good wine and classic cars, become more valuable over time. In Nebraska, the Employment and Investment Growth Act, commonly referred to as LB775, is one of those things.
Since its passage and inception in 1987, LB775 has been directly responsible for attracting and retaining more than 450 companies in the state, adding nearly $5.3 billion to its economy and employing over 39,000 people.
ConAgra expands in Omaha
| Since its passage and inception in 1987, LB775 has been directly responsible for attracting and retaining more than 450 companies in the state, adding nearly $5.3 billion to its economy and employing over 39,000 people. |
Incentives that companies receive through LB775 are "nothing extraordinary" -- everyone follows the same guidelines of the act, according to Scott Deitz, director of corporate relations for Omaha-based ConAgra Inc.
"But it has been a major influence in our consideration to grow in Nebraska," he said. "It created some reasons and incentives for us to stay in Nebraska."
In February, ConAgra announced plans to add a fifth building to its downtown Omaha campus setting. The Global Trading Center, a 140,000 square foot building, will house offices and the company's new trading floor.
Construction began in April and will be completed within a year. Trading activities currently conducted in Omaha, Minneapolis and Kearney, Neb., will be consolidated within the three-story building.
"The facility will house the vast majority of ConAgra's commodity and financial trading activities," said Deitz. "We're moving our trading group from Minneapolis to Omaha. It allows us to gain a focus. It creates logical business synergies because we'll bring significant and enhanced technical expertise in global trading to one location.
"We gave some consideration to moving out of the state some time ago, but given our roots here since 1919, it's natural that ConAgra would be in Nebraska," Deitz said.
Nuts and bolts of incentives
LB775 provides tax credits to reduce or, in some cases, eliminate a company's state tax liability. The act includes refunds on sales and use taxes, employee compensation credits, investment credits, personal property tax exemptions and performance-based incentives.
LB775 rewards companies based on the size of their investment.
In general, it is designed to stimulate growth by large companies in nearly all areas of industry. Job and investment credits can be earned over seven years and can be used over 15 years.
At the minimum level, companies investing $3 million and adding 30 full-time jobs earn a sales and use tax refund. Companies also receive a 5 percent tax credit on employee wages. Qualifying businesses are entitled to a 10 percent tax credit on qualified property. Some credits may be applied to income taxes or used for refunds on sales and use taxes.
Companies investing $10 million and adding 100 full-time jobs also receive a 15-year personal property tax exemption on new aircraft, computer equipment and machinery used in agricultural production.
Companies that invest $20 million or more are given direct refunds of all sales and use taxes paid on qualified investments. No increase of employment is required.
ConAgra qualifies at this level by investing more than $20 million in its new facility. More than 100 high-paying jobs will be created, with average salaries exceeding $50,000.
Ask and receive
| "The incentive package helped us decide to stay here in Sydney. Nebraska has LB775, job growth incentives, community development block grants and sales tax incentives. The city and state went together to say, 'Hey, we'll pitch in an incentive if Prestolite grows a certain amount of full-time permanent jobs.'"
-- Tim Ryder, plant team leader, Prestolite |
When MemberWorks Inc. of Stamford, Conn., began operations in Nebraska nine years ago, the company wasn't large enough to qualify for LB775 credits.
In fact, Denny Walker, executive vice-president, said MemberWorks didn't even know about the program's benefits to growing companies until recently.
Today the company, which offers membership programs associated with credit cards, is growing at a rate of 35 to 40 percent annually. In August, it announced plans to lease a $10 million, 75,000 square foot office building that is under construction in Omaha. The company will consolidate operations from sites throughout the city and hire 100 more employees.
"We were going to move forward with the project when the Chamber of Commerce came to us with information about LB775," explained Walker. "We're in review now of LB775, which is potentially very lucrative in helping us save a lot of tax money. It's worth millions of dollars in savings."
While MemberWorks learned of the incentives after deciding to stay in Omaha, Michigan-based Prestolite Corp. considered the law a key factor in its decision to stay in Nebraska.
Last spring, Prestolite broke ground on a $13 million expansion of its telecommunications cable plant in Sydney. Prestolite has been in Sydney for 25 years, but executives entertained the idea of expanding its Mexico or Arkansas facility instead, according to Tim Ryder, plant team leader.
The technology and trained work force was in Sydney, but costs were lower in Mexico, he explained. The Arkansas facility had the space and is close to Memphis, a major distribution hub for Prestolite.
"The incentive package helped us decide to stay here in Sydney," Ryder said. "Nebraska has LB775, job growth incentives, community development block grants and sales tax incentives. The city and state went together to say, 'Hey, we'll pitch in an incentive if Prestolite grows a certain amount of full-time permanent jobs.'
"We received well over half a million dollars in incentives."
Incentives aside
| Top 10 Largest Employers in Nebraska |
| Rank |
Employer |
No. of Employees |
| 1. |
Iowa Beef Packing |
9. 384 |
| 2. |
Union Pacific Railroad Co. |
7, 340 |
| 3. |
First Data Resources |
7, 255 |
| 4. |
Alegent Health, Inc. |
6, 900 |
| 5. |
Werner Enterprises |
6, 000 |
| 6. |
ConAgra Inc. |
5, 823 |
| 7. |
Mutual of Omaha |
5, 810 |
| 8. |
Wal-Mart |
5, 035 |
| 9. |
Burlington Northern Railroad |
4, 522 |
| 10. |
NE Methodist Health System |
4, 500 |
|
Beyond the financial incentives, executives point to the work force as imperative to their decisions to stay in Nebraska. The dedication and attitude of hard-working settlers runs in the blood of the state's residents.
"The attitude of people and their work ethic is very important to our business," said MemberWorks' Walker. "A lot has to do with the way people are willing to serve. They are always generous with what a customer is requesting. It's a value that's hard to define."
Ryder called Nebraska workers a competitive advantage.
"The key is the value that people bring to work when they come in the door," said Ryder. "It's the values they already have. It's not something we give them.
"Man oh man, these people care about what they are doing! I just don't think you can beat the care and quality and work ethic in this area. That's the real competitive edge.
"You can all buy the same latest and greatest equipment, so what's your competitive advantage? It's the quality of the people, and the teamwork you have. That's why things can be done well."
NEBRASKA FACTS AND CONTACTS
DEMOGRAPHY AND ECONOMY
Population: 1,656,082
Capital: Lincoln
Three Largest Cities: Omaha (364,253), Lincoln (209,192), Grand Island (41,177)
GSP: $41 billion
Per Capita Income: $22,917
Percentage of Durable Goods Manufacturing Labor Force Organized: 10.6%
Right to Work State: Yes
1997 Avg. Unemployment Rate: 2.6%
Average Hourly Manufacturing Wage: $12.40
Population Over 25 With Bachelor's Degree or More: Omaha, 23.1%; Lincoln, 28.5%, Grand Island, 14.6%
EM's Education Quotient for the Largest School Districts: Omaha, green; Lincoln, gold star; Grand Island, green
Corporate Income Tax Rate: 5.58 - 7.81%
Percentage Employment by Sector: Construction, 4.5%; manufacturing, 13.4%; mining, 0.13%; service industries, 27.1%; transportation/public utilities, 6.2%; wholesale/ retail, 24.4%
Primary Industries: agriculture, food processing, industrial equipment, metal fabrication
Targeted Industries: plastics industry, food processing, telecommunications, metal fabrication, machinery and equipment
BUSINESS ASSISTANCE
Major Financial Incentives: Employment Expansion & Investment Growth Act, Quality Jobs Act
Worker Training Programs: Skill Training Employment Program
Technology Transfer Programs: Nebraska Manufacturing Extension Partnership
Enterprise Zones: 5
Foreign Trade Zones: 2
International Trade Offices and locations: Office of International Trade & Investment, Lincoln (402) 471-4668
Environmental Permit Assistance: Nebraska Dept. of Environmental Quality, P.O. Box 98922, Lincoln, NE 68509, (402) 471-2116
QUALITY OF LIFE
Average Price for a Single-Family Home: Omaha, $126,120; Lincoln, $168,012; Grand Island, $151,050
Cost of Living Index: Omaha, 91.9; Lincoln, 100.8; Grand Island, 97.0
FOR MORE INFORMATION CONTACT
Maxine Moul, director, Nebraska Dept. of Economic Development, P.O. Box 94666, Lincoln, NE 68509-4666, (800) 426-6505 Fax: (402) 471-3778 |
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