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Small businesses could soon have more access to property tax exemptions

Despite Idaho's five year tax exemption being available since 2010, no business in Bonner County had been able to qualify for it until Quest Aircraft had a $3.1 million expansion project in 2016. The Legislature is now considering loosening the requirements for the exemption in order to help rural counties. File photo.

No business in Bonner County had qualified for Idaho’s five-year property tax exemption until Quest Aircraft undertook a $3.1 million expansion project in 2016 to increase production of its KODIAK aircraft. The Legislature is now considering loosening the requirements for the exemption in order to help rural counties and small businesses. File photo.

Idaho counties may soon receive more authority to grant property tax exemptions to businesses seeking to move to or expand within the state.

The Senate Local Government and Taxation Committee approved a bill March 14 that expands a property tax exemption for manufacturers with building projects worth at least $3 million. The bill has already passed through the House and will now go before the full Senate.

The bill would give county commissions the ability to lower the threshold for qualifying for the exemption from $3 million to as low as $500,000 in order to help rural counties grow and attract new businesses. The bill also expands the exemption so that it can go to any business type except retailers.

Megan Ronk cropped

Megan Ronk

“I think we can all understand some of the struggles our rural communities are facing,” said Megan Ronk, director of the Idaho Department of Commerce. “We have heard from local partners around the state that the $3 million threshold just wasn’t attainable to many of our rural counties.”

The property tax exemption has been around since 2010 and has helped Idaho businesses expand. Counties can award the exemption for up to 100 percent of the property tax rate for up to five years.

Pocatello-based ON Semiconductor has received the exemption for eight of its projects, six in Pocatello and two in Nampa, said Arlen Wittrock, public affairs consultant at ON Semiconductor and chairman of the Idaho Economic Advisory Council.

Arlen Wittrock

Arlen Wittrock

“This has been critical to our business,” Wittrock said. “This expansion of the exemption doesn’t affect our business at ON Semiconductor, but I think it helps smaller businesses and smaller communities to take advantage of this opportunity for investment.”

Valley County has never had a business take advantage of the tax exemption because of the $3 million threshold, but it has a project lined up that will benefit from the looser requirements, said  Gordon Cruickshank, a Valley County commissioner.

“If we did the grand slam deal it might be worth over $3 million, but there is talk about doing it in three phases,” he said. “This will allow our county to provide some tax incentives for those phases.”

About Benton Alexander Smith

Benton Alexander Smith is a reporter for the Idaho Business Review, covering the Idaho Legislature, new business, technology and financial services.