An Interactive Guide to Starting a Business in Hanover County, Virginia

About Hanover

Statistics and Profile

(To view the most recent version of information about Hanover, please consult the Hanover County Economic Development web site:http://www.hanovercounty.biz)

Population

Hanover County had a 36.4% increase in population during the period of 1990-2000. The average annual percent change over the decade is 3.1%.

Population	Hanover	MSA	Virginia
1980 Census	50,398	761,311	5,346,797
1990 Census	63,306	865,640	6,187,358
2000 Census	86,320	996,512	7,078,515
2005 Estimate	98,498	1,053,647	7,538,791
2010 Projected	104,400	1,233,300	7,892,900
Source: U.S. Bureau of the Census, Weldon Cooper Center, and VA Employment Commission

Population by race (2005 Census Estimate)

Race	Population
White	83,139
Black or African America	8,667
American Indian and Alaskan Native	266
Asian	1,021
Native Hawaiian and other Pacific Islander	84
Some other race	210
Two or more races	883
Hispanic or Latino	1,148
Total	95,208
Source: U.S. Bureau of Census; Census of Population and Housing

Per Capita Income
Hanover	$ 33,980
Richmond-Petersburg MSA	$ 32,879
Virginia	$ 33,730

Source: Bureau of Economic Analysis, 2005

Median Adjusted Gross Income for Married Couples
Hanover	$ 69,245
MSA	$ 63,243
Virginia	$ 57,924

Source: Weldon Cooper Center, September 2005

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Taxes (return to top)

Local Taxes

•Lowest real estate tax rate in the Greater Richmond area;
• No Business and Professional Occupation License Tax (BPOL) except for contractors;
• Competitive machinery and tools tax;
• Business personal property taxes are calculated on a sliding scale and are reduced each year the business is in operation;
• Merchant’s capital or inventory tax is based only on inventory in place on January 1;
• Consumer utility tax for electric, gas and telephone;
• Businesses located in the Town of Ashland pay both Town and County taxes.

Business taxes in Hanover County and the Town of Ashland are described below.

Tax Description	Hanover County	Town of Ashland	Assessment Ratio per $100 of Assessed Value
Real Estate	$.81	$.07	100% of market value
Machinery and Tools	$3.57	$.77	10% of original cost
Business Personal Property¹	$3.57	$.77	60% of original cost (Year 1 in service)
			50% of original cost (Year 2 in service)
			40% of original cost (Year 3 in service)
			30% of original cost (Year 4 in service)
			20% of original cost (Year 5 in service)
			10% of original cost (Year 6+ in service)
BPOL	None²	Yes³
Merchant's Capital	$1.90	None	10% of original cost based on inventory in place on January 1
Industrial/Commercial Utility	Yes	None	.5% of gross receipts
Consumer Utility	$3.00	$1.00 (electric, gas, & telephone) Per line per month	Per line per month
¹Business personal property includes, but is not limited to, automobiles and trucks, office equipment, furniture and fixtures, and machinery and equipment of non-manufacturing businesses. Items specifically exempted include: computer application software, furniture and fixtures, corporate aircraft of manufacturers, inventory (except inventory of merchants), and merchandise in a foreign trade zone. The machinery and tools of manufacturers and certain of other businesses are considered a separate class of property and are subject to the machinery and tools tax. These items may be taxed at a lower rate than other personal property. ²Only contractors are subject to BPOL of $.10 per $100 of gross receipts of $100,000+. ³Non-manufacturing companies are charged $30 for gross receipts up to $100,000 or 0.105 per $100 of gross receipts between $100,000 and $25 million; plus .05 of gross receipts for $25 to $50 million; plus .02 of gross receipts over $50 million.

State Taxes

Corporate Income Tax - 6 percent
The corporate income tax rate is applied to federal taxable income. If a corporation is engaged in multi-state activities and its income is subject to tax in Virginia and other states, it pays tax only on the portion of its income from Virginia sources.

In determining this portion, income is divided into allocable and apportioned income. Apportioned income is based on a three-factor formula of payroll, property and sales.

Sales and Use Tax - 5 percent
The sales and use tax is charged on consumer goods bought in the state of Virginia. Of the 5 percent, 4 percent goes to the state and 1 percent to the local jurisdiction in which the tax was charged.

Tax Credits

Major Business Facility Job Tax Credit
Qualifying companies locating or expanding in Virginia receive a $1,000 corporate income tax credit for each new, full-time job created over a threshold number of jobs; the normal threshold for the job tax credit is 100 new jobs.

A $1,000 credit is available for each job in excess of the threshold and is taken in equal installments over three years. Unused credits may be carried over 10 years.

Worker Retraining Tax Credit
Virginia businesses may be eligible to receive an income tax credit equal to 30 percent of all expenditures made by the employer for worker retraining.

The credit has a spending cap of $2.5 million in any taxable year.

Eligible worker retraining consists of Department of Business Assistance certified courses at Virginia community colleges and private schools, or retraining programs through apprenticeship agreements approved by the Virginia Apprenticeship Council.

Day Care Facility Investment Tax Credit
Virginia businesses can receive a 25 percent state tax credit on expenditures for construction, renovation, planning or acquisition of facilities to provide day care for company employees.

Recycling Equipment Tax Credit
An income tax credit is available to manufacturers for the purchase of certified machinery and equipment for processing recyclable materials.

The credit is equal to 10 percent of the original total capitalized cost of the equipment. In any taxable year, the amount of credit cannot exceed 40 percent of the company's Virginia income tax liability before the credit.

Tax Credit Programs (LOCAL)
Hanover County exempts or partially exempts the following property from taxation:

Certified recycling equipment
Rehabilitated commercial/industrial real estate for up to 15 years
Certified solar energy devices

Hanover County taxes the following tangible personal property at a reduced rate:
Aircraft

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New Business Assistance (return to top)

Economic Development Incentive Plan

$1.5 million is allocated to assist with infrastructure improvements for priority economic development projects.
$500,000 of the allocation is set aside for individual projects, subject to certain criteria, (tax revenues, jobs created, and targeted industry). The maximum amount per project is $100,000.
All funds must be used for water and sewer improvements and capacity fee payments, road improvements, traffic signals, stormwater management improvement or fees, or other improvements authorized by the Board of Supervisors. The current Hanover County Board of Supervisors may be viewed online at: http://www.co.hanover.va.us/board/default.htm.
Incentives cannot be used for retail businesses and cannot be used if a Governor's Opportunity Fund (GOF) Grant is requested.
Funds can be used to match up to 50 percent of the cost of eligible improvements.

New Business Incentives

Federal, state, and local incentive programs and are based on three (3) types of incentives:

Site acquisition/development/infrastructure
Financing
Tax credits

SITE ACQUISITION/DEVELOPMENT/INFRASTRUCTURE

Economic Development Incentive Plan
Hanover County has developed an incentive program to allocate funds to select economic development projects based on the project investment, number and types of jobs created and payroll. The incentive is negotiated on a case-by-case basis based on these criteria.

Fast Track Designation
Hanover County staff will review a fast track designated project's site plan and provide written comments in not more than seven working days.

County staff will arrange a meeting with the applicant and project engineer to discuss any comments and identify changes to the plans required for site plan approval. The building permit review process may run concurrently with the site plan review and is also eligible for fast track status.

Governor's Opportunity Fund
The Governor's Opportunity Fund supports industrial development projects that create new jobs and investment in Virginia.

Funds can be used for site acquisition and development, transportation access, training, construction or build-out of publicly owned buildings, or grants or loans to industrial development authorities.
GOF guidelines are in accordance with criteria established by state legislation.

Rail Industrial Access Program
The Industrial Access Rail Program provides funds to construct railroad tracks to new or expanding industrial and commercial projects in Virginia.

Funds may be used to construct, reconstruct, or improve part or all of the necessary tracks and related facilities on public or private property.
Financial assistance to any one county, city or town is limited to $450,000 in any one fiscal year. A maximum of $100,000 of unmatched funds and an additional $50,000 on a dollar for dollar matching basis is available per project.
Funds may not be used for right-of-way acquisition or adjustment of utilities.

Industrial Access Road Program
The Virginia Department of Transportation (VDOT) administers a program to assist in constructing industrial access roads to provide adequate access to new and expanding manufacturing or processing companies.

Improving existing roads to handle additional traffic generated by either an industrial expansion or a new plant location
Constructing a new road from a publicly maintained road to the property line of the new industry when no road exists

A resolution from the local governing body must address the commitment of right-of-way and any adjustments to utilities (at no cost to the program). It also must describe the extent of private investment made by the industry.

The maximum award for an industrial access road is $300,000. However, the state will fund an additional $150,000 if the amount is matched on a dollar-to-dollar basis from public and private sources other than VDOT.

The amount of the award is based on the eligible capital investment of the company.

Industrial Development Revenue Bonds
Tax-exempt Industrial Revenue Bonds (IRB) are issued through Hanover County's Industrial Development Authority and the Virginia Small Business Financing Authority (VSBFA) to assist businesses in acquiring land, constructing or expanding buildings and purchasing equipment.

The bonds are designed to provide capital for new or expanding manufacturing facilities.

Creditworthy businesses can obtain long-term financing at favorable interest rates for up to 100 percent of the cost of acquiring, constructing and equipping a facility, including site preparation. The bonds may also be used to lease facilities and equipment at tax-exempt rates.

All projects financed with IRBs must meet federal tax code requirements for eligibility. Tax exempt financing may be used for projects within a single political jurisdiction with a total capital investment value of less than $10 million.

Foreign Trade Zone
Operating as an international airport expansion into Hanover County, RIC handles freight and customs clearances with efficiency and speed. A major business advantage sponsored by the airport is Richmond's Foreign-Trade Zone (FTZ) #207.

Hanover County has a Foreign Trade sub-zone located in the Lewistown Road Economic Development Zone.

Foreign Trade Zone Benefits include:

No duty is paid on re-exported merchandise.
If foreign merchandise is sold domestically, no duty is paid until it leaves the zone or zones.
If foreign merchandise is manufactured into a product with a lower duty rate, the lower duty rate applies on the foreign content when duty is paid.
Merchandise in a zone may be stored, repackaged, manufactured, manipulated, destroyed, altered or changed.
No duty is charged on most waste and scrap from production in an FTZ

Financing

Industrial Development Revenue Bonds
Tax-exempt Industrial Revenue Bonds (IRB) are issued through Hanover County's Industrial Development Authority and the Virginia Small Business Financing Authority (VSBFA) to assist businesses in acquiring land, constructing or expanding buildings and purchasing equipment.

The bonds are designed to provide capital for new or expanding manufacturing facilities.

Creditworthy businesses can obtain long-term financing at favorable interest rates for up to 100 percent of the cost of acquiring, constructing and equipping a facility, including site preparation. The bonds may also be used to lease facilities and equipment at tax-exempt rates.

All projects financed with IRBs must meet federal tax code requirements for eligibility. Tax exempt financing may be used for projects within a single political jurisdiction with a total capital investment value of less than $10 million.

Virginia Investment Partnership Grant Fund
The Virginia Investment Partnership is a discretionary performance incentive program targeted to companies that have operated in Virginia for at least five years and propose projects that fall into one of the following two categories:

Tier One - Virginia manufacturers that make a capitalized investment of at least $25 million.
Tier Two - Virginia-based employers that make a capitalized investment of at least $100 million and create at least 1,000 new jobs.

The program, administered by the Virginia Economic Development Partnership, is a competitive grant fund and is performance based. Additional conditions for eligibility may apply.

The Virginia Department of Business Assistance (DBA) Financial Services Division administers the programs of the Virgnia Small Busniess Financing Authority (VSBFA), which is a statewide conduit issuer of industrial development bonds and is the vehicle through which DBA provides financial assistance to Virginia busiensses. DBA staff works with businesses, bankers and other state agencies to provide direct funding and credit enhancements through a variety of financing programs for the benefit of eligible new and expanding businesses.

Real Estate and Capital Equipment Programs
This real estate program fanances up to 90% of the cost of purchasing, expanding, and/or rehabilitating owner-occupied real estate. The program can be used to purchase the building a company is leasing; provide permanent financing for new construction; or fund the renovation/expansion of an existing building. The cpatial equipment program funds the purchase of new (up to 70% cost) or used (up to 50%) machinery and equipment that has a minimum five-year future economic life. Loan amounts can range from $50,000 to $1,000,000 for qualified companies.

Environmental Compliance Assistance Fund
The Virginia Department of Environmental Quality (DEQ) has entered into a cooperative agreement with the DBA to develop and administer a revolving loan program. Through the program, low-interest rate loans are available to small businesses for the purchase and installation of replacement equipment needed to comply with the Clean Air Act; or to implement voluntary pollution prevention measures; or for the implementation of selected voluntary agricultural best management (BMPs) practices as listed in the Virginia Agricultural BMP Manual.

Some examples of eligible loan uses include high-volume, low-pressure spray guns, dry cleaning machines, alternative curing technologies, ultrasonic cleaning equipment to replace a solvent system, debarkers and chippers, and agricultrual BMPs that include equipment or structures such as animal waste control facilities and animal waste structure pumping equipment.

Child Day Care Financing Program
Though the Child Day Care Financing Program, VSBFA provides low-interest installment loans to "regulated" Providers in the Commonwealth of Virginia. A regulated Family Home Provider may be: 1) licensed by the Virginia Department of Social Services (DSS); 2) registered through the Voluntary Registration Program; 3) approved through a local Department of Social Services; 4) part of a Licensed Family Day Care System; or 5) participating in the USDA Food Program. A regulated Center-based Provider may be: 1) licensed by the DSS; or 2) filed as "religious-exempt" with the DSS. Both for-profit and non-profit entities are eligible to apply. Start-ups are also eligible to apply.

Loan proceeds can be used to meet or maintain childcare standards, including health, safety or fire codes, or to make quality enhancements to their child care program. Loans may also be used for certain start-up costs; however, loans for building construction, working capital or to refinance or consolidate existing debt are not eligible for this program. Some examples of eligible loan uses include equipment purchases for infant care, playground equipment and fencing, or renovation and reparis to plumbing and electrical systems, kitchens and bathrooms.

Loan Guaranty Program
The Loan Guaranty Program is designed to reduce the risk to banks in making loans, thus increasing the availability of short-term capital for small businesses.

The VSBFA will guarantee 75 percent of a bank loan, up to $500,000. Typical borrowings include revolving lines of credit to finance accounts receivable and inventory, and short-term loans for permanent working capital and fixed-asset purchases, such as office or research equipment.

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