MD Competitiveness World Bank South Africa

8/6/2019 MD Competitiveness World Bank South Africa

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Baltimore Development

Corporation

Foreign-Trade Zone #74


2/23

Baltimore

Washington D.C.


3/23

B

altimore Facts

Founded 1797

Population: 620,000 people

Diverse racially and ethnically

80 square miles land area; 9 squaremiles of water

Median household income: $42,000 Mayor and City Council form of

government

40 miles from Washington, DC


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Business RetentionBusiness Retention

& Expansion& Expansion

Business AttractionBusiness Attraction

Increase EmploymentIncrease Employment

Generate TaxesGenerate Taxes

BDC GOALS


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BDCs Principals of Economic

Development Will the project generate a return to

the City?

How many permanent jobs will becreated?

Applying the but for test: But forBDC/City incentives, will thisdevelopment happen?

Outreach, outreach, outreach: 75% ofall new jobs are created by existing

businesses


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Why Baltimore?

Two-thirds ofUnited Statespopulationreached within

overnight truckdrive.

Farthest in-land

Port in theUnited Statesprovides majorlogisticaladvantages


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Why Baltimore?

7.6 million residents in theBaltimore/Washington D.C.region

Port is#1 in Roll-on/Roll offCargo

Port #1 in Paper

Port has large coal exports

Major rail access (CSX/NS)

Major high-way access (1-95/1-70)


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*** Press Release ***Baltimores Foreign Trade

ZoneRanked Fourth in the WorldJuly 2, 2010: fDi Magazine,

produced by the FinancialTimes, ranked Foreign TradeZone (FTZ) #74, managed

by the BaltimoreDevelopment Corporation, asthe fourth best port-related

Foreign Trade Zone in theworld.


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Foreign Trade Zone #74 Sites


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Federal, City, & Private Partnership

FTZ Board

Customs Grantee

Operator

Zone User


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Benefits of FTZs

Cash Flow

Export or Re-export

Opportunities Quotas

Accountable Losses

Inverted Tariff

Opportunities Quality Control

Marking/Labeling

MerchandiseProcessing Fee

Exhibition Zone to Zone

Transfer

Simplification of

Import/ExportProcedures


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Sample Company FTZ Savings and Start-Up Costs

Item Savings Category Amount Comments

1 Estimated Number of Entries 2,000

2 Number of Containers per year 2,500

3

Potential MPF @$485 on Number ofEntries $970,000

MPF=Merchandise ProcessingFee

4 Actual MPFPaid (52 @ $485) ($25,220)

MPF=Merchandise ProcessingFee

MerchandiseProcessing Fee Savings $944,780

5 Export Duty Free Savings $19,000Is there a duty on Drawback

process currently in place?

6 Estimated Drawback Savings $50,000 3rd Party drawback filer fees

7 Scrap Duty Savings $6,000 Defective product disposed of

8Duty Deferral on Average Annual Duty

Rate ( 6%) $336,000 Opportunity cost of capital

9 Duty on Cycle Counts ($36,000)Could be substantial. Netting vs.

Offsetting

10 Truckers Bonded Container Delivery Charge ($10) ($25,000)Truckers Port to Zone bonded

movement charge

Total Net Variable Savings $1,294,780


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Taking Advantage of Inverted Tariffs

1933-FTZs created to keepcompanys manufacturing in USA

2000-Law passed allowing invertedtariffs in FTZs


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Inverted Tariffs: BMW

10% Duty onengine

2.5%

Duty onfinished car

FTZ


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Re-Exporting in an FTZ

Never pay duties on products thathave entered an FTZ!

Do not have to pay $ to brokers

Do not have to chase downCustoms

Never pay IRS taxes


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Examples ofBaltimore FTZImports

Automobiles

Metals sold onLondon MetalExchange

Textiles

Wine/Spirits

Garlic

Silicon for solarpanels

Tires

Steel plate

manufacturing Tractors


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Enterprise Zone ofBaltimore


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State, City and Private Partnership

State ofMarylandDepartment of Business and Economic Development

Baltimore CityBaltimore Development

Corporation

Other Countiesaround Maryland

Over 500 businessesCurrently receive

EZcertification


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Enterprise Employee Tax Incentives

EZ-NewEmployee

EZ-EconomicallyDisadvantaged

Employee

EZ-Focus Area*Employee

EZ-Focus area*Disadvantaged

Employee

First Year $1,000 $3,000 $1,500 $4,500

Secondyear

$0 $2,000 $0 $3,000

Third year $0 $1,000 $0 $1,500

TOTALS: $1,000 $6,000 $1,500 $9,000


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Enterprise Property Tax Incentives

Years after projectcompletion

reduction in propertytaxes on

improvements

Year 1 80%

Year 2 80%

Year 3 80%

Year 4 80%

Year 5 80%

Year 6 70%

Year 7 60%

Year 8 50%

Year 9 40%

Year 10 30%


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5.5 million square feet to be built over 10

years2,000 housing units3 million s/f. of office space 230,000 s/f of retail space500 hotel rooms

BRAC ZONE

Not to exceed $160 million

$800 million in revenue toCity over life ofTIF

TAX INCREMENTFINANCING

Westport


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Questions?

Elizabeth Weiblen Hines

Director, Foreign Trade Zone #74

Baltimore Development Corporation

36 S. Charles Street, Suite 1600

Baltimore, MD 21201

Direct: 410-779-3938Office: 410-837-9305 x 338

Fax: 410-837-6363

Documents

MD Competitiveness World Bank South Africa