Kochava is a software company providing its clients with tracking and analytics measuring the effectiveness of advertising campaigns on mobile devices. And everyone knows a rapidly growing, innovative tech company like that belongs in the Bay Area of California or Seattle. Right?
Nope.
Kochava was founded in November 2011 in Sandpoint, Idaho, population 7,300, give or take a few folks. When the company began contemplating its next growth move in 2014, its leaders considered whether it was time to join the traditional tech scene. “There were people wanting them to go that way,” says Jeremy Grimm, director of Publisher Development at Kochava, and former director of planning and community development for the City of Sandpoint. Grimm worked for the city when Kochava was making this decision and later joined the company.
If not for Idaho’s Tax Reimbursement Incentive (TRI), the Kochava corporate story would probably read much differently. Available to companies since 2014, the TRI offers a maximum credit of 30 percent on income, payroll and sales taxes for up to 15 years, depending on the criteria met by the company.
“Luckily the founder and CEO is very focused on quality of life, moving to Sandpoint from Washington, D.C. because of the quality of life,” says Grimm. “But I think the TRI program made a difference. A personal decision is one thing, but a fiduciary responsibility — with a board of directors asking why you’re there and what you’re doing — is another. It’s more than a feeling; it has to make material and financial sense. In our case you can show that 28 percent of our sales, income and payroll tax is returned to us for the next 10 years, and that’s pretty significant.”
It’s pretty significant for the people they hire, too.
“We hired guys right out of high school,” Grimm says. “They literally graduated from high school, had an affinity for programming, did a summer internship and by September they’re on the payroll, making more than any high school graduate in the state.”
‘Bluebird’ of Happiness
The TRI incentive has five requirements:
- Companies in rural areas must create 20 or more new jobs, while those in urban areas must create 50 or more jobs.
- New jobs must be full time and pay equal to or more than the average county wage.
- A meaningful community contribution is required.
- The company must prove its stability and create a significant economic impact to the community and state.
- The company must prove that the incentive is a critical factor to its decision.
In 2014 and 2015, 24 companies of all types and sizes were approved for the TRI through early December. Site location specialist John Kerr with Hickey & Associates is representing a company that was approved in September 2015 for a 25-percent refund of its sales, income and payroll tax for 10 years. Project Bluebird, as the project was dubbed by Idaho Commerce, is a food processing company that would create up to 80 new jobs, with a capital investment of $15 million, according to figures on the state’s website.
Kerr says Project Bluebird was absolutely looking at locations in other states and the TRI was definitely a factor — though not the only factor — in the company’s decision-making process.
“These incentives can often play a role that tips the scales in one direction or the other,” Kerr says. “In this case, there was an opportunity in Idaho, and we’re still in the due diligence mode, but having the TRI available definitely helps ease the minds of the executive leadership team.”
“We hired guys right out of high school. They literally graduated from high school, had an affinity for programming, did a summer internship and by September they’re on the payroll, making more than any high school graduate in the state.”
A similar view is taken by Daragh Maccabee, CFO at Glanbia, a food processing company headquartered in Twin Falls, Idaho. The company has cheese and whey production facilities in Twin Falls, Gooding, Richfield and Black Rock, and is also a partner in Southwest Cheese, a 50/50 joint venture located in Clovis, N.M. Glanbia was approved for a TRI in November 2014. The company is investing $82 million to expand production facilities in Gooding and in Twin Falls. The Gooding site includes two facilities.
“Multiple activities go on at that site,” says Maccabee. “Cheese and whey production are the core, but we also run our milk and cheese transportation function from that site and add on facilities, partly related to this project, for further processing of whey. We have a warehouse and a wastewater treatment site.” Glanbia’s Gooding facilities are vital to the town and county of Gooding. “It’s one of the largest employers and provides a home for the milk produced in the area as well,” Maccabee adds. “The knock-on effect for Gooding is particularly important.”
Though the TRI played an important role in the decision to expand Glanbia’s facilities in Idaho, Maccabee says it’s also a valuable indicator for other businesses looking at Idaho. “The TRI is generally representative of a good business climate, a good regulatory climate, for businesses like ours — agriculture — and dairy production in particular,” Maccabee says. “We produce and market 900 million pounds of cheese a year, but it all started with that 30 million pounds of cheese back in 1990. We’ve got such a longstanding tradition and knowledge of the Magic Valley area that it was a very strong, compelling reason to continue that good story.”
