Location:
HARBORS; SPECIAL DISTRICTS; TAXATION;
Scope:
Connecticut laws/regulations; Other States laws/regulations; Program Description;

OLR Research Report


September 2, 2010

 

2010-R-0305

PORT DISTRICTS

By: John Rappa, Chief Analyst

You asked how many states have port districts, how the districts are governed, and what their powers are. You also asked if any states provide tax incentives for businesses developing or using port facilities.

SUMMARY

Port districts operate in at least five states (Illinois, Michigan, Oregon, Texas, and Washington), most under laws allowing counties to form autonomous or semi-autonomous special taxing districts to develop, maintain, and operate port facilities. The districts may levy property taxes, charge user fees, and issue bonds.

Illinois' port district is different—it was created by the legislature, spans six counties, and is overseen by a nine-member board consisting of gubernatorial and county representatives. It cannot levy taxes, but may charge user fees. It may issue bonds to finance terminals and other capital improvements, but back them with only the revenue the improvements generate (i.e., revenue bonds).

(Connecticut law allows municipalities to designate port districts and establish port authorities to administer them. The authorities may issue revenue bonds to finance capital improvements, but cannot levy property taxes. A board appointed by the municipality's chief elected official oversees the authorities, which have been established in Bridgeport, New Haven, and New London.)

At least seven other states (Georgia, Indiana, Louisiana, Mississippi, North Carolina, Rhode Island, and South Carolina) offer tax incentives to businesses that use ports or develop property in port areas. Most offer business income tax credits based on the fees and charges a business incurs when shipping goods and materials through a port. Connecticut does not offer port-specific incentives, but businesses that develop property or create jobs in the state's deep-water ports qualify for generic economic development tax incentives.

PORT DISTRICTS

As Table 1 shows, port districts operate in at least five states. Most were formed under a statute allowing municipalities or counties to establish special taxing districts specifically to develop and operate deep water ports. The exception is Illinois' TransPORT, which the legislature established in 2003 to develop transportation facilities along a 95-mile stretch of the Illinois River. The districts can acquire property and develop, operate, and maintain port facilities. They can sell bonds, charge fees, and, except for TransPORT, assess property taxes. An elected or appointed board oversees them.

Table 1: States Authorizing the Formation of Port Districts

State and Citation

Form By

Governing Body

Powers

Finances

Illinois: Heart of Illinois Regional Port District (TransPORT)

(70 Ill. Comp. Stat. 1807/5)

Legislatively-formed, six-county district

Nine member board, three appointed by governor and one by each county board chairman

Acquire, construct, own, lease, and develop terminals, wharf facilities, and other specified infrastructure

Project-backed revenue bonds

Rentals and other charges

MI: Port Districts (Mich. Comp. Laws 120.1-120.24)

County referendum

Five-member port commission appointed by county supervisors

Develop and operate seawalls, jetties, piers, wharves, and other specified infrastructure

General Obligation (G.O.) and project-backed revenue bonds

Tolls, rents, and charges

Property taxes and special assessments

Oregon: Public Port Districts (Or. Rev. Stat 777.005-777.953)

County referendum (Or. Rev. Stat 198.715)

Five-member elected board initially appointed by governor

Acquire and develop sea walls, jetties, piers, wharves, and other specified infrastructure

G.O. and project-backed revenue bonds

Real and personal property tax assessments

Special assessments

Port user fees

Table 1: -Continued-

State and Citation

Form By

Governing Body

Powers

Finances

Texas: Navigation Districts (Tex. Water 61.151)

County referendum

Five-member board appointed by county commissioners and, in some cases, by the city council of cities of 100,000 or more people

Control vessel operations in port areas

Acquire and develop wharves, docks, storage facilities, and other specified infrastructure

Bonds backed by property taxes levied for that purpose

Fees and charges

Washington: Port Districts (RCW 53.04.010)

County referendum

Elected three-member commission

Develop, own, operate harbor improvements, rail and motor vehicle transportation terminals, and other specified infrastructure

Property taxes

Bonds backed by special assessments in designated local improvement districts

Connecticut law allows municipalities to designate port districts and establish port authorities to run them. The authorities must be governed by a five- or seven-member commission appointed by the municipality's chief executive officer. Like the port districts described above, Connecticut's port authorities may impose fees and charges for using port facilities and issue bonds back by this revenue. But the authorities cannot assess property taxes (CGS 7-329a to 7-329u).

1967, PA 900 authorized municipalities to create port authorities. PA 98-240 and PA 02-42 subsequently limited this authorization to Bridgeport, New Haven, and New London, which had already established authorities under the 1967 act. Other municipalities seeking to establish authorities must obtain the legislature's approval.

PORT-SPECIFIC TAX INCENTIVES

As table 2 shows, at least seven states, mostly in the South, offer tax incentives to businesses for using ports or stimulating business activity there. Most of the incentives are for businesses that increase the amount of goods and materials shipped through state ports; Louisiana's are for businesses that develop or improve industrial, warehousing, and cargo-handling facilities in public ports. Rhode Island's are for businesses that create jobs in the Port of Providence Enterprise Zone. Georgia, Louisiana, and Mississippi each offer two or more incentives.

Table 2: Port-Specific Tax Incentives

State and Citation

Purpose

Tax Incentive

Eligibility

Georgia: Port Investment Bonus (OCGA 48-7-40.15A)

Increase shipping

Business income tax bonus for businesses that invest in the state and increase port usage

5% business income tax credit, with 10-year carry-forward

Total annual credit limited to 50% of annual tax liability

Manufacturing and telecommunications companies:

Operating in state for at least three years

Investing at least $50,000 in plant

Increasing shipments in and out of state ports

Georgia: Port Job Tax Credit Bonus (OCGA 48-7-40.15A)

Increase shipping

Business income tax bonus for businesses that create jobs and increase port usage

$1,250 per job added to base job creation credits

Base credits range from $750 to $4,000, depending on jobs created and business' location

Total annual credit limited to 50% or 100% of tax liability, depending on location

Manufacturing

Telecommunications

Warehouse Distribution

Research and Development

Processing

Tourism

Indiana: Maritime Opportunity District (IC 6-3-2-13)

Stimulate business activity in designated districts

10-year property tax abatement on new manufacturing equipment and inventory produced for exporting

Eight-year, adjusted gross income reductions

Manufacturing

Louisiana: Ports of Louisiana Investor Tax Credit (La. Rev. Stat. 47:6036)

Stimulate port development

Individual and business tax credits equal to the cost of developing or improving industrial, warehousing, and cargo handling facilities in publically owned and operated ports (i.e., qualified projects)

Corporations, partnerships, LLCs, and other specified business entities investing at least $5 million in qualified projects

Louisiana: Ports of Louisiana Import Export Cargo Tax Credit (La. Rev. Stat. 47:6036)

Increase shipping

Individual, corporate, and corporation franchise tax credit based on tonnage of qualified cargo imported from or exported to manufacturing, fabrication, assemble, distribution, processing, or warehousing facilities in state

Businesses, including international business entities, importing or exporting qualified cargo

Mississippi: Free Port Warehouse Property Tax Exemption (Miss. Code 27-31-53)

Increase shipping at state-licensed ports

Personal property tax exemption for goods in transit and stored in state-licensed warehouses and storage facilities

State-licensed “free port warehouses”

Mississippi: Export Port Charges Tax Credit (Miss. Code 27-7-22.7)

Increase shipping at state-licensed ports

100% business income tax credit for export related port facilities charges paid at public ports

Limits:

Maximum credit $1.2 million

Offset up to 50% of tax liability after other credits have been used

Unused credits carried forward for up to five years

Businesses exporting goods and paying over $1.2 million in port charges

Table 2: -Continued-

State and Citation

Purpose

Tax Incentive

Eligibility

Mississippi: Import Port Charges Tax Credit (Miss. Code 27-7-22.23)

Increase shipping at state ports

Business income tax credit for export related port facilities charges paid at public ports

Credits range from $1 million to $4 million based on number of permanent full-time people employed at headquarters

Credit can be used to offset no more than 50% of tax liability after other credits have been used

Unused credits carried forward up to five years

Mississippi-headquartered businesses with at least five full-time employees and minimum $2 million investment in state

North Carolina: Ports Tax Credits (N.C. Gen. Stat. 105-151.22)

Increase shipping at state ports

Business tax credit against port changes exceeding the previous three-year average for such charges

Credit cannot exceed 50% of tax liability, up to $ 2 million

Unused credits carried forward up to five years

Businesses paying charges at state ports for forest products, container cargo, and “break-bulk cargo” (i.e., cargo stored in boxes, bales, pallets, or units other than containers)

Rhode Island: Rhode Island Enterprise Zone Business Tax Credit (R.I. Gen. Laws 42-64.3)

Increase jobs in state-designated Port of Providence Enterprise Zone

Business tax credit equal to 50% of annual wages paid to new full-time employees, up to $2,500 per employee

Credit increases to 75% for employees who reside in zone

Business qualifies for 5% credit if it maintains job levels in subsequent years

Businesses creating and maintaining jobs in the zone

South Carolina: International Trade Incentive Program (S.C. Code 105-151.22)

Increase shipping at state ports

Maximum $1 million per year credit

Total annual credits for all businesses capped at $8 million

Unused credits may be carried forward up to five years

Manufacturing, warehousing, and distribution businesses that increase shipment at ports by 5% over prior year

The type and amount of incentive varies. Most of the incentives for increasing port usage are business income tax credits equal to all or a portion of the charges and fees for handling, storing, and shipping goods and materials through the ports. Some states link the credit to other programs or goals.

● Georgia's port incentives are linked to the state's generic investment and job creation tax credits. Businesses that invest in new facilities or create new jobs qualify for bonus credits if they also increase port usage.

● Mississippi limits its credit for importing goods through state ports to businesses headquartered in the state and that meet other criteria.

Indiana and Mississippi offer property tax abatements to increase port usage. Indiana's Maritime Opportunity Districts offer a 10-year property tax abatement on new manufacturing machinery and equipment and inventory slated for export. Mississippi's cities and counties may exempt goods stored in state-licensed warehouses from property taxes if they will be shipped out of the state.

Rhode Island's tax credits are for creating jobs in the Port of Providence. Like Georgia's they are part of a broader economic development strategy aimed at stimulating business activities in the state's 10 enterprise zones, which include the Port of Providence.

JR:ts