BiS: BusinessInSavannah.com - Business news for the creative coast.
In Case You Missed It

Bill to cap tax on yacht repairs passes on last day

Colonial Groups’s plans to convert the old Intermarine boatbuilding facility on Lathrop Avenue into a state-of-the-art mega-yacht repair and refit facility appear to be back on track after the Georgia General Assembly passed an 11th-hour bill that will allow the state to compete with Florida for the business.

House Bill 125, passed Thursday night on the last day of the 2017 legislative session, caps the sales tax on yacht repair work after the first $500,000 is spent. The bill is similar in scope to legislation passed in Florida in 2015 that capped the sales tax for repairs on a yacht at $60,000. New York also passed a law that same year capping sales taxes on yachts in an effort to compete with Florida.

A Senate amendment added a seven-year sunset clause to the bill.

Rob Demere, president and CEO of Colonial, has said he would not go forward with the Savannah Yacht Center project without the bill, adding that it would be too difficult to attract business with Florida’s tax advantages. With the legislation in place, Colonial is prepared to invest some $50 million in the facility.

“Georgia is poised to become a significant force in the yacht repair and refit industry currently dominated by Florida,” he said. “Savannah Yacht Center’s facilities will be second to none on the East Coast.”

One study, commissioned by Colonial Group, indicates that when the new facility is fully functioning, it could have an annual economic impact of $144 million for Chatham County alone.

Colonial Group acquired the former Intermarine USA shipyard in 2010, paying $10 million for the property in a bankruptcy sale. The facility boasts one of the largest graving docks in the Southeast. A graving dock is essentially a narrow basin that can be flooded to float ships, then drained to allow the ship to rest on a dry platform. It is used primarily to make the vessel accessible for construction, maintenance and repair work.

The SYC graving dock can accommodate mega-yachts as large as 450-feet long.

”By passing HB 125, the Georgia General Assembly has shown it cares about creating good-paying jobs for Georgians,” Demere said Friday. “We appreciate our local delegation’s hard work in support of its passage as well as so many in leadership that shared our vision for opening Georgia’s doors to an entirely new industry.”

Trip Tollison, president and CEO of the Savannah Economic Development Authority, agreed.

“The Savannah Economic Development Authority is excited that the state passed this measure that will allow Georgia and especially the coastal communities to be competitive as we pursue marine vessel manufacturing and repair work,” he said.

“Now our companies can continue with their plans to hire new employees and invest capital so the work will come to our region.”

Despite the Senate-added sunset provision, which means the cap will expire in 2025, Demere said he is ready to begin letting construction contracts once the bill is signed by the governor.

“HB 125 underpins Georgia’s ability to compete in this industry, so the sunset provision would give anyone pause when making a $50 million commitment,” he said. “Still, we’re confident once we’ve delivered on the promised jobs and economic activity, the Assembly will support the elimination of the sunset provision to ensure the industry’s continued viability in Georgia.

“Otherwise, the jobs and associated economic activity will all move back to Florida.”

Comments

In Case You Missed It