R.I. Commerce gives Flux Marine $1.9M in tax credits to remain in Ocean State

PROVIDENCE – Flux Marine Ltd., a company that makes electric outboard boat engines, is staying in the Ocean State after the R.I. Commerce Corp. board of directors voted 8-0 on Monday to provide the business with tax credits that are worth an estimated $1.9 million over 10 years in exchange for hiring at least 80 new employees by the end of 2024.

Members of the board, chaired by Gov. Daniel J. McKee, spoke during the public meeting held on a Zoom videoconference with Flux Marine founder and CEO Benjamin Sorkin, who said the company currently has eight employees at its headquarters in East Greenwich, with plans to lease and build out a manufacturing facility in Bristol with the help of the tax credits, as the business shifts from research and development to full-scale production.

Leveraging Data Analytics in the Hospitality Industry

With quickly evolving technology developments, business owners, chief financial officers (CFOs), and controllers are inundated…

Learn More

Flux Marine, established in 2018, is also going public with an investment campaign on Tuesday, Sorkin said, after already raising $15 million privately with the help of a group of investors, including the organizer of TED Talks Chris Anderson and twins Cameron and Tyler Winklevoss, investors and entrepreneurs who founded Winklevoss Capital Management and digital currency exchange Gemini.

Sorkin said Flux Marine has “found a home in Rhode Island” and “could not think of a better place” to launch the “most technologically advanced and largest marine electrification companies in the world.”

- Advertisement -

Jeff Miller, executive vice president of investments for the R.I. Commerce Corp., said the tax credit deal helped keep Flux Marine in Rhode Island, as it was considering another site in Bridgeport, Conn. The new jobs would be split between the company’s current location in East Greenwich and newly leased space in Bristol, according to R.I. Commerce.

“This is an opportunity for the state to be on the cutting edge of an inventive and new technology,” Miller said. “What better place than the Ocean State? … The advantages of the electric motor are many. They’re environmentally friendly. They can be easily recharged … and they can be mounted on an existing conventional hull, where existing fuel tanks are retrofit to hold the battery cells. Another benefit is they run very quietly.”

Flux Marine must meet benchmarks to receive the tax credits, which discount the amount of corporate income taxes the company would otherwise owe under Rhode Island law. The deal requires Flux Marine to employ 48 people in Rhode Island in 2022, 68 in 2023 and a minimum of 88 by the end of 2024. Miller said the tax credit deal under the state’s Qualified Jobs Tax Incentive program incentivizes Flux Marine using a built-in “accordion” incentive to bring the company’s employee base beyond 80 new jobs after 2024.

R.I. Commerce Corp. board member Karl Wadensten pointed out that R.I. Commerce previously awarded Flux Marine $50,000 in seed money through a Rhode Island Innovation Grant during the company’s formative years.

“Connecticut was nowhere to be found. They were crickets at that time, right Ben?” said Wadensten, comparing Rhode Island to a loyal, longtime girlfriend. “We were there during the high school years.”

“I can’t argue that,” Sorkin replied.

The Flux Marine CEO also said while the company is pledging 80 new full-time employees by the end of 2024, with a median salary of $99,680, his company expects “to go well beyond that.”

R.I. Commerce said in a report provided before the meeting that Flux Marine plans on improvements to its proposed leased space totaling $860,000, and will invest in equipment valued at approximately $3.8 million. 

Referring to analysis prepared by consultant Appleseed, R.I. Commerce said in a report that Flux Marine’s operations in Rhode Island would contribute an increase of approximately $433,500 in annual state tax revenues, including $268,400 in state personal income taxes paid by workers newly employed by the company in its expanded Rhode Island operations and by Rhode Island workers whose jobs are indirectly attributable to the company’s expanded Rhode Island operations, along with $131,200 in state sales taxes paid on those workers’ taxable household spending, and $33,900 in state business taxes.

Prior to passing the Flux Marine tax credits, the R.I. Commerce board voted 6-0, as two board members had not yet arrived to the meeting, to grant $100,000 in Rebuild Rhode Island tax credits and $300,000 worth of sales tax exemptions to Studley Building Enterprises LLC and DMP Studley LLC – holding companies owned by Paolino Properties LP – in connection with redevelopment of the Studley Building at 86 Weybosset St. in downtown Providence.

Paolino Properties is turning the 5,000-square-foot commercial office building that’s long been vacant into 65 apartments, with 4,646 square feet of ground floor retail space. Fourteen units would be “workforce housing,” with incomes of occupants not to exceed 100% of the area median income for 30 years, said Randy Nigrelli, a consultant for R.I. Commerce.

The tax credits and exemptions represent 2% of the project costs, Nigrelli said, calling it an $18.3 million development. The Studley Building apartment project, similar to Paolino Properties’ nearby Case Mead Lofts building at 76 Dorrance St., is expected to be completed by the end of July 2023 and occupied in August 2023, said Hilary Fagan, president and chief operating officer for R.I. Commerce Corp.

Marc Larocque is a PBN staff writer. Contact him at Larocque@PBN.com. You may also follow him on Twitter @LaRockPBN.