The Bowling Green Board of Commissioners approved a Job Development Incentive Fund credit agreement Tuesday for a business expected to bring about 20 jobs to Bowling Green, as well as the first reading of an ordinance that would eliminate the city’s taxation of capital gains and discontinue a deduction for capital losses.

Davert USA is expected to create about 20 jobs in the city with the startup of operations here and is estimated to generate payroll of about $8,958,000 over the course of the 10-year job development incentive agreement with the city, according to the municipal order.

The company, which provides solutions for metal fabrication, engineering, design and prototype needs, will bring about $1.6 million in capital investment to the city, according to a memo from Chief Financial Officer Jeff Meisel to City Manager Kevin DeFebbo.

The agreement will return 1 percent of the city’s occupational tax on new employees to the business while the city retains 0.85 percent of that tax during a 10-year period.

Davert USA will receive a benefit of about $89,000 during the duration of the agreement while the city’s share will be about $76,000, according to the memo.

The business has also been approved for a state incentive called the Kentucky Business Investment program, which awards a credit of up to 3 percent of gross wages when there is 1 percent local participation, according to the memo.

The city’s incentive will go into effect after a KBI agreement has

been activated for the business, according to the agreement.

Commissioner Bill Waltrip, who also serves on the committee that recommends businesses to the Board of Commissioners for job development incentive agreements, said after the meeting that, in addition to bringing 20 good-paying jobs to the city, the agreement will be a benefit to areas such as housing and retail because of those jobs.

“So, it’s a ripple effect, what this will do in our community,” he said.

Board members also approved the first reading of an ordinance that would exempt capital gains from the city’s net profit license fee by a vote of 4-1, with Commissioner Joe Denning voting against the measure. The new policy will go into effect Jan. 1 if the second reading is approved.

Capital assets include a home, household furnishings and stocks and bonds held in a personal account, according to the Internal Revenue Service website. Examples given include investment property and gold, silver, stamps, coins and gems. When a capital asset is sold, the difference between the amount you paid for the asset and the amount you sold it for is a capital gain or capital loss.

Capital gains were exempt from the net profit license fee in the city of Bowling Green until 2008. At that time, staff interpreted piece of legislation passed by the state in 2007 to standardize rules for occupational license taxes to mean that net capital gains should be subject to taxation.

Waltrip noted after the meeting that there are at least two Kentucky cities – Hopkinsville and Radcliff – that don’t tax capital gains.

If there is any doubt about whether taxing capital gains is required, the benefit should go to the citizens, not government, he said.

Both the incentive agreement and the tax exemption for capital gains measures are ways to show the business community that Bowling Green wants to bring jobs in to the community, Waltrip said.

“It seemed that, if we did not have to impose that tax, that we should give every benefit to investors in our community,” he said.

Denning said after the meeting that he voted against the ordinance because it would benefit a relatively small group of people. “It appeared to me that it was only in the interest of the select few individuals in the community rather than business people overall,” he said.

The group of people that would benefit from a capital gains tax exemption is not the only group in the community that creates jobs, and that group shouldn’t be singled out, Denning said.

Commissioner Brian “Slim” Nash said during the meeting that he has struggled with the issue of capital gains, but decided to vote in favor of the ordinance because he wouldn’t have supported the move to tax capital gains if it had been brought before the commission as a vote in 2008.

While he wouldn’t have wanted to raise taxes, Nash said raising taxes will eventually become an inevitability.

“I believe the day will come when taxes have to be raised,” he said.

Commissioner Melinda Hill said after the meeting that she has been in favor of the ordinance since the first work session, when Mayor Bruce Wilkerson brought in community members ranging from legislators to business people to speak in favor of a change in the city’s policy on capital gains. Hearing from individuals that she respects on the issue was important for her.

“I view it as a great opportunity for us to keep development going in our community,” she said of the ordinance.