Tax credits lure California hybrid company to Colorado

A Berkeley, Calif.-based company that works with plug-in hybrid electric vehicles plans to expand to Boulder solely because the Colorado Legislature passed a tax break on the cars last year.

Daniel Sherwood is co-founder of 3Prong Power Inc., which installs lithium battery packs that convert hybrid vehicles into electric vehicles for part of their operating time. He said he hopes that an 85 percent tax credit on the types of converters he installs will generate significant business. No other state offers a tax break on plug-in hybrid electric vehicles that approaches Colorado’s, he said.

Sherwood has asked the State of Colorado for confirmation that his products qualify for the tax break, as they appear to based on the wording of House Bill 1331, from 2009. Assuming that happens, his business partner, Paul Guzyk, will move to one of several locations the two have been scoping out around Boulder, and plan to have that new office running by summer’s end, he said.

Their investment is small, starting with just one employee in addition to Guzyk in the new office. But 3Prong Power’s decision to open a Colorado office because of tax policy speaks to two of the main aims of Gov. Bill Ritter’s economic development initiatives: Using targeted tax credits to create jobs and focusing efforts on renewable-energy businesses.

“Colorado passed this tax credit, and it’s a pretty generous tax credit,” Sherwood said. “It’s 100 percent of the reason that we’re thinking about going there. Colorado is actually not that great a market [for our product]. It’s not in the top 20 markets for hybrids. There’s probably more hybrids in San Francisco than in Colorado. … But tax credits motivate us, and actually California is just the opposite in this matter.”

Read the full story in the Denver Business Journal.