RD199 - 2006 Qualification Year Annual Report - Enterprize Zone Program


Executive Summary:
2006 Executive Summary

The 2006 qualification year marked the second year under the Enterprize Zone Grant Act. The statute replaced the former tax credit and job grant incentive program with two new grant incentives. In addition to the grant incentives supporting the new program's overall poicy, the grants also reflect the shift in business practices and development trends that have occurred over the past decade.

The new program's overall policy intent continues to be:

• A tool to help distressed localities versus a general economoic development incentive.

• A means to increase fiscal accountability associated with state incentives reflected in new grant monitoring and attestation components.

• A way to focus on economic situations that can maiximize the use of financial incentives and target businesses that create high quality jobs.

Under the statute, transition provisions exist that allow qualifying businesses to continue to receive the incentives available under the previous program. Businesses that began qualification periods for the "pre-2005" incentive program prior to July 1, 2005 are able to complete them provided they continue to meet the eligibility requirements. Business firms with signed agreements with DHCD in place by July 2005 may also initiate use of the tax credits but must do so before the expiration of their zone or 2019. By statute, the tax credits are only available through fiscal year 2019.

This report includes information on the usage of the grants and pre-2005 incentives. It is important to note that under the statute, zones are designated for a 10-year period with two possible five-year renewal periods. Four new designations will be available for 2008 due to the expiration of zones in Galax, Waynesboro. and South Boston/Halifax County on December 31, 2007 and the termination of the Wise County zone. DHCD is holding a competitive application round for the available designations.