RD250 - The Virginia Enterprise Zone Program 2007 Qualification Year Annual Report


Executive Summary:
The 2007 qualification year marked the third year under the Enterprise 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 policy, the grants also reflect the shift in business practices and development trends that have occurred over the past decade.

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

1) A tool to help distressed localities versus a general economic development incentive.
2) A means to increase fiscal accountability associated with state incentives reflected in new grant monitoring and attestation components.
3) A way to focus on economic situations that can maximize 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. In addition, DHCD held a competitive application round for four designations due to the expiration on December 31, 2007 of zones designated in 1988 and the earlier termination of one enterprise zone. Galax, Halifax County, Waynesboro and Wise County received the designations effective on January 1, 2008. Under the current statute, zones are designated for a 10-year period with two possible five-year renewal periods.