RD234 - The Virginia Enterprise Zone Program 2010 Qualification Year Annual Report


Executive Summary:
The 2010 qualification year marked the sixth year under the 2005 Enterprise Zone Grant Act. The 2005 statute replaced the former tax credit incentives with the Real Property Investment Grant (RPIG) and the Job Creation Grant (JCG). In addition to the grant incentives supporting the new program's overall policy, the grants also reflect shifts in business practices and development trends that have occurred over the past decade.

The program's overall policy intent provides:

1. A tool to help distressed localities versus a general economic development incentive,

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

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

The Enterprise Zone Grant Act included provisions allowing firms to continue to receive tax credits under specific and limited conditions. The tax credits will sunset at the end of fiscal year 2019.

This report includes information on the usage of the grants and pre-2005 incentives during the 2010 qualification year, which was paid from FY 2011. It reflects the implementation of the 2010 legislative changes to the JCG parameters for businesses in high unemployment areas.

In addition, zones in Lee County and the Town of Narrows were terminated due to inactivity. These designations were made available to other localities through a competitive application process. Applications were accepted in October 2010 and reviewed by DHCD and VEDP staff. Based on their recommendations, Governor McDonnell designated zones in the City of Norfolk and Pittsylvania County. Under the current statute, zones are designated for a 10-year period with two possible five-year renewal periods.