RD237 - Virginia Enterprise Zone Program 2011 Grant Year Annual Report
The Virginia Enterprise Zone (VEZ) Program is a partnership between state and local government that promotes economic development through job creation and investment in real property improvements. Used in conjunction with other local, state and federal programs, VEZ leverages private sector investment in targeted areas throughout Virginia. First established in 1982, the VEZ Program has been modified over the past twenty years to increase its effectiveness. Most significantly, in 2005, the General Assembly passed the Enterprise Zone Grant Act. The 2005 Act brought several important policy shifts, including efforts to target zones more directly to economically distressed localities by gradually reducing the number of zones and providing incentives for the creation of higher paying jobs with benefits.
The 2005 Act established performance-based Real Property Investment Grants (RPIG) and Job Creation Grants (JCG) as incentives for investment and job creation. The Act also provided for the phase-out of the previous General Income and Investment Tax Credit incentives. Each year, the number of firms applying for and receiving tax credits has declined with the expiration of firms’ 10-year qualification periods. The tax credit program will sunset fully at the close of FY 2019.
The 2011 qualification year marked the seventh year under the 2005 Enterprise Zone Grant Act. This report includes information about the use of both types of grants as well as pre-2005 incentives during the most recent qualification year. The report also reflects the implementation of 2010 legislative changes to the JCG parameters for businesses in high unemployment areas. Recently enacted legislation clarifying the relationship between the JCG and the Major Business Facility Job Tax Credits administered by the Virginia Economic Development Partnership will take effect during the 2012 taxable and program years for the affected programs.
During the 2011 program year:
• 219 applicants qualified for Enterprise Zone incentives
• 199 businesses and investors received grant incentives, including--
* 142 investors receiving over $11 million in RPIG funds for $178.5 million invested
* 57 businesses receiving nearly $3 million in JCG funds for creating 976 full-time jobs
• 20 applicants received over $2 million in pre-2005 tax credit incentives