Virginia Enterprise Zones

The Enterprise Zone Act (passed in 1982 by the General Assembly) allows the governor to designate 60 zones. In October, 2002, the 57th zone was created (2,500 acres in Patrick County/Town of Stuart).

Local governments provide local incentives. At the state level, Virginia offers:

• a reductiopn in the income tax paid by a business to the state. The reductions last for 10 years. The first year, the business gets an 80% tax credit, paying only 20% of the normal business taxes to the state. For the next 9 years, businesses get a 60% tax credit.
• a real property income tax credit, reducing state business taxes up to $125,000 within a five-year period
• an investment tax credit, up to 5% of the improvements made to facilities within the enterprize zone
• job grants, up to $100,000. For each job filled by zone residents, the state will provide a $1,000 grant. The business can receive $500 for any other positions, and the grants are provided for each year in a three-year period

A more detailed explanation from How to Complete Form EZ-5N:

1. Ten-year general income tax credit against a business's state tax liability in an amount up to 80% in year one and 60% in years two through ten. For businesses investing at least $15 million and creating 50 jobs the amount of credit is subject to negotiation between the business and DHCD. Businesses qualifying after July 1, 1997 must have 25% of new jobs filled by low-income individuals or zone residents. Businesses qualified prior to July 1, 1997 must continue to have 40% of their new jobs filled by low-income individuals or zone residents.
2. Real property improvement tax credit equal to an amount of up to 30% of qualified nonresidential zone improvements with a maximum amount not to exceed $125,000 within a five-year period. Rehabilitation and expansion projects must cost at least $50,000 or be equal to the assessed value of the non-residential real property prior to the improvements being made, whichever is greater. Qualified improvements in non-residential new construction projects must cost at least $250,000. The credit is refundable to the extent that if the business state tax liability is less than the credit allocated, the remaining balance would be refunded.
3. Investment tax credit against a business's state tax liability for businesses investing at least $100 million and creating 200 jobs. The percentage amount is negotiable and could be worth up to 5% of the investment. Business firms qualifying for the investment tax credit have the option of taking this incentive in lieu of the real property improvement tax credit.
4. Job grants for new permanent full-time positions created by business start-ups and expansions by existing firms in amounts equal to $1,000 per zone resident and $500 for positions filled by a non zone resident. The maximum grant to any one firm per year is $100,000 for three consecutive calendar years commencing with the first year. Businesses may qualify for more than one three-year job grant period provided the business firm creates additional permanent full-time positions.

Links

• October 16, 2002 press release on the Patrick County/Town of Stuart Enterprise Zone
• Virginia Enterprise Zone Program (in the Department of Housing and Community Development)
  • map of enterprise zones