(Example of Financial Benefits from the Renewal Community Program 54k ppt)

(Commercial Revitalization Deduction Program Guidelines & Application)

The City of Yakima has been selected as one of 40 communities to receive designation as Renewal Communities (RC's) by the Secretary of Housing and Urban Development.

These designations, along with seven (7) federal Empowerment Zones, take effect January 1, 2002, and remain until December 31, 2009.

Communities were selected based on a demographic profile and nomination application for qualifying census tracts that was submitted to HUD in October of 2001. The census tracts qualifying for Yakima's RC are tracts 1, 2, 6, and 15.

(See Map (816k PDF))

The goal of this program is to promote economic development in distressed communities. Businesses located in the RC will be eligible to take advantage of Federal tax incentives to hire residents and to expand or improve their operations. In addition, applications for funding submitting by local organizations to certain federal programs may receive special consideration and priority ranking. There is no direct grant funding available to RC's or EZ's.

Some tax incentives will work well for labor-intensive businesses, whereas others benefit those with capital needs. Some incentives make sense only for large companies while others work best for small ones.

BENEFITS TO BUSINESS

See HUD site: (http://www.hud.gov/offices/cpd/economicdevelopment/news/taxincentives2003.pdf)

Wage Credits

Renewal Community Employment Credit: Credit against federal taxes up to $1,500 for businesses for every existing employee and new hire who lives and works in the RC. Can be claimed for each year of RC designation.

Work Opportunity Tax Credit: Credit up to $2,400 for businesses for each new hire from groups that have high unemployment rates or other special employment needs, including youth ages 18 to 24 who live in the RC, and summer hires ages 16 to 17 who live in the RC.

Welfare to Work Wage Credit: Two-year credit for businesses that hire long-term family assistance recipients. Credits up to $3,500 for the first year, and $5,000 for the second year for each new hire.

Deductions

Increased Section 179 Deduction: Allows businesses to claim increased Section 179 deduction (up to $20,000 in additional expensing to $35,000) for qualifying RC businesses. Can be claimed on certain depreciable property such as equipment and machinery.

Commercial Revitalization Deduction: Deduction of either one-half of qualified revitalization expenditures in the first year a building is placed in service all of QRE's on ratable basis over 10 years if QRE's have been allocated to revitalization of a commercial building located in an RC.

Environmental Cleanup Cost Deduction: Businesses can elect to deduct qualified cleanup costs of hazardous substances in certain areas (brownfields) in the tax year the business pays or incurs the costs.

Bond Financing

Qualified Zone Academy Bonds (QZAB): State or local governments can issue bonds at 0-percent interest cost to them to finance public school programs with private business partnerships where the private business contributes money, equipment, or services equal to 10 percent of bond proceeds. The federal government pays interest.

Capital Gains

Zero Percent Capital Gains Rate for RC Assets: The holder, for minimum of 5 years, of an RC asset acquired between 1/1/02 and 12/31/09, will not have to include in its gross income any qualified capital gain from the sale or exchange of the asset.

Back to Incentives