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The
Physics of Incentives
Or,
Enterprise Zones in the Old Dominion
Just
outside Richmond, Broad Street is coming back to
life. In downtown Waynesboro, the future looks
bright for the Wayne Theatre Alliance’s
neighborhood. These are just two of 56 Virginia
locales benefiting from the state’s Enterprise
Zone Program, coordinated by the commonwealth’s
Department of Housing and Community Development.
“You
kind of know it’s working when you go out and see
the investment that’s occurring,” said S. Mark
Strickler, Henrico County’s director of community
revitalization, about the enterprise zone that covers
specific properties on both sides of West Broad from
the Richmond city line to Glenside Drive.
("Bring Back Broad
Street: Enterprise Zone
Sparks Redevelopment on Aging Henrico
Corridor," Richmond Times Dispatch, Sept. 3,
2007).
Businesses
large and small have benefited from a mix of state
and local incentives to invest in the Broad Street
zone. In 2006, Phllip Morris invested close to $19
million and created more than 450 jobs and received
$3.8 million in state income credits. In one block,
four other smaller businesses, including MannKidwell
Interior Window Treatments, are benefiting from such
county incentives as a $10,000 award for
construction for every full-time job created.
“It’s
definitely showing a big impact,” Andrew Kidwell
III, president and owner of MannKidwell, told the
Richmond-Times Dispatch.
The
Old Dominion’s enterprise zones are scattered
across the state. The most recent four – in the
cities of Galax and Waynesboro and the counties of
Halifax and Wise were announced by
Gov. Timothy M. Kaine on
January 25. There are enterprise zones in the City
of Alexandria and Warren County in the northern part
of the state; Tazewell County in the western section
of the commonwealth; in Hampton Roads in the east
and Danville in the far south. A complete map is
available here.
The
Virginia General Assembly established the first
Virginia Enterprise Zone (VEZ) 24 years ago and the
program is outlined in extensive detail in the
Virginia Code. Basically, an enterprise zone is a
distinct geographical area of a county, city or town
designated by the Governor. The zones are designated
for a limited time period – 10 and 20 years are
common. Businesses located in a VEZ can apply for
incentives such as job creation grants or real
property investment grants. Businesses meeting
certain conditions are eligible for between
$500-$800 for each net new permanent full-time
position earning a certain percentage above the
minimum federal wage. Businesses can receive grants
for up to 350 positions in a year and the grants are
for a calendar year. Real property investment grants
support rehabilitation, expansion and new
construction projects. For rehabilitation and
expansion projects, the investment must be at least
$50,000. For new construction, the minimum
investment must be $250,000. Larger projects may be
eligible for up to 20 percent of the qualified
enterprise zone investment with some limitations on
the amount of annual grants.
Businesses
located in VEZs are also available for local
incentives, which vary from jurisdiction to
jurisdiction. Some of the Chesterfield County
Enterprise Zone incentives include a 100 percent,
five-year tax credit on the increased assessed value
of a renovated property; one-time rebate of business
property tax for businesses relocating to an
enterprise zone; and the waiving of certain rezoning
fees or costs for hooking up utilities. Halifax
County and the Town of South Boston offer similar
incentives, such as reimbursements for a percentage
of the business license and utility taxes.
But
it is the local success stories that support the
enterprise zone concept. City officials in
Waynesboro were thrilled to hear in January that a
new VEZ had been designated. Their first enterprise
zone had expired in Dec. 31, 2007, but it had
resulted in the renovation of a museum and a
half-dozen upper-story apartments, the relocation of
an arts center and the opening of a book store and
café.
Enterprise
zones may have contributed to Forbes.com naming
Virginia "The Best State for Business" in
both 2006 and 2007.
NEXT: Doggie Happy Hours: Virginia, a
Canine-Lover’s Paradise
--
February 25, 2008
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