HUD
No. 02-008
Brian Sullivan
(202)708-0685 x7527
|
For
Release
Tuesday
January 15, 2002 |
BUSH ADMINISTRATION ANNOUNCES COMMUNITY REVITALIZATION EFFORTS
- HUD ANNOUNCES EIGHT NEW EMPOWERMENT ZONES
WASHINGTON - The Department of Housing and Urban Development today announced
an estimated $17 billion in tax incentives to stimulate job growth, promote
economic development and create affordable housing opportunities in eight new
Empowerment Zones across the country. Empowerment Zones will encourage public-private
partnership to generate economic development in some of the nation's most distressed
urban communities.
The new urban Empowerment Zones (EZs) will receive regulatory relief and tax
breaks to help local businesses provide more jobs and promote community revitalization.
The newly designated EZs will be located in Pulaski County, Arkansas; Fresno,
California; Jacksonville, Florida; Syracuse, New York; Yonkers, New York; Oklahoma
City; San Antonio, Texas; and, Tucson, Arizona. View
individual EZ announcements
"These tax incentives couldn't come at a better time," said HUD Secretary
Mel Martinez. "This critical partnership between the public and private
sectors will give local businesses in distressed neighborhoods an economic boost
to help drive revitalization, provide jobs and ultimately build a foundation
for stronger communities."
Authorized by the 2000 Community Renewal Tax Relief Act, the new Empowerment
Zones will use the power of public and private partnerships to build a framework
of economic revitalization in areas that experience high unemployment and shortages
of affordable housing.
Included in the $17 billion tax relief package, an estimated $6 billion in
incentives are exclusively available for Empowerment Zones across the country.
As distressed communities, Empowerment Zones will also be eligible to share
in an additional $11 billion in Low-Income Housing and New Market Tax Credits.
These new EZs can take advantage of wage credits, tax deductions, bond financing
and capital gains to stimulate economic development and job growth. Each incentive
is tailored to meet the particular needs of a business and offers a significant
inducement for companies to locate and hire additional workers.
Tax Credits
- Wage credits are especially attractive to businesses looking to grow.
These businesses are able to hire and retain Zone residents and apply the
credits against their federal tax liability. Businesses located within the
new Empowerment Zones will enjoy up to a $3,000 credit for every newly hired
or existing employee who lives in the EZ.
- Work Opportunity Credits provide businesses located with Empowerment
Zones up to $2,400 against their Federal tax liability for each employee hired
from groups with traditionally high unemployment rates or other special employment
needs, including youth who live in the EZ.
- Welfare to Work Credits offer EZ businesses a credit of up to $3,500
(in the first year of employment) and $5,000 (in the second year) for each
newly hired long-term welfare recipient.
Bond Financing
In addition to the wage credits, there are significant tax incentives available
in support of qualified zone property and schools with the EZs.
- Tax-Exempt Facility Bonds help Empowerment Zone businesses to receive
lower-cost loans to finance property, purchase equipment and develop business
sites within these communities.
- Qualified Zone Academy Bonds allow state and local governments to
match no-interest loans with private funding sources to finance public school
renovations and programs.
Capital Gains
Businesses located within EZs can postpone or only partially recognize the
gain on the sale of certain assets, including stock and partnership interests.
This benefit significantly reduces the capital gains tax liability on businesses
located with these designated areas.
Tax Deductions
- Under Section 179 of the tax code, businesses located with EZs may
claim increased expensing deductions up to $35,000 for depreciable property
such as equipment and machinery acquired after December 31, 2001.
- Environmental Cleanup Cost Deductions allow businesses to deduct
qualified cleanup costs in Brownfields.
In addition to the incentives described above, HUD will provide technical assistance
to these communities to ensure that businesses are fully aware of the many opportunities
available to them. To make certain the Empowerment Zones are successful in the
initial stages of their designations, HUD will host an Implementation Conference
where the newly designated EZs will meet to hear from experts in the fields
of business, taxes and economic development. The conference will also provide
presentations from representatives from previously designated EZs recognized
for their successes in forming public-private partnerships.
Other Incentives
Like all distressed communities, Empowerment Zones will also be able to take
advantage of the New Markets Tax Credits that provide investors with
a credit against their federal taxes of 5 to 6 percent of the amount invested
in a distressed area. Also available to Empowerment Zones is the Low-Income
Housing Tax Credit providing credit against Federal taxes for owners of
newly constructed or renovated rental housing.
Empowerment Zone History
The first six of the current 30 Urban Empowerment Zones were designated in
1994. They were created to establish an initiative that would rebuild communities
in America's poverty-stricken areas through incentives that would entice businesses
back to the inner cities. In 1998, the Initiative was expanded through a second
round, incorporating an additional 15 zones and changing the designation of
two Supplemental Empowerment Zones to the full status of EZs.
The 2000 Community Renewal Tax Relief Act established this round of Empowerment
Zones. HUD received 35 Empowerment Zone applications from urban communities
around the country. Successful Empowerment Zone applicants had to satisfy a
two-part selection process that weighed certain population and poverty criteria
as well as the quality of the community's strategic plan.
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