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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.
"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.
In addition to the wage credits, there are significant tax incentives available in support of qualified zone property and schools with the EZs.
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.
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.
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.
Content Archived: April 9, 2010