HUD Archives: News Releases

HUD No. 03-056
Brian Sullivan
(202) 708-0685 x 7527

For Release
May 6, 2003

Businesses in City's Renewal Community stand to save millions of dollars

MEMPHIS, TN - Business owners that set up shop or remain within Memphis' new Renewal Community stand to save thousands, even millions of dollars to help grow their businesses, boost employment and promote economic development. That was the message Housing and Urban Development Assistant Secretary Roy Bernardi delivered to hundreds of Memphis-area businesses today.

Joined by a team of nationally recognized economists and tax experts, including Robert Carroll of the White House Council of Economic Advisors, Bernardi explained the Bush Administration's plan to revitalize downtown Memphis.

"The message is clear - it's good business to do business in a Renewal Community," said Bernardi. "Small and large businesses alike have a tremendous opportunity to expand their operations, hire more workers AND save money!"

"This federal tax incentive program could be worth hundreds of millions of dollars to local employers in the form of tax credits over an eight-year period," stated Mayor Willie W. Herenton. "Its importance to the revitalization of the designated communities and our city as a whole cannot be overstated."

Last year, HUD designated Memphis and Chattanooga among 40 new Renewal Communities qualifying businesses to share in estimated $17 billion in tax incentives to promote economic development, create affordable housing and expand job opportunities. Like Empowerment Zones, Renewal Communities encourage public-private partnerships that generate economic development in some of the nation's most distressed urban communities.

By taking advantage of an attractive package of tax credits, deductions, bond financing and capital gains exclusions, business owners can spend more money expanding their operations and less on their annual taxes. 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, thereby improving employment and the general economic climate within Memphis' Renewal Community.
Businesses that remain or locate within Memphis' Renewal Community can enjoy significant tax savings in the following ways:

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 Memphis Renewal Community will enjoy up to a $1,500 credit for every newly hired or existing employee who lives in the RC - each year!
  • Work Opportunity Credits provide businesses located within the Memphis Renewal Community 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 RC.
  • Welfare to Work Credits offer RC 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

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 Memphis' Renewal Community can exclude the gain on the sale of certain assets, including stock and partnership interests. This benefit potentially eliminates the capital gains tax liability on businesses located within these designated areas.

Tax Deductions

  • Commercial Revitalization Deductions permit a State with one or more RCs to deduct $12 million per RC per year, up to $10 million per project for commercial or industrial buildings developed in the RCs. A business can deduct up to $5 million in the year the building is placed in service or deduct the full amount of eligible expenditures pro rata over 10 years.
  • Under Section 179 of the tax code, businesses located within the Memphis RC 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.

Other Incentives

Like all distressed communities, Memphis 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 Renewal Communities is the Low-Income Housing Tax Credit providing credit against Federal taxes for owners of newly constructed or renovated rental housing.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities, creating affordable housing opportunities for low-income Americans, supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet.



Content Archived: April 22, 2010