ENTERPRISE ZONE
STATE TAX CREDITS
The Utah Enterprise Zone Program was established in 1988. An enterprise zone comprises an area identified by local elected and economic development officials and designated by the state. Under the program, certain types of businesses locating to, or expanding in a designated zone may claim tax credits provided in the law.
In 1996, Senate Bill 239 significantly
revised and expanded the existing Utah Enterprise Zone Program. New tax
credits were added and eligible municipalities, as well as counties, may
now apply for enterprise zone designations. The Enterprise Zone Act
is found in Utah Code 9-2-401 through 415.
The following tax credits may be claimed by eligible businesses locating or expanding in enterprise zones on state income tax forms:
JOB CREATION TAX CREDITS (may claim for up to thirty full time positions per tax year):
1) A $750 tax credit for each new full time position filled for at least six months during the tax year.
2) An additional $500 tax credit if the new position pays at least 125% of the county average monthly wage for the respective industry (determined by the Utah Dept. of Employment Security). In the event this information is not available for the respective industry, the position must pay at lease 125% of the total average monthly wage in the county.
3) An additional $750 tax credit if the new position is in a business which adds value to agricultural commodities through manufacturing or processing.
4) An additional $200 tax credit, for two consecutive years, for each new employee insured under an employer sponsored health insurance program if the employer pays at least 50% of the premium.
OTHER TAX CREDITS:
5) A tax credit (not to exceed $100,000) of 50% of the value of a cash contribution to a 501(c)(3) private nonprofit corporation engaged primarily in community and economic development, and is accredited by the Utah Rural Development Council.
6) A tax credit of 25% of the first $200,000 spent on rehabilitating a building which has been vacant for at least two years, and which is located within an enterprise zone.
7) An annual investment tax credit of 10% of the first $250,000 in investment, and 5% of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable property.
DESIGNATIONAny area of the state of Utah which is not part of a U.S. Census Bureau Metropolitan Statistical Area (MSA) located wholly within the state may be eligible for enterprise zone designation. Application for designation must be made by a city with 10,000 or less population located in a county with 50,000 or less population and not part of an MSA as previously stated, a county with 50,000 or less population and not part of an MSA, or an Indian Tribe for tribal lands. Applications will be reviewed and approved on the basis of economic development need, its quality, and other considerations based on a variety of economic distress factors, local planning, etc.
1. Pervasiveness of poverty, unemployment, and general distress in the proposed zone.
2. Extent of chronic abandonment, deterioration, or reduction in value of commercial property in the proposed zone.
3. Potential for new investment and economic development in the proposed zone.
4. Applicant's proposed use of other state and federal development funds or programs to increase probability of new investment and development occurring in proposed zone.
5. Extent projected development in the zone will provide employment to residents in the zone, and particularly, individuals who are unemployed or economically disadvantaged.
6. The degree to which the zone applicant's application promotes innovative solutions to economic development problems and demonstrates local initiative.
7. Other relevant factors which DCED specifies.
Essentially, only Salt Lake, Utah, Davis, Weber, Cache, and Washington counties and the cities within those counties are ineligible to apply for designations. Tribal applications are eligible regardless of MSA status and population.
Designations are for limited areas identified locally. Most designations cover specific areas zoned locally for manufacturing or commercial use.
APPLICATION
Designation will be granted on the basis of the most recently available
data, and according to the criteria established in the legislation. A
review board will determine eligibility based upon the criteria. If a
county or municipality is deemed eligible by the board, its application
will be reviewed for designation. Applications
must include information established by legislation.
Designations will not cover an entire county or municipality. In its proposal, an applicant must identify a specific area, or areas which they wish to have designated as an enterprise zone, e.g., an industrial or downtown district. The proposal should explain why it makes sense to develop the area(s), and what types of industries will be developed. The area(s) and types of industries to be developed must be tied to existing local plans. The Enterprise Zone Review Committee will be interested in the validity and current applicability of local plans.
An eligible county's proposal for enterprise zone designation(s) should include applications from all municipalities who wish to submit them.
The period for submitting applications
will remain open. Review of applications will be made irregularly, and
it will be based, in part, on the number of applications to be considered.
Applications may be held for a reasonable period of time, until more are
submitted for review.
TAX CREDITS
Tax credits are available to eligible businesses in designated enterprise
zones from the start of the tax year in which the designation is made.
For example, if designation is made in August 1999, an eligible business
may claim tax credits for the entire tax year beginning January 1, 1999.
The full amount of the tax credit may be carried over for three years. Businesses closing operations in one rural area to locate in another rural area may not claim tax credits under this program. Construction jobs are not eligible for tax credits. Retail businesses and public utilities are not eligible to claim tax credits.
If you have any questions,
or would like assistance in preparing plans and application, contact:
Jonnie Wilkinson
Utah Department of Community
and Economic Development
324 South State St., Suite 500
Salt Lake City, Utah 84114-7360
Telephone: (801) 538-8782
Fax: (801) 538-8773
jwilkins@dced.state.ut.us