Colorado Economic Development Commission Enterprise Zone Contribution Tax Credit Overview and Policies This document outlines the requirements set by
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1 Clrad Ecnmic Develpment Cmmissin Enterprise Zne Cntributin Tax Credit Overview and Plicies This dcument utlines the requirements set by Clrad Revised Statutes , and the plicies established by the Clrad Ecnmic Develpment Cmmissin (EDC), as authrized by C.R.S , fr the Enterprise Zne (EZ) Cntributin Tax Credit. The EDC plicies may be amended by the standing cmmissin. Intent Enterprise Zne Cntributin Prjects encurage cmmunity participatin and public private partnerships t revitalize Enterprise Znes. Cntributin Prjects aim t fcus cmmunity engagement n an issue r pprtunity t elicit a shift, create smething, and accmplish a stated gal within a defined time perid. Prjects need t fcus n imprving ecnmic cnditins and have measurable utcmes. The gal is t garner public participatin and cntributins fr prjects that imprve the ecnmy fr the benefit f the brader cmmunity. Enterprise Zne Administratrs are fcused n managing this prgram with a strng ethic and fcus n jb creatin/retentin and business expansin. Zne Administratrs have wnership fr prjects, establishing prject parameters and helping the prjects succeed in terms f ecnmic develpment utcmes. Administratrs are fcused n implementing the ecnmic develpment plan fr the EZ. Prjects must address the ecnmic develpment plan and be referenced in the prject applicatin. Apprpriate ecnmic develpment plans include the OEDIT supprted Blueprint, the federal EDA CEDS, and the annual EZ ED plan. EZ Administratrs wrk with their cmmunities t bring frward prpsals that meet the ecnmic develpment needs and have the supprt f the cmmunity. The prject prpsal frm encurages the EZ Administratr t fcus n hw the prpsed prject implements the ecnmic develpment plan, supprts jb creatin, retentin, and business expansin and calls fr measurable utcmes. Incme Tax Credit Dnrs having made a certified cntributin t an Enterprise Zne Cntributin Prject may claim 25% f a cash dnatin as an incme tax credit, and half f that amunt (12.5%) fr an in-kind dnatin. The actual credit earned is figured based n all eligible cntributins during the tax year, and capped at $100,000 per tax-payer with the balance carried frward up t 5 years. Direct Benefit t Cntributr Deducted frm Dnatin The statutes prvide that n credit is t be allwed fr cntributins that directly benefit the cntributr. When a dnr receives a benefit, the value f the dnatin shall be reduced by the benefit received r attributable t the dnr t arrive at a cntributin that may be certified fr the tax credit. Fr example, a dnr wh attends a fund raising dinner dnates $1,000 t attend the event; the cntributin eligible fr the tax credit will be $925 if the dinner itself is valued at $75. Capital infrastructure prjects (as defined belw) typically have beneficiaries. The number f beneficiaries and the distributin f the benefit will be cnsidered and dcumented in the prject prpsal. Benefits may be evenly distributed, r may accrue t ne entity mre than t thers. The prprtinal benefit f a prject dnr will be applied t and reduce the value f the cntributin. In sme cases the prprtinal benefit may be negligible. Dnatins t all prjects are evaluated by the EZ Administratr befre certifying the cntributin. When a direct benefit is attributable t the dnr, the riginal dnatin value, the value f the direct benefit (including calculatins and assumptins), and the final cntributin value will be dcumented. The credit is certified fr the final cntributin value.
2 Prject tax credit limitatin Prjects are held t a $750,000 tax credit limit per prject (a Prject is defined by the Prject prpsal frm) per calendar year. Once $750,000 in tax credits have been certified fr an EZ Prject, n mre cntributin tax credits can be awarded that year. It is primarily the respnsibility f the Prject Organizatin, with versight by the lcal Zne Administratr and OEDIT t mnitr cntributins and t stay within the credit certificatin limit. Dnatins/Minimum Dnatin The maximum r ceiling fr a minimum cntributin that any Enterprise Zne Prject may set is $250. This ceiling des nt prhibit the certificatin f cntributins belw the $250 ceiling shuld the EZ Administratr r Prject Organizatin want t set a lwer ceiling r have n minimum cntributin requirement. This ceiling is intended t ensure that the credit is accessible t all Clrad tax payers wishing t supprt lcal ecnmic develpment initiatives while making sure that the value f the cntributin justifies the administrative csts including mnitring Prject activity, prcessing certificatins, and lgging and reprting the tax credits certified. The ceiling fr cntributin minimums des nt limit the amunt that a dnr may cntribute, but requires that the EZ credit be available t dnrs regardless f the amunt cntributed. An EZ Administratr may request apprval frm the EDC fr a higher minimum fr a specific Prject. The request shuld include a cmpelling argument fr setting a higher minimum. Such request may be made when the Prject is first prpsed r at the time f annual re-certificatin. A Prject apprved fr a minimum cntributin requirement abve $250 must request apprval fr that minimum annually at recertificatin. Fees charged t Organizatins by the EZ Administratr The lcal EZ Administratr is authrized by the statutes t charge reasnable fees t rganizatins fr their versight f the prgram. Each enterprise zne administratr that charges administrative fees shall establish a reasnable plicy regarding the impsitin f such fees and shall submit the plicy t the Clrad Ecnmic Develpment Cmmissin fr review and apprval. The EDC has authrity t review, require mdificatins t, and apprve any administrative fee plicies. Fees will be disclsed n the credit certificatin frm t the extent that it is accmmdated by the Clrad Department f Revenue. As f Nvember 2016, Cntributin Prject Fees are - Adams Cunty EZ, 1.5% n infrastructure prjects; Arapahe Cunty EZ, nne; Central Clrad EZ, 5% n cash up t $1000; Denver EZ, 1% cash/stck; East Central EZ, nne; Jeffersn Cunty, nne; Larimer EZ, 3%; Mesa EZ, 1% cash/stck and $1/frm (max. f $500 per dnatin); Nrth Metr, nne; Nrtheast EZ, 5%; Nrthwest EZ, 1% + $1/frm; Pikes Peak EZ, 3.5% n cash and stck; Puebl EZ, 1.5% cash up t $1,000 per prject/year; Regin 10 EZ, 1% and $1/frm; San Luis Valley EZ, nne; Suth Central, 1%; Sutheast, $5/frm; Suthwest EZ, 3% cash up t $500; Weld Cunty EZ, 1.5%. EZ Prject Designatin The lcal EZ Administratr is respnsible fr implementing their EZ ecnmic develpment plan. The Administratr decides which Prjects are aligned with the ecnmic develpment plan, gets the necessary supprt f their cmmunity and bard, and brings thse t the EDC fr cnsideratin. The EZ Administratr has authrity t mnitr and audit Prject rganizatins and Prject perfrmance, and may take EZ Cntributin Prject status away frm an rganizatin that is nt in cmpliance with the wrk and bjectives utlined in the Prject prpsal r annual re-certificatin plan, r is therwise nt supprting the ecnmic develpment plan fr the EZ. Page 2 f 6
3 The lcal zne administratr will bring frward t OEDIT staff and peer EZ administratrs any prpsed new prject. This review cmmittee will cnsider the applicatin, ffer feedback t tighten the ecnmic develpment fcus and t imprve prject gals and metrics when warranted. Prpsals that receive the apprval f the review cmmittee will be presented t the Ecnmic Develpment Cmmissin (EDC). The EDC is charged with reviewing and apprving prjects prpsed fr EZ Cntributin Prject status by an EZ Administratr. OEDIT may present prject prpsals n behalf f the review cmmittee and EZ Administratr t the EDC thrughut the year. The cmmissin shall apprve any prgram, prject, r rganizatin that it determines is eligible per the statutes r is essential t the missin f the EZ, upn a majrity vte. Prject Lcatin Generally the prject rganizatin will be lcated within the enterprise zne and serve individuals and businesses within the enterprise zne. Hwever, there are limited circumstances where an rganizatin lcated utside f the enterprise zne may cnduct prgrams within and benefit the enterprise zne. When the Organizatin r a prtin f their activity serves nn-ez areas, this must be nted n the Prject Prpsal frm as a percent f the rganizatin s ttal activity; EZ cntributin credits will nt be certified fr nn-ez activity. Other funds must be available t cver nn-zne related activities. Fr example, an eligible hmeless rganizatin s husing and emplyment supprt services must be lcated within a zne, r, if the husing is nt within the zne bundaries, the rganizatin s facility ffering emplyment referrals, cunseling, and training shuld be lcated in the zne. The prject prpsal frm will indicate the percent f the rganizatin s activity that impacts the EZ. Additinally, Prjects that perate in mre than ne EZ must be able t identify activity and cntributins fr each zne in which they perate a separate Prject will be established fr each zne. This allws each zne administratr t evaluate the impact f the prject within his/her EZ. Prject Term Prjects can be apprved fr a maximum 5 year term. This encurages the Administratr and Prject representative t set near-term bjectives, and t recgnize that Prjects are nt intended t be nging, but instead t rally cmmunity participatin fr a specific achievable near-term bjective. Given cmmn nn-prfit fundraising calendars and the statutry guidelines fr prject eligibility, prjects will have a mnth and date end f 12/31. A prject can be recmmended fr less than a 5 year term, but the year end-date at a maximum is the year apprved + 5. Fr example, a prject apprved by the EDC n 3/15/2017 can have a maximum end date f 12/31/2022. This term limit applies t bth Capital and Operatins prjects and t all categries and sub-categries. A zne administratr may present a new applicatin fr an existing prject prir t its end-date if there is gd reasn t cntinue the prject activity withut a break. Nte t bring existing prjects int cmpliance with the 5 year term limit, Prjects with n-ging status (r n end-date) will have phased end-dates allwing the rganizatins time t plan fr impacts n fund-raising and t acknwledge the calendar year planning fr cntributin slicitatins. Prjects apprved prir t the year 2000 (104 prjects) will receive an end-date f 12/31/2018. Prjects apprved frm 2000 thrugh 2005 (84 prjects) will receive an end-date f 12/31/2019. Prjects apprved frm 2006 and 2010 (92 prjects) will receive an end-date f 12/31/2020. Prjects apprved frm 2011 thrugh 2014 (114 prjects) will receive an end-date f 12/31/2021. Prjects apprved in 2015 and 2016 (102 prjects) will receive an end-date f 12/31/2022. Page 3 f 6
4 Prject Mnitring & Annual Review/Recertificatin Each autumn, OEDIT staff will prmpt lcal EZ Administratrs t review their active EZ Cntributin Prjects t evaluate the perfrmance, reprting, and certificatin cmpliance. Each Administratr must review each prject by meeting, phne call, r sme survey mechanism. The EZ Administratr will review with the Organizatin the activities cnducted, hw these activities are addressing the ecnmic develpment gals fr the EZ, and perfrmance metrics related t jb creatin/retentin and business expansin in the EZ. The Organizatin cntact infrmatin will be updated as needed, and EZ prgram reprting and cmpliance will be reviewed. Zne administratrs are encuraged t review and renew MOUs r agreements that they have with the Prject Organizatin. A zne administratr may chse t cnclude a Prject if it is nt meeting expectatins r is therwise ut f cmpliance with prgram guidelines. The administratr will share results f the Prject review with OEDIT. Per statutes, OEDIT will present the annual review t the EDC as a list f Prjects including hw the prject supprts the EZ ecnmic develpment gal, the Prject bjectives, and estimated cntributins fr the cming year. The EDC shall apprve Prjects it determines are eligible and essential t the missin f the EZ by majrity vte f the members f the cmmissin present. Prject Activity Level - the level f expected and necessary activity is always at the discretin f the EZ Administratr. The Administratr is interested in cntributins being slicited s that Prject activity is taking place and making a psitive impact in the EZ. The activity level will be evaluated at least annually during the re-certificatin f prjects fr the cming calendar year. Fr prjects active fr at least 12 mnths, it is expected that there be at least 5 taxpayers cntributing r $5,000 received during the past year. Prject Structure The rganizatin running the prject must be a nnprfit r gvernment entity. Either the entire rganizatin r a specific activity f the rganizatin may be eligible fr EZ Prject status. Entire Organizatin If the wrk f the rganizatin as a whle is in line with the EZ s ecnmic develpment bjectives, then EZ Prject status may be granted t the rganizatin and dnatins may be used fr general peratins. Specific Prgram r Prject within an Organizatin Specific activity r wrk within an rganizatin may supprt the ecnmic develpment plans f the EZ. In this case nly dnatins t the specific apprved purpses as utlined in the EZ Prject prpsal will be certified fr the tax credit. The EZ Administratr and the Organizatin decide n what percent f the rganizatin s wrk is related t the EZ Prject. This percent can be used t justify what prtin f an rganizatin s revenue r dnatins are t receive the EZ Cntributin tax credit. The recipient rganizatin must maintain recrds and an accunting system t track funding surces and t assciate the use f EZ cntributins with the EZ Prject. Prject Types & Categries First, the Organizatin running the Prject must be a nn-prfit r a gvernmental entity in gd standing with the Secretary f State. Secnd, a Prject must supprt the dcumented ecnmic develpment gals fr the Enterprise Zne. A Prject might nt cmply with the types and categries utlined belw, if it is in line with specific and dcumented ecnmic develpment bjectives fr the zne. Page 4 f 6
5 Third, a Prject must link t jb creatin and retentin and/r business expansin in the brader Enterprise Zne, nt nly at the Prject Organizatin. Furth, the prject will generally cmply with the fllwing types and categries. Statutes utline certain prject types as apprpriate fr EZ Prject status; the EDC in cnjunctin with lcal administratrs and OEDIT staff have further defined eligible types and categries. Type: Capital Campaign. Prjects encurage public/private partnerships and are fcused n raising funds fr a specific capital prject that will serve the brader cmmunity, and where cnstructin r implementatin will begin within 5 years. Categry: Cmmunity Facility. A new r imprved facility that enhances the lcal ecnmy. The Prject may address a variety f unmet cmmunity needs that keep peple living in the area and where thse residents supprt lcal service and retail businesses. Facilities may include scial/human service facilities like health care, child care, elder care, and recreatin facilities, and cmmunity event/meeting space. We anticipate that prpsals within Enhanced Rural Enterprise Znes may receive cnsideratin where a similar prject in a less distressed cmmunity wuld nt. Categry: Wrkfrce Husing. Husing and infrastructure fr the husing. Categry: Turist Attractin. A new r imprved facility that draws utsiders in and brings revenue int the cmmunity at large. Prjects may address a variety f ecnmic pprtunities Facilities may include museums, fairgrunds, and ther facilities that bring turism t an EZ. Categry: Infrastructure. Infrastructure includes netwrks r systems such as water, sewer, transprtatin, telecmmunicatins and streetscapes that serve the larger public. Infrastructure must be publicly wned r turned ver t a public, c-p, r nn-prfit entity upn cmpletin f the prject. It cannt be wned by a private business (ex Qwest, Cmcast, etc.). Prjects must have the supprt f relevant public entities. Prjects benefit the larger public. A dnr that directly benefits frm the prject will have the value f his dnatin reduced by the dnr s prprtin f the benefit. The number f beneficiaries and the distributin f the benefit play int quantifying any direct benefit that will reduce a dnr s cntributin. See sectin abve n direct benefit. Infrastructure prjects that predminantly benefit a limited private interest are nt eligible. Type: Operatins. These prjects attract additinal resurces t activities prmting new ecnmic activity in the zne and t reach a near-term gal. Categry: Business Assistance. Organizatins that serve businesses with training, cunseling, financing, feasibility studies, and ther resurces. Entrepreneurship prgrams. Incubatrs. Categry: Ecnmic Develpment Organizatins. Organizatins and ffices dedicated t ecnmic develpment f a regin. Categry: Jb training prgrams. These prjects fcus n training EZ residents r a wrkfrce fr a critical industry in the EZ. These prjects are vcatinal in nature and may be 2-year training prgrams fr skilled psitins. A Prject may fund a higher educatin prgram develped in cnjunctin with a business in the EZ t train the lcal wrkfrce. Such a prpsal will include a letter f supprt frm the lcal wrkfrce rganizatin highlighting the cmmunity need and benefit and referencing the Page 5 f 6
6 ecnmic develpment gal addressed. A prject cannt be created slely t train emplyees f a single business the EZ jb training tax credit supprts businesses in training their emplyees. Prject status will nt be given t a higher educatin institutin as a whle. Categry: Visitr Event/Attractin. These prjects attract peple t the enterprise zne and result in spending at ther area businesses. These may be turist attractins, museums, and events. These prjects track and dcument the impact f utside visitrs t the EZ. Categry: Healthcare. Prjects may supprt healthcare peratins when healthcare access is an issue in the cmmunity such that it is hindering ecnmic develpment. Objective indicatrs f inadequate service can be used t supprt an applicatin fr Cntributin Prject designatin, like the Health Prfessinal Shrtage Area designatin (HPSA). HPSA designatin is given by the Clrad Department f Public Health & Envirnment (CDPHE); HPSA areas dcument ppulatins with high rates f: pverty, senirs (ver age 65), infant mrtality rates, ppulatin t prvider ratis. Facilities btain HPSA designatin by prviding care t the residents f a HPSA and meeting insufficient capacity criteria. Categry: Hmeless Supprt. Prjects may fund husing, referrals and cunseling, jb placement, and ther services targeted t the hmeless. Prviding husing and services fr the hmeless may prvide the hmeless persn pprtunities t engage in the lcal ecnmy, while als helping t revitalize areas where hmeless might therwise gather and deter peple frm visiting main street businesses. Specific categries NOT eligible fr Cntributin Prject status. Scial services (nt identified in the subcategries abve) that generally strengthen a cmmunity and prmte pprtunity, thugh imprtant, are generally nt eligible fr Enterprise Zne prject status. The Enterprise Zne prgram is fcus n achieving near-term ecnmic develpment imprvements. Ineligible scial services include educatin, fd subsidies and fd banks, child care and yuth activities, elder care, hmeless preventin, and mst human services. Animal shelters and humane scieties are ineligible. There may be rare situatins where the activities identified in this paragraph d supprt the lcal ecnmic plan, and therefre may be cnsidered fr EZ Cntributin Prject status. Finally, the prpsal must have the supprt f the Zne Administratr and the cmmunity (a bard r public fficial). Page 6 f 6
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