Zones to give cash, not credit

Published 12:00 am Thursday, April 14, 2005

Changes to the state’s enterprise zone program will give businesses more cash in hand.

The state Department of Housing and Community Development, which administers the program, has traditionally given tax credits to eligible businesses. But businesses applying for the enterprise zone incentives after July 1 will instead receive grants based on job creation and real property investment, said Economic Development Director Thomas O’Grady during Wednesday’s Industrial Develop-ment Authority meeting.

&uot;Grants are more business-friendly,&uot; said O’Grady. &uot;It’s probably a little easier for the accounting methods of the businesses.&uot;

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The city’s two urban enterprise zones encompass 3,310 acres in and around the downtown business area running south to Suffolk Municipal Airport. Both the Suffolk Industrial Park and Northgate Industrial Park are in enterprise zones.

Approximately 20 to 25 Suffolk businesses currently take advantages of the state incentive program, O’Grady said.

&uot;All the businesses in Suffolk Industrial Park and Northgate Industrial Park use the enterprise zone incentives,&uot; he said.

&uot;They have also helped tremendously with the new shops and redevelopment in downtown.

&uot;There are a lot of changes to the different facets of the enterprise program,&uot; he continued.

Changes to the incentives most frequently used by Suffolk businesses-job creation and real property investment – are increasing in value, he said.

Changes include:

nReal property investment grants – Property owners or businesses must invest a minimum $50,000 in rehabilitating an existing building or a minimum $250,000 in new construction to qualify for grants of up to 30 percent of the total investment.

Investors whose projects cost under $2 million can receive a maximum of $125,000. The maximum grant caps at $250,000 for investment upwards of $2 million.

n Job creation grants – Grant amounts for new jobs will be based on wages rather than zone residency. Positions that pay 200 percent above minimum wage and provide health benefits will receive grants of $800 per year

for five years. Those that pay 175 percent of minimum wage and health benefits will receive grants of $500 annually for five years. Business can receive grants for up to a maximum of 350 jobs per year.

Businesses currently receiving enterprise zone tax credits will not be affected, O’Grady added.