Suffolk denied enterprise zone

Published 9:56 pm Wednesday, December 9, 2009

Suffolk lost its enterprise zone in a decision made by state officials last week, who gave the business incentive to Portsmouth and Franklin.

Acting Director of Economic Development Kevin Hughes said Wednesday that no companies would be losing their grants — those that apply and are certified before Dec. 31 are grandfathered in the program and will continue to receive benefits as they normally would.

“Suffolk is doing what the enterprise zone was meant to do,” Hughes said. “They want to wean you off because they want to use it for those communities that are considered distressed.”

Enterprise zones are a state program that allows municipalities to delineate their enterprise zone and then offer a combination of state and local incentives for new or expanding businesses within that zone. Once businesses meet a variety of criteria such as new jobs created and new investments made, the businesses get state incentives such as money back based upon the amount of investment and the number of employees. Local credits include certain percentages off machinery and tools tax, utility taxes (phone, cable, gas and power only), and the business license tax.

Benefits last for five years, with the percentage off the taxes decreasing each year.

Suffolk’s enterprise zone first started in 1990, and lasted for 20 years. Every 20 years, localities must re-apply for the zone, and have to compete with other localities applying that same year for the available spots. A score is compiled for each community on such criteria as household income and the number of children who receive free lunch at school.

Of five communities competing this year, Suffolk had the lowest score. Suffolk’s score was 251 of 750, while Franklin’s was 578 and Portsmouth’s was 564. Newport News (446) and Norfolk (588) were also denied.

Hughes said most businesses who used Suffolk’s enterprise zone over the past 20 years have focused on manufacturing. Two years ago, Suffolk modified its enterprise zone to include some of the newer industrial parks such as Northgate Commerce Park and Hampton Roads Logistics. The zone now covers historic downtown east to Suburban Drive, west to Kenyon and Lummis roads, north to Virginia Regional Commerce Park on Route 460 and south to the airport.

Hughes said he does not expect the loss of the zone to affect Suffolk’s ability to attract new companies.

“I’ve never dealt with a project that said, ‘No enterprise zone, no project,’” Hughes said. “It was just that little piece on top of the cake. It’s never been a deal breaker for us.”

Though the recently approved technology zone is a different program with different criteria, incentives and funding sources, Hughes said the technology zone mitigates the impact of losing the enterprise zone.

“It’s better for us to continue to have a tool,” Hughes said. “We’re not just completely losing one.”