Incentives for Virginia Property Investors and Employers
The Virginia Enterprise Zone (VEZ) program is a partnership between Commonwealth and local governments that encourages job creation and private investment in real property. VEZ accomplishes this by designating Enterprise Zones throughout the Commonwealth and providing two grant-based incentives, the Job Creation Grant (JCG) and the Real Property Investment Grant (RPIG), to qualified investors and job creators within those zones, while the locality provides local incentives.
Enterprise Zone grants are subject to an annual appropriation by the General Assembly. By statute, the Job Creation Grant is required to receive funding priority. After fully funding the JCGs, remaining funds will be allocated to the Real Property Investment Grants (RPIG). The amount paid to each RPIG applicant will be prorated proportionally should grant requests exceed the remaining funds. Job Creation Grants are not subject to proration.
Job Creation Grants
Job Creation Grants are based on net new permanent full-time job creation exceeding a four-job threshold.
- Businesses must be located within the boundaries of an established Enterprise Zone
- In addition to creating at least four net new permanent full-time positions, these positions must meet certain wage and health benefit requirements
- Certain entities and positions are prohibited from applying for JCG awards
- Grant term is five-year period beginning with the first grant year in which JCG funding was awarded
- JCG awards are determined by the wages paid and the number of months positions were filled during the Grant Year, calculated as:
- Up to $500 per grant eligible position filled by an employee earning at least 175% (150% in high unemployment areas) of the federal minimum wage (FMW) who was offered health benefits.
- Up to $800 per grant eligible position filled by an employee earning 200% of the FMW who was offered health benefits.
- Maximum positions eligible for grant consideration is 350 positions per year.
- A CPA must perform attestation/agreed upon procedures on the grant application and be included with the submission to the Virginia Department of Housing and Community Development (DCHD).
- Deadline for submission is April 1, 2021.
For more information on Job Creation Grants, see the Virginia Department of Housing and Community Development’s Job Creation Instruction Manual.
Real Property Investment Grant
As indicated above, Job Creation Grants receive funding priority. Each year, JCGs are paid out at 100 percent. The remaining funding in the annual appropriation is then utilized to fund RPIGs. In grant years in which RPIG requests exceed the available appropriation, grants will be prorated. In Grant Year 2019, RPIGs were funded at a prorated amount of approximately 84 cents per qualified dollar. In Grant Year 2018, RPIGs were funded at a prorated amount of approximately 74 cents per qualified dollar.
RPIGs are available for investments made to industrial, commercial, or mixed-use properties located within the boundaries of Enterprise Zones.
- The property must be located within the boundaries of an established Enterprise Zone
- The building or facility must be commercial, industrial, or mixed-use
- Eligibility thresholds:
- For the rehabilitation or expansion of an existing structure, the total amount of improvements must exceed $100,000 in Qualified Real property Investments (QRPI). For rehabilitation or expansion projects that include solar panels, the threshold is reduced to $50,000.
- For new construction projects, the total amount of improvements must exceed $500,000 in Qualified Real Property Investments. For new construction projects that include solar panels, the threshold is reduced to $450,000.
- The applicant must be the same entity that capitalizes the investment on their books or deducts the investment as a business expense under the Federal Treasury Regulations for tax purposes.
- Certain entities are prohibited from receiving RPIG awards. Real property investment expenditures funded by federal, state, or local grants are not eligible.
- Grant term is five-year period beginning with the first grant year awarded for the subject building or facility
- Grants are capped per building/facility over the five-year term:
- Grants may not exceed $100,000 per building or facility in a five-consecutive-year period, where the total investment is less than $5 million.
- Grants may not exceed $200,000 per building or facility in a five-consecutive-year period, where the total investment is more than $5 million.
- RPIG awards are determined by the amount spent on qualified real property investments. Grants are available up to 20% of the qualified real property investment over the respective eligibility threshold and capped as noted above.
- A CPA must perform attestation/agreed upon procedures on the grant application and be included with the submission to the DHCD.
- Deadline for submission is April 1, 2021.
For more information on Real Property Grants, see the the Virginia Department of Housing and Community Development’s Real Property Grant Instruction Manual.
Many localities in the Richmond metropolitan area offer its own packages of incentives tailored to the entities’ unique needs. A county’s Department of Economic Development can provide information regarding these opportunities, in-depth details on eligibility and application, and any related compliance requirements.
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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.