Are you in “the Zone”?

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1st in a series on economic development East of the Anacostia River.

Economic Empowerment Community/Zone (EC/EZ), HUBZone, Inclusionary Zoning (IZ), Comprehensive Plan of 2006, Comprehensive Plan Amendment of 2010, HPRB, SHPO, Main Streets and Great Streets are all terms that you may or may not be familiar with, but many of the benefits to be gained to residents in Anacostia and Congress Heights as a result of the Homeland Security Campus at St. Elizabeth’s will depend heavily on the zone that you live, own property, or do business.  But there are so many zones, zoning regulations, and proposed amendments, that many residents  remain unaware of the impacts to their opportunities.  This series will focus on various zone designations, inclusionary zoning, and the comprehensive plan amendment process that will affect development opportunities that may result due to the Homeland Security Campus development.

Although the rest of the world is experiencing an economic development downturn, Ward 8 is all abuzz due to the pending Homeland Security Campus development.  By all accounts, this is the largest public building project since the Pentagon during World War II.  Coming during a deep recession, the $3.4 billion, 4.5-million-square-foot public works project is being hailed as a boon to the local economy. The development, on a hill overlooking the United States Capitol and the Washington Monument, represents the federal government’s first significant presence in the District of Columbia’s blighted neighborhoods east of the Anacostia River.

“This project will catalyze development east of the Anacostia River faster than almost any other project we have on the drawing board,” said Neil Albert, previous deputy mayor for planning and economic development and city administrator under former Mayor Adrian Fenty.  The city hopes the presence of the Department of Homeland Security will ignite private mixed-used development on the rest of the east campus. It envisions that shops, restaurants and apartments will be added there.  These kinds of developments would be welcomed by residents of the adjoining Anacostia and Congress Heights neighborhoods, which also stand to benefit from thousands of construction jobs. In addition, minority contractors have been hired to stabilize the site and have been promised a major role in the project, which is expected to run until 2016.  Zoning will be play a major role in the implementation of these visions.

Economic Empowerment Zones

Empowerment Zones (EZs) are designated areas of high poverty and unemployment that benefit from tax incentives provided to businesses in the boundaries of the EZ. Businesses operating in EZs qualify for a variety of tax incentives including a tax credit of up to $3,000 per year for each of its employees who resides in the EZ, a Work Opportunity Tax Credit for hiring 18-39 year-old residents of the EZ, a deduction of $35,000 for the cost of eligible equipment purchases under section 179 of the Internal Revenue Code of 1986, and tax exempt private purpose “EZ Facility bonds” for commercial development. The Empowerment Zone designations were extended through December 31, 2011 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

Over 50% of DC has been designated as either a Primary or Secondary Enterprise Zone.  To determine if your business is located within an Enterprise Zone, visit the Office of the Deputy Mayor for Planning and Economic Development online at www.dcbiz.dc.gov and click on “DC Economic Development Map.” You may also visit the Department of Housing and Urban Development’s Address Locator online at www.hud.gov. If you have questions about a specific address, please contact the DC Revenue Bond-Enterprise Zone Program Office at 202.727.6365.

 

To be a qualified Enterprise Zone business, your business will need to meet the following criteria:

  • Operates as a corporation, nonprofit, partnership, LLC or sole proprietorship.
  • Only trade or business is the active conduct of a “qualified business” as defined by the IRS: a business that does not primarily develop or hold intangibles for sale or license (IRS Publication 954).
  • At least 50% of business income is from the active conduct of a trade or business within the EZ.
  • A substantial portion of the tangible property and non-tangible property is used in the active conduct of a qualified business.
  • A substantial portion of the services performed for the business by its employees is performed in the EZ.

A Qualified Enterprise Zone Business (QEZB) may take advantage of the following incentives:

Tax-Exempt Bond Financing

Federal Capital Gains Tax Exemption

DC Employment Tax Credits

Increased Expensing Allowance

Stay tuned for more information on zoning changes that affect East of the River economic development.

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