Fact SheetNEW YORK CITY EMPOWERMENT ZONE (NYCEZ):
1. Federal Empowerment Zone
-Employer wage tax credit provides employers with a tax credit equal to 20 percent on the first $15,000 of qualified wages paid to each employee. Employers can only claim tax credit against the firm's federal income tax --- see Section III regarding wage tax credits against State corporate and personal income taxes for wages paid to zone residents that work within the zone. Employers can claim wage tax credit for both full-time and part-time employees.
-Increased deduction under Section 179 of the IRS code from $17,500 to $37,500 allows EZ businesses to deduct the cost of qualified zone property (all capital purchases except buildings) in the year it is placed in service, instead of recovering that cost through depreciation.
-Tax-exempt bonds finance the purchase of land, buildings, or machinery and equipment for qualified federal enterprise zone businesses. Enterprise zone businesses are corporations, partnerships, or sole proprietorships that operate substantially within the Empowerment Zone. This measure allows up to $3 million in new tax exempt bonding capacity similar to Industrial Development Agency bond financing per year for the entire Zone. Tax exempt bond financing provides lower interest rates than conventional financing.
-Hiring EZ Youths provides a maximum credit of 35% up to $6,000 ($2,100) in wages paid for individuals who are ages 18 through 24 during the first year of employment to youths who begin work between October 1, 1996, and September 30, 1997. See the WOTC on IRS Form 5584.
-Hiring EZ Summer Youth Incentive provides a maximum credit of 35% up to $3,000 (or $1,050) in wages paid for individuals who are ages 16 and 17 years old who are hired to work for any 90-day period between May 1 and September 15.
II.. New York City
-The Industrial and Commercial Incentives Program (ICIP) provides a partial exemption of real property taxes for eligible industrial or commercial buildings which are constructed, expanded, modernized, or rehabilitated.
For industrial projects, properties are eligible to receive a 25-year real estate tax exemption consisting of a full exemption on increases of the assessed value of the property for the first 16 years, declining by 10 percent per year for the remaining nine years. The minimum required expenditure is 10 percent of the assessed value of the property. In addition, if the expenditure is at least 25 percent of the assessed value of the property, the renovation or new construction of an industrial property is eligible for a 12-year real estate tax abatement consisting of a 50 percent abatement of existing real estate taxes for the first four years, declining by 10 percent every other year for the remaining eight years.
For commercial projects with a minimum expenditure of 10 percent of the assessed value of the property, renovations and new constructions are eligible for a 15-year real estate tax exemption. This consists of a full exemption for the first 11 years on increases in the assessed value solely attributable to improvements made, declining by 20 percent per year for the remaining four years. Alternatively, there is a 25-year real estate tax exemption consisting of a full exemption for the first 16 years on the increases in the assessed value, declining by 10 percent per year for the remaining nine years. The determination of which exemption is made depends on the location of the project.
-Relocation Employment Assistance Program (REAP) entities qualified businesses to a credit of $1,000 per eligible employee per year for 12 years against business income tax liability. To qualify, a company must relocate employees from below 96th Street in Manhaftan or in the other boroughs from one or more business locations outside the Zone. The firm must have operated outside the Zone for at least two years prior to relocation.
Industrial Development Agency Bonds (IDA) enables qualified borrowers to finance equipment at interest rates of approximately 75% percent of the traditional financing rates.
-Real Estate Tax Escalation (RETE) Credit stabilizes part of a firm's rent that is directly attributable to real estate taxes. In order to qualify, a firm must relocate from outside of New York State and expand New York City employment by at least 100 industrial or commercial jobs.
-Employment Opportunity Relocation Costs (EORC) Credit provides up to $300 tax credits for each commercial job relocated and up to $500 for each industrial job relocated. In order to qualify, a firm must relocate to the city from outside of New York State and create at least ten full-time commercial or industrial jobs in the city.
-The Energy Cost Savings Program provides eligible firms with direct reductions for up to 12 years in energy costs (up to 30% for electricity and up to 20% for natural gas). _To qualify, an industrial or commercial firm must move from below 96th Street in New York City from certain parts of Long Island City or Fulton Ferry or from outside NYC and into the Zone. Firms currently located in the Zone that expand or renovate are also eligible. Firms must apply before signing a lease or a contract of sale for the new site.
-Con Edison Economic Development Incentive Rates provide new and expanding businesses with reductions in electric and gas rates for up to fifteen years.
The Business Incentive Rate (BIR) for new and vacant premises offers a five to 25 percent reduction in electric bills and three to 21 percent reduction in gas rates. Although ADR and BIR can be used in conjunction with the Energy Cost Savings Program, they cannot be used in conjunction with each other. Businesses must qualify for the ICIP program to be eligible for the BIR, provided that the company has moved to newly constructed or previously vacant office space.
-NYNEX Telephone Benefits provide up to 5 percent reductions on the cost of calls outside New York City.
-The Bid-Match System sends bid information via fax to small, woman and minority owned businesses to increase procurement opportunities. All bids for goods and services must be under $25K.
-Bonding Technical Assistance program assists small, minority or woman owned construction firms in acquiring surety bonds and working capital financing for construction contracts.
-Regional Economic Development Assistance Corporation (REDAC) Mini Loan Program provides small and startup service, retail, contractor and manufacturing businesses with loans through its nonprofit lending organization. Loans are available for machinery and equipment, leasehold improvement, real estate acquisition and working capital, and range from $5,000 to $50,000, lasting up to five years. Interest rates are based on the prime rate plus 1.5 percent, adjusted annually, plus fees ($150 nonrefundable application fee and $1 00 closing fee).
-New York City Capital Access Fund (NYCCA) enables banks to make loans to small and medium-sized commercial, industrial and retail enterprises, and nonprofit corporations that just miss the criteria for conventional bank loans. The SBRF establishes a cash reserve pool to cover losses in a participating bank's lending portfolio, thereby enhancing a company's ability to borrow.
Loans are available for working capital, real estate acquisitions, fixtures, machinery and equipment, and physical improvements. Term loans and lines of credit range from $5,000 to $500,000 for companies that demonstrate the ability to repay the debt and make an up-front contribution of up to 5 percent of the loan amount into the reserve fund. Participating banks determine whether or not, and under what terms and conditions, to make a loan.
III. New York State Economic Development Zone (EDZ)
Note: NYS Economic Development Zone program is located in portions of the Bronx and Manhaftan of the federal Empowerment Zone.
-EDZ Wage Tax Credit provides employers with up to $1500 wage tax credit for each targeted employee paid at least 135% of the minimum wage and a $750 credit for other individuals employed in the EDZ. Targeted employees include New York State residents that are eligible for the federal Targeted Jobs Credit Act, or for the federal Job Training Partnership Act, are previously unemployed, public assistance recipients, or have income below the US Commerce Department's established poverty level. This credit may be taken for up to five consecutive years and is only applicable to firms that expand by adding new full-time employees.
-EDZ investment tax credit (EDZ-ITC) is available for investments on manufacturing property, industrial waste treatment facilities, air pollution control facilities, and research and development property acquired or built in the Economic Development Zone. Corporate businesses are entitled to a 1 0% investment tax credit, while personal income taxes (i.e. sole proprietorship) are entitled to an 8% investment tax credit.
-In conjunction with the investment tax credit, the employment incentive credit (EDZ-EIC) provides an additional three percent credit (or 30% of EDZ investment credit) for corporations that continue to expand EDZ employment (employing at least 1 01 % of the average number of employees in the year before the EDZ investment tax credit was claimed). This credit may be claimed in each of the three years following the year in which the EDZ investment tax credit was claimed.
-A 25% capital tax credit is available for qualified investments and contributions to EDZ capital corporations, investments in certified zone businesses, and contributions of money to not-for-profit community development projects that have been approved by the Economic Development Zone Board.
-State sales tax exemption is available through a refund credit process to the contractor or builder for purchases of building materials used in connection with industrial or commercial property. This exemption does not apply if the property is to be used exclusively by one or more retail vendors.
Please call the New York City Empowerment Zone at 212-788-7683 for more information. IRS forms are available on the Internet (www.irs.ustreas.gov), by toll free telephone (1-800-829-3676), or by computer and modem (1 -703-321-8020 - modem settings N, 8, 1).