New enabling legislation for the Virginia Enterprise Zone was passed. If your company qualified under the old program, you will get the grandfathered tax credits, provided employment levels still meet the criteria for the full ten years in the case of the General Tax Credit or five years for the Real Property Improvement Tax Credit.

However, all grants under the program are subject to a $15.4 million cap and could be prorated.

Background

The new Virginia Enterprise Zone program was established by the in 2005 through the Virginia Enterprise Zone Act. An Enterprise Zone is a geographically defined area designated by the Governor. Although 51 Enterprise Zones now exist in the state, the legislation limits the number authorized statewide to thirty. The state and local government enter into a ten year partnership to encourage business expansion and recruitment by offering both state and local incentives. Two five year periods may be added to the designation, provided approved by the Department of Housing and Community Development. Businesses locating within the boundaries of an Enterprise Zone may qualify for state and local incentives. State incentives are based on businesses creating jobs and investing in real property. A description of the state incentives and the qualifying criteria is provided below. In addition, local incentives for businesses and residents are available. The city of Roanoke has two Enterprise Zones. Enterprise Zone One A, encompassing 1,702 acres and centered along the main east-west tracks of the Norfolk & Western Railroad, was established in January 2004. Incentives remain in effect until December 31, 2023. Enterprise Zone Two and the 581/Hershberger Subzone, with 1,077.2 acres, covers the largest inventory of vacant industrial sites in the city. Enterprise Zone Two and the 581/Hershberger Subzone remain in effect until December 31, 2015.

Map

Map of Both Enterprise Zones

State Incentives

Job Grants - Qualifying businesses located within an Enterprise Zone must increase their employment by at least four (4) full-time positions prior to receiving any job grants. For example, a qualified business creating six new (6) jobs could receive two (2) job grants. Retail, local service and restaurant/beverage service businesses are not eligible. Jobs created must report to the business' zone establishment on a regular basis, must pay at least 175% of the federal minimum wage, now $6.55 per hour, and provide health benefits to receive a grant of $500 per job per year for a period of five years. If the pay is 200% of the federal minimum wage with provided health benefits, the grant amount is $800 per job for a five year period. Grants are limited to a maximum of 350 eligible jobs per year and are based on a calendar year. Job grants and real property improvement grants are subject to a combined cap of $15.4 million statewide.

Real Property Investment Grants - Businesses located in an Enterprise Zone may be eligible for a grant equal to 20% of qualified zone improvements. Rehabilitation projects must have a minimum investment of at least $50,000 of qualified hard construction costs, with mixed use projects dedicating at least 30% of the floor area to business use. Investors making the improvements are eligible. Qualified rehabilitation improvements include, but are not limited to, the costs associated with excavation, grading, paving, driveways, roads, sidewalks, landscaping or other land improvements, demolition, carpentry, sheetrock, plaster, painting, ceilings, fixtures, doors, windows, fire suppression systems, roofing and flashing, exterior repair, and cleaning/clean-up. New construction projects require the owner to make a minimum investment of $250,000. The real property improvement grant for projects costing less than $5 million is limited to $125,000 over a five year period. Projects costing $5 million or more may collect grants up to $250,000 over a five year period. Real property improvement grants and jobs grants are subject to a combined $15.4 million cap statewide.

Contact Lindsay Hurt, Enterprise Zone Administrator, for more information. She may be reached at (540) 853-5405.

Local Incentives for Roanoke's Enterprise Zones

Local incentives are also offered by the city of Roanoke for each Enterprise Zone. For more information about the local incentives pertaining to the zones, refer to the City Enterprise Zones section.

Instructions and Forms

The Department of Housing and Community Development has online forms and prefers submissions for tax credits, grants, etc. be made online prior to the actual delivery of the materials at their office.

Additional Information