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As part of a $17 billion economic stimulus package to promote
jobs and economic growth nationwide, the U.S. Department of Housing
and Urban Development has designated the City of Syracuse,
plus six other urban communities across the country, as Federal
Empowerment Zones. The designation entitles these new EZs to receive
regulatory relief and tax breaks to promote job growth and economic
opportunity in order stimulate community revitalization.
The primary benefit to the new Empowerment Zones is a $17 billion
tax incentive package for businesses to locate and expand within
these areas. These incentives include wage credits, deductions
to taxable income, tax-exempt bond financing and capital gains
tax relief. Each incentive is tailored to meet the particular needs
of a business and offers a significant inducement for companies
to locate in and hire additional workers from the designated census
of the Empowerment Zone.
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The Syracuse Empowerment Zone includes census tracts within the
City of Syracuse and 3 "developable sites" outside the city.
Census tracts include the lakefront and former Oil City, the North Salina Street corridor, the near West Side to Geddes Street, part of the South Side to Brighton Avenue and an area south from I-690 which includes most of the University Hill. To confirm that your address is part of an EZ census tract, call the City Office of Economic Development at 315-448-8062.
Development Sites include Hancock Air Park, Electronics Park and
the former GM Fisher Guide site.
Many of the addresses in these census tracts are included in the
New York State Empire Zones. Hancock Air Park and Electronics Park
are also designated Empire
Zones.
Companies in both zones can apply for both Federal (Empowerment)
and State (Empire) Zone benefits.
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Tax Credits
- Wage credits- are especially attractive
to businesses looking to grow. These businesses are able to hire
and retain
Zone residents and apply the credits against their federal tax
liability. Businesses located within the new Empowerment Zones
will enjoy up to a $3,000 credit for every newly hired or existing
employee who lives in the EZ.
- Work Opportunity Credits - provide
businesses located with Empowerment Zones up to $2,400 against
their Federal
tax
liability for each employee hired from groups with traditionally
high unemployment rates or other special employment needs, including
youth who live in the EZ.
- Welfare to Work Credits - offer EZ
businesses a credit of up to $3,500 (in the first year of employment)
and
$5,000
(in the second year) for each newly hired long-term welfare recipient.
Bond Financing
In addition to the wage credits, there are significant tax incentives
available in support of qualified zone property and schools with
the EZs.
- Tax-Exempt Facility Bonds - help Empowerment
Zone businesses to receive lower-cost loans to finance property,
purchase equipment
and develop business sites within these communities.
- Qualified Zone Academy Bonds - allow
state and local governments to match no-interest loans with private
funding sources to finance
public school renovations and programs.
Capital Gains
Businesses located within EZs can avoid capital gain taxes entirely
or only partially recognize the gain on the sale of certain assets,
including stock and partnership interests. This benefit significantly
reduces the capital gains tax liability of businesses located with
these designated areas.
Tax Deductions
- Under Section 179 of the tax code, businesses located
with EZs may claim increased expensing deductions up to $35,000
for depreciable property such as equipment and machinery acquired
after December 31, 2001.
- Environmental Cleanup Cost Deductions allow businesses
to deduct qualified cleanup costs in Brownfields.
- Indian Reservations Deductions permit special accelerated
depreciation rules for qualified property placed in service on
Indian reservations.
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Like all distressed communities, Empowerment Zones will also be
able to take advantage of the New Markets Tax Credits that
provide equity investors in a Community Development Entity with
a credit against their federal taxes of 5 to 6 percent per year
for seven years of the amount invested. Also available to Empowerment
Zones is the Low-Income Housing Tax Credit providing credit
against Federal taxes for owners of newly constructed or renovated
rental housing.
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The first six of the current 30 Urban Empowerment Zones were designated
in 1994. They were created to establish an initiative that would
rebuild communities in America's poverty-stricken areas through
incentives that would attract investments in plant and equipment,
thereby creating jobs and enticing businesses back to the inner
cities. In 1998, the Initiative was expanded through a second round,
incorporating an additional 15 zones and changing the designation
of two Supplemental Empowerment Zones to the full status of EZs.
The current round, EZ Round III was established in January, 2002
and includes seven urban and two rural communities.
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