Tax credit zones back on the drawing board
Enterprise zone boundaries around Grand Junction must be redrawn starting Jan. 1. As a result, some businesses previously outside the boundaries could be drawn in, allowing them to qualify for a variety of beefed-up tax credits.
For example, starting in tax year 2014, companies operating inside the zone will be allowed to take $1,100 off their state income tax bills for every new employee they hire and enroll in the company’s health insurance plan.
If the business manufactures or processes agricultural commodities, the credit goes up to $1,600 for each employee.
A number of other special tax credits are available. Investment in certain types of property and equipment like commercial trucks and semi-trailers earns a tax credit.
Tax credits are also available to offset the cost of training new employees.
The credits are a dollar-for-dollar reduction in a business’ tax liability.
Under state law, an enterprise zone is an economically distressed area where special tax incentives are offered to businesses that expand or locate in the zone.
Enterprise zones provide state tax incentives to businesses located in the zones, particularly for new or expanding businesses.
The purpose of the incentives is to create new jobs and investments in the distressed area.
“All the county administrators (in the state) have to wipe the slate clean and review the distressed criteria based off of the new census data and redraw the boundaries,” said Kjersti Litzelman, Mesa County enterprise zone administrator.
Deciding where to place the new boundaries should take the whole year and will include several opportunities for the public to comment, Litzelman said.
Representatives from some areas of the county have argued for years that they should be included in an enterprise zone. They might get their chance under the new criteria, she said.
“We do have some huge changes coming,” Litzelman said.
The first part of the process requires Litzelman to sift through reams of economic and demographic data compiled during the 2010 U.S. census as updated to determine distressed areas around the county.
Under state law, there are two types of distressed areas.
An area is distressed when it has an unemployment rate that is 125 percent of the state’s unemployment rate.
The other type of distressed area is where the average income of each person living in the area is 75 percent of the state’s per person average income.
The state’s unemployment rate for November was 6.1 percent, according to the most recent data from the Colorado Department of Labor.
Based on that figure, to qualify as a distressed area, unemployment in the proposed enterprise zone would have to be 7.625 percent.
Mesa County’s unemployment rate for the month of December was 6.9 percent, according to the most recent data.
The state’s per person average income as of 2012 is $45,775, according to the U.S. Bureau of Labor Statistics.
Based on that figure, to qualify as a distressed area, average income in the proposed enterprise zone would have to be $34,333.
Mesa County’s average income was $38,478 in the first quarter of 2013, according to the most recent data.
Litzelman’s job will be to find business and industrial neighborhoods around the county with below average employment or income. The size of the boundaries she must draw will be limited by one other factor: population.
Mesa County cannot have an enterprise zone boundary that contains a population in excess of 115,000 people.
That’s why, unlike many other areas of the state, the entire county cannot be contained within a single enterprise zone.
Mesa County’s enterprise zone, one of the smallest in the state, resembles a slab of Swiss cheese due to population, said Kelly Flenniken, executive director of the Grand Junction Economic Partnership.
Flenniken serves as a member of the Mesa County Enterprise Zone Committee, which works with Litzelman on a variety of issues related to the zone. Litzelman will consult with the committee and the Board of County Commissioners as she redraws the boundaries.
The economic partnership plans to participate in the public process that will help create the new zones, Flenniken said.
“Really, when we look at what the spirit of the enterprise zone is, it’s to encourage development in otherwise distressed areas and there’s a lot of areas in our community that I think still kind of fall in that category,” she said.
One area the economic partnership would like to see brought back into the enterprise zone is Foresight Park, Flenniken said.
The park fell out of the zone earlier because development to the north — construction of an upscale residential neighborhood and expansion of Colorado Mesa University — “bumped it out,” she said.
“We don’t have a lot of other incentives and tools for economic development,” Flenniken said. “There are so many pieces of the enterprise zone that you can tap into based on what kind of project, what kind of building is constructed ... that it will really help us make a competitive go at some of our projects.”