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Georgia Department of Community Affairs Opportunity Zones State Job Tax Credit

Georgia Department of Community Affairs Opportunity Zones State Job Tax Credit. Opportunity Zones O.C.G.A. 48-7-40.1(c)(4). General Strategy

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Georgia Department of Community Affairs Opportunity Zones State Job Tax Credit

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  1. Georgia Department of Community AffairsOpportunity ZonesState Job Tax Credit

  2. Opportunity ZonesO.C.G.A. 48-7-40.1(c)(4) • General Strategy • Encourage local governments to use existing redevelopment statutes in an innovative fashion to revitalize blighted commercial, industrial and adjoining residential areas • Reward local governments and businesses that undertake such revitalization with access to maximum State Job Tax Credits • Operate state-wide, wherever eligible “pockets of poverty” and redevelopment needs occur (rural, urban and suburban). • Support bottom up, locally driven initiatives through local collaborative partnerships

  3. Promising Uses for Opportunity Zones • Rural areas with sluggish economies and blighted industrial, commercial and adjoining residential areas • Brownfields • Declining commercial corridors • Pockets of older commercial and industrial areas with outdated (blighted) facilities and buildings in otherwise affluent counties • Deteriorating in-town neighborhoods adjoining older industrial areas (state EZ allows tax abatement on rehabilitated housing)

  4. Opportunity Zone RequirementsO.C.G.A. 48-7-40.1(c)(4) • Opportunity Zones are enabled pursuant to “less developed area” portion of BEST [O.C.G.A 48-7-40.1(c)(4)] • Allows DCA to designate as an “Opportunity Zone”, an area within or adjacent to one or more contiguous census block groups with a 15% or greater poverty rate, where the area is part of an Enterprise Zone OR where a Redevelopment Plan has been adopted by the local government, and the area displays pervasive poverty, underdevelopment, general distress and blight.

  5. Opportunity ZonesApplicable Statutes for Local “Tools” • Georgia Urban Redevelopment Law – O.C.G.A. 36-61; OR/AND • Enterprise Zone Employment Act – O.C.G.A. 36-88

  6. Local Redevelopment Tools – Urban Redevelopment Law (O.C.G.A. 36-61) • Provides cities and counties the power to rehabilitate, conserve or redevelop a blighted area • Local government must adopt a resolution finding the area is blighted and that redevelopment is necessary • Local government must adopt an urban redevelopment plan for the target area

  7. Local Redevelopment Tools - Enterprise Zone Employment Act (O.C.G.A. 36-88) • State Enterprise Zone Criteria • Poverty • Unemployment • general distress • underdevelopment • Blight • Local property tax breaks for Commercial and Residential Property • Other Local Incentives

  8. Incentives • State designation of an Opportunity Zone would allow: • ANY businesses (including retail) within the area to qualify, not bound by “Business Enterprise” definition • Lower job creation threshold to 2 jobs to qualify for the state’s maximum job tax credit of $3,500 per job • Allow credit against 100% of income tax liability, with excess credit available to claim against payroll withholding

  9. Example of OZ Credit Usage Jobs Created Credit Tax Liability Withholding Year 1 2 $ 0 Year 2 3 $7,000 $1,200 $5,800 Year 3 3 $10,500 $1,000 $9,500 Year 4 4 $10,500 $1,500 $9,000 Year 5 4 $14,000 $1,700 $12,300 Year 6 5 $14,000 $2,100 $11,900 Year 7 5 $10,500 $2,050 $8,450 Year 8 6 $7,000 $1,800 $5,200 Year 9 6 $7,000 $1,750 $5,250 Year 10 6 $3,500 $1,450 $2,050 Year 11 7 $3,500 $1,600 $1,900 Year 12 7 $ 0 $ 0 TOTALS $87,500 $16,150 $71,350 In the above example, a Job Tax Credit of $87,500 is generated, with the business able to utilize all of the credit

  10. Redevelopment Area before/after

  11. Opportunity Zones – Partnerships! • Partnerships with other public and private entities targeting same areas: • Private • Bank CRA Programs, Non-Profits, Philanthropic organizations • Federal • HUD’s CDBG, HOME, HOPE and others • Treasury’s New Market Tax Credits and CDFI programs • SBA, USDA, FHLB, HHS and others

  12. Application, regulation, maps and more available at: • http://www.dca.state.ga.us/economic/DevelopmentTools/programs/opportunityZones.asp For questions, please contact: Dawn Sturbaum (404) 679-1585 dsturbau@dca.state.ga.us Brian Williamson (404) 679-1587 bwilliam@dca.state.ga.us

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