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Project Guidelines
Colorado
Economic Development Commission
Revised June 2000
Background
Statutory Purpose and Authority.
The purpose of
the enterprise zone contribution tax credit (39-30-103.5,
C.R.S.) is to encourage taxpayers to assist local enterprise zones,
working with governmental and non-profit partners, to undertake activities
“implementing the economic development plan for the enterprise zone.”
“Economic development” is further defined by the statute to
mean “directly related to job creation, job preservation,” as
well as assisting homeless shelters which provide employment-related services
in zones. The Colorado Economic Development Commission (the "EDC") is
charged with reviewing and approving proposed projects which it determines
are “eligible under the requirements of [the law] or [are] essential
to the mission of the enterprise zone.”
Categories of Projects
Eligible Categories: The
commission has determined that projects which fall in the following categories
generally meet the purposes allowed by the law, subject to review of individual
project issues:
- Homeless shelters that offer or provide referrals to child
care, job placement, and counseling services for the purpose of promoting
employment for homeless persons in enterprise zones.
- Business assistance (management training and counseling, incubators,
finance funds, feasibility studies, etc.)
- Job training projects directed at specific skill training
in cooperation with area business and industry. General institutional
support of educational institutions will not be approved.
- Infrastructure projects serving businesses (water, sewer,
transportation, telecommunications, streetscaping, business and industrial
parks), so long as the primary purpose is not to serve an individual
user or development who is a contributor.
- Marketing for business, economic, and business district development.
- Rural Health Care Facilities which are identified in a rural
enterprise zone’s development plan as essential to maintain the
viability of small and/or remote communities and directly related to
job creation or job preservation.
Ineligible Categories: The
commission has determined that projects in the following categories have
an indirect relationship to job creation and job preservation, and therefore
will generally not be approved. Although such projects may make significant
contributions to communities’ quality of life, they are often difficult
to distinguish from general community amenities which should be supported
without aid of the state enterprise zone tax credits.
The commission interprets the requirement that projects (other than homeless)
must be directly related to job creation or job preservation to mean that
the project must have as one of its main purposes creating or preserving
an environment which will help attract, expand, or retain employers in
the enterprise zone. Direct employment of the sponsoring non-profit organization
will not be used to qualify a project, nor will project construction
employment.
- Community, cultural, and recreation facilities (community centers,
events centers, senior centers, libraries, museums, arts centers, recreation
and sports facilities, golf courses, fairground enhancements, etc.)
- Education except for specific job training or child care activities
- Health care (except essential rural health care facilities)
- Housing
- Marketing for tourism, special events, etc.
- Tourism attractions
- Parks and open space
General Policies
Zone Geography: If a project operates both within and outside of enterprise zone boundaries, the sponsoring organization should be able to show that EZ contributions are used to cover those expenditures which it can reasonably allocate to the zone geography, and that other sources of funding are available to cover non-zone related activities.
An eligible homeless organization’s housing and employment support services must be located within a zone, or, if the housing is not within the zone boundaries, the organization’s facility offering employment referrals, counseling, and training should be located in the zone.
Multiple Purpose Organizations: Organizations which serve multiple purposes in addition to an approved project must maintain a separate accounting system to assure that zone-contribution funds are used only for the approved functions.
No Direct Benefit: The statute provides that no credit is to be “allowed for contributions that directly benefit the contributor.” The commission will not approve project proposals whose primary purpose is to provide infrastructure for an individual user or developer who is a contributor. Multiple-user projects may be considered on a case-by-case basis.
Grandfathering of On-going Projects: In order to meet the legislation’s mandate that changes in policy affecting on-going contributions projects be phased in over a period of years, the commission has allowed projects which fall in one of the ineligible categories that were initially approved by their zone prior to May 1, 1996, to continue to provide a tax credit for contributions subject to the following conditions: beginning July 1, 1997, the local enterprise zone administrator will certify for the state tax credit only those contributions which are made pursuant to a pledge agreement executed between the taxpayer and the zone administrator prior to July 1, 1997. Contributions pursuant to such pledge agreements which are otherwise eligible may be honored through December 31, 2000.
Child Care Projects: Contributions to promote child care are eligible for a statewide 25 percent credit for tax years beginning on or after January 1, 1999, and 50 percent for tax years beginning on or after January 1, 2000. For tax years prior to January 1, 1999, contributions to approved projects to promote child care in an enterprise zone were eligible for the EZ contribution credit. However, contributions to a child care project made pursuant to a valid enterprise zone pledge agreement may continue to qualify for the 50 percent EZ credit in lieu of the new statewide credit. (For more information, see Department of Revenue FYI # Income 35.)
Procedures
Proposed projects must be approved and submitted to the EDC by a designated local zone administrator. In order to facilitate review by the EDC, the commission requests zone administrators to honor scheduling parameters that it may issue. Effective July 1, 1999, only new or modified projects must be submitted to the commission for its approval. However, zone administrators are required to submit to the commission by November 1 of each year a list of all projects eligible for contributions in the coming calendar year. Organizations seeking approval for enterprise zone projects agree to abide by all applicable reporting and procedural requirements of the Colorado Economic Development Commission and Department of Revenue.
Proposed projects which constitute new activities are required to apply to the commission, and if approved will be considered “new” projects qualified to offer the 25 percent credit. The EDC may determine that a proposal constitutes a new or modified“project” based on the substance of the proposed activity, even though the proposal may fit under a generic title or be sponsored by an organization which was previously approved.
The Economic Development Commission reserves the right to vary from the guidelines and criteria as necessary and appropriate.
