Were you aware that the Commonwealth of Virginia appropriates grant funding for companies that invest in certain areas in the state? The Commonwealth of Virginia wants to encourage rejuvenation of certain towns and cities and is willing to award funding for the rehabilitation, expansion or new construction of real estate and/or creation of higher wage jobs. In 2016, approximately $12m was set aside for this purpose, and in 2017 the General Assembly has approved a total of approximately $13m to be awarded to Companies who meet the specific criteria.
So how does it work? The areas are called Enterprise Zones and there are two types of grants available: the Real Property Investment Grant (RPIG) and the Jobs Creation Grant (JCG). Assuming your Company meets the criteria, the next step is to submit an application to the state. Apart from one exemption, the information in the application must also include a report from a CPA that attests to the information within. Important to note; the Virginia EZ program requires that the CPA is licensed in Virginia. The qualification period is based on a calendar year, so jobs must be created and/or eligible real property assets placed in service by December 31st. The application process is managed by the Department of Housing and Community Development (DHCD) and the timeline works something like this: The online submission system opens January 1st and applications are due April 1st, no exceptions! There is a period of correspondence in May to address any application deficiencies, which must be resolved by June 1st. Grant awards are mailed to qualified recipients during July.
Also worth noting is that JCG applications have funding priority over RPIG applications; RPIG gets what’s left of any remaining amount. In recent years, there have been more RPIG applicants than funds available and the remaining funding was prorated among the qualified applicants. Each RPIG awardee received 69% in 2014, 66% in 2015, and 74% in 2016 of the amounts they requested.
So what are the criteria? As you would expect it’s very different for each grant and you can apply for both:
Real Property Investment Grant (RPIG): A single/multiple property owner, tenant or developer can qualify for the RPIG once they have incurred eligible expenses (hard construction costs only) of at least $100,000 for rehabilitation /expansion and $500,000 for new construction. The award is 20% of the eligible costs over those thresholds. There are two caps; the maximum amount anyone can receive is $100,000 (for qualified expenditure < $5m) and $200,000 (for qualified expenditure > $5m); and the time period is over 5 consecutive years, since the award is attached to the property location, not the ownership. For example, an applicant spends $300,000 on eligible rehabilitation/expansion costs and submits a grant application for $40,000 = 20% x ($300,000-$100,000). That leaves $60,000 of grant funding available for that property over the next 4 years, should the applicant (current or new owner) meet the eligibility criteria to apply.
Jobs Creation Grant (JCG): For the JCG, this translates to permanent, full-time jobs earning 175% of the federal minimum wage, with certain health benefits. There is a list of entities and positions prohibited from applying for the JCG and include: retail (NAICS 44-45), personal service (NAICS 812), food and beverage (NAICS 722); local, state and federal governments (FEIN 746), and non-profit organizations (except for NAICS 813910 and 813920). Just to be clear, while ineligible for the JCG, there is nothing to preclude a Company from submitting a RPIG application, if applicable. To apply for the JCG, a Company must have created between 5 and 350 eligible positions; each position is eligible for a $500 grant, or $800 for even higher paid jobs (200% of federal minimum wage). The grant period is for 5 years. Provided that net new positions (not necessarily the same person) created in the first year have either been maintained or increased, the Company can reapply for each of the next four years. New 5-year terms can be started repeatedly as long as net new jobs continue to be created. However, the base year will have to be reset each 5 years.
There is much to consider. Contact our specialized Enterprise Zone team to see if you are in a Zone and whether you could be eligible to apply for a grant award. We can also assist you with completing the application.