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Explaining the Empire Zone
By
DAVID HULSE
MONTICELLO — Since Governor George Pataki first
announced it last summer, many people around Sullivan County have
been trying to figure out just what or where the county’s Empire
Zone is.
While it’s new here, Sullivan County Planning Commissioner
Alan Sorensen explained that Empire Zones (EZ) have been around
since the late 1980’s. Sullivan County’s zone was designated on
July 30 of last year.
The EZ rules are complicated in part, because its
state-supported tax benefits are many, Sorensen said. For the average
small main street business, the designation can be worth $60,000
a year, for a large corporation, like Kohl’s Department Stores,
it can be $2 to $3 million annually, or more.
Businesses already designated
and those pending approval in the zone’s first year have proposed
businesses bringing some $80 million in new investment and some
2,000 new jobs, Sorensen said.
So far, the county has received applications from
businesses in every municipality except, the towns of Fremont, Rockland,
Highland, and Lumberland, and the villages of Bloomingburg and Wurtsboro.
Why here?
An EZ can be established by the state after a community
has demonstrated that it is “economically stressed.” Sorensen said
a “census tract” area along Monticello’s Broadway was chosen as
the basis for the county’s designation. That tract showed unemployment
over 10 percent, more than 20 percent of the population living below-poverty
income levels and a public-assistance rate of 14 percent of the
population.
Where is this zone?
With designation Sullivan was granted a zone of
1,280 acres, or two square miles. The EZ rules require that 960
acres of the designated program businesses be located within or
adjoining the “census tract” area. In Sullivan’s case, that means
in the towns of Thompson and Forestburgh or in the Village of Monticello.
The remaining 320 acres may be “nearby,” the census tract, which
in this case means anywhere in Sullivan County.
Businesses applying for designation to the zone
will be judged competitively as the county will bank acreage for
future development.
Am I eligible?
Eligibility in the EZ has two prerequisites.
You must demonstrate a minimum of $100,000 in
investment and/or an increase of five permanent full-time jobs.
How do you apply?
To get in on the program a business must do two
things: win designation and certification.
To become designated, applicants should come to
the planning office at the government center and speak to George
Bucci, the new EZ coordinator. Bucci will give you a five-page application
called a “boundary amendment.” It includes information about: what
you invest, how many jobs you plan to create and your employee history
over last five years.
The local EZ Administrative Board, will look over
applications and vote any recommendations for inclusion. The county
legislature has final local say on designation of properties in
zone and must pass a local law to amend the zone boundary.
After the legislature acts, the state’s EZ manager,
the Empire State Development Corporation reviews the local law and
makes final authorization for changes in the zone. The whole process
takes three to four months and may be done only once annually. Sorensen
said the county will be accepting applications for the next boundary
amendment through December 31 of this year.
After designation is completed, a business still
must be certified to receive EZ tax benefits. Sorensen, as planning
commissioner, is the certifying officer. Certification involves
another application form, in triplicate, again detailing new investment
and job creation. Sorensen reviews and certifies for the county.
A second copy is certified by the state Department of Labor and
a third by the Empire State Development Corporation.
This process, is quicker, “about a month,” Sorensen
said.
What do you get after all that?
Benefits for those eligible include:
- A 15-year Real Property tax credit, good
for 100 percent of taxes in the first 10 years, reduced 20 percent
each year over the last five. Unused credits may be obtained as
cash refunds, Sorensen said. “You might have $100,000 in credits,
and only owe $80,000 in taxes. You would get $20,000 back in cash,”
he said.
- Wage tax credit over five years of a minimum
of $1,500 for each new employee up to $3000 for “target” employees
with a history of unemployment on public assistance.
- Sales tax abatement on personal tangible
property and services, including office furniture, desks, shelving
and services, such as legal and consulting fees.
- Sales tax refund on building materials.
- Utility rate reductions of five percent on
telephone service and a negotiated rate through NYSEG or other
power suppliers.
- An enhanced manufacturing investment tax
credit. If you invest money in a building or property, machinery
or equipment, you get a percentage as a 13 percent tax credit
applied against business, corporate or personal state income taxes.
- Linked deposit. EZ participants are eligible
for loans of up to $500,000 at a state subsidized, reduced interest
rate over the first two years.
How long will EZ last?
The current sunset of the program is 2005, but
a bill to extend it another 15 years has been introduced in the
state legislature. In order to qualify for benefits, local businesses
must be certified prior to July 1, 2005, under existing legislation.
A much publicized “loop-hole” in the legislation
that would have allowed existing businesses to apply for EZ, by
changing corporate names is not being accepted in Sullivan, Sorensen
added. “The Governor’s new budget is proposing cutting out that
loop-hole and we’ll go on that basis,” he said.
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