Enterprise Zone

Portsmouth’s new Virginia Enterprise Zone was designated in 2010 and offers state and local incentives to qualifying businesses locating and expanding within the Zone. Targeted areas include the MAST Center, PortCentre Commerce Park, Downtown, Midtown and the Victory Village area.

STATE INCENTIVES
Real Property Investment Grant

• Cash grants equal up to 20% of the amount of qualified investment in excess
  of the threshold
• The qualifying investment threshold for new construction equals $500,000;
  the rehabilitation threshold is $100,000
• The maximum benefit per building or facility within any five-year period is $100,000 for projects less than $5 million and $200,000 for projects of $5 million or more
• Mixed-use projects must have at least 30% of floor area in commercial,
  industrial or office use in order to qualify
• Grants are payable to the owner and/or tenant incurring costs
• The application deadline is April 1 of year following completion of the work

Job Creation Grant

• Cash grants equal up to $800 per year for five years for new positions earning 200% of the federal minimum wage and offering health benefits; up to $500 for those earning 175-199% of the federal minimum wage and offering health benefits
• The first four positions created are not eligible for grants. Grants are paid
  on a maximum of 350 positions per year.
• Retail, food and beverage, and personal service firms are not eligible
• Firms may qualify for additional five-year periods with further job creation
• The application deadline is April 1

For more information contact the Virginia Department of Housing and Community Development at (804) 371-7121 or visit www.dhcd.virginia.gov

LOCAL INCENTIVES
Business Personal Property Investment Grant

• Cash grants equal 50% of the net increase in business personal property taxes
  and are paid over five years
• Grants are paid semi-annually after a performance agreement is signed
  with the Portsmouth EDA and after all taxes are paid to the City
• A qualifying firm must create at least 10 new jobs and invest at least $500,000
  in new business personal property
• The firm must be a target industry: technology, modeling & simulation,
  maritime/logistics office, corporate/professional office or healthcare
• The firm must have a current business license and authorize the Commissioner
  of the Revenue to release pertinent tax data
• The firm must apply within 12 months of meeting all qualifications; jobs and
  investment targets must be met within 12 months of each other

Machinery and Tool Investment Grant

• Cash grants equal 50% of net increase in machinery and tool taxes and are
  paid over five years
• Grants are paid semi-annually after a performance agreement is signed with
  the Portsmouth EDA and after all taxes are paid to the City
• Must create at least 25 new jobs & invest at least $2,500,000 in new machinery
• Jobs must pay at least 175% of the federal minimum wage
• Must authorize the Commissioner of the Revenue to release pertinent tax data
• The firm must apply within 12 months of meeting all qualifications; jobs and
  investment targets must be met within 12 months of each other

Development Fee Rebate

• Rebates 90% of fees for rezoning, use permit, and subdivision applications and site plan reviews and 50% of building plan review and building permit fees (excluding state levy) to a qualifying developments.
• Rebates are received after Certificate of Occupancy.
• Qualifying developments are new construction or improvements to an existing structure totaling $50,000 or more that results in a net increase in the property's real estate assessment as determined by the City Assessor.
• Applications consist of two parts; Part 1 must be submitted to the local Enterprise Zone administrator within 10 days of obtaining required permits; and Part 2 must be submitted to the administrator within 120 days of Certificate of Occupancy.

Commercial Facade Loan Program

• $5,000 to $50,000 loans from the Portsmouth Redevelopment & Housing
  Authority for commercial and mixed-use building façade renovations
• Terms are 2% below prime for 10 years
• Limited to contiguos zone area from Downtown waterfront to Midtown Corridor Streetscape Improvement Incentive
• Acceleration of planned streetscape improvements affecting commercial or mixed-use developments of at least $25 million (subject to availability of adequate capital funding)

Mixed-Use Development Incentive

• If needed to facilitate a mixed-use development of at least $25 million,
  an appropriately scaled public contribution can be negotiated with the developer.
  

Foreign Trade Zones

The Foreign Trade Zone (FTZ) is a federal designation that allows businesses located within the zone to defer, reduce or eliminate the payment of U.S. customs duties on imported goods held within the zone. Customs duties are paid only when and if merchandise is transferred into U.S. Customs territory. No Customs duties are paid on merchandise exported from a FTZ. Duties are not paid on broken or wasted product.

Businesses are allowed to store goods within the Zone indefinitely. With special authorization from the FTZ Board, companies are also allowed to manufacture products within the zone and pay duties on either the foreign parts used or the finished product, whatever rate is most advantageous. Merchandise may also be moved into the Zone for inspection, testing and repair.

While the Zone is physically located within the United States, businesses and activities for the purposes of tariff laws and Customs entry procedures, are treated as being outside the Customs territory of the United States. The zone is authorized by the U.S. Foreign Trade Zone Board and operates under the supervision of the U.S. Customs Service and the Virginia Port Authority as Grantee of FTZ No. 20. PortCentre Commerce Park and the Portsmouth Marine Terminal are designated as Foreign Trade Zones.

For more information, contact the U.S. Foreign Trade Zone Board at
(202) 482-2862 or visit www.customs.gov.

Tax Exemption For Rehabilitated Structures

The historic character and diversified architecture of Portsmouth is a part of our hometown personality that we want to keep and will gladly offer incentives for you to join us in those efforts. The Portsmouth City Council has approved an ordinance enacting a tax empemption for real estate that is substantially repaired, rehabilitated, or replaced. The tax exemption program
encourages renovation and revitalization of aging structures located in the City. By improving the condition and appearance of existing properties, Portsmouth will become a more appealing place for homeowners and busineeses to invest.

• Building must be at least 25 years old
• Residential rehabilitation must increase the base assessed value by at least 40% with less than 15% structural addition (1)
• Commercial and industrial rehabilitation must increase the base value by at least 60% with less than 15% structural addition (2)
• The owner or agent must file application along with a $50.00 application fee, with the City Assessor within 10 days after obtaining building permits to perform the rehabilitation
• The exemption period is 10 years

Properties located within the Enterprise Zone

• Applies to qualifying commercial, industrial and mixed-use properties (3)
• The $50 application fee is waived
• The building age requirement is reduced to 15 years
• If base assessed value increases by at least 100%, qualifying properties may receive an additional 5 years of partial exemption

For more information, contact the City Assessor’s Office at (757) 393-8631.

1) If the total square footage of such rehabilitated, renovated, or replacement structure exceeds that of the original structure by more than 15%, the excess square footage above said additional 15% shall not be entitled to the real estate exemption.
2) In the event of a complete replacement, the portion of the replacement eligible for the real estate tax exemption shall not exceed 110 % of the square footage of the original structure.
3) The term mixed-use means any building developed as mixed-use as defined in Chapter 40.1 of the City Code.

HUBZone Program

The HUBZone Program is a “placebased” federal contracting program for small businesses. The program is administered by the U.S. Small Business Administration and provides both Federal prime contract and subcontract benefits.

Types of Contracts

A competitive HUBZone contract can be awarded if the contracting officer has a reasonable expectation that at least two qualified HUBZone firms will submit offers and that the contract can be awarded at a fair market price.

A sole-source contract can be awarded if the contracting officer does not have a reasonable expectation that two or more qualified HUBZone small businesses will submit offers, determines that the qualified HUBZone small business is responsible, and determines that the contract can be awarded at a fair market price. The government estimate cannot exceed $5 million for manufacturing requirements or $3 million for all other requirements. A full and open competition contract can be awarded with a price evaluation preference. The offer of the HUBZone small business must not be more than 10% higher than the offer of the non-HUBZone/non-small business.

Other Programs

Small businesses located in the HUBZone can qualify for higher government guaranties on surety bonds for construction and service contract bids. The SBA will increase its guaranty on surety bonds to these companies from 80% to 90% making it easier for them to compete for government and private sector contracts.

Eligibility

Only companies certified by the SBA are eligible to participate in the HUBZone program. To qualify, a small business must meet all of the following requirements:

• The company’s principal office must be in a HUBZone
• At least 51% of the company is owned and controlled by U.S. Citizens
• At least 35% of the company’s employees must be HUBZone residents

8(a) firms located in a HUBZone will be able to receive contracting opportunities under both programs.

For more information, contact the Small Business Administration Virginia District Office at (804) 771-2400 or visit www.sba.gov/hubzone.

Historic Rehabilitation Tax Credits

Portsmouth has six historic districts containing homes and buildings with an exciting variety of potential uses. In that we cherish our heritage, we encourage your interest in preservation and historic rehabilitation and will assist you in any manner we can beyond the Federal and State tax credit programs briefly explained here.

Through the Federal and State Rehabilitation Tax Credit programs, property owners receive incentive for private investment in the preservation of historic buildings. Buildings that are individually listed in the National Register of Historic Places and the Virginia Landmarks Register, or are certified as contributing to a historic district that is listed on these registers, are eligible for the tax credits.

For the Federal Program

• The cost of the rehabilitation must exceed the owner’s basis in the building, or $5,000, whichever is greater
• The credit is 20% of the eligible rehabilitation expenses
• The credit applies to income producing properties only

For the State Program

• Income-producing properties: The cost of the rehabilitation must be at least
  50% of the assessed value of the year preceding the rehabilitation
• Owner-occupied properties: For rehabilitations completed after January 1, 2001,
  the cost of the rehabilitation must be at least 25% of the assessed value of the
  building in the year preceding the rehabilitation
• The credit is 25% of the eligible rehabilitation expenses

For more information, contact the Virginia Department of Historic Resources Tidewater Regional Preservation Office at (757) 886-2818.

New Markets Tax Credits

Federal New Markets Tax Credits are available to both investors and businesses in Portsmouth. Investors of any kind can invest in the Portsmouth renaissance through this program and receive 39% in federal tax credits on their investment while supporting the development and growth of local businesses. Qualified businesses can utilize this program to receive alternative sources of
financing to sustain, expand or create businesses in various sections of Portsmouth. This program has been highly effective throughout the nation at creating jobs, expanding businesses, finding new uses for existing structures and bringing new, mixed-use development to aging communities. It gives a needed influx of flexible funding options to Portsmouth businesses while benefiting
investors through tax credits and additional financial returns.

For more information, contact a Community Development Entity (CDE). Local CEDs include:

Southside Development Enterprises (757) 391-2910
Towne New Markets CDE, Inc. (757) 628-6364
Hampton Roads Ventures (757) 531-7161

Virginia Jobs Investment Program (VJIP)



Companies meeting the criteria can contact the Virginia Jobs Investment Program team at (804) 371-8120 or wfsmail@vdba.virginia.gov to request a presentation on the program. A staff member must meet with a company before its application can be processed. Eligibility for assistance in the New Jobs and Small Business New Jobs Programs is limited to projects for-profit companies in the following business sectors; Manufacturing Operations, Distribution Centers, Corporate HQ’s for Companies with Multiple Facilities (only HQ support positions will be funded), Inbound Call Centers, Information Technology Services Exclusively for Businesses, R & D Facilities.

New Jobs Program

The New Jobs Program is a vital part of the Commonwealth of Virginia’s economic development efforts. The program targets expansions of existing companies or new facility locations. In order to qualify, a company must be:

• Considering another state or country for the new location or expansion.
• Generating over 50% of its revenue from outside Virginia.
• Creating at least 25 net new jobs within 12 months from the date of the first hire.
• A new capital investment of at least $1,000,000 associated with the location or expansion.
• Paying a minimum entry-level wage rate of $10.00 per hour.
  Only full-time jobs are eligible for funding.
  

Small Business New Jobs Program

The Small Business New Jobs Program supports existing Virginia companies which have 250 employees or less companywide. In order to qualify for assistance, a company must be:

• Creating at least 5 net new jobs within 12 months from the date of the first hire.
• Making a new capital investment of at least $100,000 associated with the start up or expansion.
• Paying a minimum entry-level wage rate of $10.00 per hour. In areas that have
  unemployment of two times or more the state level, this wage minimum may be waived. Only full-time jobs are eligible for funding.

Retraining Program

Eligibility for assistance in the Retraining Program is limited to projects for-profit companies in the Manufacturing Operations and Distribution Centers business sectors. The Retraining Program provides services and funding to manufacturing companies and distribution centers to assist in training their existing work force. Retraining is defined as upgrading the skills of existing employees identified as essential to the production or distribution of a product. Companies participating in the program are typically are undergoing an integration of new technology into its production processes, changing product lines in keeping with marketplace demands, or substantially changing service delivery processes requiring an assimilation of new skills and technological capabilities. Companies may utilize the Retraining Program not more than once every three years. In order to qualify, a company must be:

• Retraining at least 10 full-time employees
• Making a new capital investment of at least $500,000 associated with the retraining project.
• Paying a minimum entry-level wage rate of $10.00 per hour. In areas that have
  unemployment of two times or more the state level, this wage minimum may be waived.
  Only full-time jobs are eligible for funding.

Other Statewide Incentive Programs

Governor’s Opportunity Fund

Discretionary funds available to the Governor to secure a business location or expansion project for Virginia. Grants are awarded to localities on a local matching basis with the expectation that the grant will result in a favorable location decision for the Commonwealth.

Virginia Investment Partnership Act

The Virginia Investment Partnership (VIP) Grant and the Major Eligible Employer Grant (MEE) are discretionary performance incentives designed to encourage continued capital investment by Virginia companies, resulting in added capacity, modernization, increased productivity, or the creation, development and utilization of advanced technology.

The Virginia Economic Development Incentive Grant (VEDIG) is a discretionary performance incentive, designed to assist and encourage companies to invest and create new employment opportunities by locating significant headquarters, administrative or service sector operations in Virginia.

Sales and Use Tax Exemptions

Virginia offers some of the broadest sales and use tax exemptions in the U.S.

Property Tax Exemptions

Virginia does not tax intangible property, manufacturers' inventory, and manufacturers' furniture, fixtures and corporate aircraft.

Virginia Small Business Financing Authority (VSBFA)

VSBFA offers programs to provide businesses with access to capital needed for growth and expansion.

VIRGINIA CORPORATE INCOME TAX INCENTIVE

Major Business Facility Job Tax Credit

Qualified companies locating or expanding in Virginia receive a $1,000 corporate income tax credit for each new full-time job created over a threshold number of jobs.

• In Portsmouth, that threshold is 25 jobs. In communities that are not economically
  distressed areas, the threshold is 50 jobs, unless in a Virginia Enterprise Zone.
• The $1,000 credit is available for all qualifying jobs in excess of the threshold
  and is taken in equal installments over two years ($500 per year) through 2012.
• Non-qualifying jobs include retail, seasonal positions, building and
  grounds maintenance, security, and other positions ancillary to the
  principal activities of the facility.
• Unused credits may be carried over for up to ten years through 2020.
• This incentive cannot be taken in conjunction with the Enterprise Zone
  Job Creation Grant.

For more information, contact the Virginia Department of Taxation at
(804) 367-8037 or visit www.tax.virginia.gov.