Renewal Communities (RC) Initiative Summary
Contact: Loretta Rivers,
In December 2000, Congress passed
legislation to create 40 Renewal Communities (RC) along with a new round of
Empowerment Zones. The Renewal Community is a new kind of initiative that
promotes partnership among federal, state and local governments and community
organizations. The RC approach is to stimulate economic development in the
nation's most distressed communities through the benefit of special tax
Usage of the
various tax incentives offers existing RC businesses the opportunity to maintain
and create new jobs, generate tax savings, and encourage the reinvestment of the
savings into business expansion. Also, the RC tax incentives can be an economic
tool that can be beneficial in attracting new businesses into an area that is
being promoted for residential and commercial growth.
City of Detroit received an 8-year RC designation beginning January 1, 2002
through December 31, 2009. Located in the northeast section of the city, the
approximately 25-square mile RC area consists of 59 census tracts comprising
191,065 residents and 2,785 businesses.
Renewal Community Map
Locator: The Address Locator allows you to find out if a business
or residence is located within a Renewal Community, Empowerment Zone or
Enterprise Community. This online tool can help verify if a particular
location is eligible for the tax incentives offered in RC/EZ/EC areas.
ANNOUNCES DETROIT AND FLINT SELECTED AS RENEWAL COMMUNITIES - ELIGIBLE FOR $17
BILLION IN TAX INCENTIVES
The RC focuses on marshalling hte support
and commitments of state and local government, and forming alliances with
business and local community based organizations. This initiative does not
provide federal funds. Instead, it offers federal tax breaks. The tax incentives
can help to reduce the federal tax liability of businesses, increase the expense
limits of business assets, permits the issuance of tax-exempt bonds and provide
for exemptions from capital gains taxation for properties that are sold.
Also, the wage credits for businesses can
assist in encouraging job development and retention. This in turn can help RC
residents to become gainfully employed and economically self-sufficient. The
increased business activity that results from these actions will provide
economic growth and benefits to the RC area.
Nationwide, the RC tax package represents a
net worth of $22 billion in available tax relief that can
create jobs, grow
businesses, clean brownfields and build homes. The numerous tax incentives are
available and designed to encourage businesses to locate or expand operations
and to hire residents of the RC.
Businesses have the opportunity to use tax
incentives that range from wage credits, deductions, environmental clean up,
capital gains and new market tax credits to new low income housing tax credits.
The emphasis is to bring a community together through public and private
partnerships to attract the investment necessary for sustainable economic and
community development for both residents and businesses.
Starting January 1, 2002 through December
31, 2009, the Renewal Community provides the usage of the following tax
Federal tax credits up to $1,500 (each year) for existing employees and new hires living in the
Work Opportunity Tax Credit:
Federal tax credits up to $2,400 for new hires from
groups that have high unemployment rates or special employment needs.
Welfare to Work Credit:
Two-year credit against Federal taxes for hire of long-term family assistance
Increased Section 179 Deduction:
Allows a business to claim an increased deduction if it qualifies as a RC
Deduction Deduction of either one-half of qualified revitalization expenditures (QREs)
in the first year a building or all QREs on a prorated
basis over 10 years.
Environmental Cleanup Cost
Deduct qualified cleanup cost of
hazardous substances in certain areas (brownfields) in the tax year that
business pays or incurs the
Zone Academy Bonds
Zero Percent Capital Gains Rate
for RC Assets: The holder, for a
minimum of 5 years, of an RC asset acquired between
January 1, 2002, and December 31, 2009, will not have to include in its gross income any
qualified capital gain from the sale or exchange of the asset.
New Markets Tax Credit:
Equity investors in qualified Community Development Entities (CDEs) can obtain a tax credit
against Federal taxes of 5 to 6 percent of the amount invested for each of the years the
investment is held, for up to 7 years of the credit period.
Low-Income Housing Tax
Credit: 10-year credit against Federal taxes for owners of newly constructed or renovated
rental housing that sets aside a specific percentage of units for low-income persons for a minimum
of 15 years. The credit varies for new construction and renovation.
For Additional Information
obtain more information about the Renewal Community and its tax incentives, you
may visit the following web sites:
Community Renewal Web site: www.hud.gov/cr
954-Tax Incentives for Distress Communities: www.irs.ustreas.gov
Booklet - Tax Incentive Guide for Businesses: www.hud.gov/offices/cpd/economicdevelopment/library/taxguide2003.pdf