All federally designated Empowerment Zones have officially expired on 12/31/2011. The Empowerment Zones and Renewal Communities were originally set to expire on December 31st, 2009. However, on December 17, 2010, the President signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law 111-312). The passing of this legislation extended the tax incentives for all Federal Empowerment Zones (Rounds I, II, and III) and the District of Columbia Enterprise Zone, retroactively, through December 31, 2011.
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HUD's Initiative for Empowerment Zones and Renewal Communities (EZ/RC)
Round I Empowerment Zones
Nine Round I Empowerment Zones were designated in 1994 - six urban and three rural EZs. Each urban EZ received limited tax breaks for businesses and $100 million in social service block grants from the Department of Health and Human Services (HHS); each rural EZ received limited tax breaks and $40 million in HHS grants. The President also announced the designation of two supplemental EZs in Los Angeles, California, and Cleveland, Ohio. The Los Angeles EZ received $125 million in HUD Economic Development Initiative (EDI) grants and $325 million in Section 108 loan guarantee authority. The Cleveland EZ received $87 million in HUD EDI grants and $87 million in Section 108 loan guarantees.
Round II Empowerment Zones
Twenty additional Empowerment Zones were designated through the Round II competition in 1999 - 15 urban and 5 rural. For Fiscal Years 1999 through 2010, a total of approximately $25.6 Million in funding was approved for each of the 15 urban EZs.
Round II Enterprise Communities
In Round II, only rural areas received Enterprise Community designation. A total of 20 rural ECs were designated. Congress approved $250,000 annually for each Round II rural EC for fiscal years '99 through '01.
Renewal Communities and Round III Empowerment Zones
The Omnibus Consolidation & Emergency Supplemental Appropriations Act for FY 2001 (P.L. 106-554), signed into law on December 21, 2000, enacted the provisions of a number of bills of the 106th Congress. Among them was the Community Renewal Tax Relief Act of 2000 (CRTR Act), which authorized the designation of 9 new Empowerment Zones (7 urban and 2 rural) and 40 Renewal Communities (28 urban and 12 rural). HUD actually designated 8 urban EZs in Round III and USDA designated 2 rural Round III EZs. One more urban designation opened because Atlanta, Georgia lost its EZ designation since the new RC designated in Atlanta shared Census tracts with the original Atlanta EZ.
The Community Renewal Initiative
The Empowerment Zone tax incentives and the Renewal Community tax incentives were worth approximately $11 billion to eligible businesses. These incentives encouraged businesses to open, expand, and to hire local residents. The incentives included employment credits, a 0% tax on capital gains, increased tax deductions on equipment, accelerated real property depreciation, and other incentives. The most widely used Community Renewal tax incentive was the employment credit, which provided tax benefits to businesses that employ residents from the designated areas.
The overall goal of the EZ/RC tax incentives was to stimulate job creation and retention and to stimulate business investment in buildings and equipment within distressed communities. The interagency partnership between HUD and IRS was essential and resulted in securing data on claim trends from 1997 through 2008.
In this website you will find Historical Information on the Community Renewal Initiative, success stories from businesses in Empowerment Zones and Renewal Communities, and information on laws and regulations that apply to these programs. There are detailed maps of these communities and links to tax incentive publications, including IRS Publication 954 on Empowerment Zone and Renewal Community tax incentives.
Thank you for your interest in HUD’s Community Renewal program. Please call us at (202) 708-6339 or e-mail us at OCRTaxCredit@hud.gov if you need any assistance.
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