The Enterprise Zone state tax credit survived a bill last year that would have killed it, but the program is not out of the woods yet.
A state House bill has created the Enterprise Zone Task Force to take a critical look at the program, which could cost businesses if the tax credits go away.
The task force is looking at the purpose of the tax credits, how the enterprise zones are currently structured and individual usage of the credits, said Laura Lewis Marchino, assistant director of the Region 9 Economic Development District.
The 15-member task force was created through House Bill 1241, sponsored by Rep. Mark Ferrandino, D-Denver, and Sen. Rollie Heath, D-Boulder, to review the program and issue a report in December with its findings.
Businesses in areas designated as economically distressed can apply for the tax credits. The 2011 annual report for the Southwest Enterprise Zone from Region 9 shows 106 businesses in the county participated in the program and received a total of $479,600 in tax credits. The report also shows 100 jobs were created from the tax credits.
It is clear two of the tax credits are under utilized: a 25 percent tax credit for vacant building rehabilitation, and credits for research-and-development costs.
The issues go deeper than just usage, though. The enterprise zones have not been looked at for 16 years. The zones should have been adjusted in 2000 after the census came out, but the state decided to delay it because of the recession, Marchino said.
“The lack of credibility in the program may be due to not updating the boundaries enough,” Marchino said. “Legislators are looking at cutting the budget and asking why they’re giving away tax credits.”
There are areas currently designated as distressed zones that are now booming, she said.
While the state typically looks at whole counties to see if they meet the distress requirements, La Plata County has only certain areas that have been labeled enterprise zones. The county as a whole did not meet the requirements, so the state looked at the individual census tract for each area within La Plata County.
La Plata County, and Durango especially, could face some changes if the boundaries are altered. All agricultural land was placed in enterprise zones, but many of those parcels could have other classifications now.
“There will definitely be changes in La Plata County,” said Donna Graves, a consultant with Region 9. “A lot of parcels have changed from agriculture to other classifications. Anything not an agricultural parcel would definitely be out.”
It’s not just agriculture areas that could see a dramatic shift. The area by Fort Lewis College is currently classified an Enterprise Zone, but the SkyRidge subdivision did not exist 16 years ago.
“That area has changed a lot and may not be eligible based on income and that kind of thing,” Marchino said. “The city of Durango does really well, so a lot of those areas would be at risk if you’re just looking at the census tract.”
Another area that could see a shift is Bodo Industrial Park, which is currently in a distress zone.
The county asks for the U.S. Highway 160 corridor to be included in zones because they want growth in that area so the city isn’t sprawled out, Marchino said.
Region 9 Executive Director Ed Morlan was appointed to the task force as an economic-development professional, and he said the group has questioned the effectiveness of the program and its economic impact.
Several subcommittees were created at its first meeting in July to look at the mechanics, intent, boundaries and tax credits. Morlan is the head of the mechanics subcommittee that is in charge of looking at how efficiently the program functions.
The task force will meet four more times before issuing its report.