The Georgia Department of Community Affairs has recently created the Application for Chronically Underdeveloped Certification for enterprise zone designation, which is attached below.
While the amendment to GA Code Section 36-88-6 created by House Bill 342 is not new per se, the process and application for taking advantage of the sales and use tax exemption within an enterprise zone were only recently developed in response to Ryan’s requests regarding a Georgia development project.
Signed in April 2017 and taking effect in July 2017, House Bill 342 added an additional benefit of a sales and use tax exemption to the Georgia Enterprise Zone Act. The newly added section 6(g) states that qualifying areas nominated for an enterprise zone, certified by the Department of Community Affairs Commissioner to be chronically underdeveloped for a period of 20 years or more, also qualify for a 30-Year Sales and Use Tax Exemption. Until recently, no application existed to seek this certification. Thanks to Ryan’s involvement, the path has now been paved to obtain these additional benefits in qualifying areas.
Enterprise zones designated under the 6(g) language not only provide the additional sales and use tax benefit, but the 6(g) provision also extends the timeline of the zone itself. An area designated as an enterprise zone under section (g) of Code Section 36-88-6 remains in existence for 30 years from the date of creation or until the redevelopment project is complete and any revenue bonds issued are retired, whichever occurs first. Outside of 6(g), enterprise zones have a duration of 10 years unless terminated earlier by resolution. However, the property tax incentives remain in effect for the full 10-year period, regardless of the termination of the enterprise zone designation.
Projects within a 6(g) designated enterprise zone can receive:
- A local property tax abatement for up to 10 years – §36-88-8(a)(1)
- By statute, property tax abatement cannot exceed:
- 100% Years 1–5
- 80% Years 6–7
- 60% Year 8
- 40% Year 9
- 20% Year 10
- By statute, property tax abatement cannot exceed:
- Local abatements or reduction in occupation taxes, regulatory fees, building inspection fees, and other fees that would otherwise be imposed on qualifying business – §36-88-9(a)
- A 30-Year Sales Tax Exemption – §36-88-6 (g)(2)
The local governing body may also assess and collect annual enterprise zone infrastructure fees from each retailer operating within the project’s boundaries, in an amount not to exceed, in aggregate, the total sales and use tax exempted on the retailer’s transactions. Fees may be pledged by such local governing body, directly or indirectly, as security for revenue bonds issued for development or infrastructure within the enterprise zone, allowing local governments another mechanism to secure upfront funding for development.
To apply for the Chronically Underdeveloped Certification and take advantage of the Enterprise Zone 30-Year Sales and Use Tax Exemption, click here to access the application form.
If you have questions about how the Enterprise Zone 6(g) language and the Chronically Underdeveloped Certification apply to the Georgia Enterprise Zone Act, please reach out to the Ryan contacts listed below.
TECHNICAL INFORMATION CONTACTS:
Maher Maso
Principal
Ryan
972.934.0022
maher.maso@ryan.com
Allea Newbold
Principal
Ryan
813.371.0566
allea.newbold@ryan.com
Matt Lowell
Principal
Ryan
321.251.2924
matt.lowell@ryan.com
Savannah Jermance
Director
Ryan
505.312.4411
savannah.jermance@ryan.com
Jay Patel
Senior Manager
Ryan
210.429.8271
jay.patel@ryan.com
Alicia Briggs
Senior Consultant
Ryan
505.609.5485
alicia.briggs@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.