Alert February 28, 2011

Federal Infrastructure Financing Still Available

Governmental assistance for infrastructure development has become a “hot potato” topic, with newly elected Republican legislators pushing to end grant and subsidy programs on both the state and federal level, while their Democratic colleagues continue to encourage increased governmental participation in the nation’s economic recovery.

Most of the economic development programs promoted by the state and federal governments target small businesses and/or economically distressed areas. Nevertheless, several programs available to larger developers are still worth considering:

Community Development Block Grants

Community Development Block Grants represent federal moneys available to local communities to finance housing rehabilitation, public facilities, and community development projects. The program is administered by U. S. Department of Housing and Urban Development (“HUD”). More information about the program can be found here.

Renewal Communities and Empowerment Zones

Developers can receive tax incentives for hiring local residents, upgrading certain equipment, and constructing or rehabilitating commercial property with respect to designated Renewal Communities or Empowerment Zones.

Available incentives include:

  • Annual employment credits up to $3,000 per employee in Empowerment Zones and up to $1,500 per employee in Renewal Communities
  • Commercial Revitalization Deductions (based on accelerated depreciation) for construction or renovation within Renewal Communities or Empowerment Zones

The programs are administered by the Office of Community Renewal of HUD. More information regarding the programs can be found here.

Business Energy Tax Credits

Developers can obtain tax credits for installing certain energy efficiency systems on or before December 31, 2016. Eligible systems include:

  • Solar energy
  • Fuel cells
  • Microturbines
  • Small wind-energy systems
  • Geothermal heat pumps
  • Combined heat and power (CHP) systems

The Business Energy Tax Credit program is administered by the Office of Energy Efficiency & Renewable Energy (“EERE”) of the U.S. Department of Energy.

Commercial Building Tax Incentives

Under this program, authorized as part of the Energy Policy Act of 2005 and extended through December 31, 2013, by the Emergency Economic Stabilization Act of 2008, commercial building owners can obtain tax deductions for expenditures related to energy efficiency. The deduction is currently limited to $1.80 per square foot, with partial deductions for certain improvements, including:

  • Interior lighting
  • HVAC and hot water systems
  • Building envelope systems

These commercial building tax incentives are administered by EERE. Information regarding the program can be found here.

Work Opportunity Tax Credit

Pursuant to the Internal Revenue Code, businesses may be eligible for a Work Opportunity Tax Credit of up to $9,000 for each new hire who qualifies as a member of a target group. Designated target groups include:

  • Qualified recipients of Temporary Assistance to Needy Families
  • Qualified veterans receiving Food Stamps
  • Qualified veterans with a service connected disability
  • Ex-felons hired no later than one year after conviction or release from prison
  • Individuals between ages 18 and 39 who reside in an Empowerment Zone, Renewal Community, or Rural Renewal County
  • Vocational rehabilitation referrals
  • Qualified summer youth ages 16 through 17 who reside in an Empowerment Zone, Enterprise Community, or Renewal Community
  • Qualified Food Stamp recipients between ages 18 and 39
  • Qualified recipients of social security income
  • Long-term family assistance recipients

The Work Opportunity Tax Credit program is administered by the U. S. Department of Labor.  More information about the program can be found here.