Legislation # 05-0686 Enactment Number none
Type Ordinance - Coded Effective Date none
Introduction Date 11/9/2005
Title Ordinance to enact the City of Hampton Enterprise Zone Incentives Program.
 
Legislation History 05-0686
DateNotice Of ActionDescription
12/14/2005 Adopted items 1 through 24 on consent agenda.
11/9/2005 Adopted on First Reading
10/30/2005 Received By Clerk's Office
 
View Attachments 05-0686
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Legislation Text 05-0686

 

City of Hampton, Virginia

Ordinance - Coded

22 Lincoln Street

Hampton, VA 23669

www.hampton.gov

 

File Number: 05-0686

 

Enactment Number: -

 

Ordinance to enact the City of Hampton Enterprise Zone Incentives Program.

 

WHEREAS, the Commonwealth of Virginia adopted the Enterprise Zone Act, Section 59.1-270 et seq. of the Code of Virginia, 1950, as amended (the Act), with the purpose of stimulating business and industrial growth which would result in neighborhood, commercial and economic revitalization;

 

WHEREAS, as part of its application the City of Hampton (the City) incorporated local incentives such as a Capital Investment Grant, a Refunds of Business License Tax and a Refunds of Local Utility Taxes;

 

WHEREAS, the Commonwealth of Virginia granted the Citys application to designate Hampton Urban as an enterprise zone under the Act;

 

WHEREAS, the City Council of the City of Hampton, Virginia now has two Enterprise Zones designated by the Commonwealth of Virginia, entitled Hampton Urban and Hampton Roads Center;

 

WHEREAS, the Virginia Department of Housing and Community Development, which oversees the Enterprise Zone Program, encourages localities with more that one enterprise zone to offer similar incentives to all enterprise zones to achieve parity; and

 

WHEREAS, the City Council desires to provide such incentives to the two enterprise zones to promote, encourage and assist commercial and industrial expansion and relocations within these designated areas of City and expand the tax base.

 

NOW, THEREFORE BE IT ORDAINED BY THE COUNCIL OF THE CITY OF HAMPTON, VIRGINIA that the following local incentives, which shall be known as the Hampton Enterprise Zone Incentives Program, shall be in existence for the term of enterprise zone designation as permitted by the Commonwealth of Virginia, for the Hampton Urban Enterprise Zone and Hampton Roads Center Enterprise Zone:

 

1. Definitions. The following definitions shall apply to the Hampton Enterprise Zone Incentives Program:

 

Added capital investment means the net cost increase of taxable personal property during a specified time period within a Hampton designated enterprise zone. This increase can be the result of newly purchased property, newly leased property or property transferred into the City of Hampton from a location outside the City of Hampton.

 

Business means any corporation, partnership, electing small business (subchapter S) corporation, limited liability company, or sole proprietorship authorized to conduct business in the City of Hampton as well as professional organizations and associations whose classification falls under subsector 813910 and 813920 of the North American Industry Classification System (NAICS).

 

Existing business means one that was conducting business within the City of Hampton and existed prior to the establishment of the enterprise zone or moves from an existing Hampton location into an enterprise zone. An existing business is also one that was not previously conducted in Hampton by such taxpayer who acquires or assumes the trade or business in Hampton and continues its operation.

 

Federal minimum wage means the minimum wage standard as defined by the United States Department of Labor in the Fair Labor Standards Act, 29 U.S.C. 201 et seq.

 

Food and beverage establishment means a business whose industry classification falls under subsector 722 Food Services and Drinking Places of the North American Industry Classification System (NAICS).

 

Full-time employee means a person employed by a business firm located within either the Hampton Urban or Hampton Roads Center Enterprise Zone (not both) who is normally scheduled to work either (i) a minimum of 35 hours per week for the entire normal year of the business firms operations, which a normal year must consist of 48 weeks or (ii) a minimum of 35 hours per week for a portion of the taxable year in which the employee was initially hired to work. Seasonal, temporary, leased, or contract labor positions, or employees shifted from an existing location in Hampton into the business firm located in the enterprise zone shall not qualify.

 

Local utility taxes shall consist of the Citys tax on purchasers of gas and electric utilities (HCC 37-201 et seq); the tax levied on purchasers of local exchange telephone service, including local mobile telecommunications (HCC 37-214 et seq). Local Utility Taxes shall not include the tax on telephone service to establish and maintain the E-911 emergency telephone system (HCC 37-224), or the public rights of way use fee (HCC 37-212), or the state and local consumption tax on gas and electric services levied in accordance with Code of Virginia 58.1-2900 -58.1-2907, or any other taxes not specifically herein named.

 

Net cost increase is equal to the difference between the applicants taxable personal property at the beginning of the specified time period and the application date.

 

New business means one that was not previously conducted within the City of Hampton by such taxpayer and that begins operation in a Hampton designated enterprise zone. A new business is also one created by the establishment of a new facility in addition to one already existing in Hampton.

 

"Newly purchased" means taxable personal property purchased after January 1, 2005 and within the time period specified in the Sections 2a, 3a and 4a of this Ordinance and used for the conduct and trade of that business located within a Hampton designated enterprise zone.  In the case of an existing business, the purchases shall have had to been made while conducting a business within a Hampton designated enterprise zone and not prior to a relocation within a Hampton designated enterprise zone.

 

Newly leased means taxable personal property leased after January 1, 2005 and within the time period specified in the Sections 2a, 3a and 4a of this Ordinance and used for the conduct and trade of that business located within a Hampton designated enterprise zone. In the case of an existing business, the leases shall have had to been made while conducting a business within a Hampton designated enterprise zone and not prior to a relocation within a Hampton designated enterprise zone. In order for newly leased property to be considered qualifying for the purposes of any Enterprise Zone incentives, the applicant must be able to provide proof of either direct payment or indirect payment (through the lessor) of local personal property taxes to the City of Hampton.

 

Taxable personal property means property subject to the City of Hamptons business tangible personal property and/or machinery and tools tax as per HCC 37-141 et. seq.

 

2. Capital Investment Grant. Any manufacturer or office oriented business located within a Hampton enterprise zone that meets the qualification requirements set forth in Section 2a of this Ordinance shall be eligible for a Capital Investment Grant for up to three (3) consecutive calendar years based on the actual business personal property and/or machinery and tools taxes paid to the City of Hampton. Capital Investment Grants shall only apply to taxable personal property that are newly purchased, newly leased, or transferred from outside of the City of Hampton.

 

(a) Qualification Requirements. For a manufacturer or office oriented business to be eligible to receive a Capital Investment Grant they must accomplish the following:

 

Existing Business

 

(i)            Must increase the number of full-time employees in the enterprise zone by 10% and the increase must constitute at least three (3) net new full-time employees, whichever is greater, within 12 months of application to the City. The wages paid to the minimum number of new full-time employees shall be equal to twice the federal minimum wage rate; and

 

(ii)    Make an added capital investment within either the Hampton Urban or Hampton Roads Center Enterprise Zone of at least $500,000 within 18 months of making an application to the City of Hampton, as verified by the Commissioner of the Revenue.

 

New Businesses

 

(iii) Must create at least 25 net new full-time employees at the enterprise zone location within 18 months of making an application to the City of Hampton and wages paid to each new employee shall be equal to twice the federal minimum wage rate; and

 

(iv) Make a $500,000 minimum added capital investment within the enterprise zone in machinery and tools and/or in business personal property within 18 months of making an application to the City of Hampton.

 

(b) Grant Computation. Capital Investment Grants shall be based on the qualifying added capital investment and shall be equal to 100% of the local tangible property tax associated with the qualifying added capital investment within the enterprise zone as verified by the Commissioner of the Revenue for a period of three consecutive calendar years. The maximum benefit to any single business shall be $50,000 annually.

 

3. Business License Tax Refund. Any new or existing business, with the exception of food and beverage establishments, located within a Hampton designated enterprise zone that meets the qualification requirements set forth in Section 3a of this Ordinance shall be eligible for a refund of business license fees for up to five (5) consecutive calendar years.

 

(a) Qualifying Requirements. For an existing or new business to be eligible to receive a Business License Tax Refund they must accomplish the following:

 

Existing Business

 

(i) Must increase the number of full-time employees in the enterprise zone by 10% and the increase must constitute at least three (3) net new full-time employees, whichever is greater, within 12 months of application to the City. The wages paid to the minimum number of new full-time employees shall be equal to twice the federal minimum wage rate; and

 

(ii) Make an added capital investment within either the Hampton Urban or Hampton Roads Center Enterprise Zone of at least $50,000 within 12 months of making an application to the City of Hampton, as verified by the Commissioner of the Revenue.

 

New Businesses

 

(iii) Must hire a minimum of 10 full-time employees within either the Hampton Urban or Hampton Roads Center Enterprise Zone within 12 months of application and the wages paid to the minimum number of new full-time employees shall be equal to twice the federal minimum wage rate; and

(iv) Make an added capital investment of at least $100,000 within either the Hampton Urban or Hampton Roads Center Enterprise Zone within 12 months of making an application to the City of Hampton, as verified by the Commissioner of the Revenue.

(b) Tax Credit Computation: The Business License Tax Credit consists of a refund of business license taxes paid in an amount equal to 100% in the first calendar year, 80% in the second calendar year, and 60% in third through the fifth calendar years. The maximum benefit to any single business shall be $10,000 annually.

 

4. Local Utility Tax Refund: Any new or existing business, with the exception of food and beverage establishments, located within a Hampton designated enterprise zone that meets the qualification requirements set forth in Section 4a of this Ordinance shall be eligible for a refund of local utility taxes as defined in Section 4b for up to five consecutive calendar years.

 

(a) Qualifying Requirements. For a new or existing business to be eligible to receive a Local Utility Tax Refund they must accomplish the following:

 

Existing Business

 

(i) Must increase the number of full-time employees in the enterprise zone by 10% and the increase must constitute at least three (3) net new full-time employees, whichever is greater, within 12 months of application to the City. The wages paid to the minimum number of new full-time employees shall be equal to twice the federal minimum wage rate; and

 

(ii) Make an added capital investment within either the Hampton Urban or Hampton Roads Center Enterprise Zone of at least $50,000 within 12 months of making an application to the City of Hampton, as verified by the Commissioner of the Revenue.

 

New Businesses

 

(iii) Hire a minimum of 10 full-time employees within either the Hampton Urban or Hampton Roads Center Enterprise Zone within 12 months of application and the wages paid to the minimum number of new full-time employees shall be equal to twice the federal minimum wage rate; and

(iv) Make an added capital investment of at least $100,000 within either the Hampton Urban or Hampton Roads Center Enterprise Zone within 12 months of making an application to the City of Hampton, as verified by the Commissioner of the Revenue.

(b) Tax Credit Computation: The tax credit consists of a refund of local utility taxes paid as defined in Section 1, in an amount equal to 100% in the first calendar year, 80% in the second calendar year, and 60% in third through the fifth calendar years.

 

5. Limitations and Forfeitures. The following limitations and forfeitures shall apply to the Hampton Enterprise Zone Incentives Program:

 

(a) A business may only qualify twice for any incentive offered through this Ordinance.

 

(b) A business may not use the same capital investment and jobs to qualify for the Hampton Technology Zone Program.

 

(c) If a business qualified for any of the outlined Hampton Enterprise Zone Incentives Program grant, refund or credit fails to pay any taxes imposed by the City by the due date, it will result in the forfeiture of all Hampton Enterprise Zone Incentives Program grants, refund or credit until such time as all taxes are paid, provided the Hampton Enterprise Zone Incentives Program is still in existence.

 

(d) If the qualified enterprise zone business files for bankruptcy during the incentive period this will result in forfeiture of any portion remaining of the grants, refunds or credits.

 

(e) If the number of qualifying employees, wages and/or investment falls below the minimum qualifying thresholds stipulated for applicable grants, refunds, or credits, the applicable grants, refunds or credits shall be forfeited for that calendar year.

 

6. Enterprise Zone Incentive Approval Process. The City Manager and/or his designee shall work in conjunction with the Hampton Commissioner of the Revenue to develop and establish procedures and forms to ensure compliance with this Ordinance and to make annual payments to qualified applicants.

 

This Ordinance shall take effect upon adoption and shall be retroactive to January 1, 2005.

 

Adopted at the regular meeting of the City Council of the City of Hampton, Virginia held on December 14, 2005.

 

 

 

Signed by ____________________________ Date _________________

Ross A. Kearney, II, Mayor

 

 

 

 

Attested by ____________________________ Date _________________

Katherine K. Glass

Clerk of the Council