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Each qualified EZ Business may obtain up to $15 million of tax-exempt financing
(EZ Bonds) of certain depreciable tangible property acquired after December 31,
1997 and which is used in the DC Zone. These funds may be used to finance,
refinance, and reimburse costs of a wide variety of capital projects, including
land acquisition, the purchase, renovation, and construction of real property,
the acquisition of equipment and machinery, and for other capital costs.
Eligible EZ Bond projects include business offices (including
tenant improvements), retail establishments such as department and specialty
stores, theaters, restaurants and coffee houses, shopping centers, recreation
and health centers, warehouses and manufacturing facilities, transportation and
parking facilities, tourism and entertainment centers, private for-profit day
care centers, and other facilities. The rental of commercial real estate also
qualifies, if at least 50 percent of the gross rental income from the real
property is derived from qualified EZ Businesses, as defined earlier (see page
1).
For purposes of tax-exempt financing, a portion of a trade or
business may qualify as an eligible business by treating that portion as if it
were incorporated separately. Generally, EZ Bond-financed property must be
acquired and first used after December, 1997. However, for property that is
substantially rehabilitated, neither the date of acquisition nor the original
use requirement applies, if the taxpayer makes certain minimum additions to its
basis in the property (generally 15 percent) during any two-year period between
December 31, 1997 and January 1, 2003.
The maximum amount of EZ Bonds available each year is subject
to an annual limit, however, the District has reserved additional bond authority
from prior years.
Unlike Empowerment Zones in other jurisdictions where
tax-exempt bond financing is contingent upon the hiring of zone residents, there
are no employment requirements in the DC Zone. Instead, businesses may claim a
special $3,000 employment tax credit on behalf of each existing and new DC
resident employee who works in the DC Zone (see the section on the DC Employment
Tax Credit on page 7).
Among the businesses excluded from eligibility for tax-exempt
financing are those predominately involved in the development or holding of
intangible personal property, the rental of residential real estate and those
involving the financing of country clubs, massage parlors, hot tubs, racetracks,
or stores that sell packaged liquor. |
