Tacoma has been named a renewable community by the Department of Housing and Urban Development, making the city eligible to share in $17 billion in federal tax incentives designed to stimulate job growth, promote economic development and create affordable housing.
As part of the Renewal Community Initiative established by the 2000 Community Renewal Tax Relief Act, Tacoma was one of 40 cities nationwide – out of more than 100 communities that applied – selected.
Using census data, renewal communities were identified areas with low household income and high unemployment.
Tacomas renewable community area has an unemployment rate of 18 percent, with 72 percent of families identified as low income, according to HUD.
The citys renewal community includes the downtown, Hilltop, Tideflats and East Side areas.
As a result of this designation, Tacoma will receive regulatory relief and tax breaks to help local businesses provide more jobs and community revitalization.
With the renewable community status, the city can take advantage of wage credits, tax deductions, capital gains exclusions and bond financing in order to stimulate economic development and job growth.
HUD has previously designated Tacoma as an Enterprise Community, meaning the city has already implemented several strategies to reduce the tax burden on residents.
Some of those strategies include obtaining State Community Enterprise Zone designation, simplifying the local business tax structure, reducing the local tax on service businesses and using creative tax incentives to encourage rehabilitation and redevelopment projects.
Tacoma plans future steps to reduce the tax burden on local businesses over the next five years, as well as additional tax credits.
Some of the incentives the city is eligible for include:
Wage credits – up to a $1,500 credit for every newly hired or existing employee in the renewal community.
Work opportunity credits – up to a $2,400 credit for each employee hired from groups with traditionally high unemployment rates.
Welfare to work credits – up to a $3,500 (first year) credit and $5,000 (second year) for each newly hired long-term welfare recipient.
Tax deductions – allowing up to $35,000 a year in property costs, such as equipment and machinery, if acquired from now through 2009.
Capital gains exclusions – a zero percent rate applied to interest of certain businesses acquired and held for at least five years.
This renewal community designation will build upon the substantial progress we have made in Tacoma in recent years through HUDs Enterprise Community program, Rep. Norm Dicks (D-Belfair) said in a statement.
I believe this combination of targeted tax incentives can spur job creation and new business development in this portion of Tacoma, where new economic activity is urgently needed.”
Last nights City Council Meeting was attended by HUD officials as part of the official announcement.
I think this can go and help the hardest hit areas in Tacoma simply to improve, said John Meyers, HUDs regional director for the Northwest.
HUDs Director of Community Planning and Development for Washington Jack Peters said he would work with city officials over the next several months to help implement the plan.
Bringing a bit of humor to the often dry world of city economics, City Council- member Kevin Phelps jokingly asked Meyers if he brought a check for the city.
The checks in the mail, Meyers deadpanned.