HomeMy WebLinkAboutR-2010-149 Commercial Revitalization Deduction Projects Submission to CTEDRESOLUTION NO R-2010-149
A RESOLUTION authorizing the City Manager, or his designee, to award the 2010
allocation of the federal Renewal Community Commercial Revitalization
Deduction to eligible projects, and directing the City Manager, or his
designee, to submit the list of eligible projects to the Washington State
Department of Community, Trade and Economic Development (CTED)
for certification
WHEREAS, economic development is a priority of the City of Yakima, and the City
intends to approach economic development on a comprehensive basis involving public, private
and community-based efforts to achieve new investment and redevelopment in the City; and
WHEREAS, the City has been formally designated a Renewal Community under the
Empowerment Zones and Renewal Communities Initiative by the federal government; and
WHEREAS, the Renewal Communities Program includes, in part, an opportunity for
Renewal Communities to participate in a Commercial Revitalization Tax Deductions plan
whereby certain local development projects (including certain rehabilitation of existing buildings)
may qualify for accelerated partial deduction of development costs by way of enhanced federal
income tax deductibility; and
WHEREAS, the City of Yakima retains responsibility for developing and administering
locally a Qualified Allocation Plan for evaluating eligible development activities within the
community; and
WHEREAS, the City of Yakima may be eligible to award an allocation of $12 million in
Commercial Revitalization Tax Deductions for the year 2010 that must be allocated by
December 31, 2010, and
WHEREAS, all applications must be determined to be eligible to receive a 2010
Commercial Revitalization Deduction allocation, and
WHEREAS, the City Council finds it is in the best interests of the City of Yakima to
approve and submit eligible projects for federal Commercial Revitalization Deductions, now
therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA.
The City Manager, or his designee, is hereby authorized and directed to select and submit
projects to the Washington State Department of Community, Trade and Economic Development
for certification of the 2010 Commercial Revitalization Deduction
ADOPTED BY THE CITY COUNCIL this 14th day of December, 2010
ATTEST
Micah Cawley/, Mayor
City CIe
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ITEM TITLE
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No
For Meeting Of December 14, 2010
Authorize the City Manager, or his designee, to select and submit
eligible projects for the 2010 allocation of the Commercial
Revitalization Deduction, and forward to state of Washington for
certification
SUBMITTED BY. Michael Morales, Director of CED
CONTACT Michael Morales, 575-3533
SUMMARY EXPLANATION
The City of Yakima was selected as a federal Renewal Community (RC) in January
2002, one of only 40 in the nation Eligible census tracts within the City of Yakima were
competitively awarded a federal Renewal Community (RC) designation in 2002 The
RC designation provides a variety of tax incentives to RC businesses located in Census
Tracts 01, 02, 03, 06, 07 and 15 These benefits include RC Wage Credits ($1500 per
employee), increased Section 179 Expensing ($35,000 annually), Zero Capital Gains
Rate on qualified assets, and the Commercial Revitalization Deduction (CRD)
The RC designation expired at the end of 2009, and has not been renewed However,
we were recently informed that our lobbying efforts had resulted in a two year extension
being included in the tax extenders package being debated in Congress Unfortunately,
a last minute compromise stripped extenders out of the proposal unless the incentive
had been previously extended We are still working with our delegation for an
opportunity to reinstate the RC extension in the final bill The likelihood of success at
this point is low, but the city council must at least authorize the City Manager to award a
2010 allocation of the CRD, in the event that the extension occurs before the end of the
year
Resolution X Ordinance Contract Other
Approval for Submittal.
City Manager
STAFF RECOMMENDATION Staff recommends approval of the allocations
BOARD RECOMMENDATION
COUNCIL ACTION
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The Commercial Revitalization Deduction (CRD) is a federal Renewal Community tax
incentive that allows accelerated depreciation of newly constructed or rehabilitated
commercial buildings within the RC The CRD is strictly a tax incentive for investment,
and is not a source of grant or loan funds Each year, the city receives. a $12 million
allocation of CRD that must be awarded within the calendar year Upon selection, the
list of projects will be forwarded to the state Department of Community, Trade and
Economic Development for certification
The RC tax incentive package has served as one of the most effective economic
development incentive tools that the city has employed It has helped small and Targe
businesses, retail and manufacturing The City of Yakima receives zero funding to
implement this program, but the economic impact of the program has proven well worth
our investment. For this reason, the city's top federal legislative priority has been the
extension of this package in some form for the next five years
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