#6 Designate and create a development opportunity zone (File Res. #2010-679)
Economic Development Department Memorandum
March 22, 2010
TO: City Council
FROM: Vic Grassman, Economic Development Director
SUBJECT: Action of a Proposed Resolution formally designating and creating
Development Opportunity Zone in the City of Janesville
(File Res 2010-679)
Executive Summary
In 2009, the Wisconsin Legislature created a Development Opportunity Zone for
the City of Janesville. Under this program qualifying businesses that make
capital investments and/or create/retain jobs in the city can qualify for State of
Wisconsin Income Tax Credits. The Janesville Development Opportunity Zone
has received an initial allocation of $5.0 million of tax credits and has five years
upon which companies can apply for them. If this initial allocation is exhausted
within this time frame, a second $5.0 million over an additional five year time
frame is available.
Staff or Department Recommendation
Staff recommends the adoption of this resolution to formally begin the five year
period. This recommendation comes at this time because a Janesville company
has successfully applied and been awarded credits. This resolution is backdated
to March 1, 2010 in order to allow this company to begin counting job creation as
allocated under this program. The entire City of Janesville is recommended as a
“Zone” to insure that any Janesville business meeting the eligibility criteria have
an opportunity to apply. This “Zone” will automatically be expanded based on
any future annexations.
City Manager Recommendation
The City Manager recommends approval of the resolution.
Background
The Janesville Development Opportunity Zone program is a valuable asset to the
City’s economic development program. Only those companies currently located
in the City or choosing to locate in the City are eligible to apply. The minimum
standards to be met are the creation of ten or more full time jobs and/or a capital
investment of $10,000/ employee or $1.0 million whichever is less. Businesses
applying can take advantage of both sources of tax credits, employment
creation/retention and capital investment. Tax credits can also be received for up
to 50% of eligible environmental remediation costs.
This economic development resource/incentive is part of the standard
information package we send out to companies expressing an interest in
Janesville as a location as well as existing companies considering expansion.
Jobs counted under this program must be maintained for five years. The WI
Dept. of Commerce is the final authority in deciding if tax credits should be given
to a company and the level of these credits based on the estimated future taxes
to be paid.
This ordinance will formally designate the beginning of the five year period upon
which Firms can apply and be awarded credits. However, the credits can be
carried forward for up to 15 years.
cc: Eric Levitt
Jacob Winzenz
RESOLUTION NO. 2010-679
A Resolution authorizing, nominating, designating, and creating a Development
Opportunity Zone for the City of Janesville.
THE COMMON COUNCIL OF THE CITY OF JANESVILLE DO ORDAIN AS
FOLLOWS:
WHEREAS
, “Local governing body” means the Common Council for the City of
§
Janesville, and is as otherwise defined in Wis. Stats. 560.70(4m) in pertinent part as
follows: “(4) Local governing body” means the governing body of one or more cities…”;
and
WHEREAS
, The City of Janesville zealously has consistently, and shall, from time to
time:
(a) Promote economic development within the City of Janesville and the
proposed Development Opportunity Zone; and
(b) Assist the Department of Commerce in the administration of the Development
Opportunity Zone program; and
WHEREAS
, the Janesville Common Council find that all of the requirements have been
fulfilled, and/or satisfied for the designation of the Janesville Development Opportunity
Zone; and
WHEREAS
, the Common Council find that creation and operation of a Development
Opportunity Zone in Janesville are in the best interest of, and of benefit to, the
residents, businesses, properties, and taxpayers of the City; and
WHEREAS
, the Common Council is empowered to designate, create, maintain, and
operate said Development Opportunity Zone pursuant to Wis. Stats §§62.11(5),
66.0101, 560.795, and other applicable and home rule statutes and constitutional
provisions; and
§
WHEREAS
, Wis. Stats. 560.795 governs Development Opportunity Zones; and
§
WHEREAS
, Wis. Stats. 560.795 “Development opportunity zones,” provides in
pertinent part, as from time to time renumbered or amended, as follows:
“560.795(1)
DESIGNATION OF DEVELOPMENT OPPORTUNITY ZONES. The following
areas are designated as development opportunity zones…
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(g) An area in the City of Janesville, the legal description of which is
provided to the department by the local governing body of the City of
Janesville.
(2) DURATION, LIMITS AND EXPIRATION.
(a) …Except as provided in pars. (d) and (e), the designation of each area
under sub. (1) (g) and (h) as a development opportunity zone shall be
effective for 60 months, beginning on the date on which the area is
designated under sub. (1)…
(b) 7. Except as provided in par. (e) 1., the limit for tax benefits for the
development opportunity zone under sub. (1)(g) is $5,000,000.
(c) Annually, the department shall estimate the amount of forgone state
revenue because of tax benefits claimed by corporation or persons in
each development opportunity zone.
(d) 1. Notwithstanding pars. (a) and (e), the designation of an area as a
development opportunity zone shall expire 90 days after the day on
which the department determines that the forgone tax revenues under
par. (c) will equal or exceed the limit for the development opportunity
zone. 2. The department shall immediately notify the local governing
body of the city in which the development opportunity zone is located
of a change in the expiration date of the development opportunity zone
under this paragraph.
(e) 1. The department may extend the designation of an area under sub.
(1)(g) as a development opportunity zone for an additional 60 months if
the department determines that an extension under this subdivision
would support economic development within the city. If the department
extends the designation of the area as a development opportunity
zone, the limit for tax benefits for the development opportunity zone
under sub. (1)(g) is increased by $5,000,000…
(3) APPLICATION AND ENTITLEMENT TO TAX BENEFITS…
(a) 4. Any person that is conducting or that intends to conduct economic
activity in a development opportunity zone under sub. (1)(e), (f), (g), or
(h) and that, in conjunction with the local governing body of the city in
which the development opportunity zone is located, submits a project
plan as described in par. (b) to the department shall be entitled to claim
tax benefits while the area is designated as a development opportunity
zone.
(b) A project plan under par. (a) shall include all of the following:
1. The name and address of the corporation’s or person’s business for
which tax benefits will be claimed.
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2. The appropriate federal tax identification number of the corporation
or person.
3. The names and addresses of other locations outside of the
development opportunity zone where the corporation or person
conducts business and a description of the business activities
conducted at those locations.
4. The amount that the corporation or person proposes to invest in a
business, or spend on the construction, rehabilitation, repair, or
remodeling of a building, located within the development
opportunity zone.
5. The estimated total investment of the corporation or person in the
development opportunity zone.
6. The number of full-time jobs that will be created, retained, or
substantially upgraded as a result of the corporation’s or person’s
economic activity in relation to the amount of tax benefits estimated
for the corporation or person.
7. The corporation’s or person’s plans to make reasonable attempts to
hire employees from the targeted population.
8. A description of the commitment of the local governing body of the
city in which the development opportunity zone is located to the
corporation’s or person’s project.
9. Other information required by the department or the department of
revenue.
(c) The department shall notify the department of revenue of all
corporations or persons entitled to claim tax benefits under this
subsection.
(d) The department annually shall verify information submitted to the
department under s. 71.07 (2di), (2dm), or (2dx), 71.28 (1di), (1dm), or
(1dx), 71.47 (1di), (1dm), or (1dx), or 76.636.
(4) REVOCATION OF ENTITLEMENT. (a) The department shall revoke
the entitlement of a corporation or person to claim tax benefits under
sub. (3) if the corporation or person does any of the following:
1. Supplies false or misleading information to obtain the tax benefits.
2. Leaves the development opportunity zone to conduct substantially
the same business outside of the development opportunity zone.
3. Ceases operations in the development opportunity zone and does
not renew operation of the trade or business or a similar trade or
business in the development opportunity zone within 12 months.
(b) The department shall notify the department of revenue within 30 days
after revoking an entitlement under par. (a).
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(5) CERTIFICATION BASED ON THE ACTIVITY OF ANOTHER. (a) The
department may certify for tax benefits a person that is conducting
economic activity in the development opportunity zone under sub. (1)
(e) or (f) and that is not otherwise entitled to claim tax benefits if all of
the following apply:
1. The person’s economic activity is instrumental in enabling another
person to conduct economic activity in the development opportunity
zone under sub. (1) (e) or (f).
2. The department determines that the economic activity of the other
person under subd. 1. would not have occurred but for the
involvement of the person to be certified for tax benefits under this
subsection.
3. The person to be certified for tax benefits under this subsection will
pass the benefits through to the other person conducting the
economic activity under subd. 1., as determined by the department.
4. The other person conducting the economic activity under subd. 1.
does not claim tax benefits under sub. (3).
(a) A person intending to claim tax benefits under this subsection shall
submit to the department an application, in the form required by the
department, containing information required by the department and by
the department of revenue.
(b) The department shall notify the department of revenue of all persons
certified to claim tax benefits under this subsection.
(c) The department annually shall verify information submitted to the
department under s. 71.07 (2dm) or (2dx), 71.28 (1dm) or (1dx), 71.47
(1dm) or (1dx), or 76.636.
(d) The department shall revoke the entitlement of a person to claim tax
benefits under this subsection if the person does any of the following:
1. Supplies false or misleading information to obtain the tax benefits.
2. Ceases operations in the development opportunity zone under sub.
(1)(e) or (f).
3. Does not pass the benefits through to the other person conducting
the economic activity under par. (a)1., as determined by the
department.
4. That designation of the area as a development zone will likely
retain or increase employment in the area.
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5. That economic development in the area is not likely to occur or
continue without the department’s designation of the area as a
development zone.
6. That the area meets at least 3 of the following criteria:
a. The unemployment rate in the area is higher than the state
average for the 18 months immediately preceding the date
on which the application under s. 560.72 (2) or (3) was
submitted to the department.
b. The percentage of persons residing in the area who are
members of households with household income levels at or
below 80% of the statewide median household income is
higher than the state average.
c. The percentage of households in the area receiving
unemployment insurance under ch. 108, relief funded by a
relief block grant under ch. 49 or aid to families with
dependent children under s. 49.19 is higher than the state
average.
d. In the 36 months immediately preceding the date on which
the application under s. 560.72 (2) or (3) was submitted to
the department, a number or workers in the area were
permanently laid off by their employer or became
unemployed as a result of a business action subject to s.
109.07(1m).
e. An employer in the vicinity of the area has given public
notice under s. 109.07(1m)(a) of either a business closing or
a mass layoff of at least 25 employees, or 25% of the
employees, of a business, whichever is greater, that will
result in a number of workers in the area being laid off
permanently.
f. Property values in the area have been declining.
g. There has been a decline in the population in the area.
(1m) In making a determination under sub. (1)(e), the department shall consider
all of the following:
(a) The extent of poverty, unemployment or other factors contributing to
general economic hardship in the area.
(b) The prospects for new investment and economic development in the
area.
(c) The amount of investment that is likely to result from the designation of
the area as a development zone.
(d) The number of full-time jobs that are likely to be created or retained in
the area as a result of its designation as a development zone.
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(e) The number of full-time jobs that are likely to be available to the target
population as a result of the designation of the area as a development
zone.
(f) The competitive effect of designating the area as a development zone
on other businesses in the vicinity of the area.
(g) The needs of other areas of the state.
(h) Any other factors that the department considers relevant.
(i) The department shall notify the Department of Revenue within 30 days
after revoking an entitlement under par. (e).
NOW, THEREFORE, BE IT RESOLVED by the Common Council for the City of
Janesville as follows:
1. Each and every of the above recitals is reiterated and incorporated herein by
reference as if fully set forth verbatim.
2. DESIGNATION. The boundaries of the Janesville Development Opportunity
Zone shall be the corporate limits of the City of Janesville, a Wisconsin Municipal
Corporation located in the County of Rock, as from time to time amended and/or
modified through annexation (attachment).
3. The City of Janesville’s governing body hereby authorize, nominate, designate,
and create a Development Opportunity Zone, in accord with the applicable
Wisconsin Statutes, as from time to time renumbered and/or amended.
4. The City Administration is authorized, empowered, and directed by the Common
Council to take any and all steps that the City Administration may, from time to
time, find necessary and/or desirable to create, designate, qualify, obtain all state
and other approvals for, maintain, and operate a Development Opportunity Zone
within and for the City of Janesville.
BE IT FURTHER RESOLVED
, that the City Manager and his designee(s), on behalf of
the City of Janesville, is/are hereby jointly and severally authorized and empowered to
negotiate, draft, review, revise, modify, amend, execute, enter into, file and/or record
additional agreements, amendments, documents, and letters of understanding
concerning this matter, and to take whatever additional other actions that the City
Manager and/or his designee(s) may determine in his sole discretion, from time to time
and at any time, necessary and/or desirable in the public interest to effectuate the intent
of this Resolution. This Resolution and designation by the Common Council shall be of
full force and effect as of March 1, 2010, the public health, welfare, and common good
so requiring. All applications, eligibility, and qualification by participants for tax credits
under this program shall be honored and shall include those filed on or after March 1,
2010.
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ADOPTED: Motion by:
Second by:
Councilmember Aye Nay Pass Absent
APPROVED:
Brunner
McDonald
____________________________________
Perrotto
Eric J. Levitt, City Manager
Rashkin
Steeber
ATTEST:
Truman
Voskuil
____________________________________
Jean Ann Wulf, City Clerk-Treasurer
APPROVED AS TO FORM:
____________________________________
City Attorney, Wald Klimczyk
Proposed by: Economic Development Director Vic
Grassman
Prepared by: City Attorney Wald Klimczyk
J:\Attorney\Word\Shared\Resolution Development Opportunity Zone Creation 030810.doc
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