EMPIRE ZONE: MYTHS AND FACTS

The Empire Zones Program is one of the most effective, innovative and widely recognized economic development programs in the country. The program was created to make New York State more competitive and stimulate economic growth through a variety of State tax incentives designed to attract new businesses to New York and to enable existing businesses to expand and create more jobs. Today, there are more than 9,800 certified businesses employing more than 380,000 people in 82 empire zones statewide. The program is administered at the local level, in partnership with Empire State Development (ESD), New York State's lead economic development agency, and the State Departments of Labor and Taxation and Finance.

Participation in the program begins at the local level. Each local zone community has a zone coordinator to assist you. For a listing of the zone coordinator nearest you, visit Empire State Development's website at www.nycedc.com.

MYTH: As long as my business is located in the zone, I can get zone benefits.
FACT: To participate in the Empire Zones Program, a business must first be located in an empire zone and become zone certified. To qualify for certification, a business must be able to demonstrate that it will create new jobs and/or make investments in the empire zone and be consistent with the local zone's development plan, including a cost-benefit analysis. Applications approved by local zone officials are then forwarded to the State for review and approval by the Departments of Economic Development (Empire State Development) and Labor. Contact your local zone coordinator to discuss whether your business qualifies for zone certification. Once a business is certified it is eligible to claim tax credits, subject to requirements and performance based formulas set in Tax Law.

MYTH: My business is located in a community that has an empire zone. Therefore, my business is in the zone.
FACT: Each zone community is given 1,280 acres, or two square miles of area that can be used to designate zone boundaries. Check with your local zone coordinator to see if you are located within an empire zone designated area.

MYTH: My business is in New York State but not in an empire zone, so I can not participate in the Program.
FACT: To be eligible for certification, a business must be either located in an empire zone or qualify as a regionally significant project. There are 76 local zone communities statewide. Each zone community is limited to 1,280 acres, or two square miles, to designate zone acreage within up to seven distinct and separate contiguous areas. If a business can not be located within one of these distinct areas, it may qualify as a regionally significant project. Certain businesses that meet specific job and/or investment criteria and are sponsored by a local zone community can be located outside of the zone boundaries and still participate in the Program. Check with the local zone coordinator nearest to your business to discuss your location needs and regionally significant projects.

MYTH: The program favors large businesses, and small businesses can not benefit from the program.
FACT: Over 90% of the businesses participating in the Empire Zones Program are small businesses (less than 100 employees). And, most of the businesses that enter the program have less than 20 employees at the time of certification. The Program benefits are tied to job creation and investment. Small, medium and large companies can take advantage of this Program to grow and expand their businesses.

MYTH: My business is too small to realize any benefits from the Zone Program.
FACT: There are a variety of zone related tax incentives that are available for any size business that qualifies for participation in the Program. And, most businesses participating in the Program are small businesses (fewer than 100 employees). To realize any benefits from the Zone Program, the business must create jobs and/or make qualifying investments.

MYTH: The program is too complicated for small businesses.
FACT: Again, most businesses participating in the Program are small businesses. Local zone coordinators are available to help small businesses with Program requirements.

MYTH: I have to be an industrial or manufacturing type business in order to be eligible for all of the zone benefits.
FACT: Any business is eligible for at least some of the program benefits provided they can be certified in accordance with the local zone development plan, are making qualifying investments and/or are creating jobs.

Once certified, any business may be able to claim the following:

• Tax Reduction Tax Credit which helps reduce a business' overall tax liability;
• Sales Tax Exemption on the State portion of the sales tax for taxable purchases made by the business;
• Real Property Tax Credit for real property taxes paid;
• Wage Tax Credit for each new qualifying employee hired in the zone;
• Sales Tax Refund for sales tax paid on construction and materials used in building construction or renovation.

• The investment tax credit is 10% of qualifying investments - 8% if the business is a sole-proprietor. Up to 19% of the investment can be claimed when the investment tax credit is combined with the employment incentive credit to reward employment growth.

MYTH: I must own the building where my business operates to be eligible for zone benefits.
FACT: Businesses that lease or rent property to operate their businesses can be eligible for some or all of the benefits. One of the most powerful business development incentives of the Program is the Real Property Tax Credit for qualified empire zone enterprises. The Real Property Tax Credit is a credit for real property taxes paid based on a formula that considers job creation, wages (including benefits), and investments made in the zone. A lessee may claim the Real Property Tax Credit if the lessee has a lease, executed or amended on or after June 1, 2005, to pay the real property taxes; makes the payments directly to the local taxing authority; and obtains proof of payment.