Downtown Tucson Incentive Programs

Empowerment Zone

The following benefits are available through the Empowerment Zone Program:

1. Employment Tax Credit: A federal tax credit of up to $3,000 (20% of the first $15,000 in employee wages) per employee. The credit is available to businesses located in the Zone that hire residents of the Zone. The credit applies to new hires and existing employees and can be received for each of the years that the Zone is in existence.

2. Work Opportunity Tax Credit: A federal tax credit of up to $2,400 (40% of the first $6,000 in employee wages) per employee aged 16-24. This credit is available to any business, regardless of location, that hires anyone aged 16-24 who lives inside the Zone. This credit is limited to the first year of employment. For firms located within the Zone, this credit may be taken in addition to the Employment Tax Credit but not in conjunction with the Welfare to Work Tax Credit.

3. Business Investment Incentives: Zone businesses are allowed to accelerate depreciation on new tangible personal property (up to an additional $35,000 write-off in the year that the assets are placed into service). Zone businesses may also be eligible for rollover and partial exclusion of gains on sale of qualified assets. These benefits apply to companies that qualify as Empowerment Zone Businesses, conduct most of their business in the Zone, and have at least 35% of their employees living in the Zone.

4. Issuance of Tax Exempt Bonds: The City can issue up to $130 million in tax exempt bonds, over the life of the designation, to make loans to existing or new businesses in the Zone.

5. Qualified Academy Zone Bonds: Any primary or secondary school or program located in the Zone can issue bonds and the lender will receive a tax credit equal to the interest payment, essentially making the bond interest-free. The bonds can be used to refinance debt, repair existing facilities, and provide equipment, training, and materials. In order to qualify, the program curriculum must be designed in conjunction with the business community and receive up to 10% of the bond value in in-kind donations.

6. Welfare to Work Tax Credit: A federal tax credit of up to $8,500 over two years per employee. (35% of the first $10,000 in employee wages for the first year and 50% of the first $10,000 in employee wages for the second year.) This credit is available to any company hiring a recipient of long-term family assistance. Please note that this credit can be taken in addition to the Employment Tax Credit but not in conjunction with the Work Opportunity Tax Credit.

For more information, please check the website for the Tucson Regional Economic Opportunity office at www.treoaz.org or call 520-243-1947.

Enterprise Zone

The Arizona Department of Commerce Enterprise Zone Program provides a state income tax credit for the creation of qualified new jobs.

If a business is non-retail and has added net new jobs, the business may qualify for an income tax credit on its Arizona State Income Tax. The credits may be up to $3,000 per qualified employment position over three years. A qualified employment position must be a full-time, permanent job, pay an hourly wage at or above the annual Wage Offer ($8.91 for the year 2002), and provide health insurance to employees for which the employer pays at least 50% of premium. Additionally, 35% of the net new eligible employees must live within the Enterprise Zone when hired.

For further information regarding the Enterprise Zone , please visit the website for the Tucson Regional Economic Opportunity office at www.treoaz.org or call 520-243-1909.

Government Property Lease Excise Tax

Government Property Lease Excise Tax (GPLET) is a program that eliminates the real property tax obligation for a company, replacing it with a predetermined excise tax that is dependent on the type of use. The excise tax is reduced 20% every ten years for the duration of the agreement with the City of Tucson. In addition, a business located in a single central business district is subject to an abatement of the first eight years of the excise tax. The use of GPLET requires the transfer of title for the building and leasehold improvements to the City of Tucson, and would require a lease agreement between City and Offeror. The impact of this program is an abatement of the first eight years of excise tax, followed by two years in which the excise tax will equal approximately 50% of the normal property tax obligation, with a larger decrease in later years as the excise tax rate is reduced 20% every 10 years. The use of GPLET does not reduce the company’s personal property tax obligation.

The following is a breakdown of the excise tax rates that are applicable:

1. Office:
a. $1 per square foot for a one story building
b. $1.25 per square foot for 2 to 8 stories
c. $1.75 per square foot for more than 8 stories

2. Retail:
a. $1.50 per square foot

3. Hotel/Motel:
a. $1.50 per square foot

4. Residential:
a. $.50 per square foot

5. Parking:
a. $100 per space

For more information, please contact the City of Tucson Real Estate Division at 520-791-4181.

Fee Waiver Program

To encourage private investment and redevelopment in Downtown, the City of Tucson has created a number of financial incentives for developers and investors who are interested in joining in the creation of the "Heart of the City". As of September 2005, the City has waived $84,920.45 in fees. More information about available incentives and tax credits from the City of Tucson is available by calling 520-791-5580.

Construction Sales Tax/ Public Improvement Program

The City of Tucson collects construction sales tax on new projects in the core of downtown and shall deposit the receipts in an investment fund. Developers would apply for funds to pay for new public infrastructure or fees in an amount equal to their contribution of construction sales taxes. This program also sunsets in November, 2005.

Development Services Development Tools:

Special Projects Manager

The Development Services Department has established a special “ambassador” for this project. This person will provide a single point of contact to shepherd the project through the development review process. Additionally, the “ambassador” will act as an agent for the developer to monitor the review process to ensure that all issues are addressed in an expeditious manner and assisting with the resolution of any issues. It is envisioned that by having a dedicated staff person to monitor this development application, the overall processing time will be reduced from the standard 4-week review time.

New Jersey Rehabilitation Sub-Code

Effective October 28, 2002, Mayor and Council has adopted the New Jersey Rehabilitation Sub-code.

The Sub-code is a complete and straightforward set of stand-alone rules for existing-structure renovation, purposely written in simple, non-regulatory language and containing all of the technical requirements to guide any project. The Sub-code includes special provisions applicable to structures that meet the standards for historic buildings established by the U.S. Secretary of the Interior. It also contains a comprehensive set of requirements that ensure fire safety in existing buildings. Because the code is clear and specific it enables owners and contractors to reliably predict the cost of renovation in any building.

The New Jersey Rehabilitation Sub-code will not affect the requirement for permits, any Land Use Code issues, or our current historic district requirements. For a more comprehensive understanding of the benefits, refer to http://www.cityoftucson.org/dsd .

Third Party Plan Review

Most commercial developers who desire an expedited review pay for 3rd Party Building Code Reviews. DSD made these external reviews available because existing staffing levels cannot support performing all reviews in-house, and meet the adopted review timeframes by the Department. Development Services has contracted for the services of three companies to perform 3rd party Building Code Reviews, at the expense of the Developer. In addition to this, Development Services has established 2nd Party Land Use Code (LUC) reviews.