framework of economic revitalization in areas that experience high unemployment and shortages of affordable housing.?? yanquis

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HUD No. 02-013CCH
Contact: Scott Hudman
(817) 978-5965
For Release
Wednesday
January 23, 2002






HUD ANNOUNCES CORPUS CHRISTI SELECTED AS RENEWAL COMMUNITY - ELIGIBLE FOR $17 BILLION IN TAX INCENTIVES
CORPUS CHRISTI - The Department of Housing and Urban Development today announced that the City of Corpus Christi will be designated a "Renewal Community," eligible to share in an estimated $17 billion in tax incentives to stimulate job growth, promote economic development and create affordable housing. The 2000 Community Renewal Tax Relief Act established the Renewal Community Initiative that will encourage public-private collaboration to generate economic development in 40 distressed communities around the country.

As a result of this Renewal Community designation, Corpus Christi will receive regulatory relief and tax breaks to help local businesses provide more jobs and promote community revitalization.

"These tax incentives will help businesses grow in some of our country's most challenging communities," said A. Cynthia Leon, Southwest Regional Director for HUD. "By creating the incentives that will promote job growth and economic development, we are joining with the private sector to restore economic vitality and restore whole communities in the process."

"The City of Corpus Christi has worked hard for this designation and we couldn't be more pleased," said Mayor Samuel Loyd Neal. "These tax cuts bring businesses, jobs, and growth through the rest of the decade. So this is great news for now and for our future."

Renewal Communities will use the power of public and private partnerships to build a framework of economic revitalization in areas that experience high unemployment and shortages of affordable housing.

An estimated $6 billion in tax incentives are exclusively available for Renewal Communities across the country. As distressed areas, Renewal Communities will also be eligible to share in an additional $11 billion in Low-Income Housing and New Market Tax Credits.

These new RCs can take advantage of wage credits, tax deductions, capital gains exclusions and bond financing to stimulate economic development and job growth. Each incentive is tailored to meet the particular needs of a business and offers a significant inducement for companies to locate and hire additional workers.

Seventy-five percent of the residents in the City of Corpus Christi's Renewal Community live in poverty and cannot afford even basic necessities for their families. By cutting taxes, improving local services, and reducing crime, Corpus Christi hopes to attract businesses in the area that will make up its Renewal Community. The new jobs created will help ease the 19% unemployment rate currently found within Renewal Community area.


Tax Credits
Wage credits are especially attractive to businesses looking to grow. These businesses are able to hire and retain RC residents and apply the credits against their federal tax liability. Businesses operating in the new Renewal Community will enjoy up to a $1,500 credit for every newly hired or existing employee who lives and works in the RC.
Work Opportunity Credits provide businesses in Renewal Communities with up to $2,400 against their Federal tax liability for each employee hired from groups with traditionally high unemployment rates or other special employment needs, including youth who live in the RC.
Welfare to Work Credits offer businesses a credit of up to $3,500 (in the first year of employment) and $5,000 (in the second year) for each newly hired long-term welfare recipient.
Tax Deductions
Commercial Revitalization Deductions permit a State with one or more RCs to deduct $12 million per RC per year, up to $10 million per project for commercial or industrial buildings developed in the RCs. A business can deduct up to $5 million in the year the building is placed in service or deduct the full amount of eligible expenditures pro rata over 10 years.
Section 179 Deductions under the tax code allow a qualified Renewal Community business to expense up to $35,000 of additional qualified property such as equipment and machinery acquired each year during the period of the RC designation, 2002 through 2009.
Environmental Cleanup Cost Deductions allow businesses to deduct qualified cleanup costs in Brownfields.
Capital Gains Exclusions
Zero Percent Capital Gains Rate applies to an interest in, or property of, certain businesses operating in a Renewal Community, if the asset is acquired during the period of the RC designation and held for at least 5 years.

Bond Financing
Qualified Zone Academy Bonds allow state and local governments to match no-interest loans with private funding sources to finance public school renovations and programs.

In addition to the incentives described above, HUD will provide technical assistance to these communities to help make businesses fully aware of the many opportunities available to them. To make certain the Renewal Communities are successful in the initial stages of their designations, HUD will host an Implementation Conference in the spring of 2002 where the newly designated RCs will meet to hear from experts in the fields of business, taxes and economic development.

Other Incentives
Like all distressed communities, Renewal Communities will also be able to take advantage of the New Markets Tax Credits that provide investors with a credit against their federal taxes of 5 to 6 percent of the amount invested in a distressed area. Also available to Renewal Communities is the Low-Income Housing Tax Credit providing credit against Federal taxes for owners of newly constructed or renovated rental housing.

The 2000 Community Renewal Tax Relief Act authorized HUD to designate 40 Renewal Communities and seven new urban Empowerment Zones. HUD received more than 100 Renewal Community applications from communities around the country. Urban RC applicants were ranked according to their 1990 Census rates of poverty, unemployment and low-income households. Rural RC applicants were exempt from the household income factor. Bonus points were given for having low crime and having been identified by GAO as an extremely distressed area. In other words, the most economically distressed communities were awarded designation. Existing EZ/ECs also received a preference in rating and ranking.

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