Denver’s Tax Credit & Workforce Services Denver Economic Development & Opportunity Joanne Greek/ Rachel Lyons/ Sarah Murphy

Introductions If time permits, please share your name and a brief overview of your business. Have you pre-certified or certified as a qualified business in Denver’s Enterprise Zone? (DEZ) Have you participated in Denver’s Business Investment Program? (BIP)

DEZ Video OED EZ video https://youtu.be/SkE9UBMvQEY https://www.youtube.com/watch?v=SkE9UBMvQEY&feature=youtu.be OED EZ video https://youtu.be/SkE9UBMvQEY [show video]

Denver’s Enterprise Zone For a geographic location to have Enterprise Zone status, it must meet at least 1 of 3 economic distress criteria: Per capita income <75% of state average Unemployment rate 25% > state average Population growth rate <25% of state average

Denver’s Enterprise Zone 18 Enterprise Zones throughout Colorado Encourage businesses to locate and expand in economically distressed areas. State of Colorado tax credit program that allows businesses located within a specific geographic area to receive tax credits against their state tax liability. The City and County of Denver is a Home Rule Jurisdiction and administers its own sales and use taxes. Companies that certify for Enterprise Zone credits are still responsible for all City taxes.

Colorado’s Enterprise Zones

Denver’s Enterprise Zone

Incentives for entrepreneurs & businesses of all sizes BUSINESS INCOME TAX CREDITS CREDIT AMOUNT Investment Tax Credit (ITC) 3% of equipment purchases Commercial Vehicle Investment Tax Credit (CVITC) 1.5% of commercial vehicle purchases Job Training Tax Credit 12% of qualified training expenses New Employee Credit $1,100 per new job Agricultural Processor New Employee Credit $ 500 per new job Employer Sponsored Health Insurance Credit $1,000 per covered employee R&D Increase Tax Credit 3% of increased R&D expenditures Vacant Building Rehabilitation Tax Credit 25% of rehab expenditures (hard costs)

Rehabilitation of Vacant Building Credit Examples Rehabilitation of Vacant Building Credit

Examples Carry Forward

Impact of the Denver EZ Benefits of the EZ program to Denver in 2017: $6,850,000 in EZ credits certified Over 260 businesses completed certification 65 manufacturers (25%) / NAICS Sector Code 20-39 Over $195 million invested in Section 38 Property (FFE and inventory) Businesses trained nearly 6,670 employees with $25 million spent on training 454 new jobs created $12 million increased investment in R&D $6.74 million invested to revitalize vacant buildings for commercial use

Interactive Map Enterprise Zone https://choosecolorado.com/doing-business/incentives-financing/ez/ Enter the address of your business. The map will be shaded red if it is located within the Denver Enterprise Zone.

https://choosecolorado.com/doing-business/incentives-financing/ez/ Pre-Certify IMPORTANT! Pre-certify annually Pre-certification can be completed up to 3 months in advance of the business' tax year start date No cost or obligation to pre-certify https://choosecolorado.com/doing-business/incentives-financing/ez/ 13

The Fine Print The Department of Revenue provides FYI publications with further guidance on EZ credits. Please share with your tax advisor.

Enterprise Zone Contribution Projects An additional way to earn EZ tax credits while giving back to the community EZ – Contribution Projects: encourage community participation and public-private partnerships to revitalize EZs. EZ Administrators work with their communities to bring forward proposals that support local economic improvements, result in job creation/retention and business expansion, and have the support of the community. Colorado taxpayers, including business entities, may earn a 25% state income tax credit for cash contributions to targeted efforts and 12.5% for in-kind contributions of goods or services. Example: Construction Co ABC donates $1,000 in materials to an organization building affordable housing units. Contact us for a list of EZCP partners in Denver

Manufacturing Equipment States Sales Tax Exemption Purchases of machinery or machine tools and parts thereof are exempt from state sales and use tax when the machinery will be used in manufacturing. The manufacturing exemption is expanded to exempt additional purchases from sales and use tax when machinery is used solely and exclusively in an enterprise zone. (example: materials for construction or repair of machinery is now eligible, mining operations, etc) To qualify the machinery must be: Used in Colorado, used directly to manufacture tangible personal property, meets federal definition of Section 38 property, is purchased at $500 or more This exemption is for the State of Colorado taxes ONLY. The business still has tax liability with the City of Denver. “The City and County of Denver is a Home Rule Jurisdiction and administers its own sales and use taxes. Manufacturing equipment located within the City and County of Denver is not exempt from municipal sales/use taxes.”

Manufacturing Equipment States Sales Tax Exemption Process to claim state sales tax exemption Complete Enterprise Zone pre-certification Complete form 1191. The seller must complete a section of this form. The seller keeps a copy. The other copy must be submitted to Dept of Revenue when you file your return. Retain a copy for your records 3) Dept of Revenue FYI Sales 10 publication/ provides additional guidance on eligibility 4) FYI Sales 90/ Sales & Use Tax Refund Request “If tax was paid on a purchase that qualifies for exemption, the purchaser may request a refund for the tax paid. See FYI Sales 90 for information regarding sales and use tax refund claims.” We have brought a limited number of these forms with us today. If you would like hard copies, please see us after the presentation.

Denver Enterprise Zone Questions/Comments about the DEZ program?

Denver’s Business Investment Program Tax credit on Business Personal Property tax owed to the City Awarded annually to Denver businesses that are new, new to Denver or expanding in Denver A business that invests $1 million in BPP can receive an estimated $12,000 in tax credits over a four-year period A business investing $34,000 in BPP could still save nearly $400 in taxes over the four‐year period

Denver’s Business Investment Program Any Denver business that made a significant capital investment through a business start-up or expansion is eligible to apply if any one of the following criteria are met. Investment of at least $1 million in business expansion Increased investment by at least 100% of the prior business capital level Increase of at least 10 employees over the preceding 12-month average Increase of at least 10% in employment over the preceding 12-month average

88 Companies of all Sizes Proportionally beneficial to companies of all sizes and types. Smallest: 2 Largest: 1,450 Median: 44

Type of Investment Proportionally beneficial to companies of all sizes and types. Smallest investment:$7,500 Largest investment: $60m Median investment: $280k

Participation by Industry Type Finance and Insurance 5% Health Care & Social Assistance Wholesale Trade Management of Companies and Enterprises 3%

Why a Business Investment Program? Geographically neutral (i.e., not restricted to Enterprise Zones) Proportionally beneficial to companies of all sizes

Apply The application window for 2018 is closed. 2019 applications will be available in early April. Online application process (separate from the EZ portal). Will send email reminder to those companies that express interest.

Questions? BIP Joanne Greek 720-913-1513 Joanne.greek@denvergov.org InvestinDenver@denvergov.org DEZ Rachel Lyons 720-913-1533 Rachel.lyons@denvergov.org

Thanks! Thank you for attending! Please share this information with family, friends and colleagues in the Denver business community!