The Promise Zone in Eastern Kentucky may soon be doing more than just promise to help the region develop economically. Thanks to some recent legislation filed in Congress there may be some tax credits coming to go with it.
This was part of the message that Kentucky Promise Zone Coordinator Sandi Curd delivered Thursday afternoon to a group of about three-dozen people, who were gathered in the old Whitley County Courthouse to get an update on the program.
“It means at last we might have something besides just connections and free technical assistance to offer to those people in the Promise Zone, who have for profit businesses,” Curd told the audience.
On March 23, U.S. Rep. Hal Rogers (R-KY), U.S. Rep. John B. Larson (D-CT) Rep. Steve Cohen (D-TN), and Rep. Joe Wilson (R-SC) introduced The Promise Zone Job Creation Act to create new tax credits to incentivize the hiring of residents of federally-designated Promise Zones. It would also encourage new investments to bring property, equipment or software to these hard-hit communities.
“Coal country has suffered devastating and economically debilitating impacts from this Administration’s war on coal. In Kentucky’s coalfields, we’ve lost nearly 11,000 coal mining jobs since 2009, making the effort to revitalize and rebuild a difficult, uphill battle,” Rogers said in a news release.
“I am proud of the efforts that local leaders have already undertaken to leverage the Promise Zone designation in Eastern Kentucky, and with this legislation, we can take those efforts to the next level. I am proud to partner with this bipartisan group of members in introducing this bill, which will encourage new businesses to establish roots in the coalfields where they will find some of hardest working, dedicated workforces in the country.”
The Promise Zone Job Creation Act was originally introduced by Senator Bob Casey (D-PA) in the 113th Congress. This bipartisan, bicameral effort will establish employment tax credits and bonus depreciation to enable businesses and residents to realize more immediate economic benefits.
The Promise Zone Job Creation Act is designed to create employment tax credits and establish bonus depreciation.
The legislation would create an employment credit to be provided to businesses that employ Promise Zone residents. Credit would apply to the first $15,000 of qualifying zone employee wages. The credit rate would be 20 percent for zone residents who are employed within the zone and 10 percent for zone residents employed outside of the zone.
Qualified property placed in service within the zone would be eligible for additional first-year depreciation of 100 percent of the adjusted basis of the property. This includes tangible property with a recovery period of 20 years or less, water utility property, certain computer software, and qualified leasehold improvement property. The property must be placed in service within the zone while the zone designation is in effect.
Curd said that other legislators in the past have tried unsuccessfully to get tax credits for businesses in the Promise Zone.
“This is the first time we have had the chairman of the appropriations committee lead the charge,” she added.
Curd noted the that Clinton Era Empowerment Zones are a good example of how tax credits can help an area grow, such as Clinton, Wayne and Jackson counties.
“Tax credits have brought in numbers of businesses and allowed others to expand. We have been able to see that impact census data on poverty so we know it works,” Curd noted.
What is the Promise Zone?
In 2014, President Barack Obama announced that five low income areas across the country had been selected as Promise Zones, including an eight county area in Southeastern Kentucky comprised of Bell, Clay, Harlan, Knox, Leslie, Letcher, Perry and all but two census tracts in Whitley County. Promise Zones are limited to groups of less than 200,000 people, which is why the two census tracts in Whitley County were taken out.
There will be a total of 20 Promise Zones after the final round of Promise Zones are announced this summer. Louisville is currently trying to get an urban Promise Zone designation for a portion of that city.
Until recently, Southeastern Kentucky was the only rural region in the nation to receive the designation, but a second rural Promise Zone is now located in South Carolina.
The 10-year Promise Zone designation doesn’t guarantee its regions any additional grant money, but it does give counties in those regions additional points on some federal grant applications, which can sometimes be the difference between receiving or not receiving grant funds.
This includes some, but not all grants, for federal agencies such as Housing and Urban Development (HUD), the Department of Justice, and the United States Department of Agriculture (USDA).
Curd noted that being located in the Promise Zone should make it more likely that organizations and groups will receive federal grants.
“I wish I could tell you that once you got those points you were guaranteed to bring it home, but no. We have seen that in the last two years. It is still a competitive process. You are still going against the best in the nation after that funding source,” Curd said.
“It can be done. We know that because we watched last year when the state of Kentucky linked with a work training group in the Promise Zone to pull in a $19.9 million Supplemental Nutrition Assistance Program (SNAP) grant.”
So far, Curd said she had written 211 letters of support for various proposals from groups located inside Kentucky’s Promise Zone.
Curd said she would encourage any organization in the Promise Zone that is going after state or federal funding to get a letter of support from her office even if it doesn’t translate into additional points on a grant application.
Another thing the Promise Zone does is it offers free technical assistance.
“The federal government has these little offices of very, very specific expertise. They can’t offer that to the whole nation. To the Promise Zone they will offer that for free,” Curd said.
She cited the example of Williamsburg Mayor Roddy Harrison, who took advantage of one of these programs, 311 For Cities.
311 For Cities enables participants to type in any question that is giving them trouble, such as dealing with deadbeat landlords on Main Street whose properties are looking bad.
“Really, do you think we are the only people in the entire nation that has that problem?” Curd asked.
The program enables people to look at what other similar sized government bodies have done to tackle similar problems.
“It doesn’t necessarily mean that it gives you the answer, but it allows you not to have to ponder and try to figure it out yourself. It allows you to be able to respond and rather than having to invent,” Curd noted.