State of Colorado Enterprise Zone Program: Contribution Projects

The purpose of the Enterprise Zone Contribution Tax Credit (authorized by C.R.S. 39-30-103.5) is to encourage taxpayers to assist local enterprise zones, working with governmental and non-profit partners, to undertake activities "implementing the economic development plan for the Enterprise Zone."  "Economic development" is further defined by the statute to mean "directly related to job creation [or] job preservation", "to promote nonprofit or government-funded community development projects in enterprise zones,” and to assist homeless shelters which provide employment-related services in the Enterprise Zone.

Projects (or modifications of existing projects) must be approved by the designated local Enterprise Zone Administrator, Michael Wisdom.  If approved, projects shall be submitted by the local Enterprise Zone Administrator to the State for approval from the EDC.  Organizations seeking approval for a project, program, or organization for the Enterprise Zone Contribution Tax Credit agree to abide by all applicable reporting and procedural requirements of the EDC and Department of Revenue.  Eligibility to provide the Enterprise Zone Contribution Tax Credit to donors may be suspended at any time if a project ceases to comply with the requirements of the statute or EDC policies.

In general, a project must have, as one of its main purposes, creating or preserving an environment which will help attract, expand, or retain employers in the enterprise zone.  Direct employment of the sponsoring non-profit organization will not be used to qualify a project, nor will project construction employment.

Guidelines
Zone Geography:  If a project operates both within and outside of Enterprise Zone boundaries, the sponsoring organization should be able to show that EZ contributions are used to cover those expenditures which it can reasonably allocate to the zone geography, and that other sources of funding are available to cover non-zone related activities.  An eligible homeless organization's housing or employment support services must be located within a zone.

Multiple Purpose Organizations:  Organizations that serve multiple purposes in addition to an approved project must maintain a separate accounting system to assure that zone-contribution funds are used only for the approved functions.

"Umbrella" fund-raising agencies:  Organizations that pass contributions through to other organizations are not eligible for the EZ Contribution Tax Credit.

No Direct Benefit:  The statute provides that no credit is to be "allowed for contributions that directly benefit the contributor."  The EDC will not approve project proposals whose primary purpose is to provide infrastructure for an individual user or developer who is a contributor, or for job-training projects for an individual company who is a contributor.  The EDC will consider proposals that have matching contributions from sources that do not receive a direct benefit, on a case-by-case basis.

Child Care Projects:  Contributions to promote childcare may be eligible for a separate statewide 50 percent credit for tax years beginning on or after January 1, 2000.  Under current law, this credit ends December 31, 2009.  For more information, see Department of Revenue FYI Income 35.  Contributions for childcare are NOT eligible for the EZ Contribution Tax Credit.

Reporting Requirements:   Contributions certified for EZ contributions must be reported to the local zone administrator promptly, and zone administrators must report all contributions to State EZ staff within 90 days or less.  Zone administrators are required to submit to EDC staff by November 1 of each year a list of all projects proposed to be re-certified for contributions in the coming calendar year.  Organizations with approved contribution projects must submit an annual recertification application to their local zone administrators, including required performance reporting, prior to this deadline.

Cap on Aggregate Tax Credits per Project:  Each project must limit the total contributions it certifies for the Enterprise Zone Contribution Tax Credit each year to $750,000 or less in potential tax credits, (this is equivalent to $3 million in cash donations or $6 million of in-kind donations).

Local Zone Fees:   Local Enterprise Zone Administrators are allowed to charge a fee to organizations to whom they provide administrative services for the administration of the organization's approved Enterprise Zone Project.  State Legislature does not provide funds for this administration.  Taxpayers are not charged a fee on their contribution, and shall receive the Contribution Tax Credit on their full donation.  SLVDRG does not charge contribution project fees.

Please contact Michael Wisdom at wisdom@slvdrg.org or 719-589-6099 for information about becoming an Enterprise Zone Project or other questions.