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HUD Update

The federal Empowerment Zones and Renewal Communities sunset at the end of this year.  HUD recently updated its website with call to extend the program:

The Renewal Community and Empowerment Zone (RC/EZ) programs are scheduled to expire at the end of 2009. However, in his unwavering efforts to seize the opportunities to create and save jobs through federal programs, such as the RC/EZ programs, President Obama requested in his Fiscal Year 2010 budget that Congress act to extend the RC and EZ designations to December 31, 2010. Extending the designations would allow tax relief to remain available to the 300,000 businesses located in the distressed RC/EZ areas, thereby helping create or retain jobs in high poverty areas, in an environment where the unemployment rate is the highest it has been in 25 years.

It is critically important to extend the provisions immediately rather than allow the RC and EZ designations and the related tax incentives to lapse. Extending retroactively would cause a drop in utilization.

Nationwide, the benefits that derive from the $11 billion tax incentive package are clear. In this regard, the most widely utilized of the Community Renewal tax incentives is the employment credit, which provides federal tax benefits to local businesses for employing residents from the designated areas. Recent years have shown a steady upward trend in utilization of this incentive. This has led to substantial increases in business development and job creation.

Based on the latest data from the Internal Revenue Service, HUD estimates that approximately 480,000 jobs for RC and EZ residents generated over $2 billion worth of employment credits for eligible employers throughout the country in 2007-2008. Businesses have also utilized a related incentive for hiring high risk youth and providing summer jobs to teens residing in RC and EZ communities, which are two categories tied to the RC and EZ designations under the Work Opportunity Tax Credit.

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