Title of Regulation: 13VAC5-112. Enterprise Zone Grant Program Regulation (amending 13VAC5-112-290, 13VAC5-112-380).

Statutory Authority: § 59.1-541 of the Code of Virginia.

Public Hearing Information: No public hearings are currently scheduled.

Public Comment Deadline: March 17, 2021.

Effective Date: April 1, 2021.

Agency Contact: Kyle Flanders, Senior Policy Analyst, Department of Housing and Community Development, Main Street Centre, 600 East Main Street, Suite 300, Richmond, VA 23219, telephone (804) 786-6761, FAX (804) 371-7090, TDD (804) 371-7089, or email kyle.flanders@dhcd.virginia.gov.

Basis: The Board of Housing and Community Development is authorized to promulgating this regulation under § 59.1-541 of the Code of Virginia.

Purpose: This regulatory change provides additional flexibility for applicants and regulants and is necessary to protect the health, safety, and welfare of the citizens as it removes provisions that require unneeded in-person interactions in the COVID-19 environment.

Rationale for Using Fast-Track Rulemaking Process: The regulatory change is noncontroversial as it allows for digital-only applications. This is standard practice for many agencies and entities. Most program applicants already submit secondary digital applications.

Substance: This change eliminates the need to submit hard copies of Enterprise Zone applications, critical during the COVID-19 environment.

Issues: This regulatory action is advantageous to the public and the agency as it provides flexibility and eliminates the need for hard copies of applications. No disadvantages exist for the public or the agency or Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Board of Housing and Community Development (Board) proposes to no longer require that applications for grants under the Virginia Enterprise Zone (VEZ) program be submitted in hard copy.

Background. The VEZ program is a partnership between state and local government that is designed to encourage job creation and private investment. VEZ accomplishes this by designating enterprise zones throughout the state and providing two grant-based incentives, the Job Creation Grant (JCG) and the Real Property Investment Grant (RPIG), to qualified investors and job creators within those zones, while the locality provides local incentives.

The current regulation states that applications for the JCG and the RPIG must either be hand-delivered by the date specified in this section or sent by certified mail with a return receipt requested and postmarked no later than the date specified in this section. The Board proposes to amend the text to state that applications for the JCG and the RPIG must be received by the Department, as specified by the Department, no later than the date specified in this section. In practice, the Department of Housing and Community Development has indicated that it would accept applications either electronically or in hard copy.¹

Estimated Benefits and Costs. The proposal in practice appears to be beneficial in that it would provide greater flexibility for firms in delivering applications for the JCG and the RPIG, and may moderately reduce costs. By sending applications electronically, travel and printing costs could be saved versus the hand delivery of applications, and the costs of postage and printing could be saved versus applying by certified mail.

Businesses and Other Entities Affected. The proposed amendments affect the approximate 200 annual applicants for VEZ grants, as well as about 40 certified public accountants.² The existing and proposed regulations require that the accuracy and validity of information provided in applications be attested to by an independent certified public accountant licensed by the Commonwealth. The proposal does not produce cost for any affected entity.

Small Businesses³ Affected. The proposed amendments do not appear to adversely affect small businesses.

Localities⁴ Affected.⁵ The proposed regulation particularly affects localities with enterprise zones. The following cities contain enterprise zones: Bristol, Covington, Danville, Emporia, Franklin, Galax, Hampton, Hopewell, Lynchburg, Martinsville, Newport News, Norfolk, Petersburg, Portsmouth, Radford, Richmond, Roanoke, Staunton, Waynesboro, and Winchester. The following counties contain enterprise zones: Accomack, Alleghany, Bedford, Brunswick, Carroll, Dickenson, Grayson, Greensville, Halifax, Henrico, Henry, Isle of Wight, Lancaster, Lunenburg, Mecklenburg, Northampton, Northumberland, Page, Patrick, Pittsylvania, Prince Edward, Prince George, Pulaski, Richmond, Scott, Smyth, Southampton, Tazewell, Washington, Westmoreland, Wise, and Wythe.⁶

The proposal does not introduce costs for local governments.

Projected Impact on Employment. The proposal does not appear to affect total employment.

Effects on the Use and Value of Private Property. The proposal may modestly reduce application costs for private firms that apply for either the JCG or the RPIG, which may very modestly positively affect their value.

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¹According to the Department of Housing and Community Development, this information would be in a guidance document.

²Data source: Department of Housing and Community Development

³Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million.

⁴Locality can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

⁵§ 2.2-4007.04 defines particularly affected as bearing disproportionate material impact.

6 Source: https://www.dhcd.virginia.gov/sites/default/files/Docx/vez/vez-map.pdf

Agency's Response to Economic Impact Analysis: The Board of Housing and Community Development and the Department of Housing and Community Development staff concur with the economic impact analysis.

Summary:

The amendments remove requirements for a hard copy application to be submitted for those seeking grants under the Enterprise Zone Program and allow applicants to submit digital-only applications.

13VAC5-112-290. Application submittal and processing.

A. In order to claim the grant, an application must be submitted to the department on a prescribed form. Applicants shall provide other documents as prescribed by the department.

B. Local zone administrators must verify that the location of the business is in the enterprise zone in a manner prescribed by the department.

C. The accuracy and validity of information provided in such applications, including that related to permanent full-time positions, wage rates, and provision of health benefits are to be attested to by an independent certified public accountant licensed in Virginia through an agreed-upon procedures engagement conducted in accordance with current attestation standards established by the American Institute of Certified Public Accountants, using procedures provided by the department as assurance that the firm has met the criteria for qualification prescribed in this section.

D. Business firms with base year employment of 100 or fewer permanent full-time positions and that create in a qualification year 25 or fewer grant eligible positions seeking to qualify for job creation grants as provided for in § 59.1-547 of the Code of Virginia shall be exempt from the attestation requirement for that qualification year. The permanent full-time positions, wage rates, and provision of health benefits of such business firms shall be subject to verification by the department.

E. In order to request job creation grants, business firms shall submit the application form, final attestation report, if an attestation is required, and all required documentation to the department by no later than April 1 of the calendar year subsequent to the qualification year.

F. If the April 1 due date falls on a weekend or holiday, applications are due the next business day.

G. Applications submitted by April 1 without the required attestation report shall be considered late applications and processed according to subsection I of this section.

H. The department shall notify the business in writing of any incomplete or missing required documentation or request written clarification from the business firm on information provided by no later than May 15. Business firms must respond to any unresolved issues by no later than June 1. If the department does not meet its May 15 date for notification, then businesses must respond to any unresolved issues within 10 calendar days of the actual notification.

I. Any applications with the required final attestation report and required documentation submitted after the April 1 due date but before May 15 of the calendar year subsequent to the qualification year will be held until the department determines that funds remain and it will not have to prorate grant awards. At such time, the department will review and process such applications and any applications pursuant to subsection F of this section on a first-come first served basis.

J. The department shall award job creation grants and notify all applicants by June 30 as to the amount of the grant they shall receive.

K. Applications must either be hand-delivered by the date specified in this section or sent by certified mail with a return receipt requested and postmarked received by the department, as specified by the department, no later than the date specified in this section.

L. Applicants may only apply for grants that they are otherwise eligible to claim for such calendar year, subject to the limitations provided by 13VAC5-112-400.

13VAC5-112-380. Application submittal and processing.

A. In order to claim the grant an application must be submitted to the department on prescribed form or forms. Applicants shall provide other documents as prescribed by the department.

B. Local zone administrators must verify that the location of the building or facility is in the enterprise zone in a manner prescribed by the department.

C. The accuracy and validity of information provided in such applications, including that related to qualified real property investments are to be attested to by an independent certified public accountant licensed in Virginia through an agreed-upon procedures engagement conducted in accordance with current attestation standards established by the American Institute of Certified Public Accountants, using procedures provided by the department as assurance that the firm has met the criteria for qualification prescribed in this section.

D. In order to request real property investment grants, zone investors shall submit the application form, final attestation report, and all required documentation to the department by no later than April 1 of the calendar year subsequent to the qualification year.

E. If the April 1 due date falls on a weekend or holiday, applications are due the next business day.

F. Applications submitted by April 1 without the required attestation report shall be considered late applications and processed according to subsection H of this section.

G. The department shall notify zone investors in writing of any incomplete or missing required documentation or request written clarification from the business firms on information provided by no later than May 15. Zone investors must respond to any unresolved issues by no later than June 1. If the department does not meet its May 15 date for notification, then businesses must respond to any unresolved issues within 10 calendar days of the actual notification.

H. Any applications with the required final attestation report and required documentation submitted after the April 1 due date but before May 15 of the calendar year subsequent to the qualification year will be held until the department determines that funds remain and it will not have to prorate grant awards. At such time, the department will review and process such applications and any applications pursuant to subsection F of this section on a first-come first served basis.

I. The department shall award real property investment grants and notify all applicants by June 30 as to the amount of the grant they shall receive.

J. Applications must either be hand-delivered by the date specified in this section or sent by certified mail with a return receipt requested and postmarked received by the department, as specified by the department, no later than the date specified in this section.

K. Applicants may only apply for grants that they are otherwise eligible to claim for such calendar year, subject to the limitations provided by 13VAC5-112-400.