The VEZ Program is a partnership between the state, local communities and the private sector that encourages job creation and private investment. It is a tool used by the commercial real estate industry to jumpstart development and re-development projects.
The VEZ program designates Enterprise Zones throughout the state and provides 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.
Last fall the committee identified an issue that threatened the eligibility of building owners to receive grants under the VEZ program. New changes to the IRS Repair Regulations (Section 263a) required that certain improvements and repair costs be treated as expenses in the current calendar year. However, state code language required that these costs be capitalized to qualify for grant funding under the VEZ. Thus, without action by the state legislature, commercial property owners would no longer be eligible to benefit from the VEZ program for improving existing buildings in blighted areas, even though substantial building costs would have qualified for grant funding in prior years.
To address this unintended negative impact, ICSC partnered with the Virginia Retail Merchants Association (VRMA) to work with the McAuliffe Administration and state legislature on this issue. As a result of these efforts, Governor McAuliffe signed legislation into law allowing ICSC members in Virginia to continue to have access to the Enterprise Zone Grant Program (VEZ), effective July 1, 2017.