Part V. Procedures for Qualifying for Real Property Investment Grant
13VAC5-112-330. Effective dates.
Beginning on July 1, 2005, a qualified zone investor shall be allowed a real property investment grant. Units of local, state and federal government or political subdivisions shall not be considered qualified zone investors.
Statutory Authority
§ 59.1-541 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 23, Issue 12, eff. March 21, 2007.
13VAC5-112-340. Computation of grant amount.
A. For any qualified zone investor, the amount of the grant shall be equal to 20% of the amount of qualified real property investment in excess of $500,000 in the case of the construction of a new building or facility. In the case of the rehabilitation or expansion of an existing building or facility grants shall be equal to 20% of the amount of qualified real property investment in excess of $100,000. Beginning on January 1, 2019, the installation of solar panels shall be considered eligible investments for the purposes of the real property investment grant. A qualified zone investor may receive a grant for the installation of solar panels provided that such solar installation investment is in an amount of at least $50,000 and the grant shall be calculated at a rate of 20% of the amount of qualified real property investments in excess of $450,000 in the case of construction of a new building or facility. Grants shall be calculated at a rate of 20% of the amount of qualified real property investment in excess of $50,000 in the case of the rehabilitation or expansion of an existing building or facility. In the case where the grant is awarded based solely on solar investment, the grant shall be calculated at a rate of 20% of the amount of total qualified real property investments made in solar installation. For such properties eligible for real property investment grants made solely on the basis of solar installation investments of at least $50,000 but not more than $100,000, awards shall not exceed $1 million in aggregate in any fiscal year. Qualified zone investments are defined in subdivisions 1 and 2 of this subsection:
1. Qualified zone investments include expenditures associated with (i) any exterior, interior, structural, mechanical, or electrical improvements necessary to construct, expand, or rehabilitate a building for commercial, industrial, or mixed use; (ii) excavations; (iii) grading and paving; (iv) installing driveways; and (v) landscaping or land improvements. These can include costs associated with demolition, carpentry, sheetrock, plaster, painting, ceilings, fixtures, doors, windows, fire suppression systems, roofing, flashing, exterior repair, cleaning and cleanup, and solar panels.
2. Qualified real property investments do not include:
a. The cost of acquiring any real property or building.
b. Other costs, including (i) the cost of furnishings; (ii) any expenditure associated with appraisal, architectural, engineering, surveying, and interior design fees; (iii) loan fees, points, or capitalized interest; (iv) legal, accounting, realtor, sales and marketing, or other professional fees; (v) closing costs, permits, user fees, zoning fees, impact fees, and inspection fees; (vi) bids, insurance, signage, utilities, bonding, copying, rent loss, or temporary facilities incurred during construction; (vii) utility connection or access fees; (viii) outbuildings; (ix) the cost of any well or septic or sewer system; and (x) roads.
c. The basis of any property (i) for which a grant under this section was previously provided; (ii) for which a tax credit under § 59.1-280.1 of the Code of Virginia was previously granted; (iii) which was previously placed in service in Virginia by the qualified zone investor, a related party as defined by § 267(b) of the Internal Revenue Code, or a trade or business under common control as defined by § 52(b) of the Internal Revenue Code; or (iv) that was previously in service in Virginia and has a basis in the hands of the person acquiring it, determined in whole or in part by reference to the basis of such property in the hands of the person from whom it was acquired or § 1014(a) of the Internal Revenue Code.
B. For any qualified zone investor making less than $5 million in qualified real property investment, the cumulative grant will not exceed $100,000 within any five-year period for any building or facility.
1. In cases where subsequent qualified real property investment within the five-year period results in the total qualified real property investment equaling $5 million or more then the qualified investors shall be eligible to receive grants provided that the total of all grants received within the five-year period does not exceed a maximum of $200,000 per building or facility.
2. In such cases the grant will be available to the qualified zone investor whose qualified real property investment application results in the total qualified real property investment for the building or facility to equal $5 million or more for the calendar year in which the $5 million threshold is met. The grant will be equal to 20% of the amount of qualified real property investment in excess of $500,000 in the case of the construction of a new building or facility, or in the case of the rehabilitation or expansion of an existing building or facility 20% of the amount of qualified real property investment in excess of $100,000 notwithstanding the $200,000 cap per building or facility pursuant to subsection D of this section.
C. For any qualified zone investor making $5 million or more in qualified real property investments, the cumulative grant will not exceed $200,000 within any five-year period for any building or facility.
D. Notwithstanding subsection E of this section, in the case of a building with multiple tenants or owners, the maximum amount of the real property investment grant to each tenant or owner shall relate to the proportion of the property for the tenant holds a valid lease or the owner has a deed of trust.
1. This maximum shall be determined by the cumulative level of qualified real property investment made within the five consecutive year period. The first five consecutive year period starts with the first real property investment grant issued pursuant to § 59.1-548 of the Code of Virginia.
2. If the total of all qualified real property investments up to and including those made in the current grant year are less than $5 million then the maximum real property investment grant that any one qualified zone investor shall receive shall be equal to the qualified zone investor's proportion of the building or facility's useable floor space times $100,000 or 20% of the amount of qualified real property investment in excess of $500,000 in the case of the construction of a new building or facility, or in the case of the rehabilitation or expansion of an existing building or facility 20% of the amount of qualified real property investment in excess of $100,000, whichever is less.
3. If the total of all qualified real property investments up to and including those made in the current grant year are $5 million or more then the maximum real property investment grant that any one qualified zone investor shall receive shall be equal the qualified zone investor's proportion of the building or facility's useable floor space times $200,000 or 20% of the amount of qualified real property investment in excess of $500,000 in the case of the construction of a new building or facility, or in the case of the rehabilitation or expansion of an existing building or facility, 20% of the amount of qualified real property investment in excess of $100,000, whichever is less.
E. The total grant amount per building or facility within a five-year period shall not exceed $200,000.
Statutory Authority
§ 59.1-541 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 23, Issue 12, eff. March 21, 2007; amended, Virginia Register Volume 24, Issue 8, eff. January 23, 2008; Volume 26, Issue 1, eff. October 14, 2009; Volume 35, Issue 23, eff. August 7, 2019.
13VAC5-112-350. Eligibility.
A. Only office, commercial or industrial or mixed use real property is eligible. A mixed-use building where the office, commercial or industrial use is less than 30% shall not be eligible for this grant.
B. A qualified zone investor shall apply for a real property investment grant in the calendar year following the year in which the property was placed in service provided that:
1. The total amount of the rehabilitation or expansion of depreciable office, commercial or industrial or mixed use real property placed in service during the calendar year within the enterprise zone equals or exceeds $100,000 with respect to a building or facility.
2. The cost of any newly constructed depreciable office, commercial or industrial or mixed-use real property (as opposed to rehabilitation or expansion) is at least $500,000 with respect to a building or facility.
C. In the case of a tenant, the amounts of qualified zone investment specified in this section shall relate to the proportion of the property for which the tenant holds a valid lease.
D. In the case of buildings with a tenant or multiple tenants, such tenant(s) shall request written consent from the owner to apply for the grant.
E. In the case of buildings with a tenant or multiple tenants, such tenants shall coordinate with the owner and all other tenants under this section. Unless other coordination and agreements have been reached by the owner and all tenants, the department will automatically determine the amount of each tenant's real property investment pursuant to 13VAC5-112-340 D.
F. In the case of buildings with multiple owners, such owners shall have written coordination from all other owners. Unless other coordination and agreements have been reached by all owners, the department will automatically determine the amount of each owner's real property investment pursuant to 13VAC5-112-340 D.
G. Units of local, state and federal government or political subdivisions are not eligible to apply for this grant.
Statutory Authority
§ 59.1-541 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 23, Issue 12, eff. March 21, 2007; amended, Virginia Register Volume 26, Issue 1, eff. October 14, 2009.
13VAC5-112-360. Qualification in zones whose designation period is ending.
In the case of zones whose designation period is ending, zone investors must apply for qualified real property investments that were placed in service prior to the zone expiration date to receive a real property investment grant notwithstanding 13VAC5-112-350 B. Zone investors may not qualify for investments made after the zone expiration date.
Statutory Authority
§ 59.1-541 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 23, Issue 12, eff. March 21, 2007.
13VAC5-112-370. Intrastate Anti-Piracy Rule.
Real property investment grants will not be available to assist a Virginia qualified zone investor to relocate from one area of Virginia to another unless there is an increase in employment or building square footage for the qualified zone investor.
Statutory Authority
§ 59.1-541 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 23, Issue 12, eff. March 21, 2007.
13VAC5-112-380. Application submittal and processing.
A. In order to claim the grant an application must be submitted to the department on prescribed 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 be 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.
Statutory Authority
§ 59.1-541 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 23, Issue 12, eff. March 21, 2007; amended, Virginia Register Volume 37, Issue 13, eff. April 1, 2021.
13VAC5-112-390. Accuracy and validity of information.
A. The department may at any time review qualified zone investors records related to qualification to assure that information provided in the application process is accurate.
B. Qualified zone investors shall maintain all documentation regarding qualification for enterprise zone incentive grants for a minimum of three years following the receipt of any grant.
C. Real property investment grants that do not have adequate documentation regarding qualified real property investments may be subject to repayment by the qualified zone investor.
Statutory Authority
§ 59.1-541 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 23, Issue 12, eff. March 21, 2007.