Virginia Enterprise Zone Grants and How to Apply

The information below was accurate as of the October 19, 2022 meetup. For the most up-to-date information, please visit https://www.dhcd.virginia.gov/vez.

The Virginia Enterprise Zone (VEZ) program is a partnership between state and local government that encourages 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. Meanwhile, the locality provides local incentives.

So what is a qualified real property investment? Do solar components qualify?

Irving: Those are hard construction costs. They’re structurally part of the building or facility. I like to tell people if you were to take the building, pick it up, shake it, and turn it upside down, if it falls out, it’s probably not a qualified investment. If it stays with the building, it probably is. 

Qualified real property investments include things attached to the building: carpentry, drywall painting, roofing, doors, windows, ceilings. Things that are not qualified include any kind of permit or fee, the acquisition costs of the building, signage, any item that goes beyond the property lines. Let’s say you’re adding sidewalks or any kind of utilities beyond the property line; those do not count, and machinery and tools also do not count.

In 2019, there was a legislative change in the Virginia state code to allow projects with solar components to qualify at a lower threshold. So if you have a project in which you are using solar, that’s only improving your building, and you are spending at least $50,000 (or with solar up to $100,000), you could qualify with the $0 threshold for the 20%. And just like any of the other projects, solar is part of a larger project with other qualified investments, and that would then lower the overall threshold with that $50,000 So if it was a new construction job, it would go from $500,000 to $450,000 and for a rehabber or expander from $100,000 to $50,000.

Let’s talk about job creation grants.

Irving: Job creation grants are for jobs that are full-time, high wage, and have health benefits. The owner of the company must provide at least 50% of health benefits to the employee unless we net new jobs in Virginia. 

Net new jobs cannot include jobs that are moving from one locality to another. Those are not considered new jobs for the purposes of this type of agreement. Types of jobs that are not eligible include units of government – so local, state, federal – and also nonprofits. All job creation grants are available to new and existing businesses.

So for a new business, that first year to count toward the grant would be the year before you actually started, and so you would have zero as the base year. If you’re an existing business, you can choose your base year, and it can be either of the two calendar years immediately preceding the year that you’re applying for the grant. So let’s say you’ve never applied before, and you’re applying for this upcoming year for grant year 2022. Then you can choose 2021 or 2020 as your base year number.

So you must meet a four-job threshold, just like we have that threshold for the amount of qualified investments you must make. You must create at least five jobs to meet that four-job threshold. For that job to count, those first four jobs don’t receive grants, and eligible positions must be net new to Virginia, permanent full-time earning at least 175% of minimum wage, and offered health benefits. Also there are positions that aren’t able to be counted, which are personal service, food and beverage, and retail. 

What counts as a “permanent” full-time job? How does remote work impact this?

Irving: According to this grant, that means that the job is there for an indefinite duration. It can’t be a job that is only going to be around for a certain amount of time. Also, they must report to work in the [Enterprise Zone] a regular basis, which means at least once per month. That’s a rule that we’ve always had, but it’s becoming even more important now, with all of the working from home that we have. 

For instance, I work for DHCD, but I live in Farmville. I don’t necessarily report to work once a month in that region and location, so I would not count for this this type of grant. They must also be scheduled to work either a minimum of 35 hours per week for at least 48 weeks, or a minimum of 35 hours per week for a portion of the taxable year in which the employee was hired. They must have a minimum of 1,680 hours per year.

How to Apply