Alabama Administrative Code › Title 305 - ALABAMA DEPARTMENT OF ECONOMIC AND COMMUNITY AFFAIRS › PLANNING AND ECONOMIC DEVELOPMENT DIVISION › Chapter 305-5-3 - ALABAMA ENTERPRISE ZONE ACT › Section 305-5-3-.09 - Enterprise Zone Procedures Manual

Current through Register Vol. 42, No. 9, June 28, 2024
The enterprise zone procedures manual is incorporated as a
				  rule and attached as a part of the body of the rules.
Graphic 1
				  al0601
Author
: Charles Reynolds
Statutory Authority
:
Code of Ala.
					 1975
, §§
											41-23-1 through 41-23-7, 41-23-29(6).
Ed. Note
: Adopted as new rule by amendment of
					 chapter.
I. INTRODUCTION
The Alabama Enterprise Zone Act (87-573) was passed by the
					 legislature of the State of Alabama on May 26, 1987, and signed into law on
					 July 22, 1987. The purpose of the legislation is to stimulate business and
					 industrial growth in depressed areas of the state, both urban and rural, by the
					 relaxation of certain governmental controls, by providing assistance to
					 businesses and industries, and by providing state and local tax and non-tax
					 incentives in these areas.
The program is designed to be a partnership with the local
					 governing authorities and the Department of Economic and Community Affairs
					 working together with private sector employers to accomplish the goals of the
					 program and to bolster the local areas as well as the State's economic outlook.
					 As with any new program, questions concerning procedures and processes will
					 arise. It is our hope here at ADECA that this manual will address a number of
					 these questions and allow for a smooth transition from legislation to
					 operation.
II. ROLES AND RESPONSIBILITIES
A. THE DEPARTMENT
The "Department" for purposes of this program is defined as
					 the Alabama Department of Economic and Community Affairs hereafter referred to
					 as ADECA.
ADECA, with input from the Enterprise Zone Advisory
					 Council, shall have the responsibility for the general implementation of the
					 law to include:
1. monitoring the operation of the act and conducting a
					 continuing evaluation of the progress made in the enterprise zones.
2. assisting the appropriate local governing authority of
					 an enterprise zone in obtaining assistance from the Federal Government,
					 including the possible suspension of federal regulations within the enterprise
					 zone.
3. assisting the appropriate local governing authority of
					 an enterprise zone in obtaining assistance from any other department of state
					 government, including assistance in providing training and technical assistance
					 to new businesses and small businesses within an enterprise zone.
4. assisting an employer within an enterprise zone in
					 obtaining the benefits of any incentive or inducement program authorized by
					 Alabama law.
5. submitting an annual written report evaluating the
					 effectiveness of the program to the Governor and the Legislature no later than
					 the third day of each regular session.
6. promulgating rules and regulations to effectuate the act
					 in accordance with the Administrative Procedures Act.
7. acting as the certifying agency to both the Council and
					 State Department of Revenue that a company has met the requirements and is
					 certified as eligible to receive the appropriate tax incentives to be
					 determined through their tax returns.
B. APPROPRIATE LOCAL GOVERNING
					 AUTHORITY
The "Appropriate Local Governing Authority" for the purpose
					 of this program is defined as the governing body of a county or a municipality
					 in whose jurisdiction an enterprise zone is located and operating.
The "Appropriate Local Governing Authority" shall have the
					 following responsibilities under the act to include:
1. passing a resolution, through the utilization of public
					 hearing/comment format, endorsing a company to participate in the program and
					 make application for the enterprise zone's benefits. The public hearing/comment
					 period should begin with a public notice run in a newspaper of general
					 circulation at least 15 days prior to the hearing. The hearing can be scheduled
					 in conjunction with regularly scheduled council or commission meetings.
2. providing ADECA with any comments received pertaining to
					 endorsing a company.
3. assisting ADECA in certifying eligibility of an employer
					 expanding in or locating within the boundaries of the enterprise zone.
4. putting in place a mechanism through which any local tax
					 and non-tax incentives specified in the application for zone designation will
					 be made available. It is recommended that the appropriate local governing
					 authority might wish to develop its own rules and regulations to deal with
					 provision of the local incentives.
5. assisting ADECA in evaluating progress made in the
					 enterprise zones.
6. giving priority to federal programs for use in the
					 enterprise zones. (UDAG, CDBG, JTPA, EDA. FmHA, SBA, etc.)
7. authorizing ADECA to supersede certain specified local
					 regulations and ordinances which may serve to discourage economic development
					 within the enterprise zone.
8. providing for a local contact person or board to respond
					 to questions and provide information on the day-to-day operation of the
					 enterprise zone.
C. A PRIVATE EMPLOYER
A "Private Employer" for purposes of this program is
					 defined as a business or industry located within the boundaries of an
					 enterprise zone and operating a private-for-profit business.
A "Private Employer" shall have the following
					 responsibilities under the act to include:
1. obtaining an endorsement resolution approved by the
					 appropriate local governing authority in whose jurisdiction (ENTERPRISE ZONE)
					 the establishment is located, or to be located. This represents the private
					 employers effective date for participation in the program.
2. Locating or expanding within the boundaries of an
					 enterprise zone.
3 filing with ADECA the endorsement resolution and an
					 application of intent to apply for the benefits of the enterprise zone and
					 certifying to ADECA that documentation will be made available to verify the
					 areas of certification.
4. expanding its labor force or making a new capital
					 investment or preventing loss of employment.
5. not closing or reducing employment elsewhere in Alabama
					 in order to locate or expand into an enterprise zone.
III. PROCEDURES
SEQUENCES OF EVENTS
PRIVATE EMPLOYER
1. Locates or is located in the boundaries of an enterprise
					 zone.
2. plans to expand its labor force, make a new capital
					 investment, or prevent loss of employment.
3. solicits the appropriate local governing authority for
					 an endorsement resolution as their entry date for participation in the
					 program.
APPROPRIATE LOCAL GOVERNING AUTHORITY
4 considers the private employer's request for
					 endorsement.
5. if favorable, publish notice of public hearing/public
					 comment period in newspaper of general circulation at least 15 days prior to
					 hearing (council or commission meeting).
6. consider public comments and either approve or reject
					 resolution of endorsement.
7. issues approved endorsement resolution to company and a
					 copy of an application of intent provided by ADECA and forwards copy of public
					 notice and any relevant comments to ADECA.
PRIVATE EMPLOYER
8. forwards copy of endorsement resolution and application
					 of intent to ADECA.
ADECA
9. receives copy of endorsement resolution and application
					 of intent from private employer.
*10. issues an identification number to the company and
					 will work with company to identify and define certification
					 requirements.
11. forwards copy of documents to State Department of
					 Revenue as a signal to issue tax forms and requirements to the private
					 employer.
**PRIVATE EMPLOYER
12. hires employees in the proper areas in order to meet
					 certification requirements and be certified by ADECA to the State Department of
					 Revenue as eligible to receive benefits of the enterprise zone program.
13. maintain appropriate documentation from company's date
					 of endorsement forward to verify areas of certification to ADECA.
APPROPRIATE LOCAL GOVERNING AUTHORITY
14. assists ADECA in certifying eligibility of private
					 employer to receive the benefits of the enterprise zone.
15. puts a system in place on the local level to ensure
					 that local tax and non-tax incentives are provided and sets requirements for
					 the granting of these benefits.
ADECA
16. certifies a private employer through the use of a
					 questionnaire format, as eligible to receive the benefits of the enterprise
					 zone program to the Department of Revenue.
17. issues a certification number to the private employer
					 on their ADECA-EZ1 form to utilize when filing tax return claiming tax
					 incentives under Section 5 of the Act or issues an approved contract to the
					 company under Section 11 of the Act.
18. updates certification on an annual basis for continued
					 reception of benefits by the private employer.
*If questions exist concerning a private employer's
					 eligibility, the endorsement resolution and the application of intent will be
					 taken to the Enterprise Zone Advisory Council for their review and
					 input.
**The certification areas will be adequately addressed in
					 other sections of this document; however, the definitions of new permanent and
					 full-time employee are important to the certification areas required of a
					 private employer. These definitions are published in the Enterprise Zone rules
					 and are as follows:
"NEW PERMANENT EMPLOYEE" - a full-time employee hired
					 pursuant to this act who remains employed with the firm for a minimum of nine
					 months.
"FULL TIME EMPLOYEE" - an employee working a minimum of
					 thirty (30) hours per week and receiving appropriate company benefits.
IV. PUBLIC NOTICE
(SAMPLE)
An example of a public notice that would be appropriate is
					 shown below:
The request
COUNTY COMMISSION/CITY COUNCIL
comments concerning the endorsement of _________ to
					 make
NAME OF COMPANY
application for the State and local tax and non-tax
					 incentives available through the Alabama Enterprise Zone Program.
Any written comments should be forwarded to:
					 --------------
NAME
on or before and/or public
DATE
comment may be made at on in
TIME DATE LOCATION
If you should desire additional information prior to the
					 hearing date please contact at
Once again, this notice should be run at least fifteen (15)
					 days prior to the scheduled meeting in a newspaper of general circulation and
					 the date for receiving written comments should be the same as that of the
					 hearing. If the hearing coincides with a regularly scheduled Council or
					 Commission meeting. an extra called meeting would be avoided.
V.
ENDORSEMENT RESOLUTION AND
					 APPLICATIONS OF INTENT
Copies of an ENDORSEMENT RESOLUTION and APPLICATIONS OF
					 INTENT are included as part of this package to assist in simplifying the
					 initial applications.
RESOLUTION OF ENDORSEMENT
Whereas, an industry prior to participating in the Alabama
					 Enterprise Zone Program or accruing any benefit from the program must obtain an
					 endorsement resolution approved by the appropriate local governing authority,
					 and
Whereas, the appropriate governing authority must assist
					 the Alabama Department of Economic and Community Affairs in certifying
					 eligibility of industries expanding or locating within enterprise zones,
					 and
Whereas, it has been determined through a public
					 hearing/public comment period that the granting of this endorsement by this
					 governing authority as well as the potential benefits to be received by this
					 company will not threaten the well-being of existing industries located within
					 the county/municipality, and
Whereas, it has been established that the said company
					 operation falls into Standard Industrial Classification (SIC) codes 20 - 42, 44
					 - 49, Or consist of major warehousing and distribution centers or regional
					 and/or corporate headquarters of companies whose standard industrial
					 classification (SIC) codes are 20 - 42, 44 - 49 or such other activities having
					 a prospect of significantly impacting the areas economy without adversely
					 affecting the well-being of existing industries located within the city/county
					 hosting the enterprise zone.
Therefore, be it resolved that we, the members of
COUNTY COMMISSION/CITY COUNCIL
endorse
NAME OF COMPANY
to apply for the benefits of the enterprise zone and will
					 assist them in meeting certification requirements as set forth through
					 procedures established by the Alabama Department of Economic and Community
					 Affairs, the Alabama Department of Revenue and/or other state agencies.
Adopted this day of Nineteen Hundred and ____.
MAYOR/CHAIRMAN OF COUNTY COMMISSION
CERTIFICATION:
I do hereby certify that this Resolution of Endorsement was
					 duly adopted at a meeting of the _____________
CITY COUNCIL/COUNTY COMMISSION
held on the ____ day of ____,
DAY MONTH YEAR
CLERK OF CITY COUNCIL/COUNTY COMMISSION
APPLICATION OF INTENT TO APPLY FOR SECTION
					 5
(CODE OF ALABAMA 41-23-24) BENEFITS
ADECA PRE-APP NUMBER
DATE OF APPLICATION:
NAME OF COMPANY:
LOCATION:
RESOLUTION OF ENDORSEMENT PASSED BY:
DATE OF RESOLUTION:
In filing this application of intent to apply for the
					 benefits of the Enterprise Zone Program,
NAME OF COMPANY
will provide appropriate documentation to the Department of
					 Economic and Community Affairs to certify that our Company:
1. a. Expanded its labor force, or
b. Made a new capital investment, or
c. Prevented loss of employment.
2. Did not close or reduce total employment elsewhere in
					 Alabama in order to expand into the zone.
3. Is located within the boundaries of the (Urban/Rural)
					 Enterprise Zone.
If certifying Pan 1.a. (expansion of labor force), our
					 Company will further certify and document that at least 30% of our new
					 permanent, full-time employees were formerly unemployed for at least 90 days
					 prior to this employment, or
If certifying Part 1.b. made a new capital investment, our
					 Company will further certify and document that at least five new permanent
					 full-time employees have been hired, and
If applying for a credit for expenses of training new
					 permanent full-time employees that the training provided was in new skill
					 areas.
I am filing this application of intent to apply for Section
					 5 benefits of the enterprise zone for my company and will provide necessary
					 documentation to verify my company's eligibility to be certified to both the
					 Council and the State Department of Revenue as eligible to receive the benefits
					 of the Enterprise Zone Program.
Signature:
OWNER, PRESIDENT, CHIEF EXECUTIVE OFFICER
APPLICATION OF INTENT TO APPLY FOR SECTION
					 11
(CODE OF ALABAMA 41-23-30) BENEFITS
ADECA PRE-APP NUMBER:
DATE OF APPLICATION:
NAME OF COMPANY:
LOCATION:
CITY/COUNTY:
RESOLUTION OF ENDORSEMENT PASSED BY:
DATE OF RESOLUTION:
In filing this application of intent to apply for the
					 benefits of the Enterprise Zone Program,
NAME OF COMPANY
will provide appropriate documentation to the Department of
					 Economic and Community Affairs to certify that our Company:
1. a. Expanded its labor force, or
b. Made a new capital investment, or
c. Prevented loss of employment.
2. Did not close or reduce total employment elsewhere in
					 Alabama in order to expand into the zone.
3. Is located within the boundaries of the (urban/Rural)
					 Enterprise Zone.
4. Will certify annually that at least 35% of our employees
					 in our Zone operation at the time of employment were:
a. Residents of the urban enterprise zone (city limit to
					 city limn) or a. 1. Residents of the same county in which a rural enterprise
					 zone is located, and
b. Receiving some form of public assistance prior to
					 employment, or
c. Considered unemployable by traditional standards,
					 or
d. Lacking in basic skills.
5. Will give preference and priority to Alabama
					 manufacturers, suppliers, contractors and labor. except where not reasonably
					 possible to do so without added expense, substantial inconvenience. or
					 sacrifice in operational efficiency.
I am filing this Application of Intent to apply for
					 benefits of the enterprise zone and will provide the necessary documentation to
					 participate in a contract with the Department of Economic and Community Affairs
					 for available benefits under this section of the act and understand this
					 certification must be updated on an annual basis for my company's continued
					 participation in the program.
Signature:
OWNER, PRESIDENT, CHIEF EXECUTIVE OFFICER
VI. TAX CREDIT INCENTIVES PROVIDED THROUGH SECTION 5
					 OF THE ACT
A. INTRODUCTION
The maximum tax credit available to any private employer
					 locating in an enterprise zone is $2,500 per new permanent employee hired
					 pursuant to the act and hired on or after the date of endorsement. The $2,500
					 figure may be attained through the utilization of the various tax credits made
					 available through the act. The choice of which credits to pursue and which will
					 be of maximum benefit should be made by the private employer. Each incentive
					 may stand alone or may be paired with another in order to arrive at the maximum
					 available benefit for the private employer's zone operation.
B. VARIOUS INCENTIVES AND CERTIFICATION
					 REQUIREMENTS
1. Private employer may choose to apply for incentives as
					 follows:
a. an Alabama Income or Franchise Tax Credit on taxes due
					 from the zone operation if the private employer can certify that at least 30%
					 of new permanent employees hired pursuant to the act were formerly unemployed
					 for at least 90 days prior to this employment, or
b. an Alabama Income or Franchise Tax Credit for new
					 investments in the zone or improvements to existing facilities in the zone
					 provided that at least five new permanent employees are hired, or
c. an Alabama Income or Franchise Tax Credit of up to
					 $1,000 per new permanent employee for expenses of training those employees in
					 new skills.
C. LIMITATIONS
A private employer prior to applying for the benefits of
					 the act should consider which credit or combination of credits would allow for
					 the maximum benefit and create the least paperwork in terms of providing proper
					 certification. The keys to reception of the benefits are good up-front planning
					 by the private employer and a coordinated, cooperative effort to comply with
					 the areas of certification they have chosen to pursue. It a private employer
					 chooses to certify part VI. B. 1 a., then the 30% requirement will be relevant
					 to any reception of benefits. If a private employer chooses to certify VI.
					 B.1.b., then the making of a new capital investment and hiring a minimum of
					 five new permanent employees (see definitions in Section III.) will be relevant
					 to any reception of benefits. If a private employer chooses to certify part VI.
					 B.1.c., then either the 30% and/or the minimum of five new permanent employees
					 hired would be relevant to any reception of benefits, as would a certification
					 that the training was in new skills.
VII. TAX EXEMPTIONS PROVIDED THROUGH SECTION 11 OF
					 THE ACT
A. INTRODUCTION
The exemptions available through this Section of the
					 Alabama Enterprise Zone Act are not tied to the $2,500 per new permanent
					 employee referenced in Section 5, but requires a
contract
between the
employer
and
ADECA
that must be presented to the
Council
and approved by the
Governor
. The benefits of this Section require a great
					 deal of certification areas to be verified and also these areas to be updated
					 on an annual basis for continued participation of a company in the program. The
					 decision to pursue this area of benefits should be weighed carefully by the
					 employer due to the number of certification areas required for participation in
					 this section's benefits.
B. AVAILABLE BENEFITS
If a contract is entered into with an eligible company, the
					 following benefits may be derived:
1. An exemption from sales and use tax imposed by the State
					 of Alabama on the purchases of the material used in the construction of a
					 building, or any addition or improvement thereon, for housing any legitimate
					 zone business enterprise and machinery and equipment used in that enterprise,
					 and/or
2. Certain exemptions from income taxes levied by the State
					 of Alabama on eligible corporations and individuals, for a period of up to five
					 years, and/or
3. Certain exemptions of corporate franchise taxes levied
					 by the State of Alabama for a period of up to five years.
Note: If a private employer is part of a
					 Taxable/non-Taxable bond issue, the Sales and Use exemption is usually provided
					 in conjunction with the issue and if the exemptions are already being received,
					 through another program, then the enterprise zone benefit could be gained
					 through another exemption area.
After the original certification of the private employer to
					 receive the benefits of the enterprise zone and a contract is in place, the 35%
					 annual certification requirement is mandated in order for the private employer
					 to continue receiving any benefits of the enterprise zone program connected to
					 Section 11.
VIII. CONCLUSION
This manual has been compiled to assist local zone
					 managers, appropriate local governing authorities and private employers in
					 preparing applications and starting the process toward obtaining the benefits
					 of the Enterprise Zone. As additional questions develop or it you require
					 additional information, contact either Charles R. Reynolds or William H.
					 Wallace at (205) 284-8784 or address written request and appropriate forms
					 to:
ALABAMA DEPARTMENT OF ECONOMIC AND COMMUNITY AFFAIRS
3465 NORMAN BRIDGE ROAD
P.O.BOX 250347
MONTGOMERY, AL 36125-0347
ATTENTION: CHARLES R.
					 REYNOLDS