The Washington State Department of Community, Trade and Economic Development accepted recommendations from the City of Tacoma and the Tacoma Community Redevelopment Authority for $12 million in Commercial Revitalization Deductions (CRD) this year. The CRDs were awarded to six commercial building projects in Tacoma.
Each year projects compete for $12 million in CRD allocations. This year, six projects applied for funding. The state of Washington awarded the allocations to:
— Atrium Court LLC on behalf of future commercial owners: $904,500
— Bridge Lofts LLC on behalf of future commercial owners: $1,895,500
— Carlile Transportation Systems freight facility: $5,000,000
— McFarland Cascade Holdings, Inc. shipping center: $1,477,000
— Sun-In Holdings LLC trans-load facility: $573,000
— Tacoma Hospitality LLC (Marriot Courtyard): $2,150,000
The benefits to these projects include a reduced federal tax bill and an increased ability to make their projects pencil by giving owners financial relief early in the projects when they incur the most expenses.
Tacoma is the only place in Puget Sound — and one of only 28 urban communities around the country — to maintain a U.S. Department of Housing and Urban Development (HUD) Renewal Community (RC) designation. With the designation, Tacoma businesses and developers within the RC area became eligible for a variety of federal tax credits and deductions through 2009. One of those is the Commercial Revitalization Deduction (CRD) allocation which allows property owners to use an accelerated depreciation schedule on their projects.
“We applaud the city of Tacoma for utilizing its entire $12 million Commercial Revitalization Deductions authority for 2005. Since its designation by HUD as a Renewal Community, Tacoma is one of the few Renewal Communities in the nation to consistently ensure that its full annual authority is allocated to commercial projects, said HUD Regional Director, John W. Meyers. These deductions serve as a catalyst for revitalizing distressed neighborhoods.”
In addition to the CRD allocation available to property owners and developers, Tacoma businesses can also take advantage of the RC designation through other tax credits and deductions, including the RC Wage Credit, Increased Section 179 Deduction and Zero Percent Capital Gains. Unlike the CRD, these business tax incentives do not require an application. Instead, businesses can file the proper forms directly with the Internal Revenue Service.
The RC zone covers most of Tacomas downtown core, the Port area, Upper Tacoma and a portion of the Citys East Side. The RC designation replaces Tacomas former HUD Enterprise Community designation and is slated to last until Dec. 31, 2009. HUD ranked RC applicants according to their poverty, unemployment and low-income households rates on the 1990 Census.
Tacoma businesses and developers — both inside and outside the RC zone — can take advantage of more distressed community tax incentives than just the ones mentioned here. For more information, check HUDs Web site at http://www.hud.gov/cr or in IRS Publication 954 at http://www.irs.gov
Commercial property owners, who are rehabilitating or developing their property, can apply for a portion of Tacomas $12 million Commercial Revitalization Deduction allocation. To get on the list to receive an application in for the 2006 CRD Round, or for questions regarding the CRD or other Renewal Community tax incentives, please contact Shari Hart, Tacoma Economic Development Department, at (253) 591-5208 or shart@cityoftacoma.org.
