Buffalo-Lackawanna Renewal Community
A Renewal Community (RC) designation stimulates economic development in eligible neighborhoods by offering Federal tax incentives to encourage businesses to locate or expand operations and to hire residents of the RC. The tax benefits took effect January 1, 2002 and remain until December 31, 2009.

Buffalo-Lackawanna, one of 40 designees (one of five in NYS) selected by the Department of Housing and Urban Development (HUD), is 11 square miles that include sections of the Lower West Side, East Side, Downtown, Seneca-Babcock, Broadway-Fillmore, the former Republic Steel area of South Buffalo and the First Ward in Lackawanna.

Summary of Tax Incentives
Renewal Community Employment Credit (RC Wage Credit) – Credit against Federal Taxes up to $1,500 for businesses for each year of RC designation for every existing employee and new hire who lives and works in the RC. Available January 1, 2002 through Dec. 31, 2009. Cannot count wages for both the WOTC and RC credit.

Increased Section 179 Deduction-Allows businesses to claim increased Section 179 deduction. The increase can be as much as $35,000 for a qualified Renewal Community business. May be claimed on property such as equipment and machinery.

Commercial Revitalization Deduction (CRD) Accelerated Depreciation - Deduction of either one-half of qualified revitalization expenditures (QRE’s) in the first year a building is placed in service or all of QRE’s over 10 years if QRE’s have been allocated to revitalization of a commercial building located in an RC. An annual allocation of $12 million (no more than $10 million per project) is available.

Zero Percent Capital Gains Rate for RC – the holder, for a minimum of 5 years, of an RC business asset acquired between Jan. 1, 2002 and Dec. 31, 2009, will not have to include in its gross income “ qualified capital gain” from the sale or exchange of the asset. Business must qualify as a Renewal Community Business.*

There is no application or certification process for the Renewal Community Employee Credit, Increased Section 179 Expensing and Zero Percent Capital Gains Rate. A business must analyze the requirements in light of its own operations and use the same standards it applies for taking any position on its Federal tax return. This requires a legal determination, so a business should consult a tax attorney or its tax preparer. The business should retain documents establishing that it is a Renewal Community business,* such as proof that an employee is a RC resident, in the event of an IRS audit.

* A business qualifies as a Renewal Community business if it actively conducts business in a RC, has its tangible and intangible property located and used in the active conduct of business in a RC. At least 50% of the total gross income for the entity is derived from the active conduct of business with the RC and 35% of the employees reside in a RC. Tax laws exclude certain businesses from the definition, including liquor stores, golf courses, racetracks, gambling facilities, country clubs, residential properties, businesses that predominantly hold or develop intangibles for sale or license, or businesses that rent personal property. Non-profits organizations are not eligible.

• Further information, including a map of the designated census tracts and streets can be found at www.ecidany.com.
• For more detailed information on these tax credits, check out RC Initiatives information on www.hud.gov.
• To obtain copies of IRS publication 954, Tax incentives for Empowerment Zones and other Distressed Communities, visit www.irs.ustreas.gov.

Additional Information

      Renewal Community Map

For additional information on the Renewal Community contact:

Kathleen Peterson
Empire Zone Coordinator

920 City Hall
Buffalo, NY 14202

(716) 842-6923
email: kpeterson@berc.org