PAWTUCKET — Thanks to some tireless lobbying on the part of city officials and local legislators, Pawtucket won approval to have a second neighborhood designated as a state-designated “Enterprise Zone” offering tax incentives to new or expanding businesses.
The R.I. Enterprise Zone Council, an arm of the R.I. Economic Development Corporation (RIEDC), voted Tuesday to approve the zone designation request from Pawtucket to have two U.S. Census tracts, 153 and 154, designated as Pawtucket Enterprise Zone II. This approval was the last step in the process after enabling legislation allowing for an additional enterprise zone in Pawtucket was passed earlier this year by the state General Assembly. The legislation was sponsored by Rep. Elaine A. Coderre (D-Dist. 60, Pawtucket) and Sen. James E. Doyle II (D-Dist. 8, Pawtucket) and applies retroactively to Jan. 1, 2013.
The second Enterprise Zone comprises the Pleasant View neighborhood in the north central part of Pawtucket, between the Blackstone River and the George Bennett Industrial Highway. Broadway cuts through the middle of it, and the other border is Interstate 95. The city’s first enterprise zone, called the Pawtucket/Lincoln zone, covers an area on the west side that borders Lincoln.
According to city officials, how it works is that any business that is a “C corporation” under the state of Rhode Island and which is located in the enterprise zone that meets three growth benchmarks can seek eligibility for a tax credit on their state business income taxes. The tax credit is equal to 50 percent of the annual wages paid to new employees, up to a maximum of $2,500 per employee. If these new employees reside in the zone, then the tax credit is equal to 75 percent of the annual wages paid to those new employees, to a maximum credit of $5,000 per employee.
Michelle Godin, vice president of New England Economic Development Services Inc., a consultant for the city, said there is a formula used to determine the tax credits based on the three benchmarks: a company must increase its workforce by 5 percent over the previous year, increase payroll from the prior year by at least one dollar, and hire Rhode Island residents for full-time jobs.
Godin said the tax credits can apply to either a large or small business, as long as it is set up as a “C corp.” As an example, she cited a new business which locates in the enterprise zone and hires 10 employees during its first year. In the following year, if that business just added one employee and grew its payroll by at least one dollar, it would meet the 5 percent benchmark and could be eligible for a tax incentive.
Godin noted, however, that in Pawtucket, the eligibility is address-specific to the two zones and does not cover the entire city. Only Central Falls and West Warwick have community-wide enterprise zone eligibility.
She added that the enterprise zone program has been in place in Rhode Island since 1992. Existing enterprise zones include Woonsocket/Cumberland, Central Falls/Valley Falls, East Providence, Port of Providence and Providence II, as well as southern parts of the state.
Barney Heath, Pawtucket’s director of planning and redevelopment, said the new enterprise zone should give an economic boost to the Pleasant View neighborhood, which is one of the neediest in the city, as well as spur economic development citywide.
“This enterprise zone was on the chopping block in the governor’s budget. But with a lot of hard work on the part of Mayor Grebien and (Director of Administration) Tony Pires, we were able to get this off the chopping block, and it was then approved by the legislature and enacted by the Rhode Island Enterprise Zone Council,” said Heath. “Looking forward, it’s a great tool to have available to promote economic development.”
Heath said that the proposed enterprise zone program was a key reason that Tunstall America, a provider of healthcare communications services, decided to locate to a vacant mill on Freight Street. The company has hired 150 local people and is planning to increase its work force each year by 5 percent, he said.
Abutting the Tunstall AMAC site is a future industrial development that looks promising for job creation, Heath said.
Kenwood Realty LLC owns more than six acres of land and is offering to build an 85,000- to 100,000-square foot building to lease to a manufacturer. This potential company would also get the benefit of being in the enterprise zone.
Mayor Donald R. Grebien said, “Completion of the final step needed to create a new enterprise zone in Pawtucket is very welcome news for the growth of economic development in our city. It will help assure the expansion of Tunstall AMAC and the hundreds of jobs it brings to its Freight Street facility. It will also serve as a welcome mat showing that Pawtucket is serious about creating jobs and promoting businesses not only in Pleasant View, but throughout our city, because that’s where so many employees of Tunstall and other businesses in the zone will come from.”
Grebien added, “It also shows what can be accomplished with a cooperative governmental effort by the governor’s office, RIEDC, our legislative delegation and the City Council, along with my administration, by working together on common goals for economic growth that will benefit everyone involved.”
Marcel A. Valois, executive director of the Rhode Island Economic Development Corporation, said, “It’s RIEDC’s mission to create the conditions for businesses in all sectors to thrive and to improve the quality of life for our citizens by promoting the state’s long-term economic health and prosperity.”
Valois added, “Expansion of the Enterprise Zone is one piece of a smart incentive plan that helped to attract Tunstall to Pawtucket. Since relocating, they’ve created more than 200 jobs in Rhode Island.”
Follow Donna Kirwan on Twitter@KirwanDonna