Community & Economic Development

SAN DIEGO – San Diego’s recently touted federal Renewal Community designation is already showing signs of results in the form of significant tax incentives for developers and investors with projects in several San Diego neighborhoods in need of an economic development boost.  The California Tax Credit Allocation Committee (CTCAC) today awarded $11.98 million in federal tax incentives to six San Diego commercial revitalization projects and tentatively awarded another $10 million to a seventh project, pending federal approval.

Specifically, the money applies to commercial revitalization deductions that allow for the depreciation of capital expenditures on an accelerated schedule, greatly reducing federal taxes.  This tax break is just one of several federal tax savings targeted at small businesses and investors as part of the Renewal Community program.  Other program incentives include employee wage credits, equipment tax deductions, and capital gains exclusions.

“Despite the very short window that existed for submitting applications, we were very successful in securing money for local businesses, ” said the Community and Economic Development Department Director Hank Cunningham.  “Thanks to the emergency legislation authorized by state Senator Dede Alpert and Treasurer Phil Angelides, San Diego will now have $12 million in accelerated deductions to contribute to revitalizing some of our oldest neighborhoods.”

San Diego has been designated one of 40 Renewal Communities in the U.S., encompassing parts of Downtown, the East Village, and other neighborhoods to the southeast of Downtown.  The tax incentives, authorized by Congress under the Community Renewal Tax Relief Act of 2000, encourage the construction and redevelopment of abandoned and underutilized buildings within designated Renewal Communities.  Of the five areas in California with such a designation, San Diego was the only one to utilize all of its $12 million 2002 allocation.

“The RC tax savings are part of several City assistance programs designed to help San Diego businesses,” said Ples Felix, the City’s Renewal Community Project Manager.  “Such incentives serve to attract development and investment, thereby revitalizing neighborhoods that would otherwise have difficulty competing economically.”