Debbie Balch wanted to expand her home-based marketing research and consulting business but finding the proper office building was a concern. That’s when a discussion with her accountant made the decision an easy one.
Turns out the building Balch and her husband, Jeff, were looking at was part of the Enterprise Zone Program, an area designated by El Paso County to encourage business growth by offering tax credits. Enterprise zones, which are part of a state program, are spread throughout the county.
“We needed a building and this one was affordable but we still weren’t sure,” Jeff Balch said. “When our accountant told us it was in an enterprise zone, we didn’t know what that was but it made the deal sweet. We were deciding whether to do this project and when we learned about the enterprise zone, that was the tipping point. We jumped on it right away.”
So Debbie Balch’s company — she’s the CEO and founder of market research firm Elevated Insights — found a new home in late 2015 at 525 N. Tejon St. The building had been vacant for more than two years — since Eye Associates of Colorado Springs moved on in 2013 — thus qualifying Balch’s business for a hefty tax credit.
“If you find a building that’s been vacant for two years in an enterprise zone and make improvements, you qualify for a 25 percent credit with the state, up to $50,000 if you spend $200,000,” said El Paso County Economic Development Division Manager DeAnne McCann.
Elevated Insights Chief Financial Officer Jeff Balch said the company spent about $400,000 remodeling the building, and qualified for the maximum $50,000 credit.
Elevated Insights also got a 3 percent tax credit for its investment in new office equipment, and $1,100 credit for each new job created.
“We have 18 employees and added 11 of those since we’ve been in this building,” Jeff Balch said.
Since Elevated Insights didn’t post a profit in 2016, the credits were pushed forward to a subsequent tax year.
“Enterprise zone rules allow a business to push those tax credits forward,” McCann said. “Each one has a different carry-forward period, some as little as five years and some as much as 12, so it can be really helpful for a startup business as they grow, or for an established business.”
Any business in an enterprise zone can qualify for a variety of tax credits — for investment, job training, new employees, employer-sponsored health care, research and development and vacant commercial building rehabilitation.
“Debbie had to train our new employees but we didn’t take advantage of that job training credit,” Jeff Balch said. “That’s a  percent credit, so I wish we had.”
CONTRIBUTIONS ARE BENEFICIAL
Another way to earn a 25 percent state tax credit is to contribute to a nonprofit organization or government entity that is located in — and benefits — an enterprise zone. There are about 50 local contribution projects, McCann said, including many of the area’s best-known charity organizations.
Any business or individual taxpayer may earn that contribution tax credit, she said.
“Some of our contribution projects appeal to businesses and some appeal to individuals,” McCann said. “The [Colorado Springs] Chamber & EDC is our longest standing project, and mostly businesses give to them. Springs Rescue Mission, for instance, has more individuals giving to it. So if you contribute $100, you get a $25 state tax credit.”
Colorado’s Enterprise Zone Program was started in 1986 to promote a business-friendly environment in economically distressed areas by offering state income tax credits to encourage businesses to locate in those areas. It began as a rural program but added urban areas in 1989. El Paso County joined the program in 1990 and now has a zone in Teller County, so the local program is called the Pikes Peak Enterprise Zone.
County officials have to address boundary changes every few years. Beginning in 2014, businesses were required to pre-certify each year to qualify for tax credits.
“You’d be foolish not to spend the time and energy to fill out the paperwork,” Jeff Balch said.
Russ Anderson, director of SSA PC, said his accounting firm usually does the paperwork for its clients.
“Most of the time our clients have no idea what an enterprise zone is, but they need to be more aware of it,” Anderson said. “When you consider the new business facilities credit, plus hiring, training and health care, it can be pretty big numbers.”
Anderson said many of his clients earn the contribution credit, but some people might donate to a charitable organization and not be aware of the enterprise zone credit.
“Make out your check to ‘Enterprise Zone’ and give it to Care and Share Food Bank or whomever and let them know you want the enterprise zone contribution credit,” McCann said.
Jeff Balch said that McCann’s office walked them through the process.
“I was intimidated by the process at first,” he said, “but now that I’ve been through it, I wouldn’t be. I’d tell any business owner to pre-certify and take advantage of these credits if they can.”
Interested businesses should visit elpasoco.com for more details. n CSBJ