City of Knoxville - Empowerment Zone

EMPOWERMENT ZONE

Community Renewal Initiative

U.S. Department of HUD

HUD Address Locator

Heart of Knoxville Career and Resource Center

In January 1999, Knoxville was one of 15 urban areas (selected from among 120 applicants) designated as a federal Round II Empowerment Zone (EZ). The Empowerment Zone program is the largest federal grant/incentive program for community revitalization. The Knoxville EZ includes 19 census tracts covering 16 square miles and housing a population of 48,192. The purpose of the program is to stimulate the creation of new jobs, to empower low-income people and families to become economically self-sufficient, and to promote revitalization of distressed area.

The Knoxville Empowerment Zone is governed by the Partnership for Neighborhood Improvement (PNI), a twelve-year-old nonprofit organization whose mission is the revitalization of our distressed neighborhoods. PNI has a 14-member board of directors. Seven of its members represent resources from the broader community, such as banks, businesses, government, foundations, and nonprofits. The remaining seven represent Knoxville's neighborhoods, especially the neighborhoods of the EZ.

Designated areas receive up to $100 million in federal grant funds over a ten-year period, as well as preference on applications for many other federal grant programs. To date, Congress has appropriated $6.66 million in funding for Round II EZs.

The first projects of the Knoxville Empowerment Zone are now getting under way. All are focused on providing economic opportunities for the Zone. The Empowerment Bank Investment Shop will provide access to consulting, credit counseling, and capital for Zone businesses. The Heart of Knoxville Career Center, to be located in the new Magnolia Avenue campus of Pellissippi State Technical Community College, will provide assessments, counseling, referrals, and training for Zone residents. Additional projects will be starting soon.

Each Zone also receives authority to issue up to $130 million in EZ facility revenue bonds for qualifying projects. Zones may also issue Qualified Zone Academy Bonds (QZABs) at 0% interest to finance public school programs with private business partnerships; businesses must contribute money, equipment, or services equal to 10% of the loan for the academy program.

Qualifying businesses located in the Zone may receive additional tax incentives, such as:

Increased Section 179 deduction, which allows up to $20,000 in additional expensing of depreciable property such as equipment and machinery;

Brownfields environmental cleanup cost deduction for qualified cleanup costs of hazardous materials;

Welfare to Work tax credits, which provides two years of tax credits (of up to $3,500 in year one and $5,000 in year 2 for each new hire) against federal tax liability for businesses that hire long-term welfare recipients;

Work Opportunity tax credits, which provides credits of up to $2,400 against federal taxes for each new hire from groups that have high unemployment rates or other special employment needs (such as Zone youth ages 18-24, ex-felons, welfare recipients, and 16-17 year-old Zone summer hires); (cannot be combined with Welfare to Work credits)