Virginia Department of Housing and Community Development (DHCD)
04/02/18 11:59 PM EST Electronic Receipt and Postmarked by Date
Grants to Virginia property owners, developers, and tenants to support major investments in industrial, commercial, and mixed-use facilities or buildings located in designated areas. Funding is available to offset the cost of building expansions, new constructions, and rehabilitation projects.
-The property must be located within the boundaries of an Enterprise Zone.
-The building or facility must be commercial, industrial, or mixed-use.
-Mixed-use is defined as a building incorporating residential uses in which a minimum of 30% of the useable floor space is devoted to commercial, office, or industrial use.
The Real Property Investment Grant (RPIG) is available for the rehabilitation, expansion, or new construction of commercial, industrial, or mixed-use buildings/facilities located within the boundaries of Virginia Enterprise Zones. The program defines eligible mixed-use properties as those incorporating residential uses in which a minimum of 30% of the useable floor space is devoted to commercial, office, or industrial use. In other words, to be eligible for the RPIG, no more than 70% of the useable floor space in a mixed-use building or facility may be devoted to residential use.
The first thing a potential RPIG applicant should do is contact the Local Zone Administrator (LZA) to confirm the building or facility is within the boundaries of an Enterprise Zone. Each zone has a unique LZA.
Eligible Investments and Thresholds:
-For the rehabilitation or expansion of an existing structure, the Qualified Zone Investor must capitalize at least $100,000 in Qualified Real property Investments to be eligible.
-For new construction projects, the Qualified Zone Investor must capitalize at least $500,000 in Qualified Real property Investments to be eligible.
-Investments in Machinery & Tools and Business Personal Property are not considered Real Property and should not be included in RPIG calculations.
Buildings vs. Facilities:
For grant purposes, a facility is a complex of buildings, co-located at a single physical location within an Enterprise Zone, all of which are necessary to facilitate the conduct of the same trade or business. A facility typically represents a group of buildings under common ownership, management, and operations.
Examples of Facilities: Mall, lumber mill plant, hotel with multiple buildings.
Common management and operations means that the group of buildings is designed to function as a unit, such that in the case of tenants, a management company dictates their hours of operations, etc. Clustered buildings that are not related operations but choose to co-locate for convenience or by coincidence do not constitute a facility. However, clustered buildings that share operations, amenities, and employees would constitute a facility.
If you are unsure whether your property is considered a building or part of a facility, please contact DHCD.
Qualified real property investments include expenditures associated with any exterior, interior, structural, mechanical or electrical improvements necessary to construct, expand or rehabilitate a building for commercial, industrial or mixed use.
Qualified Real Property Investments:
-Cabinetry (if taxed as real property)
-Clean-up & Dumpsters
-Demolition (if capitalized, not expensed)
-Doors and Windows
-Driveways & Paving (to property line)
-Excavation and Grading
-Fencing and Gates
-Fire Suppression Systems & Sprinkler Systems
-Gas Station Canopies (if taxed as real property)
-Labor (project-related labor only)
-Landscaping (including retention ponds)
-Lead and Termite Abatement
-Management (Superintendents, CM/PM)
-Roofing and Flashing
-Drywall and Plaster
-Sidewalks (to property line) and Patios
-Storm Water Management
*Equipment unrelated to construction and labor/material cannot be included in this category
GrantWatch ID#: 180345
-Grant awards are capped per building/ facility over a five-year term based on the cumulative level of investment starting with the qualification year in which a grant was first awarded.
-Grants may not exceed $100,000 per building or facility in a five-consecutive-year period, where the total investment is less than $5 million.
-Grants may not exceed $200,000 per building or facility in a five-consecutive-year period, where the total investment is more than $5 million.
-The dollar amount of an RPIG is determined by the amount spent on qualified real property investments.
-Grants are available in amounts up to 20% of the qualified real property investment OVER the respective eligibility threshold, capped based on the limits indicated above.
Multi-Tenant/Owner Eligibility Proration Formula:
If no coordination has taken place (as described in the information to the left of this box), DHCD will implement its proration procedures for such buildings based on the useable floor space leased/owned by the Zone Investor.
1. The maximum grant amount available (either $100,000 or $200,000) be will determined by the cumulative qualified real property investments made to the building/facility within the consecutive five-year period.
2. DHCD will then multiply the applicable grant cap by the percent of the building’s useable floor space for which the tenant has a lease or for which the owner has a deed of trust.
3. The grant cannot exceed this amount or 20% of the applicant’s qualified real property investment made in excess of the applicable investment threshold (not to exceed the maximum investment cap), whichever is less.
Grants are made for a five-year periods beginning with the first qualification year in which a grant was awarded for the subject building or facility.
After the conclusion of a five-consecutive-year period, the property begins another eligibility period and the grant cap is restored.
The applicant must be the entity that capitalizes the investment on their books for tax purposes.
The following entities are prohibited from applying for the RPIG:
-Units of local, state, or federal government (typically FEIN 546)
-Any entity that does not capitalize the investment.
Any Qualified Zone Investor (entity or individual) capitalizing the costs associated with the real property investment may apply for the RPIG.
A Qualified Zone Investor may be a:
-Property owner (occupant or non occupant)
-One of multiple owners within a building
-For Qualified Zone Investors applying as a tenant or as an owner of space within a building, supplemental forms verifying coordination with the owner of the property, other tenants and/or other owners are required. Coordination requires all owners and tenants within a multi-owner/tenant building or facility to provide their (notarized) signature(s) and square footage leased/owned as indication of their understanding that RPIG awards are capped per building or facility. This is to ensure that no more than the applicable grant cap is requested within a five-consecutive-year period for the building or facility.
An applicant must apply for the RPIG for the calendar year in which the building was “placed in service.” To be eligible for Grant Year 2017, the placed in service documentation must be approved within the 2017 calendar year (between January 1st, 2017 and December 31st, 2017).
Multiple Owners in a Building/Facility:
In the case where the Qualified Zone Investor owns space within a building/facility, the applicant will need to coordinate qualification (as described above) with all other owners within the building/facility.
The Qualified Zone Investor applying for an RPIG must have adequate documentation such as a deed of trust or an official property assessment to indicate the portion of the building (square footage) he/she owns on the date of issued placed in service document. The applicant must also request supporting documentation to determine the portion of the building that is owned by the other individuals or entities.
In cases where the required coordination does not take place, DHCD will determine the maximum grant amount available based on the proportion of the building the applicant owns. For an example of how DHCD applies the proration formula, see the scenario on Page 22 of the grant manual.
Tenants may apply for qualified real property investments made to the portion of the building for which they hold a valid lease, only if the improvements were made directly by the tenant and not the owner of the property. Only leasehold improvements made directly by a tenant or improvements made under a capital lease are considered grant-eligible.
Tenant applicants are required to submit written, notarized consent from the owner of the building/facility. If required by the owner, the applicant will need to coordinate qualification with the other tenants; otherwise DHCD will implement the proration formula explained in greater detail on page 22 of the grant manual.
-Leasehold improvements made directly by tenant: Tenant applies for RPIG
-Improvements made under a capital lease: Tenant applies RPIG
-Improvements paid for as part of an operating lease: Tenant may not apply for RPIG
In the case of a developer who capitalizes the real property investments but does not currently own the building, the developer must receive consent and coordinate with the building owner(s), and this should be reflected in the sales contract with the new owner(s) including notification of the grant availability and the developer’s intent to apply. In that scenario, the developer would not be required to coordinate and should instead provide the contract to DHCD.
Q: If I built a new building and sold the office space within the building prior to receiving my final CO, would I be eligible to apply for the maximum grant amount?
A: Only if your intention to apply for the full grant amount was stipulated in the sales contract with the new owners (which you will need to provide to DHCD). If there was no stipulation, the grant request must be coordinated with the other owners of the building as of the date the issued Certificate of Occupancy or other applicable final placed in service documentation.
-Properties that have previously qualified for the RPIG within the current 5-year period are available online (https://dmz1.dhcd.virginia.gov/EZApplication/). Use the RPIG Award Schedule to verify that your property has not received an RPIG in the past 4 years. If the property is listed on the Award Schedule, the property may have a cap on future grant requests until the 5-year period has passed.
-A Qualified Zone Investor may not apply for the RPIG for investments incurred in a previous grant year or for which Real Property Improvement Tax Credits were received.
-Unlike with JCGs: retail, restaurants, and personal service establishments are eligible for RPIG, and nonprofit entities are eligible to apply.
Unqualified Real Property Investments:
-Accounting and Bookkeeping Costs
-Architectural, Engineering and Design Fees
-Blinds or other window treatments
-Kitchen and Laundry Appliances
-Legal, Marketing or Other
-Loan fees; Capitalized Interest
-Machinery, Tools and Equipment
-Permits, User fees, Zoning fees, Impact fees, Inspection fees, or Development Fees
-Professional Services (Soft Costs)
-Realtor, Sales and Leasing Fees
-Real Estate Taxes
-Signage or Wayfinding Signage
-Public Roads and Sidewalks
-Utility Hook-up, Extension, or Access Fees
-Well, septic, or Sewer systems
-Workstations and Cubicles (unless taxed real property)
RPIGs will not exceed 20% of the qualified real property investment.
The application process for the RPIG involves two components; the electronic submittal, and the submittal of a signed hard copy of Form EZ-RPIG, as well as the required supplemental forms and CPA Attestation Report.
The application form(s), final CPA Attestation Report form, and all required documentation are due by April 1st of the calendar year subsequent to the grant year. If the April 1st deadline falls on a weekend or holiday, applications are due the next business day (April 2, 2018).
Any application submitted without the required CPA Attestation Report or submitted after the deadline will be considered late. Such applications are held until DHCD determines that funds remain after fully funding on- time applications. At such time, DHCD will review and process late applications on a first-come, first served basis. Please keep in mind that DHCD is unable to pre-qualify any applicants.
All applicants are required to submit electronically via the EZ Application Submission System. Online applications offer an auto-calculation feature and enable a more efficient processing. Online applications must be submitted through the system by no later than 11:59 PM, April 2, 2018 (EST).
The signed hard copy of Form EZ-RPIG and all other supplemental materials must also be submitted by the April 1st deadline (or next business day if weekend or holiday). The signed application materials should be mailed via United States Postal Service certified mail, return receipt requested and postmarked no later than April 1st; or shipped via UPS, Fed Ex or another service where shipping can be tracked with a shipped date no later than April 1st. The hand delivery of application is discouraged. If the April 1st deadline falls on a weekend or holiday, applications are due the next business day (April 2, 2018).
DHCD will notify applicants by May 15th in cases where any additional information is required due to application deficiencies.
Applicants must resolve any identified deficiencies by June 1st. Once the applicant provides the requested information, a final email will be sent to the applicant confirming DHCD’s receipt of the requested material.
-Calendar Year 2017: Final Placed in Service Documentation Received
-January - March 2018: Supplemental Forms, Zone Admin Signature, CPA Attestation
-April 2, 2018: Electronic Submittal, Hard Copy Submittal
-April - June 2018: DHCD Review
-June 2018: Funds Disbursed
Before starting your grant application, please review the funding source's website listed below for updates/changes/addendums/conferences/LOIs.
Contact information for Local Zone Administrators is available online at the following link:
Virginia Department of Housing and Community Development
600 East Main Street, Suite 300
Richmond, Virginia 23219
USA: Virginia: Enterprise Zones