Air Quality Empowerment Zone Proposal

GOAL: To establish a program that will allow federal tax credits for capital expenditures by taxpayers in designated Air Quality Empowerment Zones that produce specified and quantifiable emission reductions and which preserve or create jobs.

I. Designation and establishment of Air Quality Empowerment Zones ("AQEZ")

  A. An AQEZ may be designated by HUD with verification of air quality status from the EPA upon application of an affected county or Air Quality
  Management District ("AQMD") or Air Pollution Control District ("APCD") in which such county is located, consisting of a county (or portion
  thereof within the air quality district), meeting all of the following criteria:
  1. has the following air quality non-attainment designations:
  a. for PM-10 of serious, and
  b. for Ozone using the 8 hour standard, of serious, severe or extreme
  2. has at least one existing Economic Empowerment Zone (or is located in an air quality management district in which there is located at
  least one existing Economic Empowerment Zone.
  B. The designation of AQEZ would exist for a finite ten year period and would be subject to redesignation for successive ten year periods.
  C. The term of Existing Empowerment Zones that are used to qualify the County or area for AQEZ designation will be extended to co-terminate
  with the AQEZ designation.
  D. HUD will make the AQEZ determination, acting with EPA to verify the air quality status.
  E. HUD, working with EPA, shall allocate credits among designated AEQZs based on severity of need, quality of plan proposed by the air quality
  district and amount of emission reductions that will be achieved per dollar of expenditure. The determination of severity of need will take into
  account both air quality, health and economic factors, such as area asthma rates in comparison to the national average, local unemployment
  levels over the ten year period preceding application, mean income levels, capital expenditures per capita, number of days over the state and
  federal standards and the cost of job creation in the area.

II. Qualifying capital expenditures to become eligible for federal income tax credits.

  A. Applicants for federal income tax credits will submit emission reduction or mitigation plans to the air quality district in the AEQZ.
  B. The air quality district will evaluate the proposals, quantify emission reductions and determine which category of specific emissions the plan
  will impact.
  C. A formula will be developed and applied by the administering AQMD or APCD within the AQEZ to rank the proposals and determine the
  amount of the actual tax credit allocable to the various proposals from the amount allocated to the AQEZ as a whole depending on the
  following factors within each proposal:
  1. the amount of capital expenditure involved;
  2. the amount and type of emissions reductions and/or mitigation achieved;
  3. the number of new jobs created or existing jobs saved and the average wage level of those jobs;
  4. the degree to which the proposal results n emission reductions n residential areas, especially low-income communities, proximate to
  schools and workplaces; and
  5. whether the expenditure occurred before or after the effective date of a regulatorily imposed mandate, to incentivize and reward early
  participation, but not entirely exclude participation past the effective date of regulatorily imposed mandate.
  D. The taxpayer/applicant will file for the credits on its federal tax return for the year of the expenditure, including the air quality district's
  certification and calculation of the amount of the credit. Tax credits that are unusable in the current year may be carried back three tax years
  and forward indefinitely.
  E. The air quality district will be able to monitor the amount of credits if the legislation limits the dollar amount thereof.

III. Low or Zero Interest Loans

  A. The program will include funding which could be administered by the United States Department of the Treasury Community Financial
  Institutions Fund, for a limited amount of low or zero interest loans to qualified applicants to make the kinds of capital expenditures for which
  federal income tax credits would be available as set forth above if the applicant can demonstrate that:
  1. the loan is essential for the investment to be made;
  2. alternative loan sources are not readily available;
  3. the applicant is unable to benefit from federal income tax credits sufficient to justify the expenditure; and
  4. the applicant meets specified income, credit, net worth and other underwriting standards to be developed by the administering
  Empowerment Zone Authority.

Targeted or General

  A. The desired emission reductions or specific sector affected will be directly targeted if so desired. Pilot project for specific industries and/or
  geographic areas that are especially affected, such as refuse haulers, may be identified and preferred, or given greater benefit to achieve
  more immediate and directed results.
  B. Alternatively, the program could be offered generally, with the amount of credits limited by total dollars and allocated on a first come first serve
  basis.

IV. Quantification and Accountability

  A. The administering AQMD or APCD and Empowerment Zone administering authorities will be required maintain records of compliance and
  results of the program both in terms of air emissions reductions and economic benefits obtained.