Collaborative Economic Development Act
The Collaborative Economic Development Act was created by Virginia’s General Assembly in 2016 as a part of the GO Virginia legislative package. The Act calls for the creation of the Virginia Collaborative Economic Development Performance Grant Fund (“CED Fund”) that will provide grants to at least two or more Virginia localities that collaborate in joint economic development initiatives that result in the location or expansion of a certified company within their respective jurisdictions. The GO Virginia State Board, in conjunction with theVirginia Economic Development Partnership (“VEDP”) and the Department of Housing and Community Development (“DHCD”), will administer grants that are awarded from this fund.
The Collaborative Economic Development Grants are unique in that, for the first time in Virginia’s history, participating localities can recover up to 45% of the total amount of personal income tax withheld from employees holding new jobs at the certified company for a period of 6 years.
A certified company, as mentioned above, means a Virginia employer that has been certified by the Virginia Economic Development Partnership to have:
- created or caused to be created at least 200 net new jobs in the Commonwealth that are located in the applicable Participating Localities with average salaries at least equal to the average wage in the participating localities and
- made a Capital Investment of at least $25 million in the participating localities.
If, however, the Board makes a written finding of significant fiscal distress in or extraordinary economic opportunity for the participating localities, the Board may modify the job creation and capital investment requirements for a Certified Company to not fewer than 25 net New Jobs and not less than $1 million of Capital Investment.
It is common for governments across the United States to award grants directly to companies that choose to locate or expand within their jurisdictions, but unlike typical grant programs, CED grants may not flow back to the companies. Rather, to spur additional investment in Virginia’s communities, CED grants must be used for economic development activities that are aligned with the participating localities’ collaborative economic development plan. The grants awarded to the participating localities may be invested in activities such as:
- Public or private utility extension on and off site
- Public or private installation, extension, or capacity development for broadband internet
- Road, rail, public transportation access costs
- Site acquisition, grading, drainage, paving
- Workforce training initiatives that assist with targeted industries as identified by each region’s GO Virginia – Economic Growth and Diversification Plan
- Cluster scale up activities
- Small business assistance (including incubator and accelerator projects)
- And others (non-exhaustive list)
This tool, in addition to the existing grant programs offered by VEDP and GO Virginia, will serve to grow and diversify Virginia’s economy and that of its regions.
For more information, read the guidelines for the Collaborative Economic Development Act, here.