Economy improves, county loses Enhanced Rural Enterprise Zone status


The Pagosa Springs Community Development Corporation has received some much-needed support in recent months from the Region 9 Economic Development District of Southwest Colorado.

In fact, Ed Morlan and Laura Lewis Marchino, the executive director and assistant director, respectively, for Region 9, have formed a transition team to help kickstart the CDC, even going so far as to enter into a memorandum of agreement (MOA) to provide staff services for six months, until the CDC gets back on its feet and can afford to hire an economic development professional of its own.

These efforts, along with many other factors, have had an impact, and according to a Region 9 press release issued by Marchino last week, Archuleta County will no longer be on the list to qualify for Enhanced Rural Enterprise Zone (EREZ) status.

Marchino clarified in a later email that Archuleta still qualifies as an enterprise zone, so local businesses and individuals will continue to qualify for the tax credit associated with this, but it has lost the enhancement portion of the status, so the credit will be less.

According to Marchino, the status change, “only affects job creation tax credits,” not the tax credits associated with contributions to projects.

The Colorado Office of Economic Development and International Trade (OEDIT) recently updated its list for the 2015 and 2016 calendar years, and only 29 counties meet two or more of the criteria specified in the Colorado Enterprise Zone Act to become designated as an EREZ.

Dolores and San Juan counties are included on the new list, according to Marchino’s original announcement. Archuleta County, however, which was listed previously, will be going off the list. The economic conditions here have improved to the point that the county no longer meets the specified criteria.

Every two years, OEDIT is required to review the qualifying data, as set forth per statute, and to update the list of counties with EREZ status. Counties must meet two of the following five criteria to receive the status:

• The county unemployment rate is greater than 50 percent above state average.

• The county per capita income is less than 75 percent of state average.

• The county population growth rate is less than 25 percent of state average.

• The total non-residential assessed value ranks in the lower half of all counties.

• The county population is less than 50,000.

When CDC board chairman Jason Cox was asked to comment, he explained to SUN staff that enterprise zone status provides tax credits to enhance certain types of economic activity.

Cox pointed to the observation deck on Reservoir Hill and the Liberty Theatre’s conversion to digital projection as recent examples of how the CDC was able to collect charitable donations from the community and provide 25-percent tax credit to the donors.

“Basically, the Enhanced Rural Enterprise Zone is the state’s highest level of aid,” Cox explained, “and it means you’re in one of the most distressed areas of Colorado.”

While the county is losing the “enhanced rural” part of this status, it is still considered an “enterprise zone.”

Marchino explained that the CDC will still be able to offer tax incentives for charitable contributions to community development projects, as it has in the past, and businesses will still get credit for hiring new people or buying new equipment; it just won’t be as much as it was under the old status.

Cox was quick to point out that this is good news. “The Enterprise Zone designation is a tool to help entice investment into economic development activities. From the one side, you could say we are losing a lot of tax credits, but from the other side, as a business owner relocating, you might say, ‘I’m not sure I want to go to an economy that is that distressed.’ You might choose another mountain community, because to be honest, we compete a lot against other Colorado mountain communities. So, the upside is it is definitely a good thing that we are seeing this improvement.”