Business Incentives

Las Cruces Qualified Opportunity Zones

It is an economic development tool to incentivize long-term private sector investment in low-income communities.

The Benefits

• A temporary deferral of inclusion in taxable income for capital gains reinvested in an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is disposed of or December 31, 2026.
• A step-up in basis for capital gains reinvested in an Opportunity Fund. The basis is increased by 10% if the investment in the Opportunity Fund is held by the taxpayer for at least 5 years and by an additional 5% if held for at least 7 years, thereby excluding up to 15% of the original gain from taxation.
• A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in an Opportunity Fund if the investment is held for at least 10 years. This exclusion only applies to gains accrued after an investment in an Opportunity Fund.

How can QOZ be Utilized?

• Purchase of Stock of a QOZ Business
• Purchase of property in a QOZ
• Opening a business in a QOZ
  • This implies that the investment in the QOZ must be equity capital by necessity.

What are Capital Gains?

Capital gains are the profits from the sale of an asset — shares of stock, a piece of land, a business — and generally are considered taxable income. A lot depends on how long you held the asset before selling. The QOZ program are focused in Long-Term Capital Gains, which are assets held for more than one year.

***All investments in a QOZ must occur via a Qualified Opportunity Fund***

What is a Qualified Opportunity Fund?

The IRS indicates that a Qualified Opportunity Fund (QOF) is an investment vehicle that is set up as either a partnership or corporation for investing in eligible properties that are in a Qualified Opportunity Zone (QOZ).

• We have a list of QOF that was compiled by NMEDD (you may request them from me or simply send an email to [email protected]
• However, a developer can create his/her own QOF and reinvest their capital gains and take advantage of the benefits.

How can an investor(s) create a Qualified Opportunity Fund?

To become a Qualified Opportunity Fund, an eligible corporation or partnership self-certifies by filing Form 8996, Qualified Opportunity Fund, with its federal income tax return. This process has to occur with the IRS.

See the link for the instructions from the IRS here Version OptionsLas Cruces Qualified Opportunity Zones Headline.
See the link for Form 8996 from the IRS here Version OptionsLas Cruces Qualified Opportunity Zones Headline.

Does the City of Las Cruces have or manage a Qualified Opportunity Fund?

No. QOZ is a program designed to have private capital gains invested in low income communities.

What projects qualify for QOZ program?

• A Qualified Opportunity Zone Business (QOZB) A qualified opportunity zone business (sometimes referred to as an “OZ business”) is a trade or business (i) in which substantially all of the tangible property (if any) owned or leased by the business is QOZBP; (ii) at least 50 percent of the gross income (presumably of the OZ portfolio company being tested) is derived from the active conduct of a trade or business in the opportunity zone; (iii) a substantial portion of the intangible property of the entity is used in the active conduct of such business; (iv) less than 5 percent of the basis of the property of such business is attributable to “nonqualified financial property”; and (v) the entity does not engage in, or lease land to, a so-called “sin business” (which includes a golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack, gambling facility and liquor store). The term “nonqualified financial property” means debt, stock, partnership interests and certain types of derivatives but does not include cash and short-term debt instruments held as reasonable working capital.
• QOZ Properties Commercial are considered real estate development and renovation in QOZ/ expansion of business into a QOZ/ expand business inside a QOZ

What is considered renovation?

• Think about it like this—you buy a building in a QOZ that needs renovation, in order for the renovation to be considered into a QOZ tax incentive it would need to renovate based on the formula below:
  • Value of the Property-Value of Land= Residual Building Value= Minimum amount of money for the renovation
    •    QOZ tax incentive can be combined with other tax incentives.
    •    The 10-year clock starts when you invest for your tax-incentive, in other words, when you put the money in the QO Fund.

Opportunity Zones in Las Cruces

Downtown Las Cruces/Amador Próximo- CT: 35013000500

• This is a dynamic downtown tract that is attracting diverse audiences with farmer’s market, art, restaurants, bars, museums and City events. It includes a varied retail fusion like mixed use developments. The tract lies on The Las Cruces Downtown Masterplan, Metropolitan Redevelopment Area, The Las Cruces Arts & Cultural District, Amador Proximo Community Blueprint, and Tax Increment Development District.

Airport and West Mesa Industrial Park- CT: 35013001500

• Las Cruces International Airport (LRU) and Industrial Park is attractive for manufacturing and business development near the airport.
• The industrial park is an excellent location for light industry, general manufacturing, aviation related, and technology-based industries serving Doña Ana County, El Paso, TX and the US/Mexico border.
• The West Mesa Industrial Park is located on I-10 with adjacency to the Las Cruces International Airport. A portion of the No. 197 Foreign Trade Zone (FTZ) is located within the West Mesa Industrial Park, including 206 acres of public and privately-owned parcels. Doña Ana County is the grantee for the FTZ and it is prepared to execute agreements designating individual users as operators of the FTZ within their facility as applicable.
• The Las Cruces International Airport has recently adopted the Airport Masterplan. The Las Cruces International Airport has partnership with New Mexico State University Physical Science Lab for Unmanned Aircraft Vehicles (UAV) development and testing. The Las Cruces International Airport is a general aviation airport owned by the City of Las Cruces and it is FAA certified for serving passenger service (Part 139). The investments that are sought after in the airport are aimed at hangar development, aircraft maintenance, cargo related development, and UAV/UAS related development

Apodaca- CT: 35013000102

• The Apodaca Blueprint is a neighborhood-specific plan to guide future growth and development of this part of the City. The Tract is 730 acres. It is bound by I-25 on the East and U.S. 70 (N. Main Street) on the West.
• The Tract includes the former Las Cruces Country Club, which is one of the focus areas identified in the Apodaca Blueprint of the City of Las Cruces. The other focus area is the Villa Mora property which straddles the intersection of E. Madrid Avenue and Triviz Drive.
• The types of investments that are sought after are ones that abide to the Apodaca Blueprint, which are aimed towards: hospitals, garden offices, assisted living facilities, cottage homes, town houses, mixed-use residential and commercial, anchor retail, out-parcel retail, hotels, offices, restaurants, and multi-family housing. Investments that help foster a diversified sustainable economy that helps promote a community character, sustainable growth and a healthy community

NMSU & Arrowhead Center- CT: 35013000100

• This Tract contains New Mexico State University with investment potential in the Arrowhead Center, which helps commercialize technology and help small businesses at all stages grow.
• Las Cruces Convention Center and a hotel in construction process are also located within this Tract. The Burrell College of Osteopathic Medicine is also contained within this Tract.
• Arrowhead Center assists in commercializing discoveries and innovations, encouraging entrepreneurship, launching and developing new businesses, and creating lasting partnerships between stakeholders on and off-campus.

San Ysidro- CT: 35013001303

• Located between I-25 and the Rio Grande with potential land use for retail, restaurants, recreational activities, farming, and housing development.
• The Rio Grande runs on the west of this Tract, which currently is primarily dedicated at agriculture. In addition to the previous land uses described, this Tract indicates great potential for recreation and conservation.
• This Tract lies in a portion of the Rio Grande Trail Corridor, which is part of the Rio Grande Trail Masterplan. The Masterplan is part of New Mexico’s vision of a 500 -mile cross-state recreational trail for hiking, biking, and horseback riding along the Rio Grande. The International Boundary and Water Commission in collaboration with Audubon New Mexico have made efforts for augmenting the vital streamflow needed to sustain wildlife along the Rio Grande.

Las Cruces Qualified Opportunity Zones Map

Opportunity Zones are economic development tool to incentivize long-term private sector investment in low-income communities. For a detailed breakdown of where the zones are located in Las Cruces, click here.

Job Training Incentive Program (JTIP/WagePlus)

The state of New Mexico’s Job Training Incentive Program (JTIP) can reimburse your company for a portion of your training costs for above average wage positions. For more information, click here.Job Incentive Program (JTIP)

WagePlus

WagePlus is a supplement to the State of New Mexico’s JTIP program. WagePlus rewards businesses for hiring and paying above median wage. The program provides a $1,500 per job reimbursement for qualifying companies that hire and train new employees for jobs paying at least 10 percent more than the county median wage. To qualify for participation in Wage Plus, a company must manufacture a product, export non-retail services from the state or meet state green industry standards. The company must successfully complete the Job Incentive Training Program. The people they hire must have been New Mexico residents for at least one year in their lifetime. For more information, contact us at [email protected]

Local Economic Development Act (LEDA)

Under the Local Economic Development Act (LEDA) (5-10-1 to 5-10-13 NMSA 1978) the New Mexico Economic Development Department (NMEDD) is granted authority to administer grants to Local Governments (Municipality and/or County); to assist expanding or relocating businesses that are Qualified Entities that will stimulate economicdevelopment and produce public benefits pursuant to LEDA.  All grants are funded on a strictly reimbursement basis.

NMEDD targets economic development projects that comply with all legal facets of LEDA. Additional consideration is given to project that demonstrate:

• Significant Community Impact and Support
• Rural and Under-served Areas of New Mexico
• Increased Wages and Job Creation
• Significant New Capital Investment; and
• Environmentally Sustainable Outcomes.

Implementation

The Department has designed and implemented a systematic, transparent approach to prioritizing projects that meet the over-arching goals of NMEDD for financial evaluation and structuring. These goals provide guidance for funding on project impact qualifications, application review criteria, and concentration factors.

Qualifying Entry

Means a corporation, Limited Liability Company, partnership, joint venture, syndicate, association or other person that is one or a combination of two or more of the following:

• An industry for the manufacturing, processing or assembling of agricultural or manufactured products;
• A commercial enterprise for storing, warehousing, distributing or selling products of agriculture, mining or having been manufactured; or.
• An “Economic Base Employer”, which is defined as an employer who is deemed eligible for in-plant training assistance by the Economic Development Department’s Job Training incentive Program (Section 21-19-7 NMSA 1978).

Non-Qualifying Entities

• Any enterprise for the sale of goods or commodities at retail or for distribution to the public of electricity, gas, water or telephone or other services commonly classified as public utilities;
• A business in which all or part of the activities of the business involves the supplying of services to the general public or to governmental agencies or to a specific industry or customer, but not including businesses primarily engaged in the sale of goods or commodities at retail.

Program Application Requirements

Access to the on-line application portal is extended to a Qualified Entity after an initial review of program eligibility and includes:

• Demonstration of Financial Soundness and Readiness to Proceed;
• A signed Release/Authorization Form, including certification that the Qualified Entity is current with all New Mexico and Federal obligations;
• Project Scope of Work, including use of requested funds;
• 3 years Financial Statements and/or Pro Forma, along with appropriate documentation
  (purchase agreements of land, loan approval, term sheets, infrastructure order, etc.);
• Funding Sources and uses;
• Job creation and salary/benefit information;
• Project Capital Investment; and
• Completed Economic Impact data sheet.

For more information about tax credits, click here. For more info about LEDA, contact the City of Las Cruces Economic Development Department.

Gross Receipts Tax Incentive Program (GRIP)

The Gross Receipts Tax Incentive Program (GRIP) is another incentive offered by the City of Las Cruces. The program is best suited to large scale businesses but that would include certain retailers, restaurants and other types of businesses. Businesses would create infrastructure in exchange for up to 75% of GRT generated over the term of the planned infrastructure build-out and they would have to meet or exceed $5,000,000/year sales volume after three years of operation. For more information, contact us at [email protected]

Storefront Repair Grant

Application Below

The City of Las Cruces, through the Economic Development Department, is leveraging up to $400,000 in federal American Rescue Plan Act (ARPA) funds to support the economic recovery of small businesses who experienced property damage as a result of the negative economic impacts of the COVID-10 pandemic.

Through the Small Business Storefront Repair Program, small businesses can apply for up to $2,500 in grant funding to help repair storefront property damages that occurred on or after January 1, 2021.

Storefront Repair funds will help cover costs to repair current property damage or reimburse business owners for costs paid out of pocket for past damages. Eligible property damages include but are not limited to broken windows, broken doors, graffiti, broken locks, damage to landscaping and etching on windows. This grant will not cover loss of stolen goods or preventive measures such as guards, cameras or window or door coverings.

Applicants are encouraged to review the eligibility, required documentation, selection process and additional information below before applying. All ARPA funding is subject to municipal, state and federal audit requirements.

Funding Eligibility Requirements

To be eligible for a Storefront Repair Fund grant, your business must:

• Have experienced direct economic disruption because of COVID-19.
• Provide a copy of the police report indicating damages to the business.
• Provide proof of repairs to broken doors, windows, and/or locks.
• For damage caused between January 1, 2021, and February 1, 2023, please provide proof of payment for repairs.
• For damage caused after February 1, 2023, provide a quote or invoice for repairs, photos of the damage, and photos demonstrating repairs have been completed.
• Have a current City of Las Cruces Business License and be in good standing with the City and State of New Mexico.
• Provide proof of current non-profit status license and be in good standing with the City and State of New Mexico (if applicable).
• Be in compliance with all federal, state and city laws and regulations.
• If applicable, schedule and pass inspections related to repairs.
• Be located in Las Cruces city limits.
• Have no more than 40 full-time equivalent (FTE) employees as of March 15, 2020.
• Have been in business as of May 11, 2023.
• Be a locally owned, non-corporate franchise, or non-corporate chain business.
• Have experienced physical damage to storefront on or after January 1, 2021.
• Be a for profit business or nonprofit 501(c)(3), 501(c)(6) or 501(c)(19).
• Be currently open to the public and active for business.
• Operate from a physical location and/or mobile truck that serves the gneeral public.

Businesses that are not eligible:

• Short- or long-term rental or investment property (Personal real estate, independent realtors and short-term rentals that include Airbnb, Vrbo, etc.).
• Taxis, rideshares, or food delivery services (e.g., Uber, Lyft, Yellow Cab, Door Dash, Uber Eats, etc.).
• Cannabis shops, growers and dispensaries.
• “Adult entertainment” businesses as defined in City of Las Cruces Municipal Code.
• “Home-based” businesses as defined in City of Las Cruces Municipal Code.
• Business located outside the Las Cruces city limits.

For more information about the program, contact 575-541-2150, or [email protected].

Apply Here:

Retail LEDA

The City of Las Cruces is committed to fostering local economic growth and enhancing the vibrancy of our community. We are excited to introduce the Retail LEDA Program, an initiative designed to attract and support retail businesses that will contribute to the expansion of our local economy.

What is LEDA? LEDA stands for Local Economic Development Act, a powerful tool that enables us to create opportunities for economic development within our city. Under this act, we can leverage both public and private investments to promote sustainable growth and prosperity.

With the Retail LEDA Program, we invite businesses to be a part of this transformative journey. To participate, businesses are required to make a capital investment of at least $251,000, demonstrating their commitment to our community’s economic advancement.

For more information, please contact The City’s Economic Development Department at 575-541-2150 or [email protected]. Department staff will be available to answer any questions and provide further assistance to interested applicants.

Tax Increment Development Districts (TIDDS)

TIDDs are mechanisms to support economic development and job creation by creating gross receipts tax financing for public infrastructure. Parties may include New Mexico cities, counties and private developers.

Film

The State of New Mexico offers a 25-35% refundable tax credit.  For more information on how to qualify, click here.

Film Las Cruces is a full-service film office. Services they provide include location scouting for funded film and TV projects, liaison services for productions shooting in our area, permitting for City of Las Cruces, crew & resource info, news &, announcements, and crew / casting call information.  For more information go to www.filmlascruces.com.