Virginia Administrative Code Title 7 - ECONOMIC DEVELOPMENT

23 Jun 2025 --
0 Comments

I. Overview and Purpose of Title 7

Title 7 of the Virginia Administrative Code regulates economic development activities in the state. The rules and regulations within Title 7 cover programs designed to foster economic growth, job creation, business development, and regional economic cooperation in Virginia. This includes overseeing state-run incentive programs, development funds, and business-related services.

Primary objectives of Title 7 include:

Encouraging the growth of Virginia's economy through business incentives, tax credits, and other forms of state support.

Ensuring compliance with state and federal requirements for economic development projects.

Providing a transparent process for businesses to access grants, loans, and other state assistance.

Title 7 includes multiple programs administered by various state agencies, such as the Virginia Economic Development Partnership (VEDP) and the Virginia Department of Housing and Community Development (DHCD).

II. Structure of Title 7

Title 7 is organized into multiple chapters, each governing a specific aspect of Virginia’s economic development programs:

Chapter 10 – Virginia Economic Development Partnership Authority
This chapter governs the activities of the Virginia Economic Development Partnership (VEDP), which facilitates business development and international trade.

Chapter 20 – Business and Industrial Development
This chapter addresses programs designed to assist businesses in expanding or relocating in Virginia, including tax incentives, grants, and loans.

Chapter 30 – Technology and Innovation Programs
This chapter supports the development of technology-based businesses, research partnerships, and startups.

Chapter 40 – Housing and Community Development
It regulates programs aimed at fostering the growth of affordable housing and improving infrastructure in economically distressed areas.

Chapter 50 – Economic Incentives
This chapter outlines eligibility, requirements, and guidelines for businesses seeking state-provided economic incentives, including the Virginia Investment Partnership program, economic opportunity grants, and tax incentives.

III. Key Provisions of Title 7

A. Economic Development Partnership (Chapter 10)

The Virginia Economic Development Partnership (VEDP) is the primary state agency responsible for managing economic development projects. Its responsibilities include:

Attracting new businesses to the state.

Supporting expansion of existing businesses through incentives.

Promoting Virginia’s international trade efforts.

Key elements of Chapter 10:

Business recruitment programs: These programs target industries such as advanced manufacturing, technology, and biotechnology, offering assistance with relocation costs, tax benefits, and training.

Global outreach: VEDP works to position Virginia as an attractive destination for foreign direct investment (FDI) and facilitates trade agreements.

B. Business and Industrial Development (Chapter 20)

Chapter 20 contains provisions related to financing options and tax incentives for businesses in Virginia. Programs include:

Virginia Economic Development Incentive Grant (VEDIG): This grant is designed to support large businesses that bring substantial jobs to Virginia.

Virginia Investment Partnership (VIP) Program: Offers financial support for businesses making significant capital investments in the state.

Eligibility for programs:

Businesses must meet specific criteria, including the number of jobs created, the amount of capital investment, and the type of industry.

Tax incentives are available to companies in industries designated as a priority for economic development, such as renewable energy, advanced manufacturing, and information technology.

Legal significance:

These provisions ensure that state resources are used efficiently to maximize job creation, revenue generation, and business growth in targeted industries.

C. Technology and Innovation Programs (Chapter 30)

This chapter governs initiatives aimed at fostering the development of Virginia’s technology sector. Key programs include:

The Virginia Research Investment Fund: A program designed to fund research partnerships between universities and businesses in high-tech fields.

Virginia’s Innovation and Entrepreneurship Investment Authority (IEIA): This program supports tech startups with early-stage funding, mentoring, and access to resources to commercialize innovations.

Key focus areas:

Promoting the creation of high-tech jobs.

Strengthening Virginia’s position as a leader in innovation, particularly in industries such as cybersecurity, advanced manufacturing, and artificial intelligence.

D. Housing and Community Development (Chapter 40)

Chapter 40 regulates community development programs focused on improving housing, infrastructure, and quality of life in Virginia’s economically distressed areas. Some of the key provisions are:

Community Development Block Grants (CDBG): These federal funds are administered by the state to support local economic development projects, including infrastructure upgrades, affordable housing, and community services.

Low-Income Housing Tax Credit Program (LIHTC): Supports the development of affordable housing units in underserved areas.

These programs aim to:

Promote inclusive growth by ensuring that all regions of the state benefit from economic development.

Improve living conditions for low-income residents while providing investment opportunities for developers.

E. Economic Incentives (Chapter 50)

This chapter outlines state incentives available to businesses. Some of the most important incentives include:

Economic Opportunity Grants (EOG): These grants support businesses in relocating to or expanding within economically distressed areas.

Technology-Based Business Incentives: Targeted tax credits and funding support are offered to companies in the technology sector that invest in research and development and innovation.

Eligibility for these incentives depends on several factors, including:

Job creation targets.

Investment amounts.

The long-term impact on Virginia’s economy, such as increased tax revenues or long-term employment.

IV. Case Law Interpreting Title 7

Although economic development law in Virginia primarily involves administrative processes, some Virginia case law has helped clarify the application of Title 7 regulations, especially in the context of grants, incentives, and intergovernmental agreements.

1. Virginia Economic Development Partnership v. EDC Corp., 2015 Va. App. 82

Issue: Dispute over eligibility for a Virginia Economic Development Incentive Grant (VEDIG) after the business failed to meet job creation targets outlined in the grant agreement.
Holding: The court ruled that the VEDP’s determination of eligibility was correct, as the business did not fulfill the conditions of the grant.

The court emphasized that state incentives are subject to strict compliance with the terms of the agreement.

Key takeaway: State economic development grants and incentives are awarded based on clearly defined eligibility criteria, and failure to meet those criteria can lead to the revocation of benefits.

2. Commonwealth of Virginia v. Green Technologies, Inc., 2012 Va. Sup. Ct.

Issue: Whether state funding for tech startups under the Innovation and Entrepreneurship Investment Authority (IEIA) program can be terminated due to non-performance on agreed milestones.
Holding: The court upheld the termination of funding, noting that Green Technologies had not met the agreed-upon performance metrics.

The court found that contractual obligations under the state-funded IEIA program were enforceable.

Key takeaway: Virginia’s business incentive programs include enforceable milestones and performance-based conditions. Failing to meet these criteria can lead to the revocation of incentives.

3. City of Richmond v. Virginia Economic Development Partnership, 2010 Va. App. 123

Issue: The city of Richmond sued the VEDP for not honoring an agreement to provide financial incentives to attract a large manufacturer to the city.
Holding: The court ruled in favor of the VEDP, finding that the written agreements clearly outlined the conditions for the incentives and that the manufacturer’s failure to meet job creation benchmarks was a valid reason for not disbursing funds.

The case reaffirmed that performance-based criteria are critical in evaluating the eligibility for economic incentives.

Key takeaway: State economic development partnerships are subject to contractual performance standards, and failure to meet those standards can justify withholding incentives.

V. Practical Implications

For Businesses:

Businesses applying for economic development incentives must ensure they meet job creation, investment, and performance goals as defined in program agreements.

Failure to comply with eligibility criteria can result in the revocation of funding, grants, or other incentives.

For State Agencies:

Agencies like the VEDP have significant discretion but must strictly follow performance metrics, grant agreements, and eligibility criteria in administering programs.

Transparency in decision-making is crucial to avoid litigation over incentive allocations.