Gov. John Hickenlooper this week signed into law a bill that aims to boost economic development in rural parts of the state.

Senate Bill 282 has been dubbed the “Jump-Start Program for Economically Distressed Counties.” The bill seeks to help economies in struggling parts of the state by creating tax-friendly zones in hopes of luring new businesses to those areas.

Hickenlooper signed the bill in Grand Junction on Wednesday. The governor said through an emailed statement that the bill will help rural communities that are not seeing the economic growth that is being realized in other parts of the state.

“While Colorado has moved swiftly out of the recession and continues as one of the best performing economies in the country, we realize that the growth in our state has been uneven across regions,” Hickenlooper said.

The new law defines an economically distressed county as having a population of less than 250,000 that meets certain economic factors, such as having a lower per capita income than the state’s average.

The governor said the act will give distressed communities more tools to drive economic development by requiring buinesses interested in the tax benefits to partner with government entities and higher learning institutions.

“It’s effort that builds on Colorado’s biggest strength in solving our shared challenges: collaboration,” he said.

Businesses will be required to partner with state-funded educational institutions in order to receive tax benefits. And businesses must employee at least five workers who live in the county and must offer full-time wages that at least equal the average income of county residents.

The business must be new to Colorado and cannot “directly compete with the core function of a business that is already operating in the state,” according to a Colorado Legislative Council fiscal analysis of the legislation.

If those factors are met, new businesses in the tax-friendly zones will receive 100 percent income tax credits. They are also eligible for a sales and use tax refund for the purchase of all tangible personal property they acquire, so long as it is used exclusively within the tax zones, the fiscal note states.

Employees will also reap benefits. New employees of businesses that qualify are entitled to a 100 percent income tax credit on all of their earnings.

The program is modeled after a New York program called Start-Up NY, which has received mixed results there.

Supporters of the new law say the tax benefits are necessary to attract new employers and to prevent local talent from leaving their communities.

“We have this brain drain or this leakage where we lose so many of our well-educated folks to Utah and back over to the Front Range, so I really think this is the kind of thing we need,” Rep. Yeulin Willett, R-Grand Junction, a bill sponsor, said during a May 5 House Local Government Committee hearing.

During the hearing, Kristi Pollard spoke on behalf of several entities that support the measure. They include the Denver Metro Chamber of Commerce, the Grand Junction Economic Partnership and the Pueblo Chamber of Commerce.

Pollard said that rural areas are struggling in this economy compared to urban areas. She said that while cities like Denver and Boulder are seeing increases in their workforces, areas around Grand Junction and Pueblo are hemorrhaging workers.

“Rural Colorado needs a tool that evens the playing field and allows us to be competitive with other areas across the state,” Pollard said.House Majority Leader Crisanta Duran, D-Denver, who also sponsored the bill, said “there’s no escaping the fact that there are currently two Colorados.

“The one that is centered around the oil fields and major urban centers around the Front Range and the one where the rest of us live, where some have yet to feel the benefits of any kind of economic recovery,” Duran said.

However, opponents believe that the tax-friendly zones are a little too friendly — and unfair to established local businesses and communities.Kathy White, deputy director for the Colorado Fiscal Institute, said the legislation “rewards businesses by relieving them all of their tax liability.” White said that new businesses would not be required to pay taxes that support schools and transportation in their new communities.

“I would imagine this is a tax incentive that many businesses would like,” White said.

— Twitter: @VicVela1