California Enterprise Zone News

NEEDLES - Needles may still be in the running for an enterprise zone. The Needles Chamber of Commerce received a phone call on Sept. 1 from the chamber of commerce in Anaheim that sparked new hope for community efforts to obtain the coveted status.

Anaheim and Needles were among 10 applicants which were not granted enterprise zone designations this year and it appeared chances were slim of either ever being chosen over the next several years as fewer slots would become available. Needles ranked 12th out of the 15 applicants, Anaheim was 14th.

In descending rank order, the five new zones for 2009, which were announced on Aug. 19, are Hesperia, Tulare, Pittsburg, Sacramento and Taft. State legislation has limited the number of enterprise zones existing at any given time to 42.

Enterprise zones allow distressed and disadvantaged cities to compete by offering tax incentives to businesses, among other perquisites, which in turn are supposed to stimulate the local economy by providing job opportunities and increased local revenue. Zones are granted for a 15-year period.

According to Sue Godnick, executive director of the Needles Chamber, Anaheim has invited the city to join a group effort proposing state legislation that will allow those cities not ranking high enough this year, plus an additional zone for an auto plant in Fremont, to be granted one-time enterprise zone statuses. The initiative is to be titled “100,000 New Jobs for Californians (11 New Enterprise Zones).”

On Sept. 8, Needles City Council approved submitting a letter of support along with others from the newly-formed coalition of chambers of commerce.

The initiative is expected to be introduced during the next special session of the legislature. The process may take from two to four months, reported Chuck Chisholm, member of the Needles enterprise zone application committee.

Brad Hoover, another committee member, will be gathering letters from five companies who have expressed an interest in locating in Needles if an enterprise zone is obtained, Godnick reported.

from the needles desert star

The Enterprise Zone program is an essential tool for economic growth in California. The program delivers measurable benefits to our state by creating jobs and business growth opportunities, while reducing unemployment, increasing household income and lowering poverty rates. The state’s 42 Enterprise Zones are located in economically distressed communities across California, from Eureka to Calexico and points in between. The Enterprise Zone program has played a pivotal role in statewide job expansion, while creating job opportunities for those with barriers to employment.

Since it’s creation in 1984, the Enterprise Zone program has been vital to hundreds of businesses, spurring job creation, retention and attraction and making California a more attractive place to do business. Combined with the Enterprise Zone program, lowering taxes and fees, especially on California businesses, will increase revenues, so that fewer budget cuts will be required.

California does have a budget problem, but we can grow ourselves out of this dilemma, by providing businesses with reasons to stay, grow and expand. Small and medium-sized businesses have always been the backbone of California’s economy, yet the state faces an uncertain financial future unless we provide them with the tools necessary to promote business growth in California. Without it, the future will be bleak indeed.

In the midst of this recession, other states are expanding their enterprise zone programs and are implementing incentives that are focused on attracting businesses from California. It is absolutely imperative that California have a meaningful and useful economic development program to fight back. The enterprise zone program is just that.

Professor Charles Swenson from the University of Southern California Marshall School of Business confirms that enterprise zones work. His research found that California’s enterprise zone program decreases unemployment rates, boosts wage, salary and household incomes and decreases poverty rates. Another study by the California Department of Housing and Community Development found that poverty rates and unemployment declined and incomes increased more in enterprise zones than in the rest of the state.

That is exactly why the city of Salinas and its partnering communities worked hard to obtain a designation as an enterprise zone. As part of our commitment to economic development, the Salinas Valley Enterprise Zone is partnering with the Monterey County OneStop Career Center to help match qualified employees with eligible businesses and put people back to work.

Additionally, the Salinas Valley Enterprise Zone will soon start aggressively marketing the benefits of the zone to existing businesses. A new entity, the Salinas Valley Economic Development Corporation, is being formed to attract new businesses to the area.

As our state looks for ways to solve its financial crisis, our decision makers should focus on increasing employment opportunities and growing our economy. Designating the Salinas Valley as an enterprise zone is a step in the right direction. Our entire region, and now the state, is committed to enhancing residents’ quality of life by revitalizing distressed communities and creating high-paying jobs.

By encouraging businesses to stay in the Salinas Valley and attracting new ones, the Salinas Valley will be able to diversify and grow its local economy and ensure that the region has a healthy economy.

The Renewal Community and Empowerment Zone (RC/EZ) programs are scheduled to expire at the end of 2009. However, in his unwavering efforts to seize the opportunities to create and save jobs through federal programs, such as the RC/EZ programs, President Obama requested in his Fiscal Year 2010 budget that Congress act to extend the RC and EZ designations to December 31, 2010. Extending the designations would allow tax relief to remain available to the 300,000 businesses located in the distressed RC/EZ areas, thereby helping create or retain jobs in high poverty areas, in an environment where the unemployment rate is the highest it has been in 25 years.

It is critically important to extend the provisions immediately rather than allow the RC and EZ designations and the related tax incentives to lapse. Extending retroactively would cause a drop in utilization.

Nationwide, the benefits that derive from the $11 billion tax incentive package are clear. In this regard, the most widely utilized of the Community Renewal tax incentives is the employment credit, which provides federal tax benefits to local businesses for employing residents from the designated areas. Recent years have shown a steady upward trend in utilization of this incentive. This has led to substantial increases in business development and job creation.

Based on the latest data from the Internal Revenue Service, HUD estimates that approximately 480,000 jobs for RC and EZ residents generated over $2 billion worth of employment credits for eligible employers throughout the country in 2007-2008. Businesses have also utilized a related incentive for hiring high risk youth and providing summer jobs to teens residing in RC and EZ communities, which are two categories tied to the RC and EZ designations under the Work Opportunity Tax Credit.

For the third year in a row, the City of Santa Clarita was named the Best Economic Development Program in the State of California from the California Association for Local Economic Development (CALED). The award recognizes outstanding and innovative programs which have made a significant contribution to the field of economic development. The City of Santa Clarita was presented with the award at CALED’s Annual Training Conference, held last week in Monterey.

Santa Clarita also took home the Grand Prize for its Support for Small Business Program for the category of Economic Development Programs, which recognizes outstanding and innovative programs which made a significant contribution to the field of economic development during 2008. A third Grand Prize was awarded to Santa Clarita for its Enterprise Zone Marketing Campaign for the category of Economic Development Promotions, which recognizes outstanding efforts and achievements in economic development advertising, marketing and promotion.

“The City of Santa Clarita consistently strives to implement and execute programs that assist businesses to thrive in Santa Clarita,” said Santa Clarita Mayor Frank Ferry. “These CALED awards are a huge honor, as well as testament to our hard work and dedication to Santa Clarita businesses and its workforce.”

Please visit our website at www.amtcg.com for more details on the California Enterprise Zone.

You will be able to contact us directly from our website.

• The 2006 report to HCD on enterprise zones found specifically:

• Poverty decreased 7.35% more in zones than in the rest of California;

• Unemployment rates fell by 1.2% more than the rest of the state;

• Household incomes grew 7.1% faster in zones; and

• The wages and salary levels in zones grew 3.5% more than the rest of the state.

“Census tracts that were designated as EZs experienced larger declines in unemployment and poverty rates compared to the areas surrounding them, or compared to the areas that had similar unemployment and poverty rates.” – Report by Ayse Imrohoroglu and Charles Swenson at the University of Southern California, “Do Enterprise Zones Work?,” 2007

Salinas Valley was granted their final designation on January 30th.  That would make it the first of the 2008 round of applicants to be granted final designation.

The Gardena City Council has decided to spend $42,000 on an application seeking designation of the city as a state Enterprise Zone, which will allow officials to offer business tax incentives.

The city applied for the designation last year but it was not approved. This year, city officials said they will have a better chance because of an improved application.

The city does not have a Redevelopment Agency, so city officials believe the Enterprise Zone designation would help attract desired businesses.

To qualify as an Enterprise Zone, an area must meet certain economic and distressed criteria.

Monrovia is a city that desperately looks to be added into the new 2009 Enterprise Zone designation.

“This designation can really help Monrovia compete with other cities that have zones because other such cities are able to entice businesses out of Monrovia,” (City manager Ochoa.)

A few mid-size businesses already have left Monrovia to relocate in cities with EZ designations, according to Ochoa.

But competition among cities applying for the designation is tough. The state allows for 42 EZ zones - and just four zones are available for the current application period that ends in late March. Westlake anticipates the HCD will receive between 10 and 12 applications.

Pasadena has had an EZ designation since 1992. The zone covers the northwest part of the city, as well as the Walnut Avenue corridor. “It definitely has been a boost,” said city spokeswoman Ann Erdman. “It’s really helped us to bring in businesses to Pasadena and retain businesses here.”