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AB 484 Passes Senate Committee

Assemblyman Luis Alejo’s AB 484 to extend the life of the Watsonville and Antelope Valley Enterprise Zones pending a new zone application round, passed the Senate Transportation and Housing Committee yesterday.

The following is a press release released by the Assemblyman’s office:

Assemblymember Luis Alejo (D-Salinas)’s AB 484 to allow an enterprise zone that expired in 2012 to be eligible to receive all enterprise zone benefits until the California Department of Housing and Community Development (HCD) completes any regulatory or administrative review of the program overall passed the Senate Committee on Transportation and Housing 5-2 with bipartisan support today.

AB 484 was introduced with the intent that businesses within an expired enterprise zone can continue to receive uninterrupted benefits until such time that regulation changes and policy reforms be determined later this year. HCD is currently working on a regulatory and administrative review of the program. Two enterprise zones have lost their designation this year. The Watsonville zone expired in April and the Antelope Valley zone expired at the end of January.

“This bill is a one-time solution to HCD’s closure of the RFP process,” says Alejo. “I agree that the Enterprise Zone Program needs reforms. But while a discussion of reforms on the Enterprise Zone Act continues, we should maintain predictability for the businesses in the most depressed areas of our state.”

In Governor Jerry Brown’s proposed 2012-13 budget, he indicated that legislation would be proposed to reform the enterprise zone program. In addition, HCD issued a memorandum announcing that no new zone designations would be issued until further notice, and zones that have recently received conditional designations would receive a one-time restart of their 180-month deadline to complete the final designation process.

Testifying in support of the legislation was John Martinelli’s of the S. Martinelli & Company, the producer of the apple juice. “I feel a little like ‘Mr. Smith goes to Washington,’” Martinelli says. “This is my first time to Sacramento and testifying in committee.” Martinelli employs union workers and testified that other states have been trying to lure his business to move.

The Enterprise Zone program has helped many businesses, especially small and medium sized businesses, to succeed in the Watsonville area. These businesses are providing jobs for families and our citizens. The Watsonville Enterprise Zone has 334 companies participating in the program. These businesses have created or retained over 10,000 jobs in the community, at least 10% of those being union jobs. The Zone has helped at least 2,000 employees move off of public assistance, including 150 veterans and 300 ex-offenders.

“I introduced this bill because I fear that without the Enterprise Zone program, my hometown of Watsonville will lose more jobs,” says Alejo. “I fear that Watsonville will be ignored as a place to bring a new job or expand an existing business. At least four major companies in Watsonville have indicated that they would be forced to reconsider manufacturing in Watsonville if they were to lose the hiring and sales and use tax credits. Any loss of a job will be devastating.”

Some of Watsonville’s fastest growing employers, such as Fox Racing Shox and Nordic Naturals, have used the Enterprise Zone program to expand employment and to purchase manufacturing equipment. Fox Racing Shox went from 75 employees in 1999 to over 800 employees in 2012. Nordic Naturals went from 7 employees in 2000 to over 250 employees in 2012. Martinelli’s has gone through multiple expansions and now employs over 300 people.

Many of the businesses that participate in the program have union employees, including Couch Distributing, Beverly’s, Superior Foods, Driscolls, Elixer Distributing, Martinelli’s, Watsonville Community Hospital, and Palo Alto Medical Foundation.

“The Legislature should commit to diminishing the rate of business relocation out of state and to preserve marketplace stability in order to maintain business confidence in government as the best ways to combat this era’s record unemployment rates,” says Alejo. “Other states have cash incentives to lure employers and the Enterprise Zone helps keep California competitive. Enterprise Zones provide incentives for businesses to open and/or relocate to economically distressed areas, hire local employees and help revitalize the local economy.”

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