HCD sent out an email blast today from Cathy Creswell announcing that the Governor has asked her to leave her position with the Department as of February 14:

To HCD Stakeholders and Colleagues:

A new year brings the promise of new beginnings and renewal. Recently, the Department has undergone a number of changes and faced many challenges, and I have been proud to lead this great organization over the last year. However, I have been informed by the Administration that my service will be complete as of February 14th. It has been my greatest honor to work at HCD for the past 25 years and have the opportunity to make a real difference in the lives of low income Californians and communities. This Department has a noble history and tradition exemplifying the best in public service. I am grateful to have been able to lead an effort during the last year to build on our strengths and improve our effectiveness in serving the people of California. Despite great uncertainty, budget reductions, and an economy and housing market that exacerbate the problems we are trying to solve, the Department has made significant progress in meeting those challenges.

Working at HCD all of these years has also given me the opportunity to work with some of the most dedicated, compassionate, and talented professionals and advocates in the world. I am so grateful for your generosity in sharing your talents, expertise and passion and am a better person for having known all of you.

The Administration has indicated an interim appointment should be announced shortly. Randy Deems, Acting Chief Deputy will be responsible for helping to make a smooth transition and will be in charge should there be any gap between the time I leave and an interim appointment is made.

I remain committed to working for housing opportunities and justice for all Californians. As Professor Clare Cooper Marcus reminds us: “A good home can protect, heal and restore us. A good home expresses who we are now, and over time can help us become who we are meant to be.” Every Californian deserves that good home and I look forward to working with you to bring that goal to a reality.

Cathy Creswell

This article from the Santa Clarita Valley Signal has some interesting details about the process taking place on the way to final designation of their new Enterprise Zone. All the way at the end, for example, the article notes that:

Laura Biery, administrative analyst for the city of Santa Clarita, said the Santa Clarita City Council is expected to vote on aspects of the Enterprise Zone program at its meeting Feb. 28.

That indicates that we should not expect that final designation announcement from HCD until some time in March. The article also notes that, once approved, the zone will be effective retroactively to 1/1/2011.

The Antelope Valley Enterprise Zone expires today, January 31, 2012.

HCD is on a roll. Fast on the heels of new final designations for Anaheim and Sequoia Valley, the new Sacramento Enterprise Zone (which also includes the City of Rancho Cordova) has now received its final designation.

This leaves five more conditional zones for HCD to complete by April.

On October 10, 2011 HCD issued a memo that they would be moving ahead with the final designation process for eight remaining zones that had previously received conditional designations. In that memo, a 180 day deadline was established for all of those zones to comply with all of their conditions or lose the opportunity to receive a final designation.

At today’s CAEZ board meeting in Sacramento a representative from HCD announced that the Anaheim EZ has received it’s final designation effective February 1, 2012 and the Sequoia Valley EZ in Tulare County received its final designation which will be effective retroactively to October 2010 (because of AB 1550).

The remaining six conditional zones are:

• Harbor Gateway Communities cities of Los Angeles and Huntington Park, and County of Los Angeles)
• Pittsburg (City of Pittsburg and County of Contra Costa)
• Sacramento (cities of Sacramento, West Sacramento, Rancho Cordova, and County of Sacramento)
• San Diego (cities of San Diego, Chula Vista, and National City)
• San Francisco (City and County of San Francisco)
• Santa Clarita Valley (City of Santa Clarita and County of Los Angeles)

HCD has announce three more listening sessions in January to gather public feedback about possible regulatory changes to the Enterprise Zone program. The full announcement can be found here.

There will be meetings on January 18th in Sacramento, on January 23rd in Los Angeles, and on January 26th in Tulare.

Here is an interesting article in the Santa Clarita Valley Signal regarding the progress HCD is making on issuing final designations to the remaining 8 conditionally designated Enterprise Zones. The article deals with Santa Clarita specifically, but many of the issues could be extrapolated to other zones.

The article suggests that final designation will take until April to complete. The memo issued by HCD on October 10, 2011 stated a 180 day deadline with no exceptions – that clock will run out in April. The article also states that at least Santa Clarita will be made effective retroactively to Jan. 1, 2011 even though they received their conditional designation on Dec. 15, 2010.

Here is the entire article:

The deadline for transitioning the new local Enterprise Zone, by the California Department of Housing and Community Development, is April 10, said Jonas Peterson, president and CEO of the Santa Clarita Valley Economic Development Corp.

“This is great news in that the city, county and Economic Development Corp. finally have a timeline to work with for bringing our new Zone online,” Peterson said.

The valleywide zone was initially approved effective Jan. 1 of last year, but Gov. Jerry Brown called to eliminate the program early last year under his proposed budget plan in order to recoup additional revenues to address California budget deficits.

In an interview with Peterson this spring, he said the plan did not factor in the tax revenue, jobs or tax savings benefiting local communities that have enterprise zones.

The Housing and Community Development department, which administers the Enterprise Zone Program, has been holding “listening sessions” to gather feedback from communities as it considers regulatory changes.

“We’ve been invited to participate in upcoming listening sessions with the state,” Peterson said.

“Our goal is to participate, offer suggestions and work with the state to keep the EZ program as strong as possible.”

Assembly member Manuel Perez, D-Coachella, an advocate for local economic development and chairman of the Assembly
Committee on Jobs, Economic Development and the Economy also sponsored an enterprise zone reform bill, AB 231, to preserve the enterprise zone benefits through reforms.

“The EZ program is an effective tool for local economic development, and the reforms in AB 231 will help to better tell that story,” Perez said.

The key fact for SCV business owners to keep in mind, Peterson said, is when the local Enterprise Zone program receives final approval, the benefits will be retroactive to Jan. 1, 2011.

“This retroactive effective date means that companies in the zone will be able to qualify hiring and investing activity that occurred in all of 2011.”

While applications will not be processed until final approval of zone expansion is granted by the state, Peterson said companies should proceed with hiring and investing.

“When final approval does come, businesses in our unincorporated areas will be able to apply for benefits based on 2011 activity.”

The city of Santa Clarita already has an enterprise zone program, which received final approval July 1, 2007. The city’s program is active through June 30, 2022. The valleywide program will encompass companies previously not located within the city limits.

The Santa Clarita Valley pushed hard to save the Enterprise Zone program from elimination last year through a broad coalition with support from the city, county, EDC and chamber, Peterson said.

“Together, we had one of the strongest delegations in the state. If necessary, I’m confident we can duplicate that effort again this year.”

Last March, an informal coalition of enterprise zone advocates from the local business community, city of Santa Clarita, SCVEDC and SCV Chamber of Commerce met with 18 state legislators in Sacramento to explore ways to salvage the program.

Companies, organizations and community leaders submitted letters and made calls to legislators in support of the EZ program.

“Our elected state officials, including Assemblyman (Cameron) Smyth, Sen. (Sharon) Runner and Sen. (Tony) Strickland were all very supportive,” Peterson said.

In addition to visits to the state capital, and calls and letters to legislators, local companies Aerospace Dynamics International, Stay Green and AT&T also visited with government leaders in Sacramento in support of the program.

Company executives spoke of the economic benefits derived from the program and were able to cite specifics as to how many people they’ve hired and whom they had hired as a result of the program giving legislators a chance to hear from real employers.

Santa Clarita was identified by the Department of Housing and Community Development as having one of the best-run enterprise zones in the state, citing it as a model program.

Here is an article from the Imperial Valley Press discussing Assemblyman V. Manuel Pérez’s involvement in the HCD “listening session” held last week in El Centro:

Assemblyman V. Manuel Pérez, D-Coachella, joined business owners, community members, and local officials from the Imperial and Coachella valleys to voice strong support for the protection and strengthening of the California Enterprise Zone program at a public forum in El Centro held by the California Department of Housing and Community Development.

Thursday’s forum was the second of three “listening sessions” held by the California Department of Housing and Community Development to hear from communities about the Enterprise Zone Program. The state department administers the Enterprise Zone Program and is considering regulatory changes to the program.

Though the department has not yet released the draft rules, it is using the sessions to gather local input.

About 55 people participated in the two-hour session, held Thursday morning in a full room at the San Diego Gas & Electric’s Renewable Energy Resource Center. Pérez’s remarks began with a focus on the economic empowerment role of the program.

“Our communities are working on the front lines to bring new resources and private investment to areas that have been extremely hard hit by the recession, not to mention that historically have been overlooked,” he said. “…The EZ Program is unique among government programs because it targets lower-income, struggling neighborhoods and combines a mix of tools to genuinely promote community and economic empowerment.

“In our region, based on locally defined goals and objectives, the EZ Program has helped encourage entrepreneurship and brought the dignity of work to our residents,” he added.

Pérez strongly encouraged HCD leaders not only to thoughtfully consider community input, but also cautioned them to conduct a thorough legal analysis before pursuing any changes to the program that may cause legal turmoil.

“Quite frankly, our communities cannot afford to wait while lawsuits move through the courts. We need economic development now,” he said. “With unemployment in Imperial County at 28.9 percent, there is no room for false steps. While the EZ program can be improved, we cannot accept proposals that effectively shut the program down in the name of ‘reform.’”

The 80th District’s three Enterprise zone managers were in attendance, as well as a number of local businesses, elected officials, and economic development professionals from the Coachella and Imperial Valleys who spoke about the significance of the EZ program for their communities.

The Imperial Valley was represented by Calexico-County Enterprise Zone manager Daniel Fitzgerald; Imperial Valley Enterprise Zone manager Diane Cason; Imperial Irrigation District Director John Pierre Menveille; County Supervisors Jack Terrazas and John Renison; El Centro City Councilman Efrain Silva; Brawley Mayor Pro Tem Sam Couchman; and Imperial City Councilman Mark Gran. Local businesses included Community Valley Bank, EnergySource, CalEnergy, and Simbol Materials.

Pérez has been a vocal supporter of local economic development and the need to empower local jurisdictions to attract business investment and job creation. As chair of the Assembly Committee on Jobs, Economic Development, and the Economy, he has conducted oversight hearings, working group meetings, and stakeholder engagement on the program. The findings and proposals from that effort are included in his Enterprise Zone reform bill, AB 231.

According to state law, HCD may use the regulatory process to clarify the implementation of the existing program, whereas substantive program changes must be implemented through legislation.

HCD will be holding two “listening sessions” this week to allow for public discussion of their recent proposal to make changes to the Enterprise Zone program using the regulatory process.

The first meeting will be Tues. Dec. 6 in San Diego, and the second meeting will be Thurs. Dec. 8 in El Centro.

Here is the League of California Cities reaction to the meeting held by HCD last week:

Last year, Gov. Jerry Brown sought to eliminate California’s Enterprise Zone Program, which provides tax incentives to help attract business to the state, retain and expand business and industry, and create job opportunities for Californians. This proposal was ultimately unsuccessful, partially due to the two-thirds vote requirement, but it’s likely that the Enterprise Zone drama will re-emerge in 2012.

The California Department of Housing and Community Development (HCD) indicated on Nov. 2 that it will be seeking changes to the Enterprise Zone process. HCD expressed its intent to make changes through rulemaking (when possible) and legislatively (if necessary). Because it isn’t clear how the program may change, HCD has also indicated that the two Enterprise Zones that will be expiring in 2012 (Antelope Valley and Watsonville) will not be re-designated until reforms are implemented.

Topics for potential rulemaking changes include, but are not limited to:

Better collection of data;
A review and update of audit procedures;
Limitations on retroactive vouchering;
Increasing the discretion of HCD to grant expansion requests; and
Updating criteria HCD uses to award designations.
Legislative reforms include any of the topics mentioned above that cannot be accomplished through rulemaking, limiting availability of credits to employers that create new jobs in California (not just for hiring new employees) and reviewing existing legislative efforts.

HCD has signaled that the process to reform Enterprise Zones will be open and transparent and that the topics for reform are open for discussion. As the process unfolds it will be important for cities to communicate how these proposals will affect various Enterprise Zones so that any changes will improve the current program and not handicap the ability for this program to be successful.

The League will continue to monitor this process closely to protect Enterprise Zones and assist cities with economic development.

On Wednesday HCD Director Cathy Creswell hosted a meeting in Sacramento for Enterprise Zone stakeholders to provide an update on the memo sent out on October 10, and to explain the Department’s goals and strategy for program reforms.

There was a handout listing “Topics for Potential Enterprise Zone Reform.” It was emphasized that these were starting points for discussion and that this was the beginning of a transparent and open process. Director Creswell was adamant in her commitment to open and transparent communication with stakeholders throughout the process.

HCD is attempting to pursue certain program changes through a regulatory process and then others via legislation. Besides revisiting the vouchering regulations, the Department is investigating whether it can enact rules that place limitations on the issuance of vouchers that will effectively create limitations on retroactive application of vouchers.

Their expectation is to have a series of public stakeholder meetings in coming weeks at locations around the State in order to have a draft of new regulations by the end of January 2012. They expect the rule making process to go into the summer of 2012.

The real question is whether this activity initiated by HCD, a branch of the Administration, reflects an actual policy of the Administration to work toward making changes to the Enterprise Zone program as opposed to eliminating it.

The memo can be found here, and the following is the complete text of the memo:

This memorandum provides an update and guidance on how the Department of Housing and Community Development (HCD) will administer the Enterprise Zone (EZ) Program.

HCD suspended work on a number of pending EZ designations while Program changes were under consideration in the Governor’s budget proposals. The current Budget did not modify the EZ Program.

Given the critical need to stimulate California’s economy, while at the same time recognizing the State’s fiscal challenges, HCD will immediately institute policies for the EZ Program operation as outlined in this memorandum.

HCD will also solicit input to identify options to strengthen the effectiveness of the EZ Program, improve linkages to other economic development activities, and identify further improvements and reforms. HCD will seek input on the following topics:

• Further use of HCD’s discretion to rein in costs and further encourage job growth from the EZ Program.

• Utilizing HCD’s rulemaking authority to achieve many of the cost-saving goals articulated in the Governor’s 2011 May Revise.

• Potential legislative proposals to reform the EZ Program, including consideration of reforms proposed in current legislative efforts.

Summary of Immediate Actions by HCD:

1. HCD will not issue an RFP for new EZ designations until further notice.

Until further notice, HCD will not issue applications for new EZ designations. Up to 42 EZs are allowed by statute, and two existing EZs will expire in 2012. HCD will use its authorized discretion to not open up applications for new EZs until the Program is sufficiently reformed to strengthen its effectiveness to incentivize job creation.

Current EZs will continue for the pendency of their 15-year terms absent changes in applicable law.

2. HCD will proceed with final designations.

HCD will immediately proceed with all pending applications in accordance with applicable legal requirements. The following conditional EZs need to complete
the designate process to begin or continue operations. Each of the following EZs will be provided 180-days to satisfy all outstanding conditions and execute
MOUs. There will be no extensions past the 180 days.

• Anaheim (City of Anaheim)
• Harbor Gateway Communities cities of Los Angeles and Huntington Park, and County of Los Angeles)
• Pittsburg (City of Pittsburg and County of Contra Costa)
• Sacramento (cities of Sacramento, West Sacramento, Rancho Cordova, and County of Sacramento)
• San Diego (cities of San Diego, Chula Vista, and National City)
• San Francisco (City and County of San Francisco)
• Santa Clarita Valley (City of Santa Clarita and County of Los Angeles)
• Sequoia Valley (cities of Dinuba, Exeter, Farmersville, Lindsay, Porterville, Tulare, Visalia, Woodlake, and County of Tulare)

3. HCD will reopen applications for EZ expansions consistent with its State mandate. HCD is required by statute and regulation to process applications for expansion of currently designated EZs.

Pending applications for expansion will be processed immediately. Future applications will be processed according to the relevant statutes and regulations.

4. HCD will convene stakeholders to examine additional reforms to the EZ Program, with the intent to initiate rulemaking within three months. HCD will convene stakeholders to examine what changes should be made to the EZ Program to increase transparency, accountability, cost effectiveness, and
effectively stimulate job growth.

HCD will seek input on policies that should be issued or changed with respect to HCD’s administration of the EZ Program. Stakeholders will be asked to provide input on potential amendments to the Program through HCD’s rulemaking authority that achieve some of the policy reforms proposed in the Governor’s May Revise, as well as reforms proposed through current legislative efforts.

The stakeholder process will also seek recommendations on other legislative changes to the Program that the Administration may seek to institute.
Stakeholder meetings will be noticed within the coming weeks.

While we are waiting for final confirmation, sources are saying that HCD has been the green light to issue final designation letters to those Enterprise Zones that are still in their conditional status.

At the quarterly CAEZ board meeting on July 14, the Enterprise Zone program manager at HCD, John Nunn, announced that the final designation for the new Sequoia Valley Enterprise Zone in Tulare County would be completed within a matter of days. That has not occurred. As the article reprinted below from RecordOnline.com suggests, the Governor’s office has been directing HCD to stall and delay its normal functions vis a vis the Enterprise Zone program.

The article details the frustrations of local officials and businesses in Tulare County with the delay in the implementation of their new Enterprise Zone. However, under legislation passed in 2006 (AB 1550), the new zone is in fact authorized to provide the benefits of the Enterprise Zone under its conditional designation retroactively to October 2010. The statute instituted by AB 1550 says:

an expiring enterprise zone that applies for a new enterprise zone designation pursuant to Section 7073 or 7073.1, and receives a conditional designation letter from the department, may offer, and a taxpayer doing business within the geographic boundaries of the new zone referenced in the conditional designation letter shall be eligible to receive, all enterprise zone benefits until the department makes a final designation or declines to redesignate the zone. The department shall make the effective date of the new zone the date of expiration of the previous designation and the term of the new zone shall begin on that date.

Since the Enterprise Zone in Lindsay, CA expired on October 5, 2010, and Lindsay was a part of the multi-jurisdictional Enterprise Zone application for Tulare County, the benefits of the new zone actually began on October 6, 2010.

The following is the full article that appeared in Recordonline.com:

Porterville City officials say they are vexed with Gov. Jerry Brown’s inaction to designate the area as an enterprise zone — a vital component of Porterville’s efforts to recruit and retain business in town.

The state’s Enterprise Zone Program, which targets economically distressed areas and provides incentives designed to encourage business investment and promote creation of new jobs, is responsible for designating 42 enterprise zones by the state legislature.

Among those 42 zones, is Sequoia Valley, which includes the cities of Porterville, Lindsay, Exeter, Visalia, Tulare, Farmersville, Woodlake, and Dinuba and parts of Tulare County’s unincorporated communities.

In 2009, the state Department of Housing and Community Development announced the conditional designation of the Sequoia Valley Enterprise Zone, but that has been at a standstill since Brown first proposed eliminating the program as a way to balance the state budget.

“We continue to be undeniably frustrated with the state’s lack of activity on enterprise zones,” City Manager John Lollis said. “If there’s no legislation to eliminate them, we should be moving forward with it — you would think. It’s not happening.”

Lollis said that the inaction is keeping local businesses from taking advantage of hiring credits that, in turn, stimulate employment and expand business.

“They’re playing ‘hide the ball,’ who’s got the ball? Look at who’s in control…the underlying issue is that the governor is not supportive of it and the democratic legislature is not supportive of it,” Lollis said.

Linda Wammack, Porterville development associate, said that the city has learned the HCD is not issuing any final designations at the direction of the governor’s office.

“For Porterville, this is really important especially with the development of the new courthouse, we know there’s going to be an influx of small businesses that support people who work at the courthouse,” she said about the $93 million South County Justice Center planned for construction near the downtown area.

She explained that for every new hire, a company located within an enterprise zone receives a credit to offset its state taxes, up to $37,000 over a five-year period for each eligible employee.

Wammack said that based on an hourly wage of $11 per hour, in the first year a business can earn $11,000 in credit that comes out of its tax liability.

“We are very frustrated and just recently, an enterprise zone task force of sorts has been talked about with the city manager from Visalia, Porterville, Tulare, the chairman of the Tulare County EDC (Economic Development Corporation), along with some staff people from those entities. We’re looking to working together to bring more attention and to find our options on how to move this forward,” she said.

The first step already taken, Wammack said, is a conference call with Yolanda Benson, a government relations representative for the California Association of Enterprise Zones, to bring the city up to speed with what’s happening at the state level.

Wammack said there are nine jurisdictions in a conditionally designated status, two of which have been conditionally designated since 2007, four since 2009, and three since 2010.

“We’re all in limbo,” she said. “We’re all trying to come together for the governor to allow HCD to authorize our documents.”

Benson calls it a “bureaucratic hang-up.”

“It’s not that the government is stopping these, it’s just not giving them (HCD) the green light to finish activity to finalize these zones,” Benson said. “We are talking to the governor’s office, we are talking to HCD and we hope to hear something within the next week as far as where the governor wants to go.”

From the local CBS affiliate KPSP:

The City of Indio has expanded its portion of the Coachella Valley Enterprise Zone boundary, which give tax breaks to businesses.

The State of California, Department of Housing and Community Development, who administers the statewide program, approved the 141.5 acre expansion of the enterprise zone in Indio. Now the same enterprise zone program tax benefits are applicable to these new areas.

“The Enterprise Zone is an effective economic development program that gives us the edge in attracting new businesses to the area, job creation, and stimulating economic activity for our region,” said Coachella Valley Enterprise Zone Chairman, Glenn Miller who is also Indio’s Mayor Pro Tem.

The Coachella Valley Enterprise Zone Authority will now focus on marketing the new area to existing businesses and potential new job creators.

“It will also greatly assist existing businesses who can utilize the program incentives to better sustain their operations in today’s economy,” continued Chairman Miller.

The Coachella Valley Enterprise Zone includes over 56 square miles in size and includes the areas of Thousand Palms, Indio, Coachella, Thermal and Mecca. Areas within the zone are eligible for State Income Tax credits and other financial incentives.

These benefits are only available to companies within the enterprise zone.