EZ Policy Blog

From IVPressOnline.com:

Two cities in Imperial County are classified as disadvantaged, though the state may expand the coverage to include most of Imperial County.

However, instead of being a negative, the classification, along with a distinction of an enterprise zone, would benefit businesses by offering tax credits for new hires and some purchases.

The Imperial County Board of Supervisors will look today at whether it wants to pursue combining the Imperial Valley Enterprise Zone with the Calexico County Enterprise Zone, as well as combining the zone to include other cities in the county.

An enterprise zone is a state classification that an area is disadvantaged, which would mean that it has high unemployment, low average income and low wages, Diane Cason, manager of the Imperial Valley Enterprise Zone based out of Brawley, said. The zone classification helps to create jobs by drawing in businesses and keeping them in the area.

“It’s a business attraction tool,” she said.

The zones allow businesses in the area to receive tax credits, like a hiring credit that could save businesses $37,400 per person throughout a five-year period on income tax if the business hires qualified employees, she said. Qualified employees are those that are processed through the One-Stop Career Center, like those on unemployment.

Businesses can also save on sales tax on qualified equipment, like phones and some manufacturing machines, she said. Individuals can save up to $1 million and corporations can save $20 million.

“It’s a tremendous advantage,” she said.

Enterprise zones help businesses in retail, manufacturing, food processing and professional services like doctors, she said. Some of the businesses that utilize the Imperial Valley zone are Spreckles Sugar Co., Brawley Pharmacy and CalEnergy.

It makes the area more competitive for businesses outside of the area and in other states, because it offsets taxes, she said.

“I think that it has helped retain the businesses here,” she said. “It’s just part of an economic tool.”

It has helped increase jobs in Calexico, Calexico County Enterprise Zone Manager Daniel Fitzgerald said. In 2009, at least 40 vouchers were approved for new positions.

“That’s 40 people who previously didn’t have a job,” he said. “That’s in 2009, which was a bad year.”

Getting the classification of an enterprise zone is a competitive process with a four-inch stack of papers for an application, he said. There is a limit of 42 enterprise zones in California.

The reason that the board will be looking to an enterprise zone now is because of how intensive the application process is, he said. The application isn’t due until Aug. 18.

At least Calexico, El Centro, Imperial and Brawley will have to sign on to the agreement to become an enterprise zone in order for the state to combine the two current ones in Calexico and Brawley, he said. There can’t be huge gaps between the zone.

Others, like Holtville, Westmorland and Calipatria, will get the option to join, but it does cost money to be part of the zone, he said.

One disadvantage to creating a countywide zone is it might reduce the appeal of being in one of the current zones, he said. However, the main competition isn’t within the state.

Places like Arizona and Texas are appealing to businesses because of lower taxes, he said. Within an enterprise zone, the taxes are able to be offset.

Neither Fitzgerald nor Cason would say if they support combining the zones, but county Planning Director Jurg Heuberger showed his support in a letter to the Board of Supervisors.

It would not limit businesses to either Calexico or Brawley, he wrote. It would reduce any competition between zones in the county.

“It is my opinion by making this zone available to all qualified areas of the county, namely some of the town sites as well as all of the remaining five cities, we can’t lose and only win,” he wrote

Here is a nice news story from NBC affiliate KMIR 6 news in the Coachella Valley:

And here is a related article in the Desert Sun.

The Salinas Valley Enterprise Zone has been at the forefront of trying to use the Enterprise Zone as a tool to help its community’s gang problem. As reported in The Californian, this approach is being formalized in a new local program:

Paul Edmond of Salinas wants a job, but says he wants a safer Salinas even more.

So Edmond says he has no problem with the new Ceasefire program, which aims at reducing violence by giving gang members better employment opportunities and job training. Even if it means giving up a chance at a job for himself.

“You got to think about the kids,” Edmond said Tuesday outside the Monterey County Department of Social and Employment Services’ One Stop Center on South Main Street. “[Giving Ceasefire participants jobs] would be a good thing, because it stops gang members from committing violence.”

The new initiative gives gang members an ultimatum: Give up their criminal ways — and accept help finding jobs — or face prosecution and hard time.

Today, at least 10 large businesses in the Salinas Valley will hear a presentation by Salinas police and other officials about the potential benefits that Ceasefire can bring to prospective employers.

Those attending the meeting are expected to obtain more information on the potential benefits of participating, including tax credits and subsidies that cover part of a participant’s salary. The presentation will be held at Sysco Food Service, 1622 Moffett St., but is not open to the public.

Andrew Myrick, manager of the Salinas Valley Enterprise Zone, said eligible businesses taking part in Ceasefire could benefit from state-funded tax credits that pay up to 50 percent of employees’ wages. To qualify, however, the businesses must lie in the enterprise zones of Salinas, Gonzales, Greenfield or King City.

Ceasefire participants must also fulfill one of 18 criteria before their employers can receive the tax credit.

Salinas has been designated as one of 42 California Enterprise Zones and a targeted employment area, allowing its businesses to become eligible for “hiring tax credits.”

Salinas Mayor Dennis Donohue has said the city reached out to about 10 of the city’s largest employers, including Salinas Valley Memorial Healthcare System, HSBC credit services and major agricultural companies.

HSBC is declining to comment about any involvement in Ceasefire, spokesman Neil Brazil said Tuesday.

While some businesses support the program, representatives said they need more information before they can decide whether to participate.

Adrienne Laurent, spokeswoman for SVMH, said the hospital is sending a few representatives today to the Ceasefire presentation. According to hospital policy, however, SVMH cannot directly employ any Ceasefire participants who have a criminal background.

“We certainly support the mayor’s efforts to build a safer community,” she said. “That’s definite.”

Lorri Koster, co-chairwoman of Salinas-based agricultural company Mann Packing, said the company supports the city’s goals. At least one Mann representative will attend to hear officials’ message, Koster said.

She said it’s important that businesses help efforts to reduce gang violence in the city.

“There is a stigma that this is not a safe community,” Koster said. “[We have to be] willing to do our part, to step up and try to fix it. You can’t just sit back and do nothing — you can’t.”

That doesn’t mean any jobs will necessarily be forthcoming during the winter season, when the agricultural labor market is as dormant as the Salinas Valley fields.

“We want to help,” she said. “Unfortunately, we are laying off employees right now.”

Some residents, according to comments left on The Salinas Californian’s Web site, oppose giving gang members a helping hand in this manner — frustrated that scarce jobs will go to criminals instead of law-abiding citizens.

Others said that while Ceasefire is a good program, they are skeptical it can succeed during an economic climate with high unemployment. Salinas’ jobless rate reached 17 percent in November.

“I think it is OK for them to get jobs to keep them busy, but it is hard because we would have to trust them,” said resident Jasmin Reyes, interviewed in east Salinas on Wednesday.

Still, after the city’s record-breaking 29 homicides last year, some are ready to support any efforts at progress.

“I think it’s worth trying,” said resident Jenny Lopes at an Oldtown Salinas coffee shop, but added that unemployed people who aren’t involved with gangs should have a fair chance at finding work.

The Southwest Community Center is located in the Santa Ana Enterprise Zone and provides food and toys to the area needy.  On Monday its storage facility containing all that food burned down.

From the Orange County Register:

SANTA ANA – A community center that sponsored poor children and needy seniors for the holidays lost crates of food and gifts to a fire that swept through its storage patio late Monday.

The fire at the Southwest Community Center was reported just before midnight and took firefighters about 30 minutes to put out. Fire Capt. Chris Caswell said it appears to have been an accidental fire, “possibly electrical in nature.”

It destroyed hundreds of crates of food the center had set aside for meals for the needy and for a holiday party this weekend. It also burned about 100 stockings filled with small gifts, such as socks and toiletries, for poor seniors and children.

But the center had most of the donated toys and stockings for its Adopt-A-Family event in storage, off site. And, as word of the fire spread on Tuesday, other charities and food banks stepped in to help.

“We’re going to have Christmas,” center director Connie Jones said. “We’re going to have it. It just might be on a smaller level.”

The community center serves more than 100 hot meals every day to the homeless and needy. It hands out bags of groceries to poor families, helps them pay their rent and, every year, adopts more than 200 families for the holidays.

The center was also planning a holiday party for children in the neighborhood this weekend. It was expecting around 800 to attend.

Most of the toys and gifts it plans to distribute over the holiday season were safe from the fire – either in storage or not yet delivered to the center by its donors. What it lost were a few stuffed animals, about 100 stockings and lots of food.

The fire left blackened boxes of stuffing, scorched vegetables and stacks of canned food that had been melded together. Jones estimated that there were 300 crates of cans, meat and vegetables stored on the patio for the center’s regular hot-meal service, all of it destroyed.

But by early Tuesday afternoon, help was already coming in. Jones said the Orange County Food Bank and Second Harvest had offered food. The Orange County United Way announced that it would take donations for the center.

And, as dozens of people began arriving for the center’s daily lunch, a company called 1-800-BoardUp met them with free sandwiches, chips and cookies. The company had boarded up the center and then bought lunch for 150 of the center’s clients at Sam’s Club.

“I depend on this to eat every day,” said Ignacio Martinez, 47, who lives on the streets in Santa Ana. The community center, he said, “is like my home, my family. It’s just breaking my heart, honestly.”

A former housekeeper named Annie Mae Tripp started the center in 1971, after she had a dream that she was feeding thousands of people. She moved into the current building – a former pet shop on West Second Street – about five years later.

The building is still standing, but damaged by smoke and water. Workers set up a metal fence around it on Tuesday.

But center officials said they intend to go forward with their holiday plans. “We’ll do what we can to still bring the holiday cheer,” Jones said.

Contact the center at (714) 547-4073 or by email: info@swcommunitycenter.org

Last July I posted a video of a meeting of the Oakland City Council where there was a passionate appeal to expand Oakland’s Enterprise Zone into part of the City of Berkeley in order to prevent Bayer Health Care from relocating a major facility out of the country.  In September word came that Bayer had decided not only to stay, but to expand its Berkeley operations.

The State has really made this effort a priority, and as of December 1, that expansion was made official by HCD.  Here is a video of the Berkeley City Council meeting of  12/8/09 where the City manager announces the approval to a round of applause:

Berkeley City Council Meeting 12/8/2009 from Max Shenker on Vimeo.

According to the Merced Sun-Star, a coalition of jurisdictions in Merced County is pooling its lobbying resources in support of the Enterprise Zone program:

The Merced County Association of Governments has drafted its legislative lobbying priorities for 2010.

The association’s One Voice program, a countywide coalition of business owners, elected officials and government staff, travels to Sacramento and Washington D.C., to present these issues to federal and state legislators.

Their state priorities for the year are:

And third on their list is, “Preserve enterprise zones — specially zoned areas with tax incentives for businesses — and tax credits for business incubators, including incentives for green energy.”

Here’s a story from the Contra Costa Times on what the San Joaquin Valley Enterprise Zone is doing to market the incentives.  There are a couple of gems in article:

Officials with San Joaquin County’s newly updated and expanded enterprise zone are aggressively going after its latest additions — portions of Lodi, Manteca and Tracy, for instance — to take advantage of the tax-incentive program designed to spur job growth.

And with the economy struggling, supporters say, the state incentives couldn’t have come at a better time.

Some policy experts, however, say the promises of enterprise zones are overstated.

In September, the state finalized the county’s new enterprise zone, a special label that allows businesses within the designated area to take advantage of tax credits for new employees, machinery and other benefits.

The new zone, which expires in 15 years, covers 656 square miles of property, much larger than the county’s previous zone of about 30 square miles. The last zone, which was established in 1993 and expired in 2008, included mostly portions of Stockton and surrounding areas, while the new one has added many of the county’s other cities.

Fran Aguilera, the county’s economic development director, has been holding workshops with business owners throughout the county to drum up participation. While the enterprise zone program is the state’s largest job incentive offering, it is not widely used.

Aguilera estimated that about 5 percent of qualified businesses statewide use the tax credits. Large manufacturers are the most common participants, while small- to mid-size businesses rarely take part, he said.

“We want to make sure we get the word out, because it’s important,” Aguilera said. “If we can save them tax dollars … that means more wealth in our community.”
That there is little participation in enterprise zones would not surprise researchers at the Public Policy Institute of California.

The think tank analyzed employment and geographic data from 1992 to 2004 and conducted interviews with local enterprise zone administrators. In June, study authors released a report that concluded the zones don’t create jobs any better than areas that can’t offer businesses the same tax incentives.

“Our main finding is that enterprise zones have no statistically significant effect on either employment levels or employment growth rates,” the study’s authors wrote. “The absence of evidence … clearly calls into question whether the state should continue to grant enterprise zone tax incentives.”

Aguilera called the report “voodoo science” and said its authors didn’t probe deep enough for other benefits, such as reduced poverty and increased household incomes. He said other studies have drawn more positive conclusions.

Cindy Schock, human resources director for Scientific Specialties, in Lodi, said her business is a real-world example of the program working.

The manufacturer of disposable medical and research supplies, which she admitted has been largely shielded from the recession, has already approved 10 new hires under the enterprise zone program. An additional 16 new hires are in the works, Schock said.

“It’s worked great for us,” she said. “I don’t know why more people aren’t taking advantage of it.”

Ursula Luna-Reynosa, economic development director for the city of Tracy, said the program is technical and hard to market.

“There’s not really a great sound bite,” she said. “You take advantage of the program when you do your taxes.”

Now that the expanded zone includes Tracy, where 70 percent of the workforce commutes out of town, Luna-Reynosa said she hopes the program will encourage local business growth.

From the Santa Clarita Valley Signal:

The city of Santa Clarita is proud to announce the Recovery Zone Facility Bond (RZFB) program. RZFBs are tax-exempt private activity bonds authorized by the American Reinvestment and Recovery Act (ARRA) to stimulate the local economy.

The program allocated $13,270,000 to the city for the purpose of investing in private projects that would benefit the community.

“The RZFB presents a great opportunity for local businesses looking to upgrade their infrastructure or expand their existing operations,” commented Mayor Laurene Weste. “This is also another great tool for the city to help attract new businesses to Santa Clarita and create more jobs for our local residents.”

The RZFB program provides a wide range of businesses access to tax-exempt bonds typically reserved for governments and a very narrow range of private businesses. RZFBs can be used in place of conventional financing and provide a lower interest rate.

To be eligible, businesses must be located within the city-designated Recovery Zone. The boundaries identified and approved by the Santa Clarita city Council for the Recovery Zone are the same as that of the Enterprise Zone, which includes 97 percent of all commercial and industrial-zoned properties in the city.

To determine whether a business is within the Recovery Zone, please refer to the Recovery Zone map attached to the press release e-mail.

A significant component of ARRA and the RZFB program is the mandate for funded projects to create jobs. Therefore, projects with a significant impact to the local job market are more likely to be approved for funding.

While these bonds are not required to be issued until Dec. 31, 2010, the State of California requires each jurisdiction participating in the RZFB program to submit a plan of issuance in January 2010.

“The city is under a tight deadline to determine which projects may take advantage of this program. Interested businesses are encouraged to contact the city as soon as possible to discuss their project,” commented Mayor Laurene Weste.

California Communities will conduct two free web seminars providing additional information about RZFB financing opportunities on Dec. 10 at 10:00 a.m. and Dec. 11 at 10 a.m.

From the Redlands Daily Facts:

In the first partnership of its kind with a bank, the San Bernardino Valley Enterprise Zone is promoting an offer by Community Bank to slash interest rates on business loans by a quarter percent, plus waive or reduce loan fees.

For some businesses, it isn’t much. But larger companies could save thousands of dollars over the life of a loan, effectively boosting their bottom line as they recover from the recession.

“We get a state tax benefit on the income earned off of qualifying loans made to businesses in the enterprise zone,” said Larry Pyle, first vice president and business center manager for the Redlands and Yucaipa branches of Community Bank.

The discounted loans apply to businesses seeking working capital, equipment, owner-occupied commercial real estate and other types of lending.

While Community Bank isn’t the only bank able to pass along this benefit, it’s the first to come forward and team with the enterprise zone, according to Wendy Clements, manager of the zone.

“To come forward and say they are reducing interest rates and fees is a step in the right direction, given the economy we’re in,” Clements said. “This will save (business owners) money to reinvest back into their businesses.”

The San Bernardino Valley Enterprise Zone – which includes San Bernardino, parts of Colton and parts of county territory – is one of 42 in the state located in low-income regions.

Companies, including certain home-based businesses, reap significant tax savings by being located an enterprise zone, as long as their workers meet certain income qualifications and other requirements.

Clements estimates dozens of businesses – possibly hundreds – that haven’t yet taken advantage of enterprise-zone tax benefits.

The loan perks from Community Bank will help that much more, Clements said.

“They wanted to work with us,” she said about the bank. “No other bank has come to us.”

Read this fascinating article in the LA Weekly about where $23 million in federal stimulus dollars have gone in Hollywood. Here’s the conclusion:

In Hollywood, where $23 million won’t get you 21 jobs, stimulus disbursements have included such wild cards as $16,822 for the visual-effects school Gnomon Inc., and $237,238 for the Musicians Institute. Yet Musicians Institute general manager Tak Sakimoto is unaware of the school’s having received any stimulus funding at all, and speculates that the money may be part of a student-loan program.

In the words of the photographer Garcia, the money going to Hollywood may mean that the “personal finances” of the beneficiaries do not get squeezed too badly. But is it creating any growth?

Despite billions poured in by the Los Angeles Community Redevelopment Agency, and Hollywood’s new reputation for late-night clubbing, Hollywood is still a tattered business district filled with barricaded empty storefronts.

It might have been a good candidate for job-intensive stimulus funding, with its struggling Business Improvement Districts, enterprise zones, special hiring areas, and woeful streets and water infrastructure. That was not to be.

The relatively new Salinas Valley Enterprise Zone has already begun to make a big impression.  Zone manager Andy Myrick has been gaining exposure and bringing attention to the zone, such as his presentation at the second of the JEDE hearings in San Jose.

The zone has launched a fantastic new website, www.salinasvalleyez.com, that, in Myrick’s words,

has been designed to target information towards particular audiences. For residents, the website offers detailed information regarding claiming the Employee Credit and how the Enterprise Zone can help them find a new job. For businesses, the website offers a detailed explanation of the program and explains how they can take advantage of the programs benefits. For tax preparers, the website offers ways to determine if a business qualifies for benefits and contains all the necessary forms and applications required to take advantage of the benefits, including a new list of all addresses located within the Enterprise Zone’s Targeted Employment Area.

A lot of thought has gone into the usability of the site and the relevance of the information, and as you can see from the following screen-shots, it’s attractively designed:

And:

Long Beach has been named the 2009 Most Business Friendly City by the Los Angeles Economic Development Corporation.  The Long Beach Post reports:

The City of Long Beach was named the Most Business Friendly city in Los Angeles County – with population over 60,000 – at the Eddy Awards last night, beating out six other cities for the distinction.

The winner is selected by the Los Angeles County Economic Development Corporation (LAEDC). This year marked Long Beach’s fourth straight nomination and first victory. The city was chosen over Downey, Whittier, El Hambra, Lakewood and Torrance.

“It’s a very prestigious award for this city,” said Robert Swayze, manager of Economic Development and Cultural Affairs, last night as he was leaving the award ceremony.

“Long Beach is an employment center and makes an investment in infrastructure that allows these [other] cities to thrive.”

The LAEDC offered no explanation for their decision, but Swayze pointed to the Port of Long Beach, which employs people not only within the city but the entire region, and its operation allows businesses in other cities to operate.

But 2009 has not been the best year for Long Beach, with an unemployment rate now over 12% and tough times for some local businesses.

“Unemployment is high throughout all of California,” Swayze countered. “We’re going to come through this. The investment that we’re making in infrastructure now will pay great dividends in the future.”

When Long Beach was announced as a finalist for the award in September, Long Beach Area Chamber of Commerce CEO Randy Gordon said that the city has a long way to go in regards to being business friendly, but pointed out that new tax breaks and enterprise zones have helped that cause.

“Without those changes, I don’t think we’re a finalist this year,” Gordon said in September.

Other cities with Enterprise Zones have won the the award in recent years. In 2008 the winner was Santa Clarita, and in 2007 it was Lancaster.

From the Berkeley Daily Planet:

By Riya Bhattacharjee
Thursday September 24, 2009

The Berkeley City Council’s decision Tuesday to expand Oakland’s Enterprise Zone into the city may have signaled a new era of tax incentives for companies in West Berkeley, but some city councilmembers remain cautiously optimistic.

Berkeley’s Economic Development Manager Michael Caplan told the council in a report that the city had already held preliminary talks with Oakland city officials about possibly adding West Berkeley to Oakland’s Enterprise Zone in May, when they became aware that Bayer Healthcare might be relocating from their facility next to the Aquatic Park campus if they found a cheaper alternative for manufacturing a portion of their hemophilia drug Kogenate.

Caplan said that while Bayer would have “almost certainly” kept research and other activities in Berkeley, up to 500 unionized jobs could have been at risk.

Faced with the prospect of losing Berkeley’s largest private sector employer, Oakland and Berkeley rushed to approve the Enterprise Zone expansion into West Berkeley. Bayer announced Sept. 16 that it had decided to stay and invest $100 million in Berkeley because it would get $10 million in tax incentives from the Enterprise Zone for over two years, including a reduction in PG&E bills.

Bayer will also be qualified to receive about $36,000 in tax credits for each new employee hired who fits certain categories, such as Native Americans, veterans and low income individuals. Cities issue a hiring tax credit voucher to businesses in its Enterprise Zones for each qualified employee they hire.

But some councilmembers said that although they understood that Berkeley’s first Enterprise Zone had been created primarily to keep Bayer from leaving, there were still a number of unanswered questions about the program itself.

Several studies have found that Enterprise Zones have done little to create new jobs—one of their goals—and some state legislators have questioned whether the zones are actually initiating economic development or are simply catering to corporate interests.

Most recently, the first of a series of hearings titled “California Enterprise Zone: A Review and Analysis” was held in Sacramento by the Assembly Committee on Jobs, Economic Development, and the Economy, where representatives from low income and women’s advocacy groups called for tighter regulation of the zones so that they benefit low and middle income residents.

“I haven’t found any way that the city can do what the state failed to do, that is, link tax benefits to actual social benefits,” said Berkeley Councilmember Kriss Worthington. “The goal should not be to hire just anybody, it should be to help job creation and to revive the local economy. The way state law currently exists, you don’t have to do these things to get tax credits. Today, you can get as much tax credit for hiring a wealthy executive as you would for hiring four low income laborers. It doesn’t prioritize social equity issues.”

The reports criticizing Enterprise Zones are also a matter of concern for another Councilmember—Jesse Arreguin, who said he wasn’t sure if the city could legally do something to mandate that companies hire low income workers to get incentives.

“I guess we’ll have to wait and see what happens at the state level,” he said.

Worthington said that most labor groups would like the hiring credits to help workers who are disadvantaged or poverty-stricken—economic conditions that prompted the creation of the program.

Councilmember Darryl Moore, in whose district the Bayer facility is located, called the new enterprise zone in Berkeley “a great asset for the city,” at the meeting.

Councilmember Linda Maio stressed that although most people in the city were unaware of the weight of the council’s decision, the Enterprise Zone was important for the economic vitality of the city.

Caplan said he was aware of the controversies surrounding Enterprise Zones.

“There are some critics who have claimed that as a state policy Enterprise Zones aren’t really worth their cost,” he said. “That is a matter of some debate—would the investment and hiring activity have happened anyway even without the Zone designation? One thing is clear though—for businesses located in an Enterprise Zone, particularly industrial businesses that intend to purchase new machinery and equipment, the zone can provide a huge cost reduction and incentive to stay and grow in the area.”

Critics of Enterprise Zones have also complained about the lack of oversight in Enterprise Zones, which have often resulted in undesirable practises [sic] such as cross-vouchering, vouchers processed outside a firm’s Enterprise Zone district.

“Those problems are less significant,” Worthington said. “They are not as important as the failure to address poverty. A lot of veterans are coming back from Iraq and Afghanistan and can’t find jobs. There’s a rise in unemployment. If we are going to use taxpayer money in tax credits, then it’s important to address these issues.”

Oakland’s Redevelopment Area Manager Al Auletta told that Planet that the city had established an Enterprise Zone in 1993 because it seemed like a great opportunity to attract and retain businesses in low income areas. Oakland’s Enterprise Zone covers much if not most of its industrial land.

There are currently 950 businesses in the Oakland zone with more than 10 employees and a total of 7000 additional businesses in the same zone which have between one and nine employees.

Auletta said that the city regulated its program according to the California Department of Housing and Community Development (HCD) guidelines.

A 2006 report on Enterprise Zones from Nonprofit Management Solutions and Tax Technology Research issued to HCD states that “employment impact estimates by enterprise zones were understated for some enterprise zones due to unusual vouchering practices in one enterprise zone—Oakland.”

According to the report, in 2003, Oakland processed 54,065 cross-vouchers—98 percent of all cross-vouchers for the state and nearly equal to the 57,471 non-cross-vouchers for the entire state in 2003—for firms located outside Oakland.

The practice appeared to shift to the Richmond Enterprise Zone in 2004, which processed 7,028 cross-vouchers, 65 percent of all cross-vouchers for the State, and 9 percent as much as the non-cross-vouchers for the entire State.

Describing cross-vouchering as “inefficient in terms of spreading workload and speeding of mail time,” the report recommended the establishment of a centralized data collection system which is used by every Enterprise Zone when vouchering employees.

Auletta said that although the number of companies that had used the Enterprise Zone programs in Oakland had fluctuated over the years, it is currently on the rise because the city had made a more concerted effort to introduce the program to businesses through ongoing

business development and assistance efforts.

Last year Oakland served roughly 400 companies, and processed 3,682 vouchers.

“We are reaching out to small businesses, which stand to benefit most from Enterprise Zones and which tend to hire locally,” Auletta said. “Roughly 80 percent of all employees claimed for hiring tax credits in Oakland reside within our Enterprise Zone area which tells us that the program is an incentive for businesses to provide employment opportunities for residents from low-income communities. For a city that is experiencing a 16 percent unemployment rate due to the worst market downturn since the Depression, we need incentives to attract and retain businesses that hire locally. It’s about quality of life for Oakland residents.”

Caplan told the Planet that once a zone is established, much of the work shifts to marketing and vouchering of qualified workers.

“I do know that budget problems have made it hard for Oakland to provide adequate staffing to their zone,” he said. “This is one reason why expansion of the zone into Berkeley and Emeryville will assist them as both of these cities will provide some funds to support the overhead costs.”

Once the Emeryville City Council votes on the expansion, a formal application to extend the zone will be submitted to the state.

“The state is pushing on their end for a quick turnaround so we are hoping that the zone becomes active in the next few months,” Caplan said.

As for regulating Berkeley’s part of the zone, Caplan said the city intended to develop and disseminate marketing materials about the zone and its tax and hiring benefits, working with Oakland to make sure that the worker vouchering function is maintained and that Berkeley workers are well served.

“The interesting thing about Enterprise Zones is that individual businesses track their own tax benefits and receive them through filling out the appropriate forms when they pay their taxes,” said Caplan, who managed the Bay Area’s first Enterprise Zone in San Jose in the 1980s. “The city doesn’t have to be involved in this —all the business needs is an address in the zone. Of course, the city will work to arrange a series of workshops for West Berkeley businesses to assist them in learning about the benefits and in seeking out qualified local workers.”

Caplan said his experience in San Jose had shown that a number of industrial businesses had made location and expansion decisions just on the basis of the zone location.

“I think for a city like Berkeley, it’s a very nice incentive to have in our toolbox—at a very low cost,” he said.

Worthington said Berkeley should focus its Enterprise Zones on disadvantaged and unemployed veterans. “We can’t change what the state incentives are. But we do have a power to prioritize what we do within our local incentives,” he said.

Caplan said that hiring decisions were ultimately made by the businesses themselves and not the city.

“But the good news is that the people who can be vouchered to provide their employers with tax credits can be targeted,” he said. “So one of the great things about Enterprise Zones is that businesses actually have an incentive to hire people who are low income.”

From Recordnet.com:

STOCKTON – The state has granted final designation to the San Joaquin County Enterprise Zone, raising to 656 square miles the area offering tax incentives to employers and manufacturers.

The state granted conditional designation to the zone a year ago, but the final designation boosted the area from 638 square miles, according to San Joaquin County.

“We took in, in essence, another 20 square miles,” Enterprise Zone Manager Fran Aguilera said. “It’s a big deal.”

The Inland Valley Daily Bulletin has an informative interview with San Bernardino Valley Enterprise Zone manager Wendy Clements that I’s sure readers will enjoy. For example, the following question and answer:

Q: You’ve said that only 68 businesses in the enterprise zone were reaping their tax advantages in 2008 and that hundreds more could be eligible for the same benefits. Has last year’s number increased or decreased?

Clements: We had 67 companies for the first half of this year versus 68 for all of 2008, so the trend is already higher. We’re making an impact … although we’d like to see the number 10 times what it is. But it’s not going to happen overnight.

As of June 30, there were over 500 vouchers, which means 500 employees in our area (are contributing) to those 67 companies receiving state tax incentives.

I hope the number of businesses will double by the end of this year, but we’d want it to be even more than that. These are great incentives. There’s a lot of money left on the table for businesses.

Q: What are some reasons that business owners are complacent in seeing whether or not they qualify for the zone’s tax advantages and other incentives?

Clements: The reaction we get is, `Why does government want to help me?’ They think anything involved with the government is cumbersome, but then they realize how easy it is. There’s a distrusting of government.

Once we get them to a workshop or one-on-one meeting, we put it in easier terms to understand rather than if they read some franchise tax board law on their own. They have a different outlook on what the enterprise zone is. We’re here to help them with anything they need. We want to see their business grow, expand and stay here.

The Desert Sun has an interview with Coachella Valley Enterprise Zone manager, Hal Joseph examining the benefits of the zone:

Away from the old Hollywood homes, beyond the exclusive country clubs, past the tribal casinos and amid the wide swaths of green where farmworkers toil, Hal Joseph sees opportunity.

As executive director of the Coachella Valley Enterprise Zone, he is responsible for attracting businesses to operate in job-thirsty regions of the desert.

The 50-square-mile zone dips into the cities of Indio and Coachella and extends into unincorporated areas of Riverside County. It’s likely to expand to 60 square miles by the end of the year.

Businesses within its boundaries are eligible for state income tax incentives — from breaks on hiring employees to equipment they need anyway.

“I think the future’s very bright for the enterprise zone here in the Coachella Valley,” Joseph said. “We’re starting to attract some businesses from all over the world that are at least taking a look at it here.”

He shared how he markets the region and what opportunities carry the greatest potential for the Coachella Valley.

Question: How does an enterprise zone work, and what are the benefits of being located in one?

Answer: The enterprise zone was established by the state Legislature in 1984. The state determined there were what they call pockets of poverty, and they wanted to help these areas out. They felt the best way to do that was by job creation.

You put people to work. You take them off welfare. You make taxpayers of them. You make homeowners of them.

We’re putting a lot of people to work through the incentives of the enterprise zone for businesses.

The major incentive is the hiring credit. But the incentives are so simple to use and so rewarding that the business owner will probably never have to pay California state income tax on their business.

Over the last four or five years, we’ve put over 12,000 people to work. It’s a multimillion-dollar operation.

How so?

Take Coachella. They are an absolute poster boy for what the enterprise zone can do for you.

High unemployment rate in Coachella, enormous. No big business at all. Tremendous amount of open space, underutilized properties. High crime rate.

Here’s what it’s done for Coachella: Over the last four years, we’ve written 1,490 vouchers, hiring credits for workers here. Businesses there have retained in their pockets over $17 million that they would normally pay in taxes.

So now what do they do? They can take that money and go out and hire more people, put more people to work and have their businesses grow.

But with the state budget in such a precarious situation, isn’t there some pressure to stop tax incentives like these?

In spite of all the trauma of the state budget, there’s not been any movement at all to eliminate the enterprise zone program.

Gee whiz, we could send all of that money to the black hole, which is called the state of California, and it will disappear on you. And then we won’t have all of these incentives for these workers and their families and all these distressed communities around the state.

But it’s not going to happen.

Why not?

The state Legislature has to have some common sense that if they don’t have at least this program, they will lose hundreds, if not thousands, of businesses to adjoining states — not only Nevada but Arizona, Idaho, Oregon. They have to have this kind of a program in order to balance out the fact that we’ve got to give businesses something here in order to keep them here.

How are things going right now in attracting businesses? Are there many out there interested in moving or creating jobs out here in this economy?

Yeah, there really are. We’ve got people from Austin, Texas, looking at us now to develop a green campus out there.

I really believe that the future of the economy in this valley is going to be in sustainable energy. We have 350 days a year of sunshine. The people from Austin, Texas, why would they come here? They’ve fallen in love with the place.

Texas does not have the incentive program we have here. Secondly, we have railroads. We have interstates, a regional airport and an international airport. We’re starting to develop world-class education systems here. These things capture people’s attention.

I will never go to another city in the Coachella Valley and encourage their business to leave and come to our zone. I will never do that. I find it almost as difficult to go to businesses in other cities in the state of California.

But I’m aggressive in reaching out to businesses anywhere in the world, anywhere in the United States to tell them how great it is to do business here. That’s my game plan.

So that’s to say your group did not approach Coca-Cola Bottling Co. when it decided to move its distribution center from Cathedral City to Coachella last year?

Coca-Cola came to me. They said, “Look, we’re in Cathedral City right now. We’re going to have to move because we’re running out of space.”

We had meetings over in Indio. We had meetings over in Coachella. That’s how that happened. We never marketed to them or knocked on their doors.

What are businesses required to do or to provide in order to get these tax credits?

Requirement No. 1 is that they have to have a business address in the zone. Not a P.O. box, but a physical location in the zone. That’s the big one.

The second one is that we have to qualify the workers. There are a series of questions that really identify the fact that these workers could really use this job. The other way to do it is by where you live and if it’s in a targeted employment area.

What do you like best about your job? What keeps you motivated?

Considering I came out of retirement?

I’m very altruistic. I believe in putting people to work.

Antioch College (in Yellow Springs, Ohio) was the single most important (decision) in my life that ever directed my future. …

Horace Mann, the father of American education, was the first president of Antioch College. He gave the commencement speech to the first graduating class.

In his speech, he carried the line: “Be ashamed to die until you’ve won some victory for humanity.”

I believe in that, and I want to help the people as much as I can. That’s what I’m here for.

Hal has always been on the vanguard of marketing his zone, but this may be the most creative publicity stunt yet.  Again from The Desert Sun:

Official’s car used in robbery: Enterprise zone director’s SUV stolen, abandoned

An Indian Wells man, who is the head of a local economic development program, says his stolen Subaru Forester was the getaway vehicle used in Thursday’s Miramonte Resort & Spa robbery.

As a result, Hal Joseph said, he has learned about security and public safety.

“I was taught a lesson; even though you think you’re safe, lock your car if you’re going to keep it outside,” he said.

Joseph is executive director of the Coachella Valley Enterprise Zone, a 50-square-mile area encompassing Thousand Palms, Indio, Coachella, Thermal and Mecca.

Tax incentives are offered to companies that establish within its limits.

He said he realized Friday that his car had been used in a crime when he read in The Desert Sun that the suspect vehicle — a white sport utility vehicle — was located shortly after the robbery, in the same area where investigators found his Subaru Thursday.

“Oh wow, it’s my car: the white SUV,” he said. “I let out a loud yell and called my wife over to read (the article).”

He noticed his vehicle was missing Wednesday morning when he stepped outside his Indian Wells Country Club home to get his newspapers.

“Here I am in my bathrobe and slippers, wondering, ‘My God, where’s my car?’” he said.

After recovering the Subaru Thursday, investigators told Joseph it was used in an unspecified crime.

It was slightly earlier that Riverside County sheriff’s deputies were called to the hotel robbery, which shocked the community.

“We haven’t had any robberies at the Miramonte in the last few years,” Riverside County sheriff’s Sgt. Herman Lopez said Friday.

At about 12:30 p.m. Thursday, an armed man entered the resort’s accounting office near the front of the hotel in the 45-000 block of Indian Wells Lane.

Police reported that the man fled, after robbing employees, in a white SUV and abandoned it at Elkhorn Trail and Arapahoe Vista — the same location, Joseph said, where authorities recovered his vehicle.

Lopez would not confirm if Joseph’s vehicle was used in the robbery as an investigation is ongoing.

The Subaru was in good condition, Joseph said, but every piece of loose property inside, including a pair of glasses, maps and a cooler, were gone.

It did not appear the Subaru was driven much, and there was still fuel in the tank.

Joseph had planned this weekend to get a car wash, change his Subaru’s locks and “buy another cooler,” he said.

Joseph concedes he left his doors unlocked, and he believes the thief used a valet key to start the engine.

Miramonte General Manager Stan Kantowski would not comment on any precautions the hotel is taking to prevent future robberies.

“We always look for ways to ensure proper security, but we are not revealing what else we are doing,” he said.

Authorities have yet to make an arrest in the case.

On July 28 the Oakland City Council passed a resolution to expand their new Enterprise Zone into parts of neighboring cities of Emeryville and West Berkeley.  The City is acting with urgency because Bayer will be deciding on Aug. 18th whether to expand or wind down a major biotechnology center located in Berkeley.  Bayer has 2,000 employees at the facility.

Speaking on behalf of the EZ expansion were Berkeley vice-mayor Linda Maio, who said that the Enterprise Zone expansion is, “essential for the regional retention of our jobs and the expansion of jobs.  It’s an urgent matter because Bayer Healthcare directors are poised right now to make a decision whether to make a multi-million dollar investment in our East Bay, … or outsource the entire operation out of state.  The Enterprise Zone will make all the difference.”

Also praising the expansion of the Enterprise Zone were two representatives from the ILWU Local 6 who have over 500 union members working at the Bayer facility.

Here is the video, watch it, it is very illuminating:

Oakland City Council Meeting 7-28-2009 from Max Shenker on Vimeo.

From the Los Angeles Business Journal:

In a bid to repair the city’s image as a place unfriendly to business, Los Angeles Mayor Antonio Villaraigosa is calling on the City Council to enact a 10 percent cut in the city business tax rates as part of a reform effort.

The reform program would also include raising tax exemption thresholds for small and startup businesses.

“For macro-economic reasons beyond our control, the business climate has gotten significantly worse,” Villaraigosa said in a July 27 letter to the Council that was released Wednesday. “Accordingly, I encourage the City Council to bring forward a new generation of business tax reforms, focused on the unique problems we face today and building upon the reforms undertaken in 2004.”

At least the U.S. Congress likes the California Enterprise Zones:

WASHINGTON, DC- Today, Congressman Jim Costa (D-Fresno) announced that a total of $1.7 million has been awarded to the Fresno Area Hispanic Foundation to help renovate and expand a commercial building to serve as a business incubator for Fresno’s designated enterprise zone. Funding was released through the US Department of Commerce made available through the Economic Development Administration.

“Small businesses are the backbone to the City of Fresno’s local economy,” Costa said. “This funding will be a shot-in-the-arm to our enterprise zone, encouraging entrepreneurship and furthering the important work of the Fresno Area Hispanic Foundation”

The incubator will continue the work of the Fresno Area Hispanic Foundation in providing technical assistance and microloans to entrepreneurs, and add on-site state-of-the-art technology resources and office space to act as a catalyst for target industries such as Internet web design, graphic design, and custom manufacturing. It is estimated that 900 jobs will be created and $36 million in private investment will be leveraged.

Kathleen Robles, manager of the San Bernardino Enterprise Zone, had an Op-Ed published in The Press-Enterprise this week:

I agree that California cannot afford to waste money on programs that do not work. However, contrary to claims made in The Press-Enterprise’s editorial “Tax-break waste” (Our Views, June 17), the state’s enterprise zone program has proven to deliver measurable benefits to our state.

Enterprise zones revitalize distressed areas and provide incentives for companies to hire disadvantaged individuals and expand their operations in California.

Reducing or eliminating the enterprise zone program would be extremely shortsighted. While our state is in the midst of its worst budget deficit and cuts are inevitable, the state’s most important economic development tool should not be put on the chopping block. By prioritizing economic growth and supporting successful economic development programs that create jobs and keep businesses in California, we can get our state back on track.

Recent research by Professor Chuck Swenson from the USC Marshall School of Business shows that the enterprise zone program reduces unemployment rates, boosts household incomes, and cuts poverty rates. These findings are in stark contrast to the claims made in the report from the Public Policy Institute of California.

According to Swenson, in order to evaluate the economic impact of the enterprise zone program, you need to look at a number of different outcomes such as job growth, unemployment rates, income levels, and business retention. The PPIC study analyzed much more limited data. After looking at all of these factors, Swenson found that the enterprise zone program reduced unemployment rates and increased the wages of enterprise zone residents.

Also, contrary to The Press-Enterprise’s editorial, evaluating enterprise zones is a critical issue to those in Sacramento. That is why AB 1550, which ushered in a new era of accountability standards for the enterprise zone program, was signed into law in 2006. AB 1550 requires additional review of a zone’s administrative support and an evaluation of financial commitments made in the zone’s application and memorandum of understanding.

The law also requires each zone to submit a biennial report to the Department of Housing and Community Development regarding progress made in achieving its goals and objectives. In addition, the application process for an area to be designated an enterprise zone is very competitive and no zone operates in perpetuity.

Areas that are designated as enterprise zones are struggling communities. The state has made a commitment to help these communities rebuild themselves. Enterprise zones help the people that are hardest hit in an economic downturn, and reducing the program’s benefits will have a disproportionate impact on low-income residents.

While there are many opinions on how the state should solve its budget crisis, eliminating the enterprise zone program is not the answer. Tax credits aimed at creating jobs and boosting business should be maintained because prominent research shows that they do work.