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HCD Delaying Zone Designations

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.”

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