The Center of the California Enterprise Zone Information Universe

League of California Cities Reaction to HCD

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.

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