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Who Wants to Be a Zone in 2009? Update: Escondido

Here is another entry into the increasingly competitive 2009 Enterprise Zone application round.  From the San Diego Union-Tribune:

Escondido will compete with a record number of cities for four open spots in a state “enterprise zone” program in an attempt to jump-start its ailing economy and make the city less dependent on sales taxes.

City officials and council members have been trying to diversify the city’s economy, which relies heavily on auto and retail sales. Mayor Lori Holt Pfeiler has said repeatedly that as Internet shopping replaces retail sales, the city’s revenue will decline.

Enterprise zones offer tax benefits and other incentives for businesses located in them. An enterprise zone could help attract coveted biotech and high-tech businesses to Escondido’s mostly vacant business park when the economy recovers.

“This is a big story for Escondido,” Pfeiler said. “We are investing in the future of Escondido.”

The City Council made the decision to pursue a designation at its meeting Wednesday.

“Escondido has a good shot at it. If we can get it, it will be that much more powerful an incentive,” Councilman Dick Daniels said. “These are times when businesses are not thinking about relocating, but we want to be in position when they do. We have great potential for a business park.”

The proposed zone would cover a jagged area that covers nearly the entire city. It is roughly bounded by Country Club Drive to the west, state Route 78 and El Norte Parkway to the north and Midway Drive to the east. The southern boundary jogs along Oak Hill Drive, Juniper Street, Centre City Parkway and Ninth Avenue.

California allows for 42 enterprise zones statewide under current legislation. One is the San Diego Regional Enterprise Zone, which encompasses part of San Diego, National City and Chula Vista.

An enterprise zone lasts 15 years, and cities that wish to keep that status must reapply on expiration.

This year, four vacancies have opened and are attracting unprecedented interest because of the recession, said Frank Luera, chief of enterprise and economic development at the state Department of Housing and Community Development. The department decides which applicants get the designation.

So far, 11 communities – none from San Diego County except for Escondido – have expressed an interest, with more expected to file applications, Luera said. In good economic times, the agency would receive six to eight inquiries for four vacancies, he said.

Luera cautioned that cities that become enterprise zones should not expect miracles. Studies have shown that while some zones have reduced unemployment, others have not.

Enterprise zones are not easy to maintain, either, Luera said. Escondido would need to offer incentives, such as reduced permit costs, a streamlined permitting process or financial assistance for facade renovations, Luera said.

Cities that administer enterprise zones also are required to market the zones and provide job training, Luera said.

Escondido officials are trying to find ways to deal with a widening budget gap caused by a sharp decline in sales tax revenue, which is projected to reach a five-year low in the coming fiscal year.

The city already has made extensive cuts in services and employee salaries and benefits to close the gap, but still has a $3.2 million deficit this fiscal year.

Next fiscal year, the city faces an even bigger deficit, projected at $5.4 million.

As a result, the city’s general-fund budget is expected to shrink from $82 million this fiscal year to a projected $72.9 million next fiscal year.

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