With news that should have thousands of local Valley businesses very pleased, state officials have announced that the San Fernando Valley is now part of the Enterprise Zone program.

So what areas will be included in the EZ program? The expansion area includes portions of:

• Chatsworth
• Canoga Park
• The Van Nuys Airport area
• Woodland Hills
• The Northeast Valley

The LA Times covered the announcement and what is means for the region, “The California Enterprise Zone Program targets economically distressed areas, providing tax breaks and other incentives to attract new businesses and foster job creation. Enterprise zones already exist in the Hollywood, Central City and Pacoima regions. Under the program, firms can earn state tax credits for hiring additional employees, receive sales tax credits on purchases of $20 million per year of machinery, receive preference on state contracts and receive a 35% cut in city utility rates for five years.”

The City of Colton, incorporated in 1887, is an “American Classic” with a very colorful past and proud history. Strategically located in the heart of Southern California, Colton is at the crossroads of the Inland Empire. It boasts affordable housing, low business taxes, a wide range of community programs for all ages and a very responsive city government. Colton is a full service City with its own Police and Fire Protection, Water and Wastewater Facilities, as well as its own Electric Utility—the second oldest in the State.

If you have a business in Colton, please contact us to see if you qualify for several key California Enterprise Zone credits.

Strategically located in the heart of the fastest-growing region in the United States, California’s Inland Empire, the City of Colton encompasses approximately 18 square miles of fertile valley nestled against the scenic San Gorgonio Mountains. A comprehensive transportation network, a skilled, ready-to-work labor pool and a viable partnership between business and City Government contribute vitality to established commerce. Available sites and a “can-do” attitude toward economic development make Colton attractive for successful relocation and new enterprise. As we move forward, we continue to build on a solid foundation rich in history and long-standing community values. We’re a city moving ahead – with Confidence.

Colton has a well balanced and diversified economy and is home to a variety of manufacturing, service, retail and distribution companies including Con-Agra Milling; McNeilus Truck; Williams Furnace; Telco Food Products; Al’s Garden Art; U.S. Express; Jon-Lin, Inc.; Ashley Furniture; the new state of the art medical facility, Arrowhead Regional Medical Center; along with the largest group of RV Dealers west of the Mississippi River.

If you operate a business in the city of Indio, CA, you most likely have access to a wide variety of tax credits to California’s State Enterprise Zone legislation.  See below for a full list of tax credits, and contact us directly for assistance on how to take advantage of this program.

EMPLOYER HIRING CREDIT
Business may reduce State of California Income Tax for a portion of the wages paid to qualified employees. The savings cover a five year period and can add up to $27,000 per employee. If the employee lives in the Targeted Employment Area (TEA) qualification is automatic and requires only a single form.

NOT OPERATING LOSS CARRYOVER
Losses incurred by Enterprise Zone Business may be carried over to years in which taxable income is earned.

SALES AND USE TAX CREDIT
A sales tax credit for new machinery and parts purchased by a Zone business is available.

NET INTEREST DEDUCTION FOR LENDERS
Net interest earned on loans to businesses located in the Enterprise Zone is eligible for the credits on the California Tax Return.

BUSINESS EXPENSE DEDUCTION
Certain property purchased for use in the Enterprise Zone may be deducted as a business expense in the first year it is placed in service.

BIDDER’S PREFERENCE
Enterprise Zone Business can receive a Bidder’s Preference of 5% when bidding on State of California contracts.

MANUFACTURER’S INVESTMENT CREDIT
To encourage investment in manufacturing equipment, the State of California offers a tax credit to taxpayers operating in the following SIC codes: 2000-3999.

CHILD CARE AND RIDESHARE TAX CREDITS
The State of California allows tax credits for employers who participate in child care rideshare programs.

Riverside County is a strategic location for business because of the many incentive zones throughout the county, the diverse and accessible transportation network and the high quality of life.

Coachella Valley  Enterprise Zone
The state-designated zone is a 56 square mile, 36,000+ acre area covering the cities of Indio and Coachella, along with the unincorporated communities of Thousand Palms, Thermal and Mecca. Numerous state tax incentives are available to businesses located within the zone

Recycling Market Development Zones
The Recycling Market Development Zones strive to attract businesses using recycled materials in their manufacturing process. The state has established a low-interest rate revolving loan fund which may be used for land acquisition, leasehold improvements, equipment purchases, and working capital for up to 75 percent of the project cost to a maximum of $2 million.

Redevelopment Project Areas
Riverside County has six redevelopment project areas including 37 sub-areas that encompass 61,016 acres throughout the county. The Redevelopment Agency utilizes tax increment and bond proceeds to finance public improvements, business assistance and housing in accordance with California Redevelopment Law. Businesses located within the project areas may qualify for construction of public improvements, tax rebates and fee assistance. In addition, the Agency provides assistance to improve, preserve and increase the supply of housing that is affordable to low- and moderate-income persons in all unincorporated areas of the county.

The redevelopment project areas offer a variety of opportunities for industrial, commercial, aviation and residential development, as follows:

• 1-1986
• I-215 Corridor
• Desert Communities
• Jurupa Valley Project Area
• Mid-County Project Area

March Air Reserve Joint Powers Authority
The joint use of March Air Reserve Base is opening up new opportunities for business development. The March Joint Powers Authority, comprised of representatives from the local jurisdictions of the cities of Riverside, Moreno Valley, and Perris and the County of Riverside, is planning reuse and joint use at March Air Reserve Base in western Riverside County. The March Joint Powers Authority is finalizing its redevelopment plans which will include new business development.

Merced County voted to expand the Merced County Regional Enterprise Zone. An additional 1,877 acres of county land were added to the enterprise zone, which has kept 3,130 jobs in Merced County and created 692 new jobs, according to Mark Hendrickson, the county’s director of economic development. The enterprise zone designation comes from the state Department of Housing and Community Development and provides tax incentives for businesses in the zone.

The Enterprise Zone Program targets economically distressed areas throughout California. Special state and local incentives encourage business investment and promote the creation of new jobs. The purpose of the program is to provide tax incentives to businesses and allow private sector market forces to revive the local economy.  Oroville is one of the few communities in the State that holds a designation for both a Recycling Zone and Enterprise Zone.

Enterprise Zones are state-designated economic development areas created to stimulate growth and create jobs and stimulate investments in local communities. Through tax incentives, hiring incentives, financial incentives, etcetera, the Enterprise Zone is designed to add to a business’s bottom line.

Oroville Enterprise Zone Hire Tax Credit
A qualified business may reduce state income taxes by the amount of wages paid to one or more qualified employees. The local Private Industry Council coordinates the eligibility verification for employers.

During the first year of employment, up to 50% of a qualified employee’s wages may be claimed against your California income tax liability. The credit percentage decreases by 10% annually. The employer’s deduction for wages must be reduced by the amount of the credit claimed.

The hiring tax credit calculation is based on the lesser of:

• The actual hourly wage paid; or
• 150% of the California minimum hourly wage, i.e. $8.00 x 1.50 – $12.00.

Employees must spend at least 90% of their work time on activities directly related to the conduct of business in the enterprise zone and perform at least 50% of the work within the zone boundaries.

Oroville Enterprise Zone Sales and Use Tax Credit
Businesses located in the Enterprise Zone may reduce state income taxes by the amount of sales or use tax paid on certain machinery purchased for exclusive use within the Enterprise Zone.

To qualify for the credit, the machinery must be used to manufacture, process, combine or otherwise fabricate a product; produce renewable energy resources; or control air or water pollution. Data processing and communication equipment are also qualified property.

Individuals and Partnerships may claim a credit equal to the tax paid on the first $1 million of machinery costs.

Corporations may claim a credit equal to the tax paid on the first $20 million of machinery costs. Special rules apply for S-Corporation shareholders.

Oroville Enterprise Zone Business Expense Deduction
Businesses operating within the Enterprise Zone may elect to treat 40% of the cost of qualified property as a business expense. The maximum deduction in the Oroville Enterprise Zone is $20,000. Therefore, this particular provision is only of benefit to C-Corporations.

Oroville Enterprise Zone Net Operating Loss Carryover
If a net operating loss is generated by a business that operates within the Enterprise Zone, 100% of the loss may be carried forward for up to 15 years.

Oroville Enterprise Zone Net Interest Reduction for Lenders
Lenders who loan money to an Enterprise Zone business can take a deduction for the net interest earned (interest earned less direct expenses) on the loan.

The types of loans that qualify for this deduction include: business loans, mortgages, and loans from non-commercial sources.

To Qualify for the Loan Interest Earned Deduction:

• The loan must be made to a trade or business located solely within the boundaries of the Enterprise Zone.
• The Loan proceeds must be used strictly for the business activities within the boundaries of the Enterprise Zone.
• The lender cannot have an equity or other ownership interest in the business.

April 1st may be April Fool’s day, however the city of Hesperia was celebrating since it marked the beginning of the region’s enterprise zone benefits. Starting April 1st, Hesperia local businesses were able to start taking advantage of the EZ tax credits, including: hiring credits, sales and use tax credits as well as business expense deductions.

“It’ll hopefully not only bring in new jobs, but also help people expand existing businesses,” City Manager Mike Podegracz said Friday.

This is very exciting for a city like Hesperia, since it will now be able to compete directly with larger cities in attracting new businesses to move to the area. This should also mean good things for the job rate in Hesperia, since local businesses will be able to apply for a number of different hiring credits.

If you have a business in the Hesperia area, contact us today to see which credits are available to you.

Santa Clarita is the fourth largest city in Los Angeles County. The California Department of Finance estimated the city population as of January 1, 2008 at 177,045. Including unincorporated areas of the Santa Clarita Valley, the population is estimated at over 275,000. It is located about 35 miles northwest of downtown Los Angeles, and occupies most of the Santa Clarita Valley. It is a notable example of a U.S. edge city or boomburb. The FBI rates it as the sixth safest city in the United States with at least 100,000 inhabitants. (Nearby Simi Valley and Thousand Oaks, in Ventura County, traditionally alternate between the first and second spots on the list.) Santa Clarita is ranked as one of the top 100 places to live by Money.

Santa Clarita’s most notable attractions are the Six Flags Magic Mountain amusement park located just outside the city limits in unincorporated Los Angeles County, and the California Institute of the Arts (CalArts), located in Valencia.

If you have a company in this area, you may qualify for the State’s Enterprise Zone tax credits.  To see if you qualify, click here.

Kings County officials are up in arms this week as Sacramento threatens to remove its designation as a state enterprise zone. Considering that we’re in the one of the worst recessions in recent history, cutting incentives to hire new employees does not seem to be the best strategy for decreasing the job crisis.

Eiji Yamashita, from the Hanford Sentinel, reports, “The county leadership is expected to send a letter to Assemblyman Manual Perez, chairman on Jobs, Economic Development, and the Economy urging him to advocate for economically depressed areas like Kings County and help them retain their enterprise zone status.”

Without this enterprise zone designation, Kings County would not have the same appeal to new businesses and may even have issues with retaining current companies, since it would be in their best interest to move to a more corporate friendly city.

Santa Ana, CA, has a rich commerce heritage. One of Santa Ana’s most notable businesses is the Rickenbacker musical instrument company, whose electric guitars and bass guitars earned fame in the hands of many rock and roll legends. Santa Ana is also the home of the First American Corporation and Ingram Micro, and the original Glenn L. Martin aviation company, which later merged with the Lockheed Corporation to form the largest aircraft and weapons manufacturing corporation on the planet, Lockheed Martin.

If you are joining the ranks of these prestigious companies in Santa Ana and want to see what types of tax benefits you can take advantage of, please contact us for a free consultation.