The city of Barstow was very excited to be approved for a California Enterprise Zone, the city can now utilize a very powerful tool to help save businesses money off their annual taxes.

Who is in the Barstow Enterprise Zone?
All types of existing businesses:

• Railroads
• Truck Stops
• Dentists and Doctors
• Auto Mechanics
• Car Dealerships
• Beauty Salons
• Coffee Shops
• Accountants
• Printers, Hotels, and More

Any businesses that is located within the boundaries of the Enterprise Zone is eligible for the numerous benefits of the Enterprise Zone location.

How do I get into the Barstow Enterprise Zone?
By relocating  in the Enterprise Zone!  Buy, lease or build within the boundaries of the Enterprise Zone and your business will receive all the benefits of being in the zone.

What are the benefits of being in the Barstow Enterprise Zone?
For starters, how about a Hiring Tax Credit of more than $30,000 per qualified employee during a 5-year period?

Your business may be eligible for:

• Sales and Use Tax Credits
• Business Expense Deduction for Business Property
• Net Operating Loss Carryover
• Net Interest Deduction for Lenders
• Employee Wage Credit

Both existing businesses, as well as new businesses that move into the Enterprise Zone, may receive the above benefits.

Other Barstow Enterprise Zone Incentives

• Favorable loan programs
• Industrial sites as low interest or interest-free financing
• Building ready to occupy
• Pads ready for building
• Fast-track planning and building permits
• 34-acre business park with utilities already in
• Barstow is a pro-business city
• One-Stop career center for workers and employers
• State sales and use tax credits on qualified purchases

Since the Governor announced the new California Enterprise Zones that had been given temporary status approval, all but one of the proposed zones has complied with the full process.  And that one zone was the city of Arvin, CA.  I researched back and discovered an article written by the mayor of Arvin, Tim Tarver, who wrote an article that discussed the current status of Arvin’s EZ.  A portion of his article is below:

As mayor of the City of Arvin, I know that one of these programs the Enterprise Zone program will help create needed employment opportunities for our city. Yet today this program is under serious threat of being phased out.

The EZ program will bring jobs to Arvin. And it will keep them here. One of the biggest challenges facing our area is being able to recruit local business investment and keep a healthy amount of employees working in our area.

The EZ program, with its attractive mix of incentives and credits, will aid our city in building a stronger base of local businesses and employees. This means a more financially secure and bright future for Arvin.

The EZ program creates incentives for businesses to locate in Arvin, and to hire local citizens who face barriers to employment. The program helps make our city competitive and enables us to import businesses, instead of exporting our talent.

The budget crisis by nature will demand fiscal restraint, but the answer to the problem cannot be to cut one of the only economic development tools that can stimulate growth and revenue in areas like Arvin.

Our city has witnessed first-hand the negative impacts of the housing market crash, the nationwide economic slowdown, and the often challenging conditions of California’s business climate.

We have also seen that the best tool for achieving long-term growth and financial security is attracting and retaining good companies and good jobs in our local area.

It would be seriously detrimental for our elected officials in Sacramento to pull the plug on the EZ program and the opportunities it has afforded to the areas and people that need it the most.

The city of Arvin is and will continue to be open for business, and we will continue to support the EZ program on the firm base of progress that it has helped us to create.

The Lynwood Enterprise Zone covers nearly all of the commercial and industrial zoned properties in the cities of South Gate and Lynwood. Hiring residents residing in targeted areas surrounding the zone may qualify your firm for additional special tax credits.  To take advantage of all of the available tax credits for this or any other California Enterprise Zone, contact us.

WHAT IS THE BACKGROUND OF THE CITY’S ENTERPRISE ZONE?
In September 2006, the cities of South Gate and Lynwood, applied to the State of California for an Enterprise Zone designation. This is a competitive process and on November 3, 2006, the cities of South Gate and Lynwood were awarded conditional designation. The City of South Gate was also authorized to receive and process applications from eligible businesses located within the Enterprise Zone area.

WHO IS ELIGIBLE?
Any individual or company operating a trade or business within the Enterprise Zone is eligible to participate in the program.

WHAT ARE THE BENEFITS?
The Enterprise Zone program may provide substantial tax savings for your business. There are five incentives available to taxpayers that invest in or operate a trade or business located within the Enterprise Zone.

The incentives are:

1) Hiring Tax Credit

2) Sales and Use Tax Credit

3) Business Expense Deduction

4) Net Operating Loss Carryover

5) Net Interest Deduction for Lenders and Bankers

WHAT ARE STATE HIRING CREDITS?

• A business within the Enterprise Zone boundary may reduce its State income tax by a percentage of the amount of wages paid to one or more qualified employee(s).
• A business/firm can claim up to 50% of an employee’s wages in the first year of employment. The credit percentage decreases by 10% annually, phasing out after five years.
• Approximately $31, 570 or more in State tax credits is potentially available per qualifying employee hired over a five-year period.

WHICH EMPLOYEES QUALIFY ME FOR THE HIRING TAX CREDITS?
A qualified employee is an employee who immediately before starting work for the business is any of the following:
1) An employee who qualified for the former Program Area hiring credit;
2) A person receiving or is eligible to receive subsidized employment, training, or services funded by the federal Job Training Partnership Act (JTPA), or it is successor;
3) A person eligible to be voluntary or mandatory registrant under the Greater Avenues for Independence Act of 1985 (GAIN), or its successor;
4) An economically disadvantaged individual 14 years of age or older;
5) A qualified dislocated worker;
6) A disabled individual eligible for, enrolled in, or who has completed a state rehabilitation plan;
7) A service-connected disabled veteran;
8) A veteran of the Vietnam era;
9) A veteran who recently separated from military service;
10) An ex-offender convicted of a felony or misdemeanor punishable by incarceration or probation;
11) A person eligible for, or a recipient of:

• Federal Supplemental Security Income (SSI) benefits;
• Aid to Families with Dependent Children (AFDC);
• Food Stamps; or
• State and local general assistance (GA)

12) A Native American Indian, or other Native American descent
13) A resident of a Targeted Employment Area (TEA); or
14) For employees hired during taxable years beginning on or after 1/1/1998, a member of a targeted group as defined in the federal Work Opportunity Tax Credit (as in effect January 1, 2001, in Internal Revenue Code Section 51).

In addition, at least 90 percent of the employee’s work must be directly related to a trade or business activity located in the Enterprise Zone and at least 50 percent of the employee’s work must be performed inside the boundaries of the Enterprise Zone.

WHAT ARE SALES AND USE TAX CREDITS?

• California income or franchise tax may be reduced by the amount of sales and use tax paid on process-related machinery parts purchased for exclusive use in the Enterprise Zone.

Qualifying property is machinery or machinery parts used to:

• Manufacture, process, fabricate, or assemble a product;
• Produce renewable energy resources;
• Control air or water pollution;
• Data processing and communications equipment including, but not limited to, computers, computer-automated drafting systems, copy machines, telephone systems, and fax machines; and
• Motion picture manufacturing equipment central to production and postproduction, including but not limited to, cameras, audio recorders, and digital image and sound processing equipment.
• Individuals, partnerships, and limited liability companies may claim a credit equal to the sales and use tax paid or incurred on the first $1 million of qualified machinery purchased. For corporations, the limit goes up to $20 million. The tax credit may be carried over.

California Governor Arnold Schwarzenegger announced that the City of Compton would receive a State Enterprise Zone Program on November 3rd 2006. The state awarded the Enterprise Zone designations on a competitive basis. Compton’s application ranked 8th of the 25 applications approved for a California Enterprise Zone.  Compton said that the enterprise zone would enable the following:

1. Business and industrial expansion and growth,
2. New businesses and industry cluster attraction,
3. Jobs and job opportunities for Compton residents ,and an
4. Infusion of new private sector equity capital and financing for Compton businesses.

Below are some of the incentives offered for companies operating in the Compton Enterprise Zone:

Reductions of Fees for Enterprise Zone Businesses:
1. Reduced Expedited Plan Check Fees
2. Reduced Building Plan Check and Permit Fees
3. Reduced Planning Entitlement Permit Fee
4. Reduced Business License Application Fee

Reductions of Administrative Processing Time for Permits and other Applications:
1. Priority Plan Checks
2. Priority Building Inspections

Incentives Related to Neighborhood Transformation Activities:
1. Job Assessments, Outreach, Recruitment, and Training
2. Coordination of Local Schools, Colleges, and Other Training Providers with Enterprise Zone Employers
3. Identification and Intake of Individuals in Targeted Groups Facing Barriers to Employment
4. Integration of Job Development Services with other Local Human Services

Other Incentives for Enterprise Zone Businesses:
1. Infrastructure and Site Assembly Incentives Site Assembly
2. Site Preparation/Clearance Assistance
3. Infrastructure Design and Construction
4. Seismic Rehabilitation
5. Reduced Development Impact Fees
6. Brownfield Remediation

We are very excited to bring you all the news and views on the California Enterprise Zones, and we will be launching on Monday!