The Madera County Recycling Market Development Zone (RMDZ) includes all of the unincorporated areas and the incorporated cities of Madera and Chowchilla. The Madera County RMDZ is located in the heart of California’s Central Valley, 240 miles northwest of Los Angeles, 166 miles southeast of San Francisco and 22 miles north of Fresno. The county is bisected by State Highways 99, 41, and 145 running north-south and Highway 152 running east-west. The RMDZ emphasis will be placed on commercial and industrial areas along the Highway 99 corridor and the eastern Madera County Highway 41 corridor.

Incentives

Incentives that Work From a Community That Works

Madera County functions through an efficient government that applies its resources where they provide the most benefit. Each incentive package is designed to meet customer needs and to directly address the specific barriers to selection. From employee training to financial support, our local toolbox of options is one of the most inclusive in the state of California.

Local incentives include fast tract permitting and site review, site location assistance, financial assistance with short and long term, industrial development bonds, equipment only purchase program, and a revolving loan fund for gap financing. The Madera Enterprise Zone and the City of Madera’s Redevelopment Agency offer tax and business incentives. Employee credits can be used to write down impact fees.

Special Districts and Zones

Madera Enterprise Zone. Since its inception, Madera has had the state’s most successful economic and employment incentive area (Enterprise Zone). Companies located in the Madera Enterprise Zone are eligible for substantial tax credits and benefits that include:

• Firms can earn over $29,000 in state tax credits for each qualified employee hired.
• Firms may reduce taxes by the amount of sales or use tax paid or incurred on certain equipment. Individuals may claim a credit on the first $1 million of qualified equipment and Corporations may claim a credit on the first $20 million.
• Firms can take advantage of up front expensing of certain depreciable properties.
• Firms can carry forward 100 percent net operating loss (NOL). NOL may be carried forward 15 years. Lenders to businesses located in the Enterprise Zone may receive a net interest deduction. Unused tax credits can be applied to future tax years, stretching out the benefits of the initial investment.
• Enterprise Zone companies can earn 5 percent preference points on state contracts.

Madera Redevelopment Agency (RDA). In an effort to end urban blight, the Madera RDA offers assistance for off-site improvements, infrastructure development and economic development assistance projects within the district.

Foreign Trade Zone (FTZ). Three designated Foreign Trade Zone areas will allow applicable companies to purchase imported equipment, raw materials and supplies at duty-free or duty-reduced rates. The FTZ also provides benefits to companies developing products for export. Some benefits include:

• Re-exports: Merchandise imported and later re-exported is never assessed any Customs duties.
• Reject, Scrap, and “Consumed” Merchandise: Imported merchandise that is admitted into a Zone and then rejected, scrapped or consumed is not assessed any Customs duties.
• Zone-to-Zone Transfers: Merchandise imported into a zone and then shipped into another zone can be shipped duty-free to the receiving zone.
• Duty Deferral: When imported merchandise is shipped to U.S. locations from a zone, the duties are deferred while the merchandise remains in the zone. The cost-of-money savings on duty deferral can be significant for large volume distributors, or operations with long inventory turnover periods.
• Inverted Tariffs: When components are imported and manufactured into a new product for re-export or sold in the U.S., the importer may elect to apply the finished product duty rate, or the component duty rate, whichever is lower.
• Merchandise Processing Fee: Importers into U.S. Foreign Trade Zones are only required to submit one Merchandise Processing Fee (MPF) per week for all shipments from the zone, thus reducing MPF costs to importers who otherwise would file multiple entries.

Bond Financing

Purchasing of Land, Building and Equipment. The Madera County Economic Development Commission (MCEDC) has been a leader in securing low interest, tax-exempt bonds (requiring a letter of credit) for new and existing industrial projects through the Industrial Development Bond Program. These special bonds can be used for the purchase of land, building and equipment up to a total amount of $10 million.

Municipal Incentives That May Be Accessed

Partnering Program. Madera County and its cities, Madera and Chowchilla, partner with new industry locations and expansions in a cost-sharing program that can include the purchase of land, the reduction of development/impact fees, and the construction of offsite infrastructure.

Locally Administered Revolving Loan Fund. The Madera County Economic Development Commission (MCEDC) is authorized to provide long- and short-term fixed asset financing and working capital for new and existing businesses, through the Madera County Small Business Loan Program. MCEDC administers funds that provide low interest loans in “gap” financing situations. The program is funded, primarily by, the State Community Development Block Grant (CDBG). Funding from the program can be for working capital, inventory purchase, equipment or machinery purchase, real estate purchase, and leasehold improvements. Terms and interest rate are set on a case-by-case basis, and are based on the asset being financed. Loans of less than $50,000 are processed and approved locally. Loans greater than $5O,000 require additional approval from the State CDBG Program. The MCEDC assures speedy, effective, and confidential processing of your loan.

Target Materials
Materials identified to provide businesses with continuous feedstock include targeted plastics, mixed paper, glass, and agricultural by-products for manufacturing development.

Infrastructure
There are two transfer stations and one disposal site in Madera County. Madera Disposal Systems, Inc. has just completed a new materials recovery facility (MRF) to separate recyclable materials. Madera offers a variety of commercial and industrial properties that range in price from $6,900 to $21,000 per acre. There are 900 acres zoned for light and heavy industry; about 50 percent is vacant and available, in parcels ranging in size from 1.7 to 150 acres.

How would your business like to use thousands of dollars from tax savings and incentive programs to reinvest into your company and your employees? In 1997 Lindsay businesses took advantage of over 6 million dollars in enterprise zone savings. The Lindsay Enterprise Zone Program offers existing and new businesses a variety of tax and other incentives which can reduce the cost of doing business and increase revenues.

Any business located within the city limits of Lindsay is eligible for these exciting tax savings and incentive programs. Enterprise zones have been carefully located throughout the State in communities, like Lindsay, that are pro-business. To ensure a long-term relationship between business and local government, the City of Lindsay has made commitments to expedite permit processing, reduce construction and permit-related fees, and provide assistance in employee hiring and training while offering a number of state tax credits to Lindsay businesses.

Take a look at some of these great State tax credits:

• Hiring Credit…up to $26,894 per employee
• Sales Tax Credit…up to $1.2 million on machinery and parts purchased
• Up front expensing of depreciable property
• Tax-free interest income for lenders
• 100% net operating loss carryovers

Hiring Tax credit: A qualified business may reduce tax by the amount of wages paid to one or more qualified employees.

• 50% of qualified wages in year 1
• 40% of qualified wages in year 2
• 30% of qualified wages in year 3
• 20% of qualified wages in year 4
• 10% of qualified wages in year 5

Qualified wages are wages paid up to 150 percent of minimum wage. As of March 1, 1998, the maximum hourly wage on which this credit may be based is $8.62. Qualified employees are those employees: residing in Lindsay’s targeted employment area (approximately 95% of City); receiving subsidized employment, training, or services under the terms of federal Job Training Partnership Act (JTPA); registered in any welfare to work program; displaced by other area businesses or long-term unemployed.

At least 90 percent of the qualified employee’s work must be directly related to a business activity located in the Zone and 50 percent of the employee’s work must be performed within the Zone boundaries. The credit must be reduced by any federal or state targeted jobs tax credit claimed.

Example: A Zone business hired 15 new employees, of which 10 meet the definition of “qualified” employee. These ten employees earn $8.62/hour and work 40 hours a week for 52 weeks a year; the tax credit for each employee is 50 percent of the first year wages or 8,964.80; the total first year tax credit for the ten employees would be $89,648.00; the total five year tax credit for each employee would be $26,894.40; the total five year tax credit for the 10 employees would be $268,944.00.

Simply stated, a business hiring 10 qualified employees for a five year period would be eligible for over a quarter of a million dollars in state tax credits over a five year period, monies that can be used to reinvest in your business.

Sales and Use Tax Credit:  The credit is equal to the amount of the sales/use tax paid or incurred for the purchase of qualified property. The combined purchase price of the property, in any year, cannot exceed $1,000,000 for individuals or $20,000,000 for corporations.

Qualified property is defined as machinery and machinery parts used to manufacture, process, combine or otherwise fabricate a product; produce renewable energy resources; control air or water pollution. The property must be used exclusively within the boundaries of an enterprise zone. Excess credit may be carried over to future years until it is used up.

Example: A Zone business purchases $10,000,000 in new machinery to set up a new production line for its operation. The business has a tax liability of $150,000. The credit earned is 6 percent of $10,000,000 or $600,000. Since the tax liability is only $50,000, the credit is $150,000 for that tax year. The $450,000 in unused credits may be carried over to future years until it is used up.

Note: If this business were a sole proprietorship or a partnership, the amount of purchase upon which the credit may be claimed would be limited to $1,000,000 and the credit to $60,000.

Net Interest Deduction: Interest earned on investments in a trade or business located in an enterprise zone is free from California tax.

Qualified investments include business loans, mortgages, and commitments of venture capital. The investment must be made in a trade or business located solely within an enterprise zone. The money loaned or invested must be used strictly for business activities within the enterprise zone, and the lender or investor must not have any equity or other ownership interest in the trade or business.

The full amount of interest, less any allowable expenses incurred in making the investment, is deductible from income if each of these provisions apply.

Example: A small business borrows $50,000 at 15 percent interest from a bank for marketing and equipment. The bank may deduct the interest income. A small business borrows $100,000 at 15 percent interest to renovate a building in an enterprise zone from family of the owners. The lenders may deduct the interest income.

Net Operating Loss Carry-Over: Net operating losses (NOLs) of individuals or corporations doing business in an enterprise zone may be carried over to future years to reduce the amount of taxable enterprise zone income for those years.

A net operating loss is defined as a loss attributable to the taxpayer’s business activities within the enterprise zone as defined in the year of loss. The carryover may extend up to 15 years or the period of time the area remains designated as a enterprise zone. The loss can be applied only to income earned in the enterprise zone, and the loss occurs strictly from business activity in the enterprise zone. The credit may not be applied to tax years prior to the year in which the loss occurred (no “carrybacks”). Part-year residents of California must prorate the credit.

Example: A company opens a new headquarters in the enterprise zone. In the first year of operation the company incurs a major loss leading to a large net operating loss. The portion of the loss attributable to the enterprise zone business, based on formula apportionment, may be carried over to succeeding taxable years where a net operating income is earned for up to 15 years after the loss, until the deduction taken is fully offset by net operating income. The income against which the loss carryover may be applied is determined by an apportionment formula based on the percentage of sales, payroll and property of the company located within the enterprise zone.

Business Expense Deduction: Part of the cost of certain property purchased for exclusive use in an Enterprise Zone may be deducted as a business expense in the first year it is placed in service. The amount of deduction is as follows:

• Tax years 1996 and 1997: $5,000
• Tax years 1998 and 1999: $7,500
• Tax years 2000 and forward: $10,000

Qualified property is defined as tangible, personal property (not real estate) which is used for business purposes and is eligible for depreciation; this includes most equipment, furnishings, and vehicles purchased for exclusive use in an enterprise zone, but not office supplies or other small items which are not normal depreciated.

Example: A taxpayer purchases machinery for use in the enterprise zone at cost of $7,500 and places it in operation in 1998. The deduction for the first year would be the full $7,500.

Located in the heart of California’s San Joaquin Valley, Kings County offers a combination of a plentiful and productive workforce at competitive wage rates. Major highway, rail and air service linking to metropolitan markets and it’s pro-business attitude make Kings County the right place to grow your business.

Industries locating or expanding in Kings County can access numerous pro-business incentives such as:

• Hiring Tax Credits – Firms can earn $31,574 or more in State tax credits for each qualified employee hired.
• Sales and Use Tax Credit – Zone companies may receive a sales tax and use tax credit for manufacturing or processing machinery, data processing and communications equipment and motion picture manufacturing equipment central to production and post production, to be used in the Zone. Individuals can claim a credit on the first $1,000,000 of qualifying purchases, while corporations can claim credit on the first $20,000,000 per year.
• Business Expense Deduction – Up front expensing of certain depreciable property.
• Net Operating Loss Carryover – Up to 100% of the NOL may be carried forward for 15 years.
• Net Interest Deduction – Lenders to Zone business may receive a new interest deduction.
• Unused tax credits – Can be applied to future tax years.
• Preference Points – Enterprise Zone companies can earn preference points on state contracts.

The City of Fresno was originally granted an Enterprise Zone designation in October 1986.  This zone expired on October 14, 2006.  At this time the City of Fresno has received a “conditional designation” for a brand new Enterprise Zone.

Businesses in the zone – from large manufacturing companies to small neighborhood restaurants – can significantly reduce their state income taxes by taking advantage of special California Enterprise Zone tax benefits.

Located within the Fresno Enterprise Zone borders are affordable manufacturing and commercial sites, as well as unique retail locations.  The zone is within immediate access of two freeways, two state highways, the Fresno Yosemite International Airport and the Downtown Chandler Airport.  It is also in close proximity to a wide range of educational facilities, housing and other amenities.  These assets add up to an increasingly powerful ability to assist current businesses and attract new companies, jobs and investments.

A business located within the Enterprise Zone can receive tax credits each time it hires an eligible employee or purchases qualified new machinery, equipment or pollution control devices.  Incentives are also available to many employees who work in the zone and lenders who make loans to qualified businesses.  Most businesses in the Enterprise Zone are automatically eligible for benefits.  There is no certification process.

If you are in the Fresno Enterprise Zone, or you want to know if you are, contact us directly by clicking here.  C & I Tax Consultants are here to help you receive the full tax credit that you are entitled to.

City of Delano Enterprise Zone: The City of Delano Enterprise Zone was first established in 1991. In November 2006, Delano received conditional approval for a new, expanded Enterprise Zone that now includes all businesses within the City limits and some County unincorporated areas.

What have the Enterprise Zone benefits done to assist Delano?

The City of Delano’s Enterprise Zone Record Since 2000:

• Attracted five new businesses to Delano, providing a total of 1,710 new jobs
• Retained or expanded two businesses in Delano, saving 20 jobs
• Invested or committed to spend over $2.5 million for local infrastructure improvements to attract new businesses to Delano.
• Processed Hiring Tax Credit Vouchers for over 3,500 qualified employees
• Created a new Enterprise Zone. More than 1,200 Delano businesses are now eligible to receive the Hiring Tax Credit.

The major benefits of the Enterprise Zone program are the tax savings on California business income tax. These include:

• Sales or Use Tax Credit: A tax credit against the purchase of new manufacturing, assembly, data processing or communications equipment equivalent to the amount of sales or use tax, or up to $1.35 million annually.
• Hiring Tax Credit: A tax credit on up to 50 percent of the wages to qualified new employees over a five-year period (up to 50 percent in the first year, 40 percent in the second year, etc.). Effective January 1, 2008 the maximum credit will be over $37,000 per employee.
• Accelerated Depreciation Deduction: The option to accelerate depreciation on business property. A business may treat 40 percent of the cost of qualified property as a business expense in the first year it is placed into service for a maximum deduction of $20,000 per year, whichever is smaller.
• Loss Carry Forward: All net operating losses may be carried forward as a deduction for fifteen years.
• Net Interest Deduction for Lenders: Allows lenders a deduction on the net interest earned from loans made to Enterprise Zone businesses. Qualified loans include business loans, mortgages and loans from noncommercial sources.
• Preference on State Contracts: Enterprise Zone businesses receive special points when bidding on State contracts.

Other advantages include:

• One stop, expedited permit process
• Career Services Center provides free job referral service that helps employers find qualified employees whose wages can be claimed as tax credits
• Access to business and technical assistance programs
• Access to specialized technical and financial assistance programs
• The Enterprise Zone pursues state and federal grants to benefit Enterprise Zone businesses
• The Career Services Center provides convenient Hiring Tax Credit Voucher processing

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 Tax Foundation‘s 2009 State Business Tax Climate Index has ranked the stat of California number 48 out of 50 states nationally.  At first glance this appears to be extremely negative.  However, the main reason why businesses in California have higher tax rates is mainly due to the fact that they are not taking advantage of the myriad of tax credit options they have available.  Below are some of the credits we can help you receive:

• EMPLOYER HIRING CREDITS
• SALES and USE TAX CREDITS
• BUSINESS EXPENSE DEDUCTION
• NET INTEREST DEDUCTION
• NET OPERATING LOSS CARRYOVER
• DEPARTMENT of WATER and POWER RATE DISCOUNT
• SITE PLAN REVIEW and FEE WAIVER
• SEWER FACILITY CHARGE EXTENDED PAYMENT OPTION
• REDUCED PARKING ORDINANCE
• WORK OPPORTUNITY TAX CREDIT

Here at C & I Tax, along with assisting accountants and companies in taking full advantage of the California EZ Tax Credits, we also feel it is our duty to spread the message of how much potential there really is for businesses that utilize these credits.  This past Friday we posted a feature article on the Santa Clarita Enterprise Zone (coverage), and Carol Rock from KHTS had this to say about EZ Zones,

“What the city discovered was that their guests were unaware of the zone designation or were unable to promote it properly. On the up side, Beiry said they have heard from businesses in the San Fernando Valley that will only locate to other enterprise zones, a plus for their economic development efforts.”

Santa Clarita Mayor Bob Kellar had this to say about Enterprise Zones, “We have a business friendly City Council and government that does not require a business license fee, does not assess a utility user tax, and offers an Enterprise Zone for even more tax savings incentives to businesses. Santa Clarita is one of the few places in LA County where there is available space and let me clarify that with ‘attractive’ available space, not just some large plot of land out in the middle of the desert but real opportunities for infill projects, or with freeway frontage, and more.”

If you want to know more information about California Enterprise Zones, click here to contact us and let us assist you in taking full advantage of the tax credits available to you.

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.