I wanted to tell you about an amazing new subsidy available for all San Francisco employers. It provides SF employers with a 100% subsidy for wages paid to qualified employees. This means that the employer receives reimbursement for 100% of the wages (excluding payroll taxes) paid to qualified employees. To qualify, an employee must be a SF resident with a minor child and a family income of less than 200% of the federal poverty level in the last 30 days(typically $3,000 per month for a family of 3). Someone who lost their job more than a month ago is eligible as is anyone who is currently employed but working less than 25 hours per week.

This credit is only available until September 30, 2010 so don’t wait if you think you have qualified employees. Click here to download the letter we received from the Mayor’s office and a link to the SF Human Services Agency website for an Employer Application http://www.sfhsa.org/1410.htm.

So far, the highlights of the show have been new HCD Branch Chief John Nun. He roused the crowd yesterday with his opening remarks focused on making the EZ program more transparent and efficient. He informed the audience that his job duties are focused exclusively on the EZ program. He has increased his staff by two members. Each staff member will be assigned to a number of zones that they will be responsible for and in fact intend to visit. John’s on hand’s approach was widely welcomed and highly praised by the audience and by CAEZ President Craig Johnson who gave his own rousing rally-the-troops speech this morning. The theme of these two speakers was the word “unprecedented” which Johnson had the audience recite with him. From lobbying, to public relations to statutory review and close collaboration with HCD, the CAEZ is taking shape and taking charge like never before. Yolanda Benson and Toni Symonds gave insightful presentations regarding current legislation, including AB 1139 and the schedule for the next few months. The legislative discussion seemed to come full circle to Johnson’s message that the audience get involved and continue to the wave of activism that is taking the EZ program to a whole new level.

After three very intense hearings, the JEDE committee has issued a list of all the recommendations for revision to the Enterprise Zone program. Final comments are due by November 6. The new draft of AB1139 should be out by November 10. At that time, we’ll know what are the next steps for the anti-business, anti-employee bill AB1139.

The thriving metropolis of Los Angeles has three State Enterprise Zones as well as a Federal Empowerment Zone and a Renewal Community designation. Within these areas, businesses can take advantage of State and/or Federal tax credits and deductions not available to businesses elsewhere. The goal of the incentives is to stimulate business attraction, growth, and increased employment opportunities within economically challenged areas of the City.

Enterprise Zones assist businesses located in the zones to lower their operating costs by providing them with tax credits and deductions. The state offers incentives such as: hiring credits, sales & use tax credits, expense and interest deductions. The City of Los Angeles offers local incentives such as, DWP rate discount, site fee waivers, sewer facility hookup payment plans, Work Opportunity Tax Credit, and reduced parking rates.

The Los Angeles Enterprise Zone was conditionally designated by the State on October 15, 2006. When the designation becomes permanent it will be valid for 15 years. In addition, the Eastside State Enterprise Zone designation is valid through January 10, 2008, and the Harbor Zone through March 3, 2009

EMPLOYER HIRING CREDITS
Up to $37,440 over a 5-year period per each qualified employee can be claimed by an Enterprise Zone business as a tax credit. An employee can qualify under any one of 13 different categories.

SALES and USE TAX CREDITS
An Enterprise Zone business can receive a tax credit of 100% of the sales/use tax paid for equipment purchases for use in the zone. Machinery, machinery parts, telecommunications equipment and office equipment such as copiers, printers, fax machines and telephone systems also qualify.

BUSINESS EXPENSE DEDUCTION
An accelerated depreciation is available for tangible personal property the first year it is placed in service in an Enterprise Zone. Office supplies and inventory do not qualify. Limits: $20,000.

NET INTEREST DEDUCTION
Lenders can earn tax-free interest on loans made to Enterprise Zone businesses.

NET OPERATING LOSS CARRYOVER
100% of Net Operating Losses may be carried forward for 15 years to reduce the amount of taxable income for those years.

DEPARTMENT of WATER and POWER RATE DISCOUNT
The Department of Water and Power offers a five-year electric rate discount to new businesses that are moving into the zone and apply within 18 months for the discount. Existing businesses whose energy consumption in the 6-month period before the date of application was at least 35% greater than the monthly average in the prior 12 months also qualify.

SITE PLAN REVIEW and FEE WAIVER
The City provides a fee waiver for review of commercial or industrial architectural plans for projects of 40,000 square feet or greater located in an Enterprise Zone during an initial application for a site plan review.

SEWER FACILITY CHARGE EXTENDED PAYMENT OPTION
The City allows Enterprise Zone businesses qualify for a one-time lump sum payment exemption if the Sewer Facility Charge is over $17,000. The fee can be paid in installments over five years but interest is payable on any unpaid balance.

REDUCED PARKING ORDINANCE
This ordinance provides reduced parking requirements for Enterprise Zone businesses compared with other areas of the City.

WORK OPPORTUNITY TAX CREDIT (WOTC)
The Work Opportunity Tax Credit (WOTC) has been IMPROVED! The WOTC program is now good through 2011. Now any business anywhere can qualify for the credits as long as they hire persons between the ages of 18-39 who reside in either the Federal Empowerment Zone (EZ) or the Federal Renewal Community (RC) area. Los Angeles contains both an EZ and an RC. There are eight (8) additional eligibility categories, some of which are not dependent on the employee’s address. The WOTC hiring credit is worth up to $2,400 per year for each eligible hire.

San Diego has a rich history of business success and innovation, and it is also home to companies that are constantly visible on the national level.

Aside from the normal benefits that operating a business in one of the State’s California Enterprise have, such as:

• Tax credits may be claimed on up to half the wages paid to qualified new employees.
• Tax credits may be claimed for sales taxes paid on equipment purchased for manufacturing or production purposes.
• All net operating losses may be carried forward as a deduction in future years.
• Business equipment depreciation can be accelerated, up to a limited amount.
• Low-income employees can claim their own personal income tax credits.
• The state will give priority for Industrial Development Bond applications.
• Lenders (both commercial and private) may deduct net interest income on loans to Enterprise Zone businesses.

Running a business in San Diego also has additional benefits, such as:

• The Enterprise Zone Job Referral Service will assist with recruitment and pre-screening for new employees at no cost and will provide the necessary verification for you to claim tax credits on their wages.
• City staff can expedite permit applications and serve as liaison with other City departments.
  Certain development fees may be reduced or waived.
• New development projects located in the City’s Enterprise Zones are eligible for direct assistance by the City. Assistance includes help in determining project application requirements, fast track permit processing, liaison help in the development process.
• The City can provide an exemption from urban impact fees and housing trust fund fees.

It appears that the city of Salinas is going to get a boost from Green Vehicles, a San Jose electric car manufacturer. Despite being known up until this point primarily for its agricultural development, Salinas is now starting to branch out into additional industries.

The plant is scheduled to open in Salinas sometime at the beginning of 2010. Green Vehicles will take fill the 80,000 square foot facility previously occupied by Firestone Tire and Rubber Co.

I have not yet heard directly from Green Vehicles on the company’s reasons for creating operations in Salinas, however the Salinas Valley’s Enterprise Zone designation most likely played a strong role in the decision making process. With numerous tax benefits supplied by the EZ program, Green Vehicles is sure to be rewarded with state tax savings for their location decision.

News coming out of Stockton this week reveals the perspective of the SBA Chief, Jim O’Neal. At the Stockton Summit, O’Neal discussed the opportunities and challenges that the economy offers small businesses in California. Despite the fact that there are quite a few difficult obstacles such as: lower consumer spending and hesitant banks; there are also a number of opportunites that businesses can take advantage of. Some of the keys that O’Neal discussed were:

• A rich workforce to pull employees from
• Lowered prices for inventory
• Lower real estate costs

In addition to these helpful benefits, companies can also take advantage of their local enterprise zone program, which could be saving your company a considerable portion of the your tax expenditures. Contact us today if you are interested in seeing what the state has allocated to you.

Gov. Arnold Schwarzenegger has vetoed all six bills designated by the California Chamber of Commerce as “job killers,” the chamber announced Monday.

Schwarzenegger also signed into law a chamber-designated “job creator” bill that will reinstate air quality permits for hundreds of construction projects in the Los Angeles region.

The six vetoes uphold Schwarzenegger’s tradition of rejecting job killer bills reaching his desk; since he took office, he has vetoed 53 out of 57 bills bearing the job-killer label.

“Governor Schwarzenegger understands that California business cannot withstand additional regulation at a time when we are struggling with economic recovery,” said Allan Zaremberg, chief executive of the state chamber. “Allowing these ‘job killer’ bills to become law would have further hampered hiring and hurt our state’s competitiveness.”

Among the bills vetoed were two that the chamber feared would increase business’ exposure to lawsuits: AB 793, which would have broadened the ability of employees to sue for discrimination; and SB 242, which would have imposed penalties on employers who failed to post signs or otherwise communicate with customers in additional languages.

Schwarzenegger also vetoed AB 943, which would have restricted the ability of employers to use credit reports in hiring decisions; as well as SB 789, which would have made it easier for farmworkers to gain union representation.

Also on the veto list were: AB 2, which would have allowed lawsuits over health insurers’ decisions to rescind coverage; and AB 1404, which would have limited the amount of pollution offsets businesses could use to meet their greenhouse gas emission reduction goals.

On the other side of the ledger, Schwarzenegger signed into law SB 827, which as of Jan. 1 reinstates permits that had been granted for hundreds of construction projects in Los Angeles, Orange, Riverside and San Bernardino counties. The South Coast Air Quality Management District permits were frozen by a judge as the result of a lawsuit filed by environmental groups challenging the district’s awarding of emission reduction credits at below-market costs.

Schwarzenegger had signed another “job creator” bill in July: AB 333, which extends the life of subdivision and parcel maps for two years; many of these development maps had been set to expire due to inactivity related to the state’s real estate crash.

The governor did sign A.B. 1383, which establishes a hospital provider fee, proceeds of which would help the state qualify for more Medicaid money from the federal government by being able to offer a larger state match. The bill authored by Assembymember Dave Jones, (D-Sacramento) was co-sponsored by California Hospital Association and two other hospital groups, but was opposed by the state chamber and some hospitals that do not serve many Medicaid patients.

Article from LA Business Journal

I attended Monday’s JEDE hearing only to hear more of the same arguments from the AB1139 opposition.  The primary opposition was once again from Labor and once again they just curtly referred to a scattering of old reports claiming that the EZ program doesn’t work.  On the contrary, the audience was filled with people from the private and public sectors beaming about the benefits of the EZ.  Several highlights were Lydia Moreno’s testimony about the effectiveness of the program and the companies who decided to stay in California because of the program.  Individual company representatives waited in line to tell their story and urge continued support and expansion of the EZ program.

Professor Samuel Bornstein, from Kean University School of Business, offered a keen remodel of the net interest deduction that he claimed could save the mortgage meltdown and cause the capital markets to function again.  The proposal was to allow lenders to claim the net interest deduction for residential loans made to small business owners who pulled money from their equity and invested it into their business.  Professor Bornstein cited statistics that many small business owners mortgaged their homes with toxic loans to fund their businesses.  Giving the lender a tax break will allow the lenders to renegotiate with the borrowers for lower monthly payments or lower principal to allow them to stay in business and keep their homes.  Several business owners testified that they could not have made it through the tough economic times without the Enterprise Zone program.

A revised 1139 should be ready by December and then open for discussion or vote in the JEDE committee by January 5, 2010.  Stay tuned.

Franchise Tax Board (FTB) today announced it has begun contacting more than 35,000 companies that did business in California in 2007, but failed to file a state tax return for that year. FTB annually reviews more than 5 million income records from government agencies and financial institutions, and matches them against tax records filed to determine whether some businesses have yet to file. As part of this annual effort, FTB collected approximately $31 million last year from businesses that failed to file tax returns.

Businesses contacted by FTB will have 30 days to file their delinquent tax return or show why one is not due. If no action is taken, FTB will issue a tax assessment that may include penalties and fees. With the state’s automatic seven-month extension, companies doing business in California are provided up to 10 and one half months to timely file their California state tax return.

Failure to file tax returns is one part of the tax gap that is defined as the difference between taxes owed and taxes paid. California estimates its annual tax gap to be $6.5 billion per year.

For those receiving notices, information is available by calling 866.204.7902. Callers should be prepared to provide the 15 digit notice number.