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.

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.

Today I attended the second of three hearings related to AB1139. The hearing focused on the Enterprise Zones and innovation. Assemblyman Manuel Perez, as head of the JEDE, presided over the hearing. Assemblyman John Perez, AB1139’s author was also present for the first part of the hearing and stated that his two main concerns were getting rid of the TEA criteria and getting rid of retroactive vouchering. His stated reason for wanting to delete the TEA criteria was not persuasive. He did not cite to any concrete numbers or even rough statistics, but in a general baby-out-with-the-bathwater stroke suggested that “some” employees who live in expensive lofts are qualifying for the credit because some nicer areas of Oakland, Long Beach and San Francisco are within the TEA. On that basis, he concluded that the TEA category must go.

There was some very persuasive commentary by proponents of the EZ, and particularly some truly amazing real life stories from businesses who said that but for the EZ, they would not be in business today. Interestingly, those employers are hiring the types of employees and providing the types of benefits that the EZ program was designed to accomplish. More on today’s hearing next week.

The next AB 1139 hearing is October 19 in San Diego.

Here’s an email I received from CAEZ president Craig Johnson about the two new hearings.

Dear CAEZ Members and Friends of CAEZ,

The Speaker of the Assembly has approved two additional Enterprise Zone hearings for the Assembly Committee on Jobs, Economic Development and the Economy. The first is scheduled for October 8 in the Bay Area and the second will be held October 14 in Southern California. Each of the two hearings will have different topics, unknown to us at this time, as is the exact location of the hearings.

Your CAEZ leadership will be meeting with the Enterprise Zone Coalition to discuss strategy and potential speakers, once we know the topics to be discussed and the hearing format. If any of you are available to attend one or both of these hearings, there will be a public comment period where the public is encouraged to speak on any topic related to the Enterprise Zone program. It would serve CAEZ and the EZ program well, to have as many public comment speakers as possible speaking in support of the program. Your active participation in this process is critical to the continued success of the EZ program.

I will keep you apprised as more information is released.

Thank you for your continued support of CAEZ and the Enterprise Zone Program.

CRAIG JOHNSON
President
California Association of Enterprise Zones

In what was mostly a redux of the AB1139 hearings a few months ago, the JEDE held the first in what will likely be a series of hearings relating to AB1139. Being pushed hard by the unions, AB1139 is set for vote by the Committee in January 2010. The Committee heard testimony from the usual players. Proponents of the Enterprise Zone program seem to have the upper hand in the presentations by presenting lucid, relevant data and testimony illuminating the EZ benefits. Opponents seemed to repeat the same talking points that have held little traction over the past year with legislators. At one point, a union representative began to berate the EZ consultants prompting Committee Chair Perez to sternly talk him down and ordered him to stick to the facts of his presentation. Over the next few weeks, I will post several of the articles and studies from the hearing as we gear up for more hearings and the eventual vote in January. Below is the Committee’s statement about its goal in examining the EZ program:

The Assembly Committee on Jobs, Economic Development, and the Economy (JEDE) is initiating a comprehensive examination of the California Enterprise Zone Program and the other state programs related to geographically-targeted economic development areas (G-TEDAs).

It is the Committee’s objective in undertaking this review to provide Members of the Legislature and the public with a more comprehensive understanding of where the state’s resources are being expended and the value these types of expenditures have for local communities. Given the current state of the economy, it is imperative that the Legislature ensure that economic and workforce development programs are best used to meet the immediate and longer term economic recovery needs of the state.

The Committee currently plans to hold three public hearings between August 18 and October 17, 2009. Stakeholder meetings are planned for the latter part of October and possibly into early November 2009. A reform proposal is expected to be sent to the Office of the California State Legislative Counsel in early November 2009. Copies of draft amendments will be available through the JEDE Office in early December 2009. Legislation arising from these hearings will, most likely, be heard in the first two weeks of January 2010.