Enterprise Zones

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California’s Sequoia Valley Enterprise Zone Formally Seeking Expansion

Thursday, April 5th, 2012

The Porterville City Council voted on Tuesday to join other stakehoders of California’s Sequoia Valley Enterprise Zone in seeking an expansion of the area’s econcomic development area.  Read about it in today’s article by Denise Madrid in the Porterville Recorder.

The city joined Tulare County and all of the incorporated cities that make up the Sequoia Valley Enterprise Zone, in their decision to expand the area by approximately 4,800 acres.

Now that the participating jurisdictions are in agreement, the request for an expansion will go before California’s Department of Housing and Community Development, the agency that oversees the state’s Enterprise Zone program.

The Sequoia Valley Enterprise Zone’s original designation was just recently approved in January.  See my previous post from January 2012.

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Finalized! CA Sequoia Valley Enterprise Zone Designation Completed

Wednesday, January 18th, 2012

The California Department of Housing and Community Development (HCD) announced Tuesday the final designation of the Sequoia Valley Enterprise Zone (EZ). This designation is effective retroactively to October 6, 2010 and will expire in 15 years. Read about it at The Recorder Online.

In September of last year, I reported on some controversy affecting this and eight other “conditionally” designated zones.  California Governor Jerry Brown’s office had instructed HCD to delay the final designation of these zones.  That order has since been retracted and the remaining designations are being processed.

According to the zone’s website, the Sequoia Valley EZ affects the California communities of Cutler/Orosi Dinuba, Ducor, Earlimart, Exeter, Farmersville, Goshen, Ivanhoe, Lindsay, North Delano, Pixley, Poplar, Porterville, Richgrove, Strathmore, Terra Bella, Tipton, Traver, Tulare, Visalia, Woodlake.  However, if your business is located within any other part of Tulare County, don’t rule out eligibility until you have confirmed it with a phone call.

Businesses located within the EZ are eligible for a number of valuable tax incentives including:

EZ Hiring Credit
Firms can earn $37,440 or more in state tax credits for each qualified employee hired

EZ Sales & Use Tax Credit
Sales tax credits on purchases of qualified machinery and parts

Net Operating Loss Carry-forward
Up to 100% Net Operating Loss (NOL) carry-forward (which can be carried forward for 15 years)

EZ Business Expense Deduction
Up-front expensing of certain depreciable property

Net Interest Deduction
Lenders earn tax-free interest on qualifying loans to EZ businesses.

Bid Preferences
EZ vendors can earn preference points on state contracts.

Please feel welcome to contact me with your questions about the State of California’s EZ program, or about this or any other particular CA zone.  I am Vaughn Hromiko, vah@WOTCPlanet.com

 

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2012 Predictions for CA’s Enterprise Zone Program

Monday, January 2nd, 2012

It’s January 2, 2012 and so far, not a peep from the Governor’s office about destroying California’s best tax incentive program. So far, so good. Last year at this time, California was holding its breath in anticipation of Governor Jerry Brown’s 2011 budget proposal. Rumors had been leaked that the Governor’s budget would propose the elimination of the state’s Enterprise Zone program.

As it turned out, those rumors were true. A heated political debate ensued that lasted into the summer of 2011. In the end, the Enterprise Zone program was preserved without modifications. The program’s opponents could not muster the votes needed to pass their nefarious legislation.

Since that time, supporters of California’s enterprise zones, like Democratic Assemblyman V. Manuel Pérez, have been pursuing more constructive legislative changes. He was recently asked by The Desert Sun about his political predictions for 2012. Among other things,

Pérez . . . predicts reforms to the state enterprise zone process, “resulting in a more accountable, transparent economic development program serving our neediest communities.”

I hope Assemblyman Pérez is right in his prediction. Reasonable changes that make the program more transparent and effective might also contribute to its continued political stability.

The Governor’s office has directed the Department of Housing and Community Development (HCD) to evaluate potential regulatory changes to the way the enterprise zone program is run. A regulatory approach will not permit the draconian revamping proposed by the Governor in 2011 . . . and might actually produce something beneficial. In any case, HCD’s evaluation appears to still be in a very early phase.

Based on my personal experience with the last set of regulations prepared by HCD for the Enterprise Zone program, it will probably be a year or more before anything concrete is ready. Prove me wrong, HCD. I’m cheering for Assemblyman Pérez to get something decent through the California legislature first.

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Grumpy Governor Obstructing CA Enterprise Zone Designations

Saturday, September 3rd, 2011

Denise Madrid of The Porterville Recorder summarized a provocative situation faced by up to nine “conditionally” designated California enterprise zones. Govern Jerry Brown’s office had directed California’s Department of Housing and Community Development (HCD), the bureaucracy that oversees the state’s EZ program, to drive with its brakes on.

Conditional-designation status is a normal phase in the lifespan of every new enterprise zone. Nine of the state’s 42 legally designated enterprise zones remain in limbo, however, as HCD delays action required to finalize their status.

The Sequoia Valley EZ, which includes Porterville, Lindsay, Exeter, Visalia, Tulare, Farmersville, Woodlake, and Dinuba and other parts of Tulare County, received its conditional designation status in 2009.

According to The Porterville Recorder,

“Linda Wammack, Porterville development associate, said that the city has learned the HCD is not issuing any final designations at the direction of the governor’s office.”

Wammack said there are nine jurisdictions in a conditionally designated status, two of which have been conditionally designated since 2007, four since 2009, and three since 2010.

“We’re all in limbo,” she said. “We’re all trying to come together for the governor to allow HCD to authorize our documents.”

Now, I don’t really know if Governor Brown is feeling grumpy about all this or not.  It was just this past January that he proposed eliminating the state’s enterprise zone program completely.  He lost that political battle . . .  maybe he just needs more time to get over it.

 

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Reader’s Question About Washington DC Empowerment Zone

Wednesday, July 27th, 2011

Someone asked me recently (1) if the District of Columbia enterprise zone is considered to be a federal empowerment zone and (2) if all residents of the District of Columbia would be eligible employees for purposes of the empowerment zone employment credit.

There are ways in which the Washington DC zone is not exactly like other empowerment zones.  For purposes of the empowerment zone employment credit, however, it’s a relatively simple concept.

The instructions to IRS Form 8844 “Empowerment Zone and Renewal Community Employment Credit,” are relatively (cough couch) clear.

Under [Internal Revenue Code] section 1400, parts of Washington, DC, are treated as an empowerment zone. For details, use the RC/EZ/EC Address Locator at www.hud.gov/crlocator or see Notice 98-57, on page 9 of Internal Revenue Bulletin 1998-47 at www.irs.gov/pub/irs-irbs/irb98-47.pdf.

I read the relevant section of IRS Bulletin 1998-47 as suggested.  It confirms that parts of the District of Columbia are to be treated as an Empowerment Zone.  However, the bulletin is not helpful to the average person who wants to find out the boundaries of the zone . . . or discover if their businesses is eligible.  Just use the HUD address locator.

The IRS instructions to Form 8844 go on to define a “Qualified empowerment zone employee” as a full or part-time employee who:

(1) Performs substantially all of the services for that employer within an empowerment zone in the employer’s trade or business and

(2) Has his or her principal residence within that empowerment zone while performing those services

The rules for the Washington DC zone, however, differ as to point number 2. 

Employees who work in the Washington, DC, empowerment zone may live anywhere in the District of Columbia.

I hope that’s helpful.  If any reader has additional information to clarify the nature of the Washington zone, I will be happy to considering posting it here.  Send me a note, or post a comment, with your sources.

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CA San Bernardino Valley Enterprise Zone Having a Wiz-Bang Year!

Thursday, July 21st, 2011

According to an article published today in the Highland Community News, the San Bernardino Valley Enterprise zones is already at the brink of certifying more qualifying employees to date this year than it did during the entire year of 2010.

CA San Bernardino EZ

This is, of course, in reference to the program’s state hiring credit, which provides state tax reduction for employers that pay eligible employees to work within the boundaries of a CA enterprise zone.

In 2010, the SBVEZ certified 2,300 eligible employees for 182 employers. So far in 2011, the zone has received more than 2,000 employee applications from 145 employers. Easy to see that last year’s record will be easily beaten.

Accountants, payroll service providers, and other professional service firms with clients in the San Bernardino Valley would be wise to investigate the enterprise zone’s benefits. I can help . . . if you have questions please feel welcome to contact me. Vaughn Hromiko, vah@WOTCPlanet.com

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Expansion of the CA Coachella Enterprise Zone in Indio – 141.5 Acres Worth

Wednesday, July 20th, 2011

From City of Indio Website www.indio.org

KPSP Local 2 News reports today that the California Department of Housing and Community Development (HCD) has approved a 141.5 acre expansion of the Coachella Valley Enterprise Zone.

Good for them!

California’s enterprise zone program offers a hiring credit based on wages paid to qualifying employees.  Businesses investing in manufacturing and other qualifying equipment for use with the zone may also receive an income tax credit equal to the amount of sales or use tax paid in the acquisition.

Other benefits include the net interest deduction for lenders who offer credit to enterprise zone businesses and a relatively small business expense deduction for qualifying asset purchases.

 

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Salinas Valley Enterprise Zone Expanding to Castroville

Wednesday, July 20th, 2011

Central Coast News posted a short TV KION 46 news story yesterday about the expansion of the Salinas Valley Enterprise Zone.

The zone will now include Highway 183 and parts of Castroville. Read the story here.

An interesting  juxtaposition . . .  when you consider that California’s enterprise zone program just recently narrowly escaped being “reformed” out of existence.

The Salinas Valley Enterprise zone now includes parts of Castroville, Salinas, Gonzales, Soledad, Greenfield and King City with the County of Monterey.  Businesses interested in exploring possible tax benefits within the enterprise zones should visit the zone’s website at http://www.salinasvalleyez.com/. 

Please feel welcome to contact me with your questions.  Vaughn Hromiko,  vah@WOTCPlanet.com.

 

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CA Enterprise Zones Safe – New Positive Reforms In Play

Wednesday, July 6th, 2011

Most Californians are aware, if at least only vaguely, that our politicians finalized the state’s budget for the year and that Governor Jerry Brown has indeed signed off. That’s last week’s news. Many of us, I am sure, would have appreciated the option of being less aware as it was happening.

Now that all of California’s financial and economic problems have been solved, we can merrily focus on other more important things. Or not.

At least one thing of definite positive value emerged from the budget battle this year – the California Enterprise Zone program has been retained fully intact. It survived because as a substantive tax issue, any meaningful change would have required the agreement of at least two-thirds of California’s state legislators.

There is a bill (AB 1411) working its way through the legislature at this time that offers meaningful but non-tax related reform to Enterprise Zone program. Unlike the Governor’s previous proposals, this new bill can be passed by a simple majority vote – but it won’t harm enterprise zone businesses.

AB 1411, offered by Enterprise Zone supporter, Assemblymember V. Manuel Pérez (D-Coachella), seeks to increase the transparency and accountability of the program overall.

“The Enterprise Zone program is an effective tool for local economic development and job creation, and the reforms in this bill will help to better tell that story,” said Pérez. “These reforms have been in the making for quite some time, and I’m pleased to be moving forward with them.”

Read more about it in The Imperial Valley News, online.

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Waiting for Governor to Sign – New Budget Does Not Touch CA EZ Program

Wednesday, June 29th, 2011

The budget deal passed by the California legislature yesterday does NOT include measures to modify the state’s enterprise zone program. We’ll report more AFTER the governor signs the legislation approving the budget.  Final passage is expected since the budget deal was worked out between Governor Brown and his fellow Democrats in the legislature, without Republican support.

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