Helping to grow jobs and improve California's business climate, the California Department of Housing and Community Development recently announced the conditional designation for five Enterprise Zones statewide. The zones are Hesperia, Tulare, Pittsburg, Sacramento and Taft.

"California Enterprise Zones give communities a chance to develop their economic potential, improve their quality of life and contribute to the state's economy.  Enterprise Zones are part of the Administration's ongoing efforts to increase the number of jobs through state and local incentives," said HCD Director Lynn L. Jacobs.

The California Enterprise Zone Program targets economically distressed areas using special state and local incentives to promote business investment and job creation.  By encouraging entrepreneurship and employer growth, the program strives to create and sustain economic expansion in California communities. 
The new designations will take the place of the zones set out in statute which expired or will expire in 2009. Each zone designation is in effect for 15 years.

Businesses within Enterprise Zones are eligible for substantial tax credits and benefits, for example:
§ Firms can earn $37,440 or more in state tax credits for each qualified employee hired.

§ Corporations can earn sales tax credits on purchases of $20 million per year of qualified machinery and machinery parts.
§ Up-front expensing of certain depreciable property.
§ Lenders to Zone businesses may receive a net interest deduction.
§ Unused tax credits can be applied to future tax years, stretching out the benefit of the initial investment.
§ Enterprise Zone companies can earn preference points on state contracts.
§ Up to 100% Net Operating Loss (NOL) carry-forward. NOL may be carried forward 15 years.

In 2006, HCD commissioned a report that evaluated the success of Enterprise Zones in spurring economic recovery. The report shows that, on average, within Enterprise Zones between 1990 -2000:
§ Poverty rates declined 7.35 percent more than the rest of the state.

§ Unemployment rates declined 1.2 percent more than the rest of the state.
§ Household incomes increased 7.1 percent more than the rest of the state.
§ Wage and salary income increased 3.5 percent more than the rest of the state.

The next step in the designation process will be the HCD issuance of a conditional designation letter to each of the new zones.  The letters will outline conditions which must be met to be granted final designation.