55A - RESO ENTERPRISE ZONE - Laserfiche WebLink

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Resolution Approving and Authorizing the Submittal of Enterprise Zone Application November 5, 2007 Page 2 Essentially, EZs are competitively designated based upon distress criteria (primarily poverty and unemployment levels) and the local government's capacity to carry out an economic development program. They must provide additional local incentives, and the EZs are designated for 15 years. The benefits of being in an EZ are that businesses located within an EZ may receive individual or corporate state tax incentives. Businesses can also receive local incentives, including local regulatory relief. EZ state tax benefits include the following: • Credit for hiring certain disadvantaged individuals; qualified hires must fall within one of 14 categories, including economically disadvantaged, dislocated workers, veterans, or individuals receiving public assistance. Credits are fifty percent for the first year of wages, forty percent of second year wages, thirty percent of third year wages, twenty percent of fourth year wages, and ten percent of fifth year wages. The maximum credit is about $35,000 per qualified hire over a five-year period. • Net operating losses - one hundred percent of losses can be carried over for 15 years. • Credit for sales/use tax paid on the first $1 million in purchases (for individuals) or first $20 million (for corporations). • Business expense deduction - forty percent of property costs (personal property, equipment, furnishings) can qualify as a business expense, rather than as a capital expense subject to depreciation. • Net interest deduction for lenders, based upon the net interest received from loans made to EZ businesses. Our jurisdiction is working with Snodgrass & Micheli, LLC and Tassa Consulting Group, LLC to prepare the Application for an EZ Designation. The proposed geographic boundaries include the City of Santa Ana and the proposed EZ includes approximately 10,447 acres. In this resolution, the Council must adopt the boundary proposed for the new EZ, which is based upon census tract data and meeting specified eligibility criteria set forth in HCD's request for proposals. Additionally, the first year budget is provided in line-item form, which is also required by HCD as part of the application process. The resolution also makes specified findings concerning the application area, essentially that this area is an economically depressed area and 55A-2