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Home My WebLink About55A - RESO ENTERPRISE ZONEREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: NOVEMBER 5, 2007 TITLE: RESOLUTION APPROVING AND AUTHORIZING THE SUBMITTAL OF THE CITY OF SANTA ANA'S ENTERPRISE ZONE APPLICATION CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ^ As Recommended ^ As Amended ^ Ordinance on 15' Reading ^ Ordinance on 2"d Reading ^ Implementing Resolution ^ Set Public Hearing For_ CONTINUED TO FILE NUMBER 1. Adopt a resolution supporting and authorizing the application for an Enterprise Zone. 2. Authorize the Executive Director of the Community Development Agency to prepare and submit an application to the State of California, Housing & Community Development Department for Enterprise Zone designation. DISCUSSION Santa Ana is engaged in the task of completing an Application for Designation as an Enterprise Zone that is due to be filed with the California Housing and Community Development (HCD) Department by November 16, 2007. HCD has a Request for Proposals (RFP) for new applications by local governments to be designated as Enterprise Zones (EZs). They have done so because eight EZs expire in 2008. The EZ Program is intended to provide state and local incentives for businesses to invest and locate in economically distressed areas of California. State law currently authorizes forty-two enterprise zones in California. In addition, the law allows existing zones to expand up to fifteen percent in geographic size. The legislative purpose of the EZ Program is to "stimulate business and industrial growth in the depressed areas of the State." The other purposes are to establish a program "to help attract business and industry to the state, to help retain and expand existing state business and industry, and to create increased job opportunities for all Californians." 55A-1 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 Resolution Approving and Authorizing the Submittal of Enterprise Zone Application November 5, 2007 Page 3 designation as an EZ is needed in order to attract private sector investment to the application area. In addition, we must demonstrate our commitment to and support for economic development in the area and provide adequate staffing. FISCAL IMPACT There is no fiscal impact associated with this action. Stephen G. rding Deputy City Manager for Development Services Community Development Agency SGH/CWD/mlr H:\ACTION ITEMS\COUNCIL\2007 CC\ResoSubmissionApp EZ 11-5-07.doc 55A-3 LCP 11/05/07 RESOLUTION NO. 2007- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING AND AUTHORIZING THE SUBMITTAL OF THE CITY OF SANTA ANA'S ENTERPRISE ZONE APPLICATION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The City Council hereby finds, determines and declares as follows: A. The City of Santa Ana ("City") wishes to be designated as an Enterprise Zone by the California Housing and Community Development Department (HCD) that oversees the Enterprise Tax Incentives Program whose goal is to stimulate growth in economically depressed areas of the State. B. The application area has a history of high unemployment and low income. C. The City has initiated an aggressive economic development program to stimulate an employment base for Santa Ana residents. D. The City has coordinated activities and implemented programs to market the Enterprise Zone and is committed to continuing said efforts. E. The City Council authorizes and supports efforts for job development, job creation, and economic development. F. The City's application area is a depressed area and that the designation of the application area as an enterprise zone is necessary in order to attract private sector investment to the application area. G. The City has jurisdiction over the application area of the proposed Enterprise Zone. H. The City Council has reviewed, determined and authorized that the proposed area for the Enterprise Zone is acceptable and appropriate. Section 2. The City Council hereby finds, determines, declares and authorizes that upon final designation: A. Staffing shall be made available to maintain record-keeping, monthly updates on zone activities, and to discuss these with program auditors. B. Aself-evaluation process shall be developed to measure the City's progress in meeting its goals and objectives that shall be submitted to the HCD for review, approval Resolution No. 2007-_ 55A-4 LCP 11/05/07 and inclusion in the Memorandum of Understanding (MOU) between HCD and the City prior to Final Designation. C. The City Council agrees to complete all actions stated within the application that apply to its jurisdiction should the proposed enterprise zone in the application be awarded a Designation. Section 3. The City Council deems the Deputy City Manager for Development Services as the Contact Person on behalf of the City. The City Council hereby directs and authorizes the Deputy City Manager for Development Services or their designee, on behalf of the City, to sign the application and execute all documents, Memoranda of Understanding, and instruments necessary or appropriate for implementation of the Enterprise Zone. Section 4. The City Council hereby approves and authorizes the submittal of the application, which includes an Enterprise Zone area in the City, to be filed with HCD. Section 5. The City Council hereby approves and adopts the proposed boundary of the proposed Enterprise Zone that has been presented on this day and that shall be included in the application, said boundary established in accordance and in compliance with census tract data and eligibility criteria set forth in HCD's request for proposals. Section 6. This Resolution shall take effect from and after its adoption. ADOPTED this day of November 2007. Miguel Pulido Mayor APPROVED AS TO FORM: Joseph W. Fletcher, Agency General Counsel By: Lorena C. Penaloza Assistant City Attorney Resolution No. 2007- 55A-5 LCP 11/05/07 AYES: Council members NOES: Council members ABSTAIN: Council members NOT PRESENT: Council members CERTIFICATE OF ATTESTATION AND ORIGINALITY I, PATRICIA E. HEALY, Clerk of the Council, do hereby attest to and certify the attached Resolution No. 2007-XXX to be the original resolution adopted by the City Council of the City of Santa Ana on November 5, 2007. Date: Clerk of the Council City of Santa Ana Resolution No. 2007-_ 55A-6