Economic Development

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Enterprise Zone Tax Credits

 

 

 Selma Is Now Part of Enterprise Zone

             

California has established four types of economic development areas (EDAS) that have related tax incentives.  These include Enterprise Zones, Local Agency Military Base Recovery Areas, Manufacturing Enhancement Areas and The Targeted Tax Area.  EZs were established in California to provide tax incentives to businesses and allow private sector market forces to revive the local economy.  The program offers special tax incentives to entities and individuals located in selected EZ areas.

 

The City of Selma is now part of the Fresno County Regional Enterprise Zone that was recently designated by the State of California.  The zone includes the cities of Fowler, Firebaugh, Kerman, Mendota, Orange Cove, Parlier, San Joaquin, Sanger, Selma, and portions of the County of Fresno Building economic opportunities statewide Enterprise zones aid economically distressed areas by offering businesses substantial incentives if they locate or expand within a designated geographic area.  Enterprise zones reward businesses that hire local workers, encourage entrepreneurship, and diversify communities’ economic base. There are currently 42 zones in California—the maximum allowed by state law—and zone designations extend for either 15 or 20 years. 

   Incentives  include:

o Hiring credits of $30,000 or more for qualified employees.

o Sales tax credits of $20 million per year for purchasing machinery and parts.

o Tax deductions and up-front expensing of certain property.

o Assistance for banks that give zone businesses loans.

 

Linking Benefits and Incentives to the Greatest Need

 

Those zone applicants that demonstrated the greatest need and potential were awarded the status. The new designations take the place of 23 zones expiring over the next several months. In order to finalize the conditional designations, local city and county governments had to complete environmental impact reports and economic development plans, then sign a memorandum of understanding with the Department of Housing and Community Development (HCD). To help ensure that economic zones meet hiring and performance measures, the State intends to audit zones annually. State law requires audits every five years.  The success of enterprise zones in spurring economic recovery is well documented. A report released by HCD in August 2006 shows that from 1990-2000, compared to the rest of California, enterprise zones on average experienced:

o Poverty rates – 7.35 percent lower than the rest of the state.

o Household incomes – 7.1 percent higher.

o Salary income – 3.5 percent higher.

o Median rents – 2.3 percent higher.

 

A recent UC Davis study reports that California’s enterprise zones added nearly 300,000 jobs to California from 1992-2002, and that employment in the zones grew at almost double the rest of the state. This study also confirmed that the tax collections generated by enterprise zones are higher than their cost.

 

To learn more about incentives, eligibility , documentation, and how to register visit:

 Fresno County Regional Enterprise Zone

 

 

 

 

 

 

Copyright 2004 City of Selma, California  ALL RIGHTS RESERVED