Outreach Program Formed to Keep Business in Valley By JACQUELINE FOX Staff Reporter Two Los Angeles County Supervisors are teaming up with the Economic Alliance of the San Fernando Valley to form a new outreach program to target business owners who, for a variety of reasons, may be contemplating a move out of the city or state. The action follows the recent formation by City Councilman Dennis Zine of a special committee on business retention, prompted by rumors that Boeing Co.’s Rocketdyne division in the West Valley is being wooed by Alabama state officials who’d like to see the company relocate there. Under the new outreach program, supervisors Mike Antonovich and Zev Yaroslavsky will partner with the Alliance’s Business Assistance Program (BAP) and hold weekly meetings with business owners who may be considering a move out of state to take advantage of tax incentives and other perks. Previously, BAP primarily helped companies when they came asking for assistance. The outreach program is supposed to take a more proactive approach. Now in its fourth year, BAP is an offshoot of a 20-year-old sister program run by the Los Angeles County Economic Development Corporation. BAP coordinates tax incentive programs for businesses across the Valley, but focuses heavily on those businesses operating inside the Valley’s designated enterprise zone, which encompasses most of Pacoima and Sunland. Any company operating in or moving to the enterprise zone is eligible for several state and local incentives. But although officials say there are roughly 2,000 businesses operating inside the enterprise zone, only about 200 of them are aware of it or what it means. As a result, many don’t know that they qualify for tax incentives that could help their businesses grow, include hiring credits, tax breaks for manufacturing equipment and even credits for expenditures on electricity. “Unfortunately we know that many businesses are not aware of the fact that they are in an enterprise zone,” said Alica DeCastro, director of the Valley Enterprise Zone. “We try to do outreach on our own by sending mailers to new companies and hosting seminars, but we still can’t get the word out to everyone. It’s a constant struggle.” Saul Gomez, the Alliance’s director of economic development said since its inception, BAP has saved or created an average of 17,000 jobs in the Valley a year, either through retention, attraction, relocation or expansion of a local business. Yet, the fact that so few business owners are aware of the incentives available to them makes them easy targets for out-of-state suitors hoping to build up specific industries. “The south has been very aggressive in offering incentives to local companies, particularly aerospace firms, because they have a shortage of those kinds of highly trained workers,” said Gomez. “Other states may hate California, but they sure love our companies.” Patti Friedman, Chatsworth-based field deputy for Antonovich said he and Yaroslavsky intend to join Alliance officials each Wednesday for meetings with targeted business owners, where they will be asked about their long-range plans for growth or any issues of concern with regard to doing business in Los Angeles. “Both of the supervisors are aware that, all across the state, large corporations are moving out and they want to work with the Alliance and BAP officials to pinpoint any problems that Valley businesses may be having, before we lose them,” said Friedman. “The goal is to retain as many businesses as possible within Los Angeles County, and whereever possible, keep those in the Valley in the Valley, because of its very strong and diverse employment bases. Losing them would have a tremendous economic impact on the city and county and the financial viability of the region.” Enterprise zone credits include: > Sales tax credits for machinery, computers, and telecommunications equipment. > A 6 percent Manufacturers’ Investment tax credit. > Up to $20,000 in credits for expansion costs made within the enterprise zone. > Hiring credits of up to $11,000 for each worker living within the enterprise zone or existing workers who receive on-the-job training for advancement purposes or to accommodate equipment upgrades. > Rate reductions from the Department of Water and Power for new and expanding businesses. Most of the credits are good for five years and are reduced each year until they run out. Still, they are significant. Learning about incentives Just ask Rob Grey, controller for Sun Valley based Pacific Sky Supply, Inc., which manufactures airplane engine parts and propellers, primarily for military transport planes. Established in 1954, Pacific found itself outgrowing its 25,000-square foot facility in 2001 and was considering a move to Georgia, where state officials were offering the company free land in exchange for relocating along with a host of other tax breaks, including hiring and training credits for new and existing workers. Gomez says news of Pacific’s plans to move out of state trickled down through word of mouth. When he got wind of their potential move, he says he quickly paid the company a visit. “I said to (Grey) ‘Do you know that you are in an enterprise zone?’ And he said ‘What’s that?'” said Gomez. According to Grey, enterprise zone incentives allowed the company to qualify for $320,000 in construction credits for a new 25,000 square-foot second floor. Other credits included reimbursements for salaries for 11 new employees and sales tax credits for a 10-year period including the five years preceding the expansion. “We had no idea what the enterprise zone was or that we were anywhere near it,” said Grey. “We only stumbled on it by accident. When we learned about what was on offer, we went to the city because we figured that someone must care about whether we stay or go. “There’s no doubt the (BAP) program has helped our company tremendously,” said Grey. “The credits on hiring covered about 60 percent of our additional labor costs, which was a very big number for us. And I would estimate that we got back about $320,000 in construction credits alone.” Grey said Pacific is now in the final approval phase for the DWP rate reduction program, hoping to offset increases in power usage resulting from the addition of new manufacturing equipment. “We are eligible for discounts based on our old rates and the increases, which, with all the new equipment in place, is at about a 40 percent jump in energy use,” Grey said.