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Friday, Mar 29, 2024

Benefits For Businesses in Expanded Enterprise Zone

To say that Universal Framing CEO Jon Bromberg hesitated to move the business out of Sylmar would be an understatement. By keeping the company there, in a designated enterprise zone, thousands upon thousands of dollars could be saved. “We didn’t want to move out of the enterprise zone,” Bromberg said. But staying put proved impossible. “Our business was growing and we were in three facilities and we needed a larger building,” he said. Accordingly, in 2005, Universal Framing moved from its 50,000-square-foot building in Sylmar to an 80,000-square-foot building in Santa Clarita. Because of the move, the company, which imports and distributes picture frame moulding, missed out on the tax credits it qualified for at its former locale. “We saved money on our electric and water bills,” Bromberg recalled. “We took advantage of the hiring credit. We derived a credit of over six figures on our state taxes.” Now, Universal Framing can begin saving again, as the start of July brought with it a major reversal of fortune for the company: the City of Santa Clarita became an enterprise zone. “It’s a tremendous bit of luck,” Bromberg said. “The benefit of the enterprise zone starting obviously has a large impact.” Bromberg plans to take advantage of any credits for which the company qualifies. But, astonishingly, other businesses in enterprise zones consistently fail to obtain the tax credits available to them. “Enterprise zones have been around since 1986,” said Jeani Brent, an esquire attorney who formerly worked for the California State Franchise Tax Board and now works as a tax consultant for PricewaterhouseCoopers. “Many of the businesses had been in zones for 10, 15 years and had no knowledge of it, and then they get a tax consultant saying, ‘we can find you hundreds of thousands, if not millions, and the government is going to give you the money.’ The business owners are going, ‘What? Are you crazy?'” Armando Jamjian estimates that fewer than 20 percent of businesses take advantage of the benefits, which include an employer hiring credit, sales- and use-tax credits, net interest deductions for lenders, a DWP electric discount rate, a sewer facility charge exemption and a reduced parking ordinance. “They’re not educated on the fact that there are credits out there, or they think they don’t qualify for them,” he said. “They’re skeptical they can get credits like these.” Jamjian estimates that he helped one such skeptical business owner save more than $2.5 million.

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