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Organizations Try to Salvage Valley Enterprise Zone

Business leaders and city officials have turned their attention to Sacramento in an effort to save a Northeast San Fernando Valley enterprise zone which helps provide financial incentives for business who locate there and employ local workers. The Northeast Valley Enterprise Zone risks losing its designation because it no longer meets the criteria of being zoned 51 percent for commercial and/or industrial use due to much residential development in the area over the years. The Los Angeles Community Development Department is preparing an application to the state to preserve the zone, which expires in October, but possibly at the expense of losing some businesses currently within its boundaries. “At best it would reduce the size of the zone to a fraction of what it currently is,” said Cliff Weiss, a senior management analyst with the department. “At worst we may not have a viable application area at all.” As the city moves ahead with the application, focus turns to a pending bill before the State Senate granting an additional two years to all enterprise zones in the state. With the additional time, it is easier to address the issues facing the enterprise zone rather than dealing hurriedly with it in a limited amount of time, said Roberto Barragan, president of the Valley Economic Development Center. The VEDC enlisted the help of the Valley Industry and Commerce Association and the Economic Alliance of the San Fernando Valley to come up with a strategy to save the enterprise zone. Los Angeles City Councilman Tony Cardenas, whose district includes the enterprise zone, is pushing for passage of the bill in the Senate. A priority is being placed on retaining the businesses in the enterprise zone that provide jobs for locals, said VICA President Brendan Huffman. “If we have to modify it, we have to modify it,” Huffman said of the zone’s boundaries. The Northeast Valley Enterprise Zone was created in 1986 and renewed in 2001. The boundaries take in much of Pacoima and portions of Sun Valley and Panorama City. Businesses within the boundaries are eligible for local tax incentives, the most popular being an employee tax credit of $31,000 per employee over a five-year period. Other incentives are a rebate on sales tax for certain equipment and parts purchases; a business expense deduction capped at $20,000; and a five-year subsidy from the L.A. Department of Water and Power. Currently, 165 businesses take advantage of the employee tax credit, Weiss said. Precision Dynamics Corp. and SDI Industries are among the zone’s largest employers Precision has 350 employees at its headquarters in San Fernando and a warehouse in Pacoima, while SDI, a consulting and design firm for the retail trades, has 200 employees in Pacoima, many of whom come from within a 20-mile radius. The credit is a positive factor that offsets some of the negative factors of doing business in California, said Mark Segal, Precision’s chief financial officer. “We’re trying to keep as many jobs here in California as possible,” Segal said. “That is our desire and this is something that helps us.” “There is some economic advantage; it does give a little breathing room,” added SDI Chairman Don DeSanctis. Worst-case scenario If legislative action does not come to the rescue and the enterprise zone loses its status in October, the employee tax credit remains as long as the business keeps the employee and the DWP subsidy continues as long as the business stays in the boundaries, Weiss said. Enterprise zones are recognized as a valuable recruitment and retention tool for economically depressed areas and provide jobs to local residents. The tax credits reduce costs which make a business more competitive. A competitive business is more likely to stay put, an important factor in a time when the Valley and other parts of Los Angeles face a shrinking amount of land available for manufacturing jobs. “If there are not places for businesses to operate that’s another thing that drives them away from the area,” said John Anderson, of California Manufacturing Technology Consultants. “Manufacturing jobs are typically on average much higher paying than retail or service industry jobs.” While the VEDC’s Barragan believes that the loss of the enterprise status would be a “deal breaker” for some businesses, DeSanctis said there were a lot of factors to take into consideration about moving a business and that sometimes one just needed to bite the bullet. Three times over the years he’s considered moving out of state and always stayed. He doesn’t want to leave Pacoima because so many of his employees come from the area. “What’s the matter with the state legislature? What’s their problem,” DeSanctis asked. “Are they mad at businesspeople?

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