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Friday, Jun 9, 2023

Santa Clarita Shines in State Enterprise Zone Competition

When officials last fall unveiled the state’s 23 new and renewed enterprise zones, a designation that provides businesses in the area with economic and tax incentives, it was assumed the winning communities would fit a certain profile: economically moribund; lots of available land; and too few good jobs. An example of such a community would be Pacoima, which for almost 20 years had a successful enterprise zone credited with bringing and keeping thousands of jobs and businesses in the northeastern Valley. So when the state passed up Pacoima and instead picked nearby Santa Clarita a more affluent city already home to a thriving business community it was a bombshell. Some questioned how Santa Clarita even qualified for the designation, since most enterprise zones are in economically challenged areas. But Dr. Dena Maloney, the dean of the Economic Development department at College of the Canyons, said the idea that an area has to be poor to receive an enterprise zone is not entirely true. In fact, there is little in the application process that says an area has to be economically deprived to qualify, she said. “I think that is the impression,” she said. “But although it is known as something that’s only for highly, highly distressed areas, that in fact is not the case.” Instead, Maloney, who helped author the application, said that the state takes various factors into consideration other than area income, such as recent plant shut downs, available financing and open properties. The city used that knowledge to their advantage and emphasized those details in their application. “There are a number of factors that make a city or a community or a region eligible,” Maloney said. “And Santa Clarita qualified.” In fact, the city scored the fourth highest points among the awarded areas, according to the state Housing and Community Development Department. On the other hand, state officials said that the Pacoima application, submitted by the Los Angeles Community Development Department, did not meet minimum standards. Eventually, and after aggressive lobbying from L.A. city officials including Mayor Antonio Villaraigosa, California Governor Arnold Schwarzenegger last month reversed course and reconfigured the Hollywood Enterprise Zone to include Pacoima, Sylmar, Arleta, Sun Valley and portions of North Hollywood and Van Nuys. Wayne Adelstein, president of the North Valley Regional Chamber of Commerce, said the renewal is a relief for area businesses. “This may save some jobs and businesses in the Valley,” he said. “As we look at our side here, by having the zone here in the Valley it becomes an option for them to look at.” Adelstein said there are no hard feelings about the Santa Clarita zone. He said the state is very clear about what types of communities qualify. “Enterprise zones aren’t approved willy-nilly,” he said. “They met the requirements or it wouldn’t have been approved.” Santa Clarita benefits Meantime, businesses in Santa Clarita are gearing up to benefit from the new designation, expected to go into effect within the next two months and last 15 years. Some 2,500 businesses on the zone’s 8,500 acres of commercial and industrial land are eligible to receive more than $31,000 in tax credits for each qualified employee, sales tax credits on machinery purchased of $20 million annually and preferred status on some state contracts. For now, many businesses are largely in the dark about how or even if they could benefit from the zone, said Kathy Norris, executive director of the Valley Industrial Association, which represents businesses in the Santa Clarita Valley. “We haven’t been educated about it quite yet,” she said. That will change, Norris said, as the city and VIA work together to get the word out. A meeting is scheduled this month. Already the new zone is credited with attracting attention from a number of new businesses, including an aerospace company and the Nebraska-based big box sporting goods retailer Cabela’s, said Paul Brotzman, director of community development for Santa Clarita. “The enterprise zone is of a great interest to them. They will often go to the municipalities for incentives to locate their facilities,” he said. Asked later whether upper-income, business-friendly Santa Clarita needed more business incentives, Brotzman was quick to point to Newhall, a neighborhood within city limits that he said has a cluster of underperforming businesses and lower-income residents. “That’s an area that clearly has a need for the employment opportunities we’re looking at creating,” he said. Plus, he added, new businesses in Santa Clarita created by the incentives will need employees, some of which will come from the San Fernando Valley. “On the other side of the Newhall Pass is Sylmar, and there’s huge needs for employment opportunity there,” he said. “If we’re able to put some new employment centers in Newhall, it’s a short hop.” Either way, the region benefits, he said. “The fact that Santa Clarita has been designated as an enterprise zone now offers us an incentive that we could provide to encourage them to look at the location,” he said. “It’s a big plus.” Santa Clarita Enterprise Zone Benefits – $30,000 or more in state tax credits per qualifying employee hired. – Sales and use tax credit on machinery. – Net operating loss carryover – Net interest deduction for lenders – Fast-track permitting – Development fee reductions or waivers – Assistance with job placement and employee recruitment Source: City of Santa Clarita

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