CITY BIDS TO BE FOREIGN TRADE ZONE; DESIGNATION COULD GIVE LANCASTER ADDED ATTRACTION FOR BUSINESS.

Byline: Jim Skeen Daily News Staff Writer

Seeking to establish the city as a foreign trade zone, Lancaster officials may pay a consultant $35,000 to complete the paperwork required by the federal government.

Lancaster officials are considering hiring Foreign Trade Zone Services, a Sacramento firm that has helped San Jose and Stockton obtain their foreign trade designation.

``A foreign trade zone is helpful in lots of cases when you are trying to site (incoming companies),'' said Lancaster Mayor Frank Roberts.

Luring new industries and jobs has been a goal of Antelope Valley civic leaders for nearly two decades. The effort has taken on new urgency with the decline of defense spending - an Antelope Valley mainstay - since the end of the Cold War.

Lancaster officials see trade zone benefits as another reason why a business would relocate here, just like the tax advantages offered through the state enterprise zone created this year in a joint Palmdale-Lancaster effort.

Lancaster officials say their aim in seeking the trade zone designation is not to compete with Palmdale, which has had a trade zone for five years. They say it is possible the trade zone could be extended northward to include Lancaster.

Palmdale at one point had two businesses taking advantage of the import fee reductions offered by the foreign trade zone, but none does so now, said Carrie Rogers, who is in charge of Palmdale's foreign trade and enterprise zones.

Anderson-Barrows, a plumbing parts manufacturer, stopped using imported parts because of concerns about their quality, and a clothing manufacturer moved its international business to Long Beach, she said.

Palmdale is negotiating with a Portland, Ore., firm that would act as the foreign trade zone operator, offering warehouse and freight forwarding services for firms interested in the trade zone benefits.

Foreign trade zones are intended to promote international trade by reducing customs fees on manufactured products that require foreign-made materials and are intended for export. That benefits the companies that do such work.

The zone permits the reduction, deferral or elimination of federal government fees charged to U.S. firms when they import foreign materials for domestic manufacturing or assembly and export.

There is no timetable set for when the application would be submitted, Lancaster officials said. The application would have to be approved by the Foreign Trade Zone Board in Washington, D.C.

The Lancaster City Council will consider hiring the consultant at their meeting at 7 p.m. Tuesday at City Hall, 44933 Fern Ave.

In 1992, the federal government approved Palmdale's foreign trade zone application. Palmdale's zone covers nine parcels totaling 1,300 acres. The zone is mostly west of Air Force Plant 42 and includes Lockheed Martin Skunk Works' Plant 10.

Lancaster officials also are looking at the idea of expanding the boundaries of the Antelope Valley's enterprise zone into the Los Angeles County portion of Edwards Air Force Base and perhaps even into the Kern County portion of the base as well.

The idea is help give aerospace companies that do business on the base a competitive edge through the state tax credits such zones offer. The tax breaks would be an incentive to bring more work to the base.

The Antelope Valley became an enterprise zone Feb. 1. For the next 15 years, businesses in the enterprise zone are eligible for state tax credits, including credits on equipment purchases, interest deductions for lenders making loans to a business in the zone, and hiring credits for workers hired through certain programs.

The Antelope Valley enterprise zone covers more than 40 square miles and includes virtually all commercial and industrial property in Palmdale, Lancaster and the unincorporated Los Angeles County portions of the Antelope Valley.

With the zone, the Antelope Valley can offer such incentives as credits for sales or use taxes paid on the first $20 million of equipment or machinery purchased, deductions for interest income earned on investments, and credit employees may take on their individual tax returns for wages earned from a firm located in the zone.

Companies are eligible for a hiring credit for wages paid to employees hired through specific programs during the first five years on the job - a potential bonus of up to $24,000.