CITY TO SEEK ENTERPRISE ZONE EDGE DESIGNATION COULD HELP PAY WORKERS.

Byline: JUDY O'ROURKE Staff Writer

SANTA CLARITA -- Businesses in run-down areas could gain a competitive edge locally and worldwide if the city snags a coveted spot in a program that fuels economic growth through tax rewards.

The state program provides tax credits for businesses that hire eligible employees and that purchase machinery and machine parts.

``Particularly in a business climate that is not as friendly as other places across the U.S. and across the world, we need every incentive-based program we can get,'' said Larry Mankin, president and chief executive officer of the Santa Clarita Chamber of Commerce.

Santa Clarita is expected to face stiff competition for designation for one of California's 23 Enterprise Zone program slots, which are doled out in staggered 15-year increments.

The program's key feature is a $34,000 tax credit -- over five years -- for each eligible employee companies hire. Eligible employees include those who are disabled, were laid off in an economic downturn, face legal issues, have a criminal record, are veterans or are American Indians.

Employers can pay whatever salary they choose, but the maximum salary eligible for the credit is 150 percent of the minimum wage, said Mark Maldonado, chief of the state's program.

``If the minimum wage is $10 an hour and the maximum credit is $7.50 per hour, there is a pretty significant benefit to hiring that individual,'' he said. The percentage of the credit declines over five years.

Sales and use tax credits are earmarked for certain industries, and banks would benefit by loaning money to participating companies. Mankin said the spinoff spreads well beyond the companies themselves.

``It helps Realtors when they rent or lease, it helps builders, and it helps companies -- when a new employee has to buy clothes, a car or a six-pack of cola. It isn't just about the company, it's about all the other people and companies a new job touches when it comes into a community.''

Retail, commercial and industrial businesses can participate.

Frontier Toyota in Valencia and Honda of Pasadena share common owners. The Honda dealership gives the thumbs up to the Altadena-Pasadena enterprise zone. Tom Frew, the Honda dealership's controller, said the company benefits when investment income is not taxed at the federal level, credits can be used to offset taxes and credits can be rolled over.

The city of Los Angeles, which has participated since the program was launched 20 years ago, has five enterprise zones, three of which are sunsetting Oct. 15. The city should reapply for all three, said Clifford Weiss, the deputy division director for the city's Community Development Department.

Hundreds of companies have taken advantage of the program in Los Angeles, hiring thousands of employees, resulting in wage credits valued in the millions of dollars, he said.

``It is our assumption those credits led to additional funds for businesses or lower taxes that allowed them to expand their business,'' Weiss said. He does not know how many companies use other tax credits because the Franchise Tax Board does not release the information.

Delta Scientific, a manufacturing company formerly rooted in Valencia, moved to Palmdale in part because of zone benefits there, said Carrie Rogers, the city's economic development manager. Rogers oversaw the Antelope Valley's enterprise program for seven years before coming to Santa Clarita in October 2004.

Growth has brought Santa Clarita a Mercedes-Benz of Valencia dealership and high-end markets, but pockets of poverty in downtown Newhall -- destined for redevelopment -- helped the city meet the state's qualifying criteria for the program.

Rogers says the zone would provide needed aid to a fast-growing region in transition. Newhall Ranch will bring 21,000 homes with an average of two residents each, Tejon Ranch will bring 25,000 homes with three-plus residents each, and the Antelope Valley is about 50 percent built out.

``What's happening in those areas, with residents growing so quickly, there is no way to keep up with jobs and the job-to-housing balance gets skewed,'' Rogers said. ``We have to set ourselves into a position to create high-paying jobs so we're seeing fewer people travel to the San Fernando Valley or the L.A. basin and beyond for jobs.''

The zones attract businesses that eye relocating out of state because they can level out the cost of doing business. Rogers said many local companies would benefit from the preference points given for government contracts, which can result in more competitive bids.

Participating cities must match jobs to needs, provide skill upgrades, attract and retain businesses and offer financing and capital improvement plans.

College of the Canyons will play a role in the jobs component. Dena Maloney, dean of the Economic Development Division, said the college has long played a role in work-force development, which is key to companies looking to relocate or expand.

The city's outlay for marketing materials, workshops and training for financial institutions and tax accountants has not been finalized.

A couple of bills circulating through the Legislature could affect the hiring process and competitiveness for zone awards, but their outcome should be known before the awards are given.

The deadline for submitting applications is Sept. 6, and the designations could be handed out before the end of the year.

judy.orourke(at)dailynews.com

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