Revitalization zone plan wins lukewarm reception; part of the problem is no one knows about the scheme.

The new state revitalization zone in Los Angeles provides some helpful incentives, but may not be enough to jump-start business activity in the riot-torn areas, sources claimed.

"It's not going to make that much difference until the feds get on board," said David Dale-Johnson, director of the real estate program at USC's School of Business and an expert on economic incentive zones.

Meanwhile, many prominent inner-city leaders said they weren't even aware the revitalization zone exists.

"We're not familiar with it," said Nuria Jenkins, vice president and loan officer at South Central L.A.-based Founders National Bank.

"The State of California needs to hire a good marketing firm to get the word out," added John Bryant, chairman and founder of Operation Hope, a West Los Angeles-based organization that puts together financing deals for minority entrepreneurs.

"I'm in the heat of the battle and I don't know about it," he said.

Last year the state established a revitalization zone, which came into being Jan. 1 in riot-damaged parts of Los Angeles County. It is the first such revitalization zone to be established in the U.S., said Sam Paredes, zone program manager for the California Trade and Commerce Agency.

The zone exists to promote all types of rebuilding, as well as new business activity in the region, Paredes said.

There are major differences between the newly established revitalization zone and the state's already-existing enterprise zones, although the two types parallel each other in most ways.

The revitalization zone has a much shorter life span than do the enterprise zones and includes a construction hiring tax credit the enterprise zones don't have.

Furthermore, both types of zones allow employers to seek tax credits for hiring workers who live within the zones. But the qualifications workers must have are much less stringent in the revitalization zone.

The revitalization zone covers all or parts of Compton, Hawthorne, Huntington Park, Inglewood, Lawndale, Long Beach, Lynwood, Pomona, Signal Hill and other selected portions of Los Angeles County.

One of several enterprise zones in L.A. County actually overlays part of the revitalization zone. That enterprise zone is roughly bordered by Figueroa Street on the west, the Santa Monica Freeway on the north, Alameda Street on the east and Martin Luther King Boulevard on the south, Paredes said. The revitalization zone supersedes the enterprise zones where the two overlap.

Enterprise zones are a much more long-term endeavor. While they are slated to exist for 15 years, the revitalization zone expires in five years.

This five-year period will give state officials a chance to see if they are taking the right direction to improve the economic situation in these areas, Paredes said.

Both zones give companies doing business in the area a variety of tax incentives. They both provide for sales and use tax credits, as well as business expense deductions for equipment and materials bought for use in the zone, in addition to a net interest deduction for lenders on loans made in the area.

But the revitalization zone also provides a special hiring tax credit for construction companies employing residents in the zone to build projects, while the enterprise zone does not.

For the first six months the revitalization zone is in effect, construction companies can take a tax credit for up to $6.37 per hour for each zone-resident employee paid. During the second six months, the amount of the deduction decreases substantially.

"We're encouraging construction companies to hire local residents right now," Paredes said.

Both zones also include an incentive allowing employers to deduct a general hiring tax credit for hiring "qualified" employees in the region. But, while the only qualification for employees under the revitalization zone program is that they be a resident, employees in the enterprise zone must qualify by being involved in a government-subsidized job development program.

The construction hiring tax credit is greater than the general hiring credit.

Both zones also allow lenders to take net interest deductions on loans made in the zone, an incentive Bryant of Operation Hope said will encourage lending.

The deduction "helps to balance out the perception that there's more risk than reward" for lending in the inner city, Bryant said. "The inner city isn't going to be rebuilt and revitalized without the financial community," he added.

The federal government has to become involved for the zone to create any real business incentives because businesses pay fewer state taxes than federal ones, Dale-Johnson said.

Not much inner-city investment has happened as a result of the state enterprise zone designations, Dale-Johnson added.

Reaction in the local business community to the new zone was less than enthusiastic.

"I don't think it (the revitalization zone) will be that effective," said Al Williams, president of the United Minority Contractors Association.

"Skip" Cooper, executive director of the Black Business Association, added that the new zone would be of limited help to the region's small businesses. These businesses are more in need of up-front cash incentives than tax credits they are not sophisticated enough to take advantage of, he said.

Paredes said, to promote the new zone, his agency is developing a marketing program that includes workshops for construction companies, as well as a marketing and information board comprised of representatives from the participating communities.

The marketing plan should be implemented within the next couple of weeks, Paredes said. It was delayed because of uncertainties over exactly which communities would be included in the zone, he added.