Enterprise Zone Pays Off for Business Owners

The co-owners of Custom Wood Products in Parlier took advantage of the state program to accelerate depreciation on their new building, putting the money they saved on taxes back into their business.

Reports like that are music to the ears of local economic development officials promoting the Enterprise Zone program, one of the state's largest economic development programs aimed at helping struggling communities.  The expansion last year of enterprise zone status to 13 Fresno County cities -- Coalinga, Firebaugh, Fowler, Huron, Kerman, Kingsburg, Mendota, Orange Cove, Parlier, Reedley, San Joaquin, Sanger and Selma -- and some unincorporated parts of the county is meeting with enthusiasm from businesses, said Steve Geil, president of the Economic Development Corp. serving Fresno County.

"It allows businesses that are here to be more profitable, to expand, to buy new equipment and reinvest, and to hire people -- that's a key." Since the zone officially got under way in summer 2007, 45 businesses have signed up, from manufacturers and food processors to automotive, distribution and health-care businesses, said Emerson Estrada, the EDC's director of business retention and expansion.

One of the key benefits of the enterprise zone program is a tax credit of up to $36,600 over the course of five years for each qualified employee. Those can include military veterans, disabled people, economically disadvantaged people, those eligible for certain federal job-training programs and residents of Targeted Employment Areas, areas chosen by the state because of their high unemployment rates.

The businesses that have signed up for the county's new zone can expect to see $15 million to $17 million collectively in tax breaks from the employee credits alone over a five-year period, with about half of that coming in the first year of the program, Geil said.

Other benefits include sales or use tax credits, business expense deductions, net-interest deductions for lenders that provide enterprise zone businesses with loans for growth or expansion, and net-operating-loss deductions.