Santa Ana Loses Bid for ‘Enterprise Zone’ Status

Santa Ana officials said they were “shocked and surprised” by the state’s rejection Tuesday of the city’s application for a business “enterprise zone,” claiming that as recently as last month Santa Ana ranked third among 23 cities competing for the special status.

“The state’s missing an excellent opportunity to have what would clearly have been their best zone,” said Hank Cunningham, Santa Ana’s assistant director of economic development. Santa Ana was the only Orange County city in the running after Placentia’s application was rejected last year.

Cunningham said he suspects that part of the problem is that many people perceive Orange County as a uniformly wealthy area--an image that “you just can’t escape.” Although most of Santa Ana is benefiting from an aggressively pro-development atmosphere, the area that would have been covered by the zone is economically depressed, he said.

The special status, granted to 13 communities by the state Department of Commerce on Tuesday, provides tax incentives for firms located within their boundaries. Santa Ana’s zone would have included the downtown and an adjacent area to the east. Proposed projects such as the $10 million Fiesta Marketplace, the Foreign Trade Zone and a local business enterprise facility would have been within the designated zone.

In turning down Santa Ana’s application, state officials cited the city’s strong economic development program and lack of job-training programs. However, city officials said they did not understand the reasons for denial of the application, adding that they have aggressively sought to establish job-training programs.

Richard Whitman, state coordinator of the enterprise zone program, said Santa Ana lost ground in the competition because Santa Ana’s strong development programs meant that other cities had greater need for tax incentives to attract business.

The city’s Transportation Center, downtown redevelopment and other capital improvements meant that “in a sense, (Santa Ana is) too good,” he said.

But city development specialist Patty Nunn said that the rosy economic picture doesn’t apply to the proposed zone, which she called “visually and economically blighted.” She noted that the unemployment rate is 6.3% downtown and 10.7% in the adjacent industrial area, compared to a countywide average of 3.5%.

The city’s overall strength, she said, should be a reason to rank Santa Ana high in the evaluation. She said the fledgling state program should take advantage of the city’s wherewithal to make the zone work. “Are we being punished for being too successful?” she asked.

Cunninghan, meanwhile, cited a $4-million state grant for retraining low-income workers and a pending application for a $1-million federal job-training grant as evidence of the city’s commitment to job-training programs.

City officials spent six months preparing the 420-page application for zone status and spent $35,000 on an accompanying environmental impact report. Cunningham said he would talk to state officials today to find out if there is any recourse for Santa Ana.

The zone, he said, had attracted some interest from firms interested in relocating there after news reports indicated that Santa Ana was in the running, but the city’s plans weren’t dependent on getting the designation. “It certainly would have been nice to have it to frame our efforts,” he said.

Three Los Angeles areas are among 13 chosen as ‘enterprise zones.’ Page 4.