Foreign Trade Zone Approved for Santa Ana

The U.S. Department of Commerce on Wednesday approved creation of a foreign trade zone in Santa Ana, which city officials hope will attract new businesses through its duty and excise tax advantages.

Firms that operate within the 92-acre zone, located just east of the civic center, will be able to import goods and raw materials duty free for storage, assembly or manufacture. The goods will be taxed only when they leave the area and if they are to be sold domestically.

Santa Ana becomes the first city in Orange County to have a foreign trade zone and one of just seven in the state. The others are Long Beach, Ontario, San Diego, Oakland, San Francisco and San Jose.

“This helps establish Santa Ana as part of the international trade environment,” Mayor Dan Young said. “It positions us to participate . . . (with those) who have created a major window on the Pacific Rim.”

The zone will be an expansion site of the foreign trade zone of Long Beach. Under an agreement reached between the two cities last year, Santa Ana will pay Long Beach $10,000 initially and $5,000 annually in return for assistance in dealing with the U.S. Customs Service and in writing a required annual report for the federal Foreign Trade Zones Board. Santa Ana will also be able to make use of the Long Beach port’s worldwide marketing program.

Designation of the 92 acres as a foreign trade zone does not give the city any additional power to condemn or rezone land parcels for particular uses, said Stephen O’Keefe, an economic development specialist with the city. The area is already part of a larger city redevelopment project.

“This designation provides a ‘hunting license’ for the City of Santa Ana to identify property owners, interested developers and tenant users” of a foreign trade zone facility, O’Keefe said. “We hope we can put them together in a happy, successful relationship.”

City officials hope to kick off activity in the trade zone with the construction of a 100,000- to 150,000-square-foot building, in which several different types of companies might be located, O’Keefe said. A developer has not yet committed to the project, but firming up plans should be easier now that the trade zone has been approved, he said.

O’Keefe said he has had contact with a number of companies interested in setting up operations in the zone: a cabinet manufacturer that would import unassembled cabinets and sell the finished product in the United States, a firm that repairs and sells heavy equipment, a company that manufactures and packages medical products, and electronic assembly companies.

Bringing new jobs into the area is the city’s primary goal in establishing the trade zone, O’Keefe said, as opposed to creating a “higher and better use” for the whole site, the goal of most city redevelopment projects. Companies already in the zone will be under no pressure to relocate, although they may want to restructure their operations to take advantage of the new import-export benefits, he said.

Based on Long Beach’s experience, the initial 100,000-square-foot project might create 200 jobs, O’Keefe said.

Long Beach administers three other zones in addition to its own, original 11-acre site in north Long Beach: a 1,350-acre expansion site near the Ontario airport, an 18.8-acre Toyota truck bed assembly subzone in Long Beach and a 72-acre subzone in San Diego operated by National Steel & Shipbuilding Co.

Rep. Robert K. Dornan (R-Garden Grove), who Young said was instrumental in pushing Santa Ana’s application through the Commerce Department, said the zone means “more jobs, more business and a healthier Santa Ana for years to come.”