Eastside Zone Wins Status as ‘Incentive Area’ to Foster Jobs

Raising hopes for better times in economically depressed areas of Los Angeles’ Eastside, the state Monday designated parts of Boyle Heights, El Sereno and Lincoln Heights as an “Employment Incentive Area.”

The special designation of the predominantly low-income, Latino area could usher in millions of dollars in investment and create jobs for up to 1,000 unemployed residents in the next few years, officials said. The program offers special tax breaks and other incentives to lure businesses into the area, which has a population of about 150,000.

“This approval signals a new beginning for economic vitality on the city’s Eastside,” said Councilman Richard Alatorre, who represents most of the incentive area and fought for the designation.

The Eastside area was one of three employment incentive areas designated Monday by the California Department of Commerce following stiff competition involving nearly 20 cities, a department official said. In addition to the Eastside communities, West Sacramento and the Bay Area town of Pittsburg were named incentive areas.

The employment incentive area program was launched in 1984 to help economically decaying areas that have large low-income populations or high unemployment. They differ slightly from so-called enterprise zones, approved the same year, in that they concentrate on boosting hiring of residents within the zone rather than simply attracting businesses to a hard-hit area. Among areas containing an enterprise zone is a 6.7-square-mile portion of Pacoima.

Monday’s announcement brings to six the number of areas in the state that have competed successfully for the employment incentive zone designation. In October, 1986, the Greater Watts area--a seven-square mile zone that includes parts of Los Angeles County and four cities--was named along with parts of Bakersfield and Sacramento. Eventually, a total of nine areas will be named.

Lupe Vela, who will coordinate the Eastside program, said the city’s Community Development Department will launch the effort by contacting more than 3,000 businesses either operating in the incentive area or which may consider locating there.

Currently, about 1,200 industrial and 1,000 commercial businesses employing about 54,000 workers operate within the incentive area, she said. The area has a 16% unemployment rate, she added.

Vela said that if a business qualifies, it may be eligible for up to $1.2 million in sales tax credits a year on machinery purchases and also may receive immediate property depreciation credits that are normally given over time. Other breaks include tax credits for hiring employees who have been out of work for at least three months and income tax credits to lenders who loan money to help businesses open in the area.

In addition to tax breaks, Vela said the program offers low-interest loans as well as assistance in siting, job training and export clearances. In general, city officials endeavor to cut out some of the red tape in obtaining permits, business licenses and other government approvals.

Vela said the special tax incentives will be available only to companies that meet all or part of the following criteria:

- The business must hire at least half of its employees from an area within the incentive zone called a “High Density Unemployment Area.” If unable to meet the 50% standard, a business with at least 30% of its employees from the unemployment area must pay a fee that will go to a community service organization.

-The business is at least 30% owned and operated by residents of the unemployment area.

Vela said officials hope that with the new tax incentives, they can avert an exodus of businesses from the Eastside as well as persuade others that it would make sense to move there. She added, however, that while the employment incentive zone will exist for 15 years, the tax breaks will last for only five. Efforts are under way in Sacramento to extend the tax incentives beyond 1993, she added.

Officials hope that with a strong marketing program, they can attract mostly light manufacturing companies that are labor intensive to move to the Eastside zone.

Persuading businesses to open shop in the incentive area will take a massive marketing effort, Vela said. She said the first of several seminars for businesses on what the program entails will be held in March.