Business Break Urged for Pacoima

In an effort to attract businesses to depressed areas, the Los Angeles City Council on Friday sought to have five sections of the city, including Pacoima, designated federal enterprise zones.

Pacoima, which already is a state enterprise zone, is unlikely to win the federal designation, however, city officials conceded. The northeast Valley community is not in bad enough shape, at least according to federal standards.

At present, there is no advantage to being designated a federal enterprise zone since Congress has not acted on legislation to provide incentives, primarily tax breaks and exemptions from some federal regulations, to encourage job-creating businesses to locate in blighted areas.

Businesses that move into the 6.7-square-mile state enterprise zone in Pacoima can receive state tax credits, such as deducting sales taxes paid on new machinery purchased to operate their business, and low-interest loans.

“We’re sort of anticipating the benefits, trying to get our foot in the door ahead of time,” said Marilyn Lurie of the city’s Community Development Department.

Pacoima does not meet federal requirements for the program, which are stiffer than the state standards. The government requires that 70% of an area’s households earn less than $12,560 a year--80% of the city’s median income. Only 42% of the households in Pacoima fall in that category, Lurie said

Above Poverty Level

In addition, at least 20% of the households in every census tract must be below the poverty level, and only a few census tracts in Pacoima met that criteria, Lurie said.

“Since Pacoima is a state-designated zone, we are, at the council’s request, submitting the application anyway, and let HUD turn us down,” Lurie said.

“It’s worth trying,” added Los Angeles Councilman Ernani Bernardi, who represents the northeast Valley and proposed seeking the designation. Bernardi has advocated that the federal requirements be changed.

The application to the U.S. Department of Housing and Urban Development includes the four other areas in the city already designated state enterprise zones: the central city, the Eastside, Watts and the Harbor area.

One hundred areas nationwide will be designated federal enterprise zones, Lurie said.

President Reagan has long advocated the creation of enterprise zones. But his proposals have been stalled in the Democratic-controlled Congress. Critics have contended that the program merely would lure business away from areas where they already are established and provide them with an unfair competitive advantage.