San Ysidro Area Gets Business Break : Commerce: ‘Enterprise zone’ designation means firms moving in or expanding will earn tax breaks, other benefits.
Areas on Otay Mesa and in San Ysidro have been designated one of 10 new enterprise zones statewide, a move that officials say should stimulate the local economy and help the area compete with out-of-state cities in attracting jobs.
Created by state law in 1984, the California Enterprise Zone Program gives significant state tax breaks to businesses that expand or move to the zones. The first 10 zones, including a 6.5-square-mile area of Southeast San Diego, were created in 1986 and 1987.
Ten more zones were announced Tuesday, including a 9-square-mile San Diego one consisting of non-contiguous chunks of San Ysidro and Otay Mesa. The Otay Mesa section includes an industrial area stretching from east of the Otay Mesa border crossing to west of Brown Field.
By locating or expanding in the special zones, businesses can qualify for sales tax rebates, state income tax credits and lower municipal fees. Most of the credits are given to employers who hire disadvantaged workers who live within the zone or those who are referred by public job-training programs.
“This is a great victory for San Diego,” said City Councilman Bob Filner, who represents the area in which the new zone lies. “The tax benefits and incentives provided by this new enterprise zone will greatly accelerate development on Otay Mesa and provide much-needed jobs.”
Francisco Estrada, Filner’s executive assistant, said the city will make sure that “local residents,” meaning those who live within the zone’s boundaries, “get a crack at those jobs.”
Michael D. Jenkins, enterprise-zone coordinator for the city, said the Southeast San Diego zone has been the top job producer among the state’s 10 current zones. He said 1,400 jobs at 400 companies have been filled through his office over the last four years.
But the purpose of the Southeast enterprise zone was not so much to attract new industry as to promote hiring of disadvantaged workers in an area of poverty and high unemployment.
The Otay Mesa-San Ysidro enterprise zone, on the other hand, is designed to help San Diego compete with other states in attracting employers or keeping the ones already here. The tax incentives theoretically will lure companies who otherwise might be wary of the area’s increasingly unfavorable image as an expensive place to do business.
Several manufacturers based in the San Diego area have complained in recent months about the high cost of housing, taxes and municipal fees.
“A lot of states such as Kentucky, Colorado and Texas are actively trying to get California businesses to move back there by offering every imaginable and aggressive package of incentives,” Jenkins said. “We are trying to respond to some of those tactics.”
As examples of the significance of the tax credits available, Jenkins said more than half of $12,000 in wages paid to a worker during the first year of a company’s operation in an enterprise zone could be deducted from the firm’s state income tax bill. Rebates of sales taxes on manufacturing or processing equipment used in the zone will also be available.
Certain municipal fees--the source of loud complaints by local companies in recent months--may be waived or deferred in the zone, Jenkins said. If a company has no profits against which to apply tax credits, some of the benefits can be carried forward for as long as 15 years, he said.
Steve Weathers, vice president of San Diego Economic Development Corp., said the enterprise zone “is going to be a big boom for San Diego.” Such incentives are needed so the city can compete against Austin, Denver and other places that offer multimillion-dollar tax incentives to corporations, he said.
The other nine California municipalities awarded enterprise-zone designations Tuesday were Oroville, Merced-Atwater, Altadena-Pasadena, Coachella Valley, Richmond, San Francisco, Long Beach, Delano and Shasta Metro.
