Larger Area Sought for Enterprise Zone : Pacoima: Officials hope to add 218 acres to district where businesses receive tax credits for hiring the unemployed or investing in the local economy.

City officials have proposed that 218 acres be added to the Pacoima enterprise zone, where state tax credits are available to businesses that hire the unemployed or make capital investments that boost the local economy.

The expansion plan is being recommended by the Community Development Department, which oversees the city’s enterprise zone program, and has the support of Councilman Ernani Bernardi, who represents the area. Enterprise zones are in areas that are struggling economically and have a high unemployment rate.

The plan envisions a 90-acre, six-block extension of the existing enterprise zone that runs south of the Golden State Freeway on Van Nuys Boulevard, plus the addition of a 128-acre area north of the Foothill Freeway centered on Arroyo Street.

State law permits a maximum 15% expansion of the existing 4,300-acre Pacoima zone--or up to 645 acres--if the state Department of Commerce approves.

The plan is partly designed to induce investment in the large and long-vacant “Gemco property” on Van Nuys Boulevard at Beachy Avenue, said David Mays, Bernardi’s chief deputy. The Gemco property has been only periodically put to commercial use since 1986, when Gemco’s parent company, Lucky Stores, sold the site to the owners of the Target store chain.

Target never made use of the site because it already owned a store nearby on Laurel Canyon Boulevard, said Julius Jones, Target regional vice president.

“It made no sense to have two stores in that market,” Jones said.

More than 100 Gemco employees at the Pacoima site lost their jobs in the ownership switch.

Recently, the site has been purchased by several individuals, complicating its redevelopment, Mays said.

“The Gemco property is a good one for the enterprise zone to revitalize,” Mays said. “That site needs assistance in getting back to productive commercial use.”

The City Council’s Ad Hoc Committee on Recovery and Revitalization is expected to review the proposed boundary changes Thursday. Officials of the Community Development Department also are urging expansion of four of the city’s five other enterprise zones. Pacoima’s is the only zone in the San Fernando Valley.

The most important feature of the Pacoima area north of the Foothill Freeway is that it contains the huge United Parcel Service facility, said Reynold Blight, head of the city’s enterprise zone program.

“The area north of the Foothill Freeway is industrial and probably should have been included in the original zone,” Blight said.

Businesses in enterprise zones can obtain tax credits totaling $19,110 over five years for each unemployed person they hire from certain government-sponsored job training programs. Additionally, manufacturers can deduct from their state income taxes an amount equal to state sales taxes they pay on equipment purchases, and banks can get a tax break for lending to businesses in the zones.

As a further inducement, the city also has made special programs available to zone businesses, including low-interest loans, and expedites zoning and construction permits sought by businesses in the zones.

But a recent audit by the city’s budget office of the enterprise zone program found that it was “not achieving its intended results.” The audit found that it was difficult to determine whether the tax incentives are effective in luring new business to the zones.

The audit also found that the city has not aggressively marketed the zones to businesses, a conclusion also reached by The Times in a review of the Pacoima zone in June.