Santa Ana Gets State ‘Enterprise Zone’ Status

Gov. Pete Wilson announced Monday that Santa Ana has been picked as a state “enterprise zone,” giving the economically depressed community an enticing menu of business tax credits and other incentives to woo new manufacturing firms and keep others from bolting out of town.

Officials in the city, which has the highest unemployment rate in the region, reacted with elation when Wilson unceremoniously delivered the news in a one-page press release.

“This designation means jobs for Santa Ana, and in this economic environment there couldn’t be any better news,” Mayor Daniel H. Young said. “I’m simply delighted.”

The special designation is highly sought among recession-racked cities in California. State officials boast that enterprise zones boost cities by creating jobs and pumping additional sales tax dollars into community coffers.

While the governor’s announcement was good news for Santa Ana, it left out Anaheim, which had also been competing to be an enterprise zone. But Anaheim officials remained upbeat, extending congratulations to Santa Ana and expressing confidence that Anaheim will reap an economic spinoff from any increase in commerce experienced by its neighbor.

“The spillover effect is for the whole area. That’s good news,” Anaheim Councilman Fred Hunter said. “I’m glad to see that one of the major cities in Orange County got an enterprise zone.”

Assemblyman Tom Umberg (D-Garden Grove), who lobbied state Trade and Commerce Agency officials in hopes of winning enterprise zone status for both Orange County cities, agreed that the designation would have ripples beyond Santa Ana.

In particular, enterprise zones prove effective in attracting manufacturing firms, and for every one job in manufacturing, seven others are created in retail and other ancillary occupations, he said.

“This is a major coup for Santa Ana,” Umberg said. “It’s going to mean that businesses that are contemplating moving might well stay. It will mean more jobs and bring additional revenue to the city.”

Santa Ana has the highest poverty rate in the county, the lowest per capita income, the highest percentage of limited-English-speaking residents, and the lowest average home price.

The city was named along with communities in Kings County and Shasta Valley, as well as the cities of Oakland and Stockton, bringing to 34 the number of specially designated enterprise zones in California since the program started in late 1986. About 23,000 jobs have been created or saved across the state because of the zones.

“Enterprise zones are an invaluable tool in creating economic incentives for business and jobs,” Wilson said in his terse statement. “They demonstrate clearly that California is committed to doing what it takes to compete and to grow.”

“This levels out the playing field. It offers our businesses significant tax breaks and keeps manufacturing jobs, (and) jobs period in Orange County,” said Patti Nunn, Santa Ana economic development director.

Nunn said that because of the high cost of doing business in California, businesses have been shutting down and moving out of the area. Santa Ana has lost 1,000 jobs, mostly in manufacturing, within the last four months.

Nunn said that the city’s being declared an enterprise zone is crucial to stemming the loss of businesses. “I don’t call it a victory,” she said. “It’s just something that is necessary.”

Doy Henley, chairman of Cox Hobbies in Corona, said Santa Ana’s new status may prompt him to move his business back to the city.

“It’s pretty tough to compete,” Henley said. “My competition isn’t other business in California; my competition is in other states,” he said, where businesses reap “astonishing” offers of tax credits and cheap land and construction costs.

* MAKING A PITCH: Joining other states’ economic development officials at a conference in Anaheim today, local business groups will be boosting Orange County and Southern California. D7

Enterprising Incentives

Santa Ana businesses could begin receiving state and local benefits by May as a result of the “enterprise zone” designation. Here are some of the benefits.

State incentives

Up to $1.3 million in sales tax credits to purchase machinery, equipment.

Up to $19,000 per employee in tax credits for hiring qualified workers.

Employees may claim tax credit to reduce their taxes on earned income.

No state tax interest earned on money loaned to firms within zone.

Local incentives

Employee hiring assistance.

Toll-free phone number for economic development assistance.

Low-interest commercial loan and rebate programs.

Source: City of Santa Ana