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Local leaders voice support for enterprise zone as job-booster

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Posted: Saturday, January 22, 2011 12:00 am | Updated: 6:44 am, Sat Jan 22, 2011.

As Gov. Jerry Brown looks at eliminating enterprise zones, the Lodi City Council and other business advocates are voicing their support for the tax credits, saying it is one of the few job-creators in the state.

At least one business in Lodi is depending on the credits to help them expand. Specialties Commodities, which used to be Lodi Nut Company, has submitted an application to become part of the enterprise zone, said Kelly Suess, general manager.

"We have not laid off any employees, but the expansion of the business is predicated on getting in the enterprise zone," Suess said.

The company would use tax credits to buy new equipment as well as hire new employees. He said this is one of the only incentives available in California for business that want to grow.

Brown said earlier this month that he wants to eliminate enterprise zones and redevelopment agencies, and then use the tax revenue for other services.

Lodi does not have a redevelopment agency, but it does have an enterprise zone that enables businesses to obtain tax credits for operating in a certain part of the county or hiring workers from a specific regions.

Lodi businesses have submitted a total of 1,243 vouchers for tax credits for new employees, new equipment or other expansions. The total in San Joaquin County is 14,613.

The Lodi City Council voted on Wednesday to draft a letter to Brown voicing support for the enterprise zone and explaining how it has been valuable to Lodi.

Councilman Larry Hansen realizes that Brown has tough decisions to make, but he said it does not make sense to target a program that generates revenue for the state.

"How much more anti-business is this state going to become? ... It's astonishing to me that the state of California, the legislators, the governors do not understand the impact of these decisions and how it impacts businesses," Hansen said.

There are hundreds of employees in the city whose jobs might depend on the credit, Hood said. The zones target disadvantaged areas with high unemployment to give businesses incentives to expand or move there.

"That's why you see enterprise zones in San Joaquin (County) and not in communities like Beverly Hills, because we need the jobs and we need the investment," Hood said.

Taking away the enterprise zone at this point would be discouraging for companies that have stayed in California or relocated here because of the tax credits, said John Solis, executive director for San Joaquin County's Employment and Economic Department.

"There's been outreach to businesses on an international level," Solis said. "Our focus is not on taking companies from other communities in California; the goal is to get companies to come into California."

The enterprise zone is one of the best incentives in California, Solis said. Without the credit, he said some businesses might leave and head to states like Nevada and Arizona that offer better incentives to new businesses.

While it is understandable that Brown has to look at every program, Pat Patrick, president and CEO of the Lodi Chamber of Commerce, said, he hopes the governor will consider modifying it as opposed to just axing it.

Patrick said the state could keep the incentives for job creation and possibly eliminate other incentives for things like purchasing equipment.

"I think that's a possible example of how the business community could give a little toward balancing the budget," Patrick said.

The tax credit for employees is spread out over five years, so the state should at least continue the incentives they promised, said Joe Hohenrieder, president of Lustre Cal.

Lustre Cal joined the enterprise zone several months ago, and has already hired four workers and plans to hire more. The company has also bought some manufacturing, hardware and software equipment that have qualified for the credit.

"If you have more labor dollars available, you can hire more people," Hohenrieder said.

He often hears skeptics say that the tax credit does not generate jobs, but he said it does keep businesses local.

"What it does, if nothing else, is it helps offset the high taxes you are paying overall and brings it down a little closer to where it should be," he said.

If the state took away credits already given to employers, Hohenrieder is worried people might be laid off.

"That really does effect you. You do your planning based on that, (and) when that changes, all of a sudden your planning doesn't work," he said.

Contact reporter Maggie Creamer at maggiec@lodinews.com. Read her blog at www.lodinews.com/blogs/citybuzz.

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  • Doug Chaney posted at 11:27 am on Tue, Jan 25, 2011.

    Doug Chaney Posts: 1232

    Mr. Bitz, worse yet, the treatment plant was originally to be funded by developer fees. Now that Hnsen, Johnson and Katzakian pushed it through early, we citizens are stuck with that $40,000,000+ bill and the developers, like Mr. Gillespie, Doucette, Munson, Kim Family Properies, Katzakian and Browman, among others, will pocket that $40,000,000 for themselves in pure profit.

  • roy bitz posted at 9:55 pm on Mon, Jan 24, 2011.

    roy bitz Posts: 489

    Enterprise zones---redevelopment projects---these are "tools" that empower our three city council gentlemen to spend tax dollars as they wish. No public voting---no accountability.
    There is an excellent article in the print issue of the Sentinel today regarding redevelopment agencies. Not exactly the same as enterprise zones but not so different either. It is relevant and loaded with enlightening comments on the issue of waste.
    We will soon have a "bridge to nowhere" here in Lodi--thanks to our three gentle councilmen. It will be know as the "treat and drink" water treatment plant. It will drain tens of millions from rate payers over the years---for not good reason.

  • Doug Chaney posted at 5:02 pm on Sun, Jan 23, 2011.

    Doug Chaney Posts: 1232

    Mr. Bitz, the enterprise zone was just "tweaked" here in Lodi to accomodate the Lodi Nut Co., therefore giving them tax breaks from the fed government pig trough and the perks provided by the city, usually massive electric rate cuts, utility rate breaks,ssome even subsidizing their rents for at least the first year , and maybe even courtesy concierge service?

  • Darrell Baumbach posted at 5:36 am on Sun, Jan 23, 2011.

    Darrell Baumbach Posts: 9403

    01. Should businesses succeed or fail based on their own efforts or should some get a "hand up" from tax payers via favorable tax rules
    • Response… In theory, businesses should succeed or fail based on their own efforts… unfortunately, there are variables that influence the outcome of success/failure independent of effort. Government regulations, mandates, red tape, political interference, laws and regulations that hamstring entities, and other considerations that businesses cannot control or have a say so in, influence the outcome… so should tax payers have to pay… I do not think so… unless the people paying the taxes think it’s a good idea.

    • 02. Is it the job of government---local--state-- or federal-- to decide which businesses will be awarded tax dollars?
    I think it is the governments job… but if it is, the criteria it uses should somehow be based on merit and not politics.

  • roy bitz posted at 8:52 pm on Sat, Jan 22, 2011.

    roy bitz Posts: 489

    Are enterprise zones good for all businesses or just those our politicians favor?

    Should businesses succeed or fail based on their own efforts or should some get a "hand up" from tax payers via favorable tax rules?

    Is it the job of government---local--state-- or federal-- to decide which businesses will be awarded tax dollars?



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