UNDER THE MICROSCOPE: CALIFORNIA’S ECONOMIC DEVELOPMENT ACTIVITY


Public and private entities have been working together since the spawn of modern-day cities. Sometimes their relationships are mutually beneficial and fruitful. Other times, the two can be perceived as opposing forces, especially when small businesses and commercial developments are involved.

In today’s challenging economic climate, however, it behooves all entities – public or private – to work toward common goals. Below are two California case studies that illustrate just what can be accomplished when cities and the people who build them work together to create a more favorable environment for the larger community.


COUNTY CASE STUDY: SAN BERNARDINO


SAVING JOBS AND MONEY — HOW PUBLIC AGENCIES HELP EASE BUSINESSES’ BOTTOM LINES



By Mary Jane Olhasso, Economic Development Agency Administrator, County of San Bernardino
 
There is no denying that this economy has created a challenging environment for business. Manufacturing has been hit especially hard, particularly in California. Now more than ever, businesses need a stable and predictable environment to operate successfully. They need the right physical location with access to markets and a solid, dependable transportation infrastructure. Most important, business needs a government it can trust.

Programs delivered at the state, county and city levels, such as Enterprise Zones, Local Agency Military Base Recovery Areas (LAMBRA) and Foreign Trade Zones, are all examples of programs that provide beneficial incentives and credits to businesses. Another example is San Bernardino County’s Workforce Investment Board, an organization committed to helping companies keep manufacturing jobs in California.

In fact, the San Bernardino County Board of Supervisors recently approved the addition of 1,252 acres of county unincorporated area to the San Bernardino Valley Enterprise Zone (SBVEZ), an area that encompasses 42 square miles in the cities of San Bernardino, Colton and unincorporated portions of the county. This was done to extend the Enterprise Zone tax credits and benefits to more businesses that are considering a county location.

Erik Wanland of CB Richard Ellis recently represented Simpson Strong-Tie, one such manufacturer that recently consolidated and relocated its operation from Brea, Calif., to the SBVEZ. Wanland noted that many large industrial occupiers are increasingly looking at opportunities to consolidate product, reduce costs and improve efficiencies.

A major manufacturer of structural products for the building industry, Simpson Strong-Tie will now streamline its operations into an existing 396,600-square-foot industrial building in the Agua Mansa redevelopment area. The building suits the company’s goals to increase plant capacity and improve efficiency, while providing the manufacturer with the financial benefits of locating in the SBVEZ. These benefits include hiring tax credits and sales or use tax credits, among others.

Hayden Industrial Products, a manufacturer of mobile and stationary heat exchangers for the power generation, construction, fluid power and agriculture industries, also relocated to a 109,000-square-foot industrial building in the SBVEZ.

“The company has been actively searching for a site that suited our production requirements and provided us the opportunity to consolidate and grow,” said Shannon Riley, Hayden’s human resources manager. “San Bernardino met our expectations and the enterprise zone was an added incentive that we will most certainly use to expand our workforce and product lines.”

According to reports, Hayden Industrial Products currently has 66 employees. The company is in the process of completing hiring tax vouchers for several of its employees. It also has plans to hire more local workers as business grows.

Businesses that locate within a California Enterprise Zone are eligible for substantial state tax credits and benefits, which may include:
  • Hiring Tax Credits — state tax credits of up to $37,440 over 5 years for each qualified employee hired.
  • Sales or Use Tax Credits — state tax credits for sales and use taxes paid, up to $20 million per year, on qualified machinery and machinery parts purchases.
  • Increased Expense Deduction — accelerated expense deductions for certain depreciable property.
  • Net Operating Loss Carry-Forward — up to 100 percent net operating loss (NOL) carry-forward. NOL may be carried forward 15 years.