Playing Zone Defense

A state initiative promises new incentives for disappearing enterprise zones



The Coachella Valley Enterprise Zone gives businesses incentives to locate and hire in depressed areas.

California’s Enterprise Zone Program was set up in 1984 to give businesses incentives to locate and hire in depressed areas. Since then, 40 zones, including the Coachella Valley Enterprise Zone, have helped hundreds of businesses expand, hire, and thrive.

The 56-square-mile Coachella Valley Enterprise Zone includes Thousand Palms, Indio, Coachella, Thermal, and Mecca.

In July, Gov. Jerry Brown signed a law that, as of Dec. 31, 2013, replaces the 40 zones with a variety of different economic incentives.

Until then, businesses in the enterprise zone will enjoy a sales and use tax credit, hiring credit, and net interest deduction for qualifying purchases, new hires, and interest received through Dec. 31, 2013. Wages paid to employees certified under the existing hiring credit program and hired before Jan. 1, 2014 may continue to generate tax credit for up to five years if they remain employed in the (now former) enterprise zone. Taxpayers who have generated excess tax credit would be able to carry over and continue using the hiring credit and sales tax credit for up to 10 years.

“The future remains uncertain regarding the details of the dissolution or the direct and indirect impacts to the participating local employers,” says Wesley Ahlgren, CEO of the Coachella Valley Economic Partnership. “We anticipate it will be several months before we have specific information regarding the proposed replacement incentives and how, or if, they will benefit our local community.”

The new law redirects $750 million in business tax credits to a state sales tax exemption on manufacturing or research-and-development equipment, a credit for hiring veterans and those who are among the long-term unemployed, and a credit to encourage businesses to expand and retain jobs in the state.

For the latest information, contact the Coachella Valley Enterprise Zone at 760-391-5176, or visit www.cveza.org

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