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Hiring credits deadline looms

Enterprise Zone tax breaks must be on books by Jan. 1

Posted: August 18, 2013 2:00 a.m.
Updated: August 18, 2013 2:00 a.m.
The revamped Enterprise Zone program may cut all Santa Clarita businesses out of the benefit-loop. Above, AMS Fulfillment used the program to hire many employees during the recession.  The revamped Enterprise Zone program may cut all Santa Clarita businesses out of the benefit-loop. Above, AMS Fulfillment used the program to hire many employees during the recession. 
The revamped Enterprise Zone program may cut all Santa Clarita businesses out of the benefit-loop. Above, AMS Fulfillment used the program to hire many employees during the recession. 

In June the California legislature took away what Santa Clarita considered to be an effective tool used in attracting businesses to the region – Enterprise Zones.

In the moment it took Gov. Jerry Brown to pen his signature approving a reform measure of a program he called “wasteful and ineffective,” 480 Santa Clarita companies lost future access to the hiring credit portion of the program if they don’t act now.

Local businesses now have only until Jan. 1, 2014 to participate in the program and take advantage of any hiring credits, said Jason Crawford, marketing and economic development manager for the city of Santa Clarita.

To help, the Santa Clarita Valley Enterprise Zone is hosting a free breakfast seminar on Aug. 21 to reach as many companies as possible.

“We’re focusing on a last-chance campaign to get the word out to any and every SCV business that this is the last chance to benefit from the Enterprise Zone program,” Crawford said.

“We want to encourage them to get as much as they can on the books by Jan. 1, 2014” he said. “A company that hasn’t yet participated in the program can still get on board and get credits on the books this year.”

But, they should do so now, advises one local expert.

“It can take four to six weeks to process a hiring credit voucher,” said Jon Collard, president of Santa Clarita-based American Tax Incentives. “The closer we get to the end of the year the more difficult it will be to get in under the deadline.”

When the Enterprise Program was reformed, a number of businesses under the new program will no longer be able to take advantage of the hiring credits after the end of the year if they don’t sign up now.

Retailers, restaurants, staffing agencies and possibly even automotive dealers will no longer be able to participate.

The reformed program is also focused on jobs paying $12-$28 per hour, hoping to target employers in the high-tech, manufacturing and biotechnical industries who also might be engaged in research and development.

While focusing only on higher paying jobs looks good on the surface, it also means a lot of people in need of employment that could potentially be hired may be passed over come 2014, Collard said.

And companies, without the benefit of a hiring tax incentive, may do less hiring just as the economy is slowly recovering and unemployment is gradually trickling downward, he said.

There is one silver lining to the dark cloud, Collard said.

Grandfather clause
New companies can still submit vouchers this year to become eligible for hiring tax credits.

“And they’ll be grandfathered in for the remainder of the employee’s employment with their firm,” Collard said.

“If they (the employee) remain employed for a full five years, the company can still take the hiring credit of up to $37,440 per employee,” he said. “And the employer has up to 10 years to use their credits; up until 2024.”

While some say the revised Enterprise Zone program levels the playing field for all companies since everyone in California will be affected equally now, others say it makes the playing field even worse now in that gives cities or regions fewer tools to attract or retain businesses.

The change, however, places all communities in California behind other states in term of ability to be competitive, Crawford said.

“The tax and regulations structures in other states are so different,” Crawford said. “California is already lagging and now we’ll see other states pursuing California businesses even more to relocate them out of the state.”

Critics may have felt it wasn’t adding jobs, but the program certainly kept jobs from leaving the state, said Brady Bryan, founder of Santa Clarita-based Bryan Consulting.

One tool to retain companies in the state, however, is the Research and Development tax credit, Bryan said. It’s one of the most lucrative in the nation, he said.

“California has a tax credit and there’s a federal one for R&D,” Bryan said. “And it’s blind to any specific industry; all companies can take advantage of it.”

Doing business in California and having both a state and federal tax credit is one tool that makes it attractive for companies to do business here – if they’re taking advantage of the existing credits, he said.

In the past only the Fortune 500 companies could afford the costs, but the tax credits we’re starting to see more and more middle-market companies take advantage of it, Bryan said.

Still, details for the state’s revamped Enterprise Zone need to be ironed out now experts said.

There are so many different criteria to meet — like granting tax credits only to companies in census tracks areas that have higher levels of unemployment, Crawford said. That might translate to making all Santa Clarita companies ineligible.

Even if hiring tax credits are available to firms offering higher wage jobs in biomedical, high-tech or manufacturing, Santa Clarita’s unemployment rate is lower than other areas and it could mean that no local company benefits as a result, he said.

Both Crawford and Collard, however, said they and other local business organizations are working with trade organizations and contacts within the state legislature to refine the legislation in a “cleanup process” so that doesn’t happen.

While both are hopeful that California “won’t be shortsighted,” Crawford doesn’t think it looks very promising, he said.

Since 2007, the city of Santa Clarita has issued over 8,300 vouchers for job-hires to over 480 businesses that have used the hiring credit portion of the Enterprise Zone program.

All it can do now is wait to see if any cleanup grants some incentives back to local businesses.

“The Enterprise Zone was really helping to level the playing field with those other states,” Crawford said. “Now it feels like the rug’s been pulled out from under us.”

For companies that want to take advantage of the Enterprise Zone program before it expires, reservations need to be made for the free breakfast seminar by calling (661) 288-4400 or email




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