Tuesday, October 20, 2015

Incentive Zones Imperial Valley Ca.

INCENTIVE ZONES
INCENTIVE ZONES
Business Guide to the Imperial County
Imperial County Community and Economic Development Department May 2002 page 23
Incentive Zone Overview
If you are an employer currently doing business in the Imperial
County or looking for a possible area to expand your business, there
are some appealing programs that you should be aware of when
making this decision.
Imperial County is currently awaiting new business ventures and is
full of exciting opportunities for employers. Within the Imperial
County are several federal and state designations that provide
incentives for businesses to locate in the area.
Imperial County offers Champion Communities, Rural Enterprise
Communities, an Enterprise Zone, Manufacturing Enhancement
Areas, as well as a countywide HUBZone. If you are familiar with
these designations, you will be able to take advantage of major
financial incentives and benefits. However, if you are not quite sure,
this section of the Business Guide will provide you with adequate
information on what type of incentives your business qualifies for,
incentives you may want to apply for and who to contact for further
assistance

Business Guide to the Imperial County
Imperial County Community and Economic Development Department May 2002 page 24
Incentive Zones Overview
Incentives Available Countywide
Work Opportunity
Tax Credits
Work Opportunity Tax Credits are available nationwide to all employers who hire qualified
employees such as veterans, ex-offenders, welfare recipients, and youth ages 18 – 24 who reside
in the Enterprise Communities.
Low Interest Loans Imperial County Community & Economic Development and the City of El Centro offer low
interest loans for economic development in Imperial County.



Hiring
Tax
Credits

Net
Operating
Loss
Carryover

Sales/
Use
Tax
Credit
Additional
Deductions
Lender
Tax
Credit
Permit
Fast-
Tracking
Contract
Preferences
Tariff
Deferrals
Enterprise Zone
Enterprise ZoneNearly all of
Calexico
ü
ü
ü
ü
ü
ü
ü
.
Foreign Trade
Zone
Approval Pending
.
.
.
....
ü
HUBZone
Imperial County
.
.
.
..
ü
.
Manufacturing
Enhancement Area
(MEA)
Brawley & Calexico
City limits
ü
.
.
.
ü
ü
.
Rural Champion
Communities
Calexico Census
Tracts 119,120,121
Niland Census Tract
101
Westmorland
Census Tract 102
Brawley Census
Tract 104
ü
.
.
.....
Rural Enterprise
Communities (EC)
Calexico Census
Tracts 119,120,121
Niland Census Tract
101
Brawley Census Tract 104
ü
.
.
.....


INCENTIVE ZONES
Business Guide to the Imperial County
Imperial County Community and Economic Development Department May 2002 page 25
Enterprise Zone
SUMMARY
Contact
City of Calexico
Redevelopment Agency
608 Heber Ave
Calexico, CA 92231
(760) 768-2177
www.calexico.ca.gov
Enterprise Zone Programs
California Technology,
Trade and Commerce
Agency
801 K Street Suite 1700
Sacramento, CA 95814
(916) 324-8211
Fax: (916) 324-8211
www.commerce.ca.gov
Benefits
¨ State tax credits and
deductions related to
hiring, equipment
purchases, and net
operating loss
¨ Tax deduction to
business lenders
Related Pages
¨ Hiring Tax Credit
¨ Manufacturing
Enhancement Area
¨ Qualified Employees
¨ City of Calexico
¨ Calexico Chamber of
Commerce
The Calexico Enterprise
Zone designation
continues through to
October 14, 2006. The
TEA designation expires
in 2012.
California Enterprise Zones can save a
business thousands of dollars through tax
credits and other benefits. Calexico is
the only city in Imperial County with
this designation.
Businesses operating in this zone may
qualify for significant state tax credits:
¨ Hiring tax credit
¨ Sales or use tax credit
¨ Net operating loss carryover
¨ Business expense deductions
¨ Lender interest income deduction
Hiring Tax Credits
State hiring tax credits can amount to
more than $30,000 per qualified
employee over a five-year period. These
credits are designed to provide
businesses with incentives to hire
qualified employees. Enterprise Zone
qualified employees are individuals who
are:
¨ Receiving or eligible for
employment services funded by the
Workforce Investment Act (WIA).
¨ Members of a targeted group as
defined in the federal Work
Opportunity Tax Credit (WOTC).
¨ Eligible to be a voluntary or
mandatory registrant of welfare to
work programs under CalWORKS.
¨ Economically disadvantaged youth
14-21 years old.
¨ Qualified dislocated workers.
¨ Disabled and eligible for, enrolled
in, or have completed a state
rehabilitation plan.
¨ Service connected disabled veterans.
¨ Veterans who recently separated
from military service, or who served
during the Vietnam Era.
¨ Ex-felons/offenders
¨ Eligible for, or recipient of,
Federal Supplemental Security
Income (SSI).
¨ Eligible for, or a short-term
recipient of, Temporary Aid to
Needy Families (TANF).
¨ Eligible for, or recipients of, food
stamps.
¨ Native Americans.
¨ Living in the Target Employment
Area (TEA).
Qualified employees must perform at
least 50% of their work within the
boundaries of the EZ, and spend at
least 90% of work-time on activities
related to the conduct of the business
located in the EZ. Qualified
employees must also be certified
through the One Stop Employment
Offices for the business to claim the
credit.
Target Employment Areas (TEA)
TEA is defined as an area within a
city, county, or city and county that is
composed solely of those census tracts
designated by the United States
Department of Housing and Urban
Development (HUD) as having at
least 51% of its residents of low- or
moderate-income levels. An
Enterprise Zone company can earn a
tax credit for hiring any person who
can demonstrate that they live in an
approved TEA

INCENTIVE ZONES
Business Guide to the Imperial County
Imperial County Community and Economic Development Department May 2002 page 26
Enterprise Zone, continued
Calculation of Credits
The amount on which you can claim a
credit is capped at 150% of minimum
Wage. The employer may pay a higher
wage, with the amount above the cap
not counting toward the credit.
Example: On Jan 1, 2002, a business
hires a qualified employee who has
been certified by the One Stop office.
This is full time employee works 2,080
hours in an Enterprise Zone business at
minimum wage ($6.75/hr as of Jan.1,
2002):
Minimum Year 1 Credit
$6.75 x 2,080 = $14,040
$14,040 x 50% = $7,020
Maximum Year 1 Credit
$6.75 x 150% x 2,080 =
$10.12 x 2,080 = $21,049.60
$21,049.60 x 50% = $10,524.80
Sales or Use Tax Credits
A business may receive state tax credit
for sales or use tax paid on equipment
and machinery related to:
¨ Manufacturing, processing, or
fabrication of a product
¨ Communications and data
processing
¨ Motion picture production
¨ Renewable energy resources
¨ Control of air or water pollution
Individuals can claim a credit on the
sales or use tax paid on the first $1
million of qualifying purchases, and
corporations on the first $20 million.
At the 7.75 percent sales tax rate, that’s
a credit of up to$17,750 for an
individual and $1.55 million for a
corporation.
Example: A business is operating in an
Enterprise Zone and spends $80,000 to
purchase machinery that is used to
manufacture toys. The sales tax paid
was $6,200. A business may reduce the
amount of state tax owed by $6,200.
Net Operating Loss Carryover
A business can carry over up to 100
percent of its net operating losses from
Enterprise Zone activity until
exhausted, or over a time limit of up to
15 years.
Example: For 2001, a business’s net
operating loss was $4,000. Because of
the loss, a business did not owe any tax
on year 2001 income. However, in
2002 the business showed a profit of
$10,000. The business may carry over
the 2001 $4,000 net operating loss to
reduce its 2002 taxable income. This
results in a business taxable income of
$6,000 ($10,000-$4,000) for 2002.
Net Operating Loss Carryover
A business can carry over up to 100
percent of its net operating losses from
Enterprise Zone activity until
exhausted, or over a time limit of up to
15 years.
Example: For 2001, a business’s net
operating loss was $4,000. Because of
the loss, a business did not owe any tax
on year 2001 income. However, in
2002 the business showed a profit of
$10,000. The business may carry over
the 2001 $4,000 net operating loss to
reduce its 2002 taxable income. This
results in a business taxable income of
$6,000 ($10,000-$4,000) for 2002.


INCENTIVE ZONES
Business Guide to the Imperial County
Imperial County Community and Economic Development Department May 2002 page 27
Enterprise Zone, continued
Business Expense Deductions
A business can elect to expense out the
cost to depreciate items in the first
year of use. Qualifying items include
business equipment, furniture and
fixtures, but not office supplies. The
maximum deduction for all qualified
property is either, 40% of the cost of
the qualified property, or $20,000,
whichever is smaller.
Example: An Enterprise Zone business
spends $40,000 purchasing an oven.
The business can claim $16,000
($40,000 x 40%) as a business expense
deduction.
Lenders’ Deduction
To encourage business locations and
expansions, the State allows lenders to
take a deduction of net interest received
on loans made to Enterprise Zone
businesses.
Example: A lender loans $5,000 to an
Enterprise Zone business. The lender
earns $550 interest and incurs $300 of
expenses directly related to the loan.
The lender may deduct its net interest
of $250 ($550 -$300) from its taxable
income.

INCENTIVE ZONES
Business Guide to the Imperial County
Imperial County Community and Economic Development Department May 2002 page 28
Foreign Trade Zone
SUMMARY
Contact
Imperial County
Community and
Economic Development
Department
836 Main St.
El Centro, CA 92243
Phone: (760) 337-7814
Fax: (760) 337-8907
www.foreign-trade-zone.
com
Benefits
¨ Reduced tariffs
¨ Deferred Customs
payments
Related Pages
¨ City of Calexico
¨ City of El Centro
¨ City of Calipatria
¨ City of Brawley
Foreign Trade Zone
application is pending.
The primary purpose of a Foreign
Trade Zone (FTZ) is to provide
incentives for domestic manufacturers
that rely on imported raw materials.
At the time of this publication,
Imperial County is applying for an FTZ
designation. If the designation is
awarded, businesses located in portions
of Calexico, Brawley, El Centro,
Calipatria, and unincorporated areas of
Imperial County would receive FTZ
benefits.
For U.S. Customs purposes, the FTZ is
considered outside the United States.
Therefore, any imported materials or
merchandise imported into the zone are
excluded from customs duty and excise
taxes until they leave the FTZ. When
the material or good is exported outside
the U.S., no duty is charged. A few of
the main benefits are listed below:
¨ Reduced tariffs
¨ Duty exemptions
¨ Duty elimination on waste, scrap,
and yield loss
¨ Weekly Entry Fee savings
Reduced Tariffs
In cases where raw materials require
higher tariffs than the finished product,
the FTZ provides manufacturers with a
level playing field. In an FTZ, a
manufacturer can import the raw
materials duty free and manufacture
finished products that require lower
tariffs when they leave the Zone.
Duty Exemptions
U.S. Customs duties are not due until
materials or finished products leave the
FTZ. Therefore, when foreign
merchandise is brought into the Zone
no duty is required until it enters the
commerce of the U.S.
Duty elimination on Waste, Scrap
and Yield Loss
Some raw materials that require a high
duty generate waste or scrap losses
when processed or manufactured. The
FTZ will reduce the cost of paying
duties on materials that will become
waste losses once they are processed.
A chemical processing plant is an
example of a company that can benefit
from this FTZ incentive.
Weekly Entry Savings
Some companies import materials on a
daily basis, and with each Entry, they
are required to pay U.S. Customs
processing fees. The maximum
processing fee is $485 per entry. This
maximum entry fee is applied to
shipments with values over $230,952.
Companies often receive shipments
well above this amount. For
companies that receive multiple
shipments on a daily basis, this
becomes extremely costly. Another
FTZ benefit will allow companies to
file Weekly Entries and pay the $485
based on weekly instead of daily
shipments.

INCENTIVE ZONES
Business Guide to the Imperial County
Imperial County Community and Economic Development Department May 2002 page 29
HUBZone
SUMMARY
Contact
Small Business
Administration (SBA)
550 West C St.
San Diego, CA 92101
(619) 557-7250
www.sba.gov
Benefits
¨ Federal set-aside
contracting
opportunities with
limited competition.
¨ Full and open
competition contracts
awarded with price
preferences.
Related Pages
¨ Small Business
Development
Services
Small businesses operating within
HUBZones receive federal contract
preferences. HUBZones were
introduced by the Small Business
Administration to stimulate job
creation in historically underutilized
business areas.
Due to the high unemployment rates
that exist in Imperial County, the entire
county qualifies as a HUBZone.
How it Works
Small businesses have the opportunity
to negotiate sole source contracts with
federal agencies and participate in
restricted competition limited to
HUBZone firms.
Additionally, HUBZone businesses
will be allowed a 10 percent price
evaluation preference in open
competition. In other words, the price
offered by a HUBZone firm would be
considered 10 percent lower than that
of a comparable bid made by a non-HUBZone
company.
All types of contracts normally
authorized under Federal Acquisition
Regulations are available. Participating
agencies include the Departments of
Agriculture, Defense, Energy, Health
and Human Services, Housing and
Urban Development, Transportation,
Veterans Affairs, the Environmental
Protection Agency, General Services
Administration, and National
Aeronautics and Space Administration.
Eligibility
HUBZone benefits are available to
new, existing, or relocating businesses
operating within the boundaries of the
HUBZone. The firm must be a small
business, owned and controlled by U.S.
citizens, and at least 35 percent of its
employees must reside in the
HUBZone. SBA has established
standards for designating businesses as
“small”. These standards include:
¨ 500 employees for most
manufacturing and mining
industries
¨ 100 employees for all wholesale
trade industries
¨ $5 million average annual revenues
for most retail and service
industries
¨ $27.5 million average annual
revenues in most general and
heavy construction industries
¨ $11.5 million average annual
revenues for all special trade
contractors
¨ $0.75 million average annual
revenues for most agricultural
industries
How to Apply
The SBA certifies firms for eligibility.
Small businesses are encouraged to use
the electronic application at the SBA
web site: www.sba.gov.
Paper applications can also be
downloaded from the web site, or they
can be obtained from the nearest SBA
district office.

INCENTIVE ZONES
Business Guide to the Imperial County
Imperial County Community and Economic Development Department May 2002 page 30
Manufacturing Enhancement Area (MEA)
SUMMARY
Contact
City of Brawley
400 Main St.
Brawley, CA 92227
(760) 344-8622
www.cityofbrawley.com
City of Calexico
608 Heber Ave
Calexico, CA 92231
(760) 768-2177
www.calexico.ca.gov
California Technology,
Trade and Commerce
Agency
801 K Street Suite 1700
Sacramento, CA 95814
(916) 324-8211
1-800-326-8606
Fax: (916) 324-8211
www.commerce.ca.gov
Benefits
¨ State hiring tax credits
¨ Business assistance
and reduced fees
Related Pages
¨ Hiring Tax Credits
¨ Enterprise Zone
¨ Qualified Employees
¨ CalWORKs
The MEA designation
will continue through
Dec. 31, 2012.
The State of California created
Manufacturing Enhancement Areas
(MEAs) to stimulate job creation in
areas experiencing triple the State’s
unemployment rate. The Cities of
Calexico and Brawley are the two
designated MEAs in California.
Benefits
MEA benefits include:
¨ Streamlined local regulatory
controls
¨ Reduced permitting fees
¨ MEA companies are eligible to
earn $30,000 or more in state
hiring tax credit per qualified
employee hired over a five-year
period.
Hiring Tax Eligibility
If a business is located within an MEA,
it is eligible for State hiring tax credits.
For a business to be eligible, it must
first satisfy these three conditions:
¨ The business must be operating in
those lines of business described in
Codes 2011 to 3999 of the
Standard Industrial Classification,
¨ 50% of the workforce must be
residents of the county in which the
MEA is located, and
¨ At least 30% of the above county
employees must be certified
qualified employees.
The California Franchise Tax Board
considers an MEA qualified employee
to be anyone who at the time of hiring
was receiving or is eligible for any of
the following programs or services:
¨ Subsidized employment, training,
or services funded by the federal
Workforce Investment Act.
¨ Eligible to be a voluntary or
mandatory registrant of welfare to
work programs under CalWORKs.
¨ Members of a targeted group as
defined in the federal Work
Opportunity Tax Credit (WOTC)
In addition, qualified employees must
perform at least 50% of their work
within the boundaries of the MEA, and
spend at least 90% of work time on
activities related to the conduct of
business located in the MEA. Qualified
employees must also be certified through
the One Stop Employment Offices for
the business to claim the credit.
The MEA tax credit is based on
qualified wages paid to the qualified
employees and the calculation is based
on the State hiring tax credit
Example: On Jan.1, 2002, a business
hires a full time qualified employee who
works 2,080 hours in your MEA
business at minimum wage ($6.75/hr as
of Jan.1, 2002). The credit is capped at
150% of the minimum wage.
Min. Year 1 Credit
$6.75 x 2,080 = $14,040
$14,040 x 50% = $7,020
Max. Year 1 Credit
$6.75 x 150% x 2,080 =
$10.12 x 2,080 = $21,049.60
$21,049.60 x 50% = $10,524.80
Application Process
If a business meets all the MEA
regulations, you do not need to receive
prior approval to take advantage of the
special tax incentive. The business will
just need to maintain accurate records of
qualified employees hired.

INCENTIVE ZONES
Business Guide to the Imperial County
Imperial County Community and Economic Development Department May 2002 page 31
Rural Champion Communities
SUMMARY
Contact
USDA El Centro
177 N. Imperial Avenue
El Centro, CA 92243
Phone: (760) 352-4418
www.usda.gov
www.ezec.gov
Benefits
¨ Preference points
awarded when
communities apply
for USDA funding.
Related Pages
¨ Enterprise
Communities
¨ City of Westmorland
¨ City of Brawley
¨ City of Calexico
¨ Small Business
Development
Services
The Rural Champion
Community designation
is in effect from 2000-2005.
In 1999, Imperial County was one of
more than 160 communities that
organized and completed a strategic
planning process as part of an
application for the Round II
Empowerment Zone/Enterprise
Community (EZ/EC) competition.
Imperial County did not receive the
Round II Empowerment Zone
designation. However, in recognition
of this effort, the U.S. Department of
Agriculture designated Imperial County
as a “Champion Community.”
USDA has executed memoranda of
understanding with Imperial County
and other Champion Communities,
pledging ongoing technical support for
implementation of their strategic plans.
Key Features
USDA is not the only agency assisting
Champions, as other agencies have also
targeted funds and technical assistance
initiatives to these disadvantaged
communities.
USDA Rural Development sponsors
conferences to train community leaders
and promotes networking among
communities.
USDA provides targeted assistance to
Champions and gives them significant
preference points when competing for
project funding.
Imperial County Champion
Communities:
¨ Niland/Calipatria Census Tract 101
¨ Westmorland Census Tract 102
¨ Brawley Census Tract 104
¨ Calexico Census Tracts 119, 120,
121

INCENTIVE ZONES
Imperial County Business Guide
Imperial County Community and Economic Development Department May 2002 page 32
Rural Enterprise Communities
SUMMARY
Contact
USDA El Centro
177 N. Imperial Avenue
El Centro, CA 92243
Phone: (760) 352-4418
www.usda.gov
www.ezec.gov
Imperial County
Community and
Economic Development
Department
836 Main St
El Centro, CA 92243
Phone: (760) 337-7814
Fax: (760) 337-8907
Benefits
¨ Funding for several
programs designed
to improve
community and
economic conditions
¨ WOTC
Related Pages
¨ Champion
Communities
¨ Work Opportunity
Tax Credits
¨ Qualified Individuals
¨ Enterprise Zone
¨ One Stop
Employment Offices
Launched in 1993, the Empowerment
Zone and Enterprise Community
(EZ/EC) Initiative is a federal
interagency effort focused on the
creation of self-sustaining, long-term
development in distressed urban and
rural areas throughout the United
States. In Imperial County the U.S.
Department of Agriculture designated
Round I Rural Enterprise Communities
in these five census tracts:
¨ Calexico Census Tracts 119, 120,
121
¨ Brawley Census Tract 104
¨ Niland/Calipatria Census Tract 101
Benchmarks
With the Enterprise Community
designation, the County received a $3
million Social Services Block Grant.
This grant has been used to fund several
programs designed to improve
community and economic conditions.
Enterprise Community funds have been
used by the Small Business
Development Center to assist small
businesses with counseling, training
and access to financing.
The Literacy Volunteers of America
have also used EC funds to increase the
literacy levels of Enterprise Community
residents. The literacy programs are
stronger than ever and continue to
address the major problem.
The Imperial Valley Housing Authority
has used EC funds to increase housing
opportunities for low-income residents
of Imperial County.
Enterprise Community funds have also
been used in the development of One
Stop Employment Service Centers.
These centers provide many services
for both employees and employers.
Incentives
These incentives are available in
Enterprise Communities; however, they
are contingent upon state and local
government funding:
¨ Enterprise Zone Facility Bonds
¨ Qualified Zone Academy Bonds
These incentives are not restricted to
Enterprise Communities, and are
available to all businesses throughout
the United States:
¨ Environmental Cleanup Cost
Deduction
¨ Depreciation of Indian Reservation
property
¨ New Markets Tax Credits
¨ Low-Income Housing Tax Credits
Work Opportunity Tax Credits
Work Opportunity Tax Credits
(WOTC) are available throughout the
United States for employers who hire
qualified individuals from targeted
economically disadvantaged groups.
Youth living in an Enterprise
Community are one of these designated
economically disadvantaged groups.
Hiring Enterprise Community youth
ages 18-24 can save a business up to
$2,400 per employee.


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