HomeMy WebLinkAbout1990-379
1
RESOLUTION NO.
90-379
2 RESOLUTION OF THE CITY OF SAN BERNARDINO DESIGNATING THE
AREA CONTAINED IN THE ENTERPRISE ZONE BOUNDARIES TO BE A
3 DEPRESSED AREA AND IN NEED OF DESIGNATION AS AN ENTERPRISE ZONE
IN ORDER TO ATTRACT PRIVATE BUSINESS FOR FUTURE DEVELOPMENT.
4 GRANTING CERTAIN INCENTIVES IN THE ENTERPRISE ZONE. AND
AUTHORIZING APPLICATION FOR DESIGNATION TO BE FILED.
5
NOW. THEREFORE. BE IT RESOLVED BY THE MAYOR AND COMMON
6 COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
7
SECTION 1. Recitals.
8
A.
The Mayor and Common Council of the City of San
9 Bernardino have thoroughly researched issues involved in
10 establishment of an Enterprise Zone within the City limits of the
11 City of San Bernardino. and are satisfied that establishment of
12 an Enterprise Zone will be beneficial to the City of San
13 Bernardino.
14
B.
The Mayor and Common Council. after due deliberation.
15 have found and determined that the neighborhoods contained within
16 the boundaries of the proposed Enterprise Zone are in need of
17 special assistance. and have agreed to adopt incentives for the
18 Zone.
19
C.
The Mayor and Common Council have established an
20 Enterprise Zone wherein tax advantages and other incentives will
21 be used to help stimulate economic development.
22
D.
It is anticipated that the Enterprise Zone will
23 preserve existing jobs and create new jobs in the Zone. encourage
24 existing businesses to remain in the Zone and to expand. cause
25 the location of new commercial and industrial development within
26 the Zone. and in other ways will serve to revitalize the Zone.
27
/
/
/
28
DAB/ses/Zone.res
August 30. 1990
1
1
SECTION 2. Finding and Determination.
2 The Mayor and Common Council of the City of San Bernardino
3 find and determine that the area contained in the Enterprise Zone
4 boundaries is a depressed area and in need of designation as an
5 Enterprise Zone in order to attract private business and private
6 sector investment for future development.
7
SECTION 3. Incentives.
8 The Mayor and Common Council hereby approve and commit the
9 City to providing those incentives to development within the
10 Enterprise Zone as are set forth in detail in the preliminary and
11 final Application for Enterprise Zone Designation, a copy of
12 which is attached hereto as Exhibit "1", and incorporated herein
13 by reference and to complete all actions set forth therein,
14 should the final application be awarded conditional designation.
15 I HEREBY CERTIFY that the foregoing resolution was duly
19
16 adopted by the Mayor and Common Council of the City of San
17 Bernardino at a regular meeting thereof, held on the 5th
18
day of September
, 1990, by the following vote, to wit:
Council Members:
AYES
NAYS
ABSTAIN
21
20 ESTRADA
x
22
23
24
25
26
27
28
REILLY
FLORES
x
MAUDSLEY
x
MINOR
x
POPE-LUDLAM
x
MILLER
x
DAB/ses/Zone.res
August 30, 1990
2
1 RESOLUTION. .DESIGNATING THE AREA CONTAINED IN THE
ENTERPRISE ZONE BOUNDARIES TO BE A DEPRESSED AREA AND IN.
2
3
4
5
1~~uL /7~L&_9}J
Ci Clerk
~h..
of
September
The foregoing resolution JS hereby approved ~~s
6
7
1990.
/
./"
8 , Mayor//
ernardino
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
9 Approved as to
form and legal content:
10
11
JAMES F. PENMAN,
City Attorney
~)
DAB/ses/Zone.res
August 30, 1990
3
day
EXHIBIT "1"
III. PLl\NNllG AND IDCAL IN:::ENl'IVES
For the past five (5) years, the city of San Bernardino has operated
a City designated Entel:prise Zone. 'Ihe comerstone of that program
has been the delivery of City financed incentives to local
businesses. Attachment Number is a report that summarizes the
results of the program to clate.It must be noted that these
incentives fomed the basis of the city's application for designation
as an Entel:prise Zone umer the state I s program in the year 1985.
'Ihough the City failed to meet the qualifying score for state
designation, the City's local program was fomed ani operated with
some success. We believe that accornpanying state incentives
available un:ier the state designated Entel:prise Zone program, with
local incentives will have a significant :impact on the city's
depressed areas that qualify for Zone designation ani the City as a
whole.
Under its current Entel:prise Zone proposal, the City will include
much of the same incentives as offered un:ier the 1985 proposal ani,
in addition, include other incentives thought to be beneficial to the
program.
A. Tax Increment Financinq CRedeveloanent Proiect Areas)
To estimate the inportance of this type of incentive to program
success, it must be considered that virtually all of the proposed
Entel:prise Zone area is included within a Redevelopment Project
Area. Additionally, areas of the proposed Zone that are not
directly within a Redevelopment Project Area are within close
enough proximity ani affected by smlar factors to allow for
mutual benefit arguments. As such, projects outside of the
Redevelopment Project Area may have access to Redevelopment
financing using mutual benefit arguments. In all, seven (7)
Redevelopment Project Areas or proposed project areas directly
:impact the Entel:prise Zone.
The primary ani JroSt inportant fuming mechanism available to the
Redevelopment Age.rcy of the City is tax increment financing. Upon
initiation of a new redevelopment project area, the total
eligible amount of property tax collected in the previous year is
established as a base amount. From inplementation of the project
ani throughout its development, the am:mnt of annual property tax
revenues received in excess of the base amount is the tax incre
ment. 'Ihese revenues will a=rue to the Redevelopment Age.rcy for
further project financing. The inportance of this method of
financing is the sale of tax exempt borx:Is to fum p~E'ary
activities to leverage private development, with the anticipated
tax increment, resulting from such development, being pledged
toward repayment of the borx:Is. As such, this method of financing
deperx:Is upon new private development =ing in the project
area. It is effective ani nonnally only feasible in conjunction
with relatively large developments or a cluster of small develop
ments projects.
'Ihe method of using tax in=ement financing is as follows:
1
1) '!he Redeveloprre.nt Agency can provide tax increment financial
assistance to developrre.nt projects with legally bindiIxJ dis
position an::l. developrre.nt agreements or owner participation
agreements, in an amount up to the total amount of tax incre
ment to be received by the Agency over a five (5) year
period, as a result of small development or developrre.nts.
2) '!he amount of financial assistance is limited to the minimum
amount necessary to cover a veritable shortfall in the
financiIxJ pro fonna of an otherwise souni, marketable,
financially feasible developrre.nt proposal. D.le to the very
nature of tax increment financiIxJ, it is difficult to predict
an annual or total dollar amount for this type of fun:iing
incentive.
B. Rebates
Businesses that anticipate expansion an::l. new business within the
conunercial area will receive the followiIxJ rebates from the City
duriIxJ the first three (3) years of operation:
1) One-hundred percent (100%) rebate of the utility services
users' tax.
2) One-hundred percent (100%) rebate of the Business License
tax.
3) Twenty-five percent (25%) rebate of the water charges (for
new businesses only).
A new business is defined as any business which is "start-up" in
nature or has relocated to the conunercial area from outside the
corporate city limits of San Ben1ardino. An existiIxJ business
within the Area, which has been purchased, is not considered a
new business. An expandiIxJ business is defined as an existiIxJ
business which has made a physical move within the conunercial
area the next result of which results in additional space for
business purposes, or has physically expanded its existiIxJ
facilities within the area. The expansion 1I1USt have resulted in
at least a fifty percent (50%) increase in pennanent full ti1ne
employees or two (2) employees whichever is greater.
'!he amount of rebate on the utility tax for an expandiIxJ business
will be based upon the amount of said tax paid by the business
over an::l. above the amount paid, for the twelve (12) rronths prior
to the expansion.
Pennanent employees referred to 1I1USt be residents of the City of
San Bernardino an::l. be on the jab a minimum of nine (9) rronths.
'!he City will offer/provide the followiIxJ rebate incentives
duriIxJ the first year of operation of industrial businesses
locatiIxJ within the industrial area.
1) 'IWenty-five percent (25%) rebate of the utility service
users I tax.
2
2) 'IWenty-five percent (25%) of the Business License Tax.
with regard to item "b" above, no additional funding for
adinistrative and personnel functions will be required for this
incentive. 1he City Administrators will be the fuctionary
personnel in inplementirq this incentive although the initial
point of contact will be the Business SUpport Facilities.
Finances, with regard to a deficit, caused by these rebates to
the City's General FUnd, has not been determined yet.
For the commercial area, the rebate program will be available
durirq the first four (4) years of the life of the Entel:prise
Zone. At that point, the effectiveness of the program will be
assessed and extended arrljor expanded depending upon the results
of the assessment.
C. Fee Exemption
I:Urirq the first three (3) years of Entel:prise Zone designation,
all new or expandin:J (refer to Item "c" above for definition) ,
within the Entel:prise Zone area will be exenpt fran all
engineerirq fees, plannirq fees, mechanical fees and buildirq
pennit fees. stonn drain and sewer fees are not covered by this
exenption.
Implementation of the action will not create an added cost to the
City because it does not require new staffirq or measureable time
of existirq staff; however, the action will represent a cost to
the City in tenus of lost revenue to the General FUnd. 1he costs
have not yet been determine either on an annual basis or for the
three (3) year tenure of the action.
1he City Administrator's office will be responsible for coor-
dinatirq the action and assurirq its prtllrpt inplementation by
applicable city Deparbrents.
D. Beautification PrOClLCUU
'Ihe area of inplementation of this incentive will be the eligible
area and conunercial area. 1he inplementirq entity will be the
Redevelopment Agency of the City of San Bernardino.
'Ihe objective of this program is to provide a financial incentive
to business owners or long tenn tenants who own commercial
properties, to finance exterior beautification as facade
inprovements. Interested business owners will file an
application with the Agency, including a description of the
proposed beautification activities and cost estimates.
If approved, the Agency will grant ll'atching funjs on a dollar
for-dollar basis up to $5,000.00. 'Ihe grant carnes via a rebate,
upon proper submittal of receipts by the owner, and an inspection
of the work by city staff. 'Ihe program, available in other
specific locations in the city, is staffed by one (1) person with
an annual budget of $50,000.00.
3
'!he City is conmtitted to :fun:ii.n:J twenty-five percent (25%) of the
:Eurrls for beautification activities within the Zone. An
evaluation will be conducted periodically to assess need aIXVor
demand for change in :fun:ii.n:J levels. '!he amount conmtitted for
the program totals $187,500.00.
'!he beautification of the existing businesses which may need
internal as well as facade improvements, will .inpose the p0-
tential for attracting new businesses to the Zone am renewed
consumer interest.
E. SI1lall Business !Dans
'!his program is administered am operated out of the City's Com-
=ity Development Depart:Ioont.
'!he Community Development Department revolving loan fund receives
on:Joing funding from the City, primarily from a fee charged by
the City on all Industrial Development Bond Issues. '!his source
has enabled the Community Development Depart:Ioont am its pre-
cesser, the Economic Development Council to make small business
loans totalling in excess of loans made under the Community
Development Depart:Ioont totals $500,000.00 within a two (2) year
period.
Legitimate new am expanding small businesses within the En-
teJ:prise Zone that may otheJ:Wise would find it difficult to
qualify for con ventional financing, are encouraged to apply for
Community Development Depart:Ioont direct loans (program will fonn
a main component within the Business SUpport Facilities) such as
plant aa:}Uisition or expansion, equipment am worki.n:J capitalare
financed through this program.
'!he small business loan program has existed within the City's
Community Development Depart:Ioont for a period of two (2) years.
'!he program is provided guidance by a loan review conmtittee known
as the Economic Development Program Canunittee (EDPC). '!his
Canunittee is conprised of area bankers am other professionals.
It is envisioned that this loan applications filed within the
Zone will be afforded the highest priority for use of :Eurrls.
A maximum of $50,000 is provided under this program is providing
gap financing to local businesses. Gap financing arrangements
are made contingent upon Small Business Administration (SEA) am
other conventional loan sources.
with the proposed merger of the Community Development Depart:Ioont
am the Redevelopment Agency, the administration am operation of
a loan program should became more efficient am effective. '!he
pro posed organizational structure is designed to include a Busi
ness Development Section with the loan program being a key
component of same (see 01art Number _).
F. Demolition
4
'Ibis program will be funjed by COB:; JOClnies. ihe objective will
be to tear down arrljor eliminate structures that represent a
blighting influence on nearlJy properties am which cannot be
mandatorily dealt with under local City ordinances.
OWners are requested to remove dilapidated structures through the
Agency's Demolition program. ihere are no additional costs to
the owner. A staff person is relegated to harrlle property
identification, owner contact, application processing, contract
bidding, award am supel:Vision. ibis program is budgeted at
$50,000.00 per year. ihe program is to be executed throughout
the period of operation of the Enterprise Zone. 'Ibis will be
reviewed periodically to evaluate demand am needs for increase
or decrease of funjing. ihe minimum financial canunitIrent
approximates $250,000.00.
ihe deJOCllition program will serve as an investIrent incentive to
potential new am expanding businesses, by covering a pre-
development activity am costs. ihe negative perception of the
area will be eradicated through the reJOClVal of a large number of
unsightly structures.
G. Fast Track Mechanism
ihe inllvidual responsible for managing am coordinating the
activities of the Business Support Facilities (referred to under
the marketing section of the proposal) will playa key role in
the fast tracking of information am d=uments for development
purposes. ihe ultimate objective of this incentive is to provide
developers with decisions (approval/disapproval) regarding
development activities in the shortest possible tilreframe.
ihe orderly flow of information am d=uments between developers
am the city's decision-makers will be streamlined am made
"tilne-efficient" by providing one point of contact for
developers. ibis contact point will be the Business Support
Facilities' manager/coordinator. ibis inllvidual, working in
conjunction with the Business Development Specialist (see
attaclunents numbered am organizational structure) within
the Redevelopment Agency will ensure that all d=uments are
processed am information dispensed in the shortest tilre period.
ihe Business Development Specialist will work with the City's
Developroont Review Committee in the fast tracking of information
am documents.
ihe Development Review Committee (DRC) was fomed in the year
1985 as an element of its then Enterprise Zone proposal. ihe
Committee has been functioning under the City's self-designated
Zone since that tilre. ihe Committee is conprised of personnel
from the various City departments involved in plan checking am
pennit issuance am is coordinated by the city's Planning am
&lllding Services Department. Once a development proposal is
received by the City, the DRC meets am acts within a ten (10)
day period, thus, allowing for a one stop review process in the
shortest tilre frame possible.
5
since the ORC is coordinated un:ier one department head, the
functioning of the unit is provided continuous guidance and
scrutiny to ensure that the primary objective of fast tracking is
always met.
H. ParJdnq and set-Back Relief
'Ibis proposal incentive will take effort within six (6) months of
conditional Zone designation by the state of California. 'Ibis
corrlition on the City's portion of incentives was also included
in the city 1985 Zone application.
Where it is detennined that the successful ocx::upancy of an
existin;J COI11lOOrCial structure is depen1ent upon meetin;J pro-
hibitive off street parking standards, such standards will be
waived. In the case where new facilities are bein;J constructed
for business ocx::upancy and the set back requireIrents of the City
is the only deterrent to successful development, such
requireIrents will be waived with respect to that specific
development. It is expected that these particular incentives
will stimulate the development, rehabilitation and re-oocupancy
of certain buildin;Jsjland due to parcel size and lot coverage.
As was proposed under the 1985 EnteJ:prise Zone proposal and
adopted by City Resolution Numbered 85-411 (Attachment Number
_), the City authorized its Planning and B..1ildin;J Services
Department to prepare code changes for inplementation of parking
and set back modifications within the COI11lOOrCial area of the
EnteJ:prise Zone. '!he City's Planning and B..1ildin;J Services
Department will develop and inplement these changes once
corrlitional designation is received.
r. Crime Prevention
As was proposed under the City 1985 EnteJ:prise Zone Application
and currently ongoin;J, the City has focllsed additional resources
through its Police Department in ensurin;J a safe community for
businesses within the Zone area. '!his effort and conunitJnent will
be exparrled to include the newly proposed Zone area. As was
stated in the previous application, two (2) Police Service
Centers were established within the City self-designated Zone
area. In addition, the Police Departroont has inplemented the
Neighborhood Watch Program within the Zone area. '!he Police
service Centers were developed to provide high visibility for the
Police Department efforts within the area, thus, actin;J in itself
as a =ime deterrant. '!he Centers also provide quick responses in
the event of =iminal activities within the area. As stated
above, this effort will exparrl with Zone designation un:ier
current proposal.
J. Business SI.1Dl:lort Facilities
In an atterrqJt to reduce the failure rate of businesses within the
EnteJ:prise Zone area, the City is proposin;J the development of two
(2) Business Support Facilities. '!hese facilities will be
6
developed in conjunction with other incentives that will became
available to Zone businesses. As stated un:ier the marketirq
section of this proposal (section ), a prilnary goal of the
City for both the Commercial and In:lustrial Areas of the Zone is
the reduction of business failures by ten percent (10%) to fifteen
percent (15%) of current failure rate. lbe Facilities will also be
inst.nnnental in assistirq the city to meet other goals for the
Zone, includirq:
1) The Marketinq of the ZOne to outside Businesses
'Ihis role will be limited to the dispensation of overall
infonnation regarding the Zone and the City.
2) Econanic stimulation
lbe Facilities will play a lead role llIrler the direction and
guidance of the Enterprise Zone Association in marketirq of
incentives to Zone businesses. lDans will also be made on the
recommendation of the Facilities Manager/Coordinator. lbe San
Bernardino Employnent and Trainirq Agency, through outstationed
employees, will provide trained employees to businesses.
3) Coordination of DevelOtllleIlt Efforts
'!he Facilities will act as the first point of contact for Zone
businesses in processirq pennits, licenses and other similar
development requirements.
As stated above, the Enterprise Zone Business Association will play
a lead role in the efforts of the Business SUpport Facili-ties. '!he
Association will be fonood. by initially invitirq key business
owners from the Zone to serve on an interim basis once Zone
designation has been received. 'Ihis core group will develop by
laws, policies and goals for proper functionirq of the group. Other
members will be added through a contractual relationship in order
to properly access the services of the Facilities. A small bee
will be charged (pro-rata) for certain services that require !rOre
than two (2) hours of staff time. lbe Association Board of
Directors will govern the operation of the Facilities in
conjunction with the City's Redevelopment Agency (Attachment Number
).
In meetirq the goals mentioned above, the followirq specific
activities will be un:iertaken by the Business SUpport Facilities:
1) Goal Number "1"
Reduction of failure rate by ten percent (10%) to fifteen (15%)
over a three (3) year period.
Activities
a. Provision of technical assistance to businesses includirq
infonnation on reasons for business failure, overall
industry as a whole, product distribution, sales, pricirq
7
and c::orrpetition.
b. Provision of referral assistance to appropriate profes
sienal services such as a=ting and legal.
c. ACCE'ssing of computer services, libnu:y services, central
typing and mailing for small, camrnercial ventures.
d. Specialized counseling (one-on-one) for start-up busi
nesses .
e. Provision of business seminars and sources in conjunction
with the Community College district.
f. Packaging of loan requests for consideration by financing
resources .
2) Goal NUmber "2"
Marketing of Zone to outside businesses.
Activities
a. Distribution of infonnation brochures in conjunction with
city DepartJoonts (see Section , Marketing) and the local
Chambers of Conunerce to businesses wishing to relocate.
b. Relating to prospective relocatees of the factors and
conditions that affect certain i.n:iustJ:y in the area.
c. Participating in Economic Developl1'e11t workshops, seminars
and presentations held for likely business prospects.
3) Goal NUmber "3"
Economic Stllnulation
Activities
a. Creation of a loan pool, using current financing mechanisms
within the Community Developl1'e11t DepartJoont and the
Redevelopl1'e11t Agercy (see Loan Incentives, Item Number
Section _) to attract other sources of financing.
b. Coordinate with the Economic Developl1'e11t Program Committee
(EDPC), which is the Committee responsible for making loan
recommendations to the Mayor and Common Council, in
attracting additional finances and increased bank
participation in the Zone area. (The EDPC is COIlqJrised
primarily of area bank representatives, see Section _,
Financing) .
c. Play primary role in marketing Zone incentives to Zone
Businesses. 'Ihis will be done through the active parti
cipation of the Business Association using newsletters,
public service announcements, "networking" and other
8
I
d.
membership events.
Coordination of vocational training efforts by the San
Bernardino Enployment and Training Agercy in meeting
business needs.
e.
Coordination of placement of trained employees in busi
nesses with San Bernardino Enployment and Training Agency.
f.
Coordination of placement incentives to businesses with San
Bernardino Enployment and Training Agercy.
g.
Coordination of Targeted Job Tax Credit (TJTC) vouchering
with the Enployment Development Deparbnent (note that
employers have been reluctant in the past to meet the
vouchering requirements for TJTC priInarily because of the
preparing of necessary d=unents on the part of the em
ployer) .
Fostering better linkage between rranufacturers within the
industrial Zone and retailers in the Cc:anrre=ial Zone for
better accessibility to products.
h.
4) Goal Number "4"
Coordination of Development Efforts
Activities
Acting as the first point of contact for developers and Zone
businesses is precessing of pennits and license d=unents.
(This effort will be coordinated with the Business Develop ment
Section of the Redevelopment Agercy, Attachment Number ) .
In carrying out the above role, the Business SUpport Facilities
will act as the primary corrponent within the City stJ:ucture for
developing Zone business. 'lhough a level of au1:onany will be
provided to better facilitate the above role, the city, through
its city Administrator, will assess the meeting of yearly goals
in detenn:ining future operations and relationships.
The Facilities will be initially financed for a two (2) year
period (see Attachment Number ) for preliminary budget
considerations. For the initial two (2) year period, the
Facilities will be financed by a cambination of funds from the
Redevelopment Agency, Cormnunity Development Deparbnent and the
San Bernardino Enployment and Training Agency and a fee for
service structure within the Business SUpport Facilities.
K. Capital IlllDrovements
Each year, the City of San Bernardino updates a five (5) year
Capital Ilnprovement Program Plan. 'lhe Plan provides for
construction, reconstruction, rehabilitation and general
i1lIprovements for the following:
9
1) General &llldin;Js
2) streets am street Lighting
3) Sewers
4) Stom Drains
5) Traffic Controls
6) Parks am Recreation
7) Recreational Field Lighting
'!he Capital Improvements Program proposed for the entire city of
San Ben1ardino for the five (5) year period 1989/1990 through
1993/1994 would require a total expenditure of $86,336,339.99. Of
this amount, a total of $ will be expenjed in the
EnteJ:prise Zone area. '!he following items (numbered "2" through
"5" above) cover those expenditures that would JOOSt affect business
development facilities within the EnteJ:prise Zone area (items are
listed by project SPeCific am total anticipated expenditures):
ProJECT/1\DDREB8
AM:lUNl'
Vl\RIOUS STREETS
Capital inprovements in Redevelopment
Project Areas.
$1,700,000.00
CElNl'RAL CITY SOUTH
Realigmnent of streets am construction
of underground utilities am larrlscaping.
$7,700,000.00
''E'' ti.l:~.l: AND MILL ti.l:Kti.t.".I.'
Remove concrete cross gutters am fill in
dip with asphalt concrete payment.
$ 42,100.00
1'IM'ERMl\N AVENUE
Replace Edison street lights, from Secorxi
street to Ninth street.
$ 70,000.00
SOUTH ''E'' ti.l:~.l:
Widen to provide second south bound lane of
west bound onrarnp to 1-10 Freeway.
$ 25,000.00
1'IM'ERMl\N AVENUE
Underground utilities from Santa Ana River
to Ninth street.
$6,000,000.00
B1lSELINE STREET
Rehabilitate payment from Medical Center
Drive to Crestview Avenue.
$ 938,000.00
Ml'. VERN:lN AVENUE
$ 526,700.00
10
Rehabilitate payment from Grant Avenue to
Secorrl street.
''DI' tfJ.'tu:a:.~.1'
Replace steet lighting from Fifth street
to Baseline street.
WM'ERMl\N AVENUE
Rehabilitate pavement arrl safety related
ilIIprovements from Redlarrls Boulevard to
Mill street.
WM'ERMl\N AVENUE
Widen to six (6) lanes arrl safety ilIIprove-
ments from Mill street to Fifth street.
ARRJWHEN) AVENUE
Replace ornamental street lights, from
Fifth street to Baseline street.
NINl'H STREET
Rehabilitate payment from "E" street, to
Tippecanoe Avenue.
SOUTH ''EI' b"'J.'1<ta!;J:
Rehabilitate pavement from Orange Show Road
to Mill street.
Mr. VERN:lN AVENUE
Underground utilities from Tenth street to
21st street.
MILL ...J:1<ta!;J:
Widen to sixty-four feet (64 ') between cw:bs
arrl rehabilitate payment from "E" street to
Santa Fe Railway, E/O Sierra Way.
MlIJOR ARl'ERIAL
Construct major arterial a=oss Santa Ana
River, between "E" street arrl Tippecanoe
Avenue.
BY-PASS
Construct By-Pass arourrl Norton Air Force
Base from Mill street to Tippecanoe Avenue.
MILL STREET
Widen Mill street to seventy-two feet (72')
between cw:bs from Watennan Avenue to
Tippecanoe Avenue.
OAK "'J.'KtitlJ:
Widening of Oak Street between Eureka street
arrl "K" street.
Mr. VERN:lN AVENUE BRIDGE
11
$ 101,000.00
$ 400,000.00
$1,163,000.00
$ 108,000.00
$ 250,000.00
$ 400,000.00
$ 420,000.00
$ 650,000.00
$8,000,000.00
$1,600,000.00
$1,500,000.00
$ 37,000.00
$4,000,000.00
Replacement of Mt. Avenue over Santa Fe
Railroad yards.
S~ Wl\.y
Exterrl Sierra way from Orange Show Road to
Mill street.
WATElOO\N AVENUE
landscaping Watennan Avenue from Santa Ana
River to Central Avenue.
Mr. VERIDN AVENUE
Widening Mt. Vernon Avenue to six (6) lanes
from Highland Avenue to 1-10 Freeway.
MILL STREET BRIDGE
Construct second bridge on Mill street over
Santa Fe Railway "B" yards.
ORAN:;E SHOW ROAD
Exterrl Orange Show Road from Arrowhead Avenue
to Watennan Avenue.
MILL STREET -- HmSE I
'Two (2) of two (2) annual payments to install
Master Plan Drain from Lytle Creek to west
of Pennsylvania Avenue.
MILL t:r.l:.Kta:i'.I:
Install stonn drain from "E" street to Warm
Creek Channel.
$2,000,000.00
$ 400,000.00
$25,000,000.00
$6,000,000.00
$2,500,000.00
$ 105,500.00
$ 218,700.00
Mr. VERIDN AVENUE $ 700,000.00
Install Fhase "1" of "3" stonn drains, fram
Seventh and Western streets to Baseline Avenue.
Ml\STER PIAN DRAIN $ 440,000.00
Install Master Plan Drain in easement from
El Camino Real to Orange Show Road.
NINTH t:r.l:~~ $2,500,000.00
Install stonn drain in Ninth street fram "E"
street to Twin Creek (A-2).
CENl'Rl\L AVENUE $ 920,000.00
Install stonn drain in Central Avenue from
East Twin Creek to Tippecanoe Avenue (C-16).
"I" t:r.l:.Kta:i'.I: SEWER - HmSE I $1,305,800.00
Construct sewer from Mill street to sixth
street.
"I" STREET SEWER -- HmSE II $ 735,000.00
Construct sewer, from sixth street to
Muscott street.
12
NINTH l:fn(l:....~. SEWER
Install relief sewer between Ninth street
and Arrowhead Avenue and Eleventh street and
Watennan Avenue.
SOUTH "E" STREET
Install relief sewer from Santa Ana River to
Blood Bank Road.
ARBIJWHEAD AVENUE
Install relief sewer between 'Ihird and
Eighth streets.
NINTH STREET
Modify traffic signals from "H" street to
Sierra Way.
''EI' STREET
Modify traffic signal from sixth street to
Tenth street.
Bl\BELINE AT M1'. VERN:>N
Modify traffic signals.
SOUTH ''EI' STREET
Install left-turn phases at Mill street and
Inland Center Drive.
MILL b.na:a:..~'
signal interconnect from Mt. Vemon to "G"
street.
BlIAm.Tl\lE l:fnuw.L'
Install detection loops to coordinate signal
system at "H" street, "E" street and sierra
Way.
M1'. VERN:>N AVENUE
Interconnect signals from Rial to Avenue to
Baseline street.
MILL l:f.L'KtilS'.L' AT "I" l:f~'KtilS'.L'
Modify traffic signals, provide interconnect
with "H" street and "G" street, and widen
street.
lW\LTO AVENUE
widen and upgrade crossing protection at grade
crossing between Meridian Avenue and Rancho
Avenue.
13
$ 485,200.00
$ 50,000.00
$ 193,400.00
$ 292,000.00
$ 114,000.00
$
37,000.00
$
45,000.00
$ 136,000.00
$
31,271.00
$
92,000.00
$ 135,000.00
$ 180,000.00
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EXHIBIT "z"
~. --
"
Y~3IS
State of California - Franchise Tax Board
Guidelines for 'Ente'rprise Zone Tax Incentives
Enterprise zones have been established
in California to stimulate development in
selected economically-depressed areas.
The Enterprise Zone Act provides state
tax incentives for corporations and
individuals who operate or invest in a
business located within a designated
enterprise zone.
The Enterprise Zone Act provides five
business-related tax incentives which
are explained in this publication:
1. Credit for sales and use tax paid on
certain machinery:
2. Credit for employing qualified
employees;
3. Business expense deduction for the
cost of certain machinery:
4. Net operating loss carryover;
5. Net Interest deduction for lenders.
A sixth incentive is available only to
employees who work in a designated
enterprise zone. Employees may claim a
tax credit to reduce the amount of their
income tax on wages earned in an
enterprise zone. See form FTB 1046.
This guide briefly explains the five
business-related tax incentives to help
Investors and business operators
understand the potential financial impact
of each provision and what must be
done to take advantage of the tax
incentives. Detailed information about
the methods used to compute allowable
tax savings is explained in form FTB
3805Z, Enterprise Zone/Program Area
Deduction and Credit Summary.
An Important Consideration
Enterprise zone tax incentives apply
only to Investments and business
activities that are undertaken alter an
enterprise zone has received final
designation. In addition, the geographic
boundaries of a zone are important to
know to determine whether tax
incentives are available at a specific
business location. Further information
about the geographic boundaries of the
zones and the dates of official final
designation is available from:
California Department of Commerce
1121 L Street, Suite 600
Sacramento, CA 95814-3908
Altention: Enterprise Zone Programs
Telephone: (916) 324-8211
".
1 Sales and Use Tax Credit
California income or franchise tax may
be reduced by the amount of sales or
use tax paid on certain machinery
purchased for exclusive use in an
enterprise zone. In any year, individuals
may claim a credit equal to the tax paid
or incurred on the first $1 million of
equipment cos~ corporations may claim
a credit equal to the tax paid or incurred
on the first $20 million of equipment
cost
EXHIBIT "3"
To qualify for the credit, the machinery
and machinery parts must be used to:
. Manufacture, process, combine or
otherwise fabricate a product:
. Produce renewable energy
resources; or
. Control air or water pollution.
The following conditions apply when
you claim this credit
. You must use the machinery and
machinery parts exclusively within
the boundaries of an enterprise zone;
. The amount of credit, in any single
year, is limited to the tax that would
be imposed if the income related to
business activity in the enterprise
zone represented all of your net
income; you may claim the remaining
credit in future years by appiying it to
tax imposed only on enterprise zone
income;
. You may not increase the basis of
property by the amount of the sales
or use tax paid;
. If you purchase out-of-sJate
machinery and claim the credit for
the use tax paid, you will be allowed
the credit only if equipment of a
comparable quality and price was not
available for purchase in California
when you needed it
Example: You spend $50,000 to pur-
chase equipment used to manufacture
wooden toys. The sales tax paid for the
purchase is $3,000. You may reduce the
amount of your tax imposed on enter-
prise zone income by up to $3,000. If
you cannot claim the full $3000 in a
single year, you may carry dver the
rem~ining amount to reduce next year's
tax Imposed on enterprise zone income.
Record Keeping
To support the sales and use tax credit
claimed on your tax return, you must
keep records that identify or describe
the property purchased, the amount of
sales or use tax paid on its purchase,
and the location where it is used. If you
purchase out-ol-state machinery, you
should be able to substantiate attempts
to purchase comparable items within
California.
2 Hiring Credit
A qualified business may reduce tax by
the amount of wages paid to one or
more qualified employees.
For an employer claiming this credit, a
new employee is someone who is hired
alter the area is designated as an
enterprise zone and is:
. Receiving subsidized employment,
training or services under the terms
of the Federal Job Training
Partnership Act (JTPA): or
. Registered in the Greater Avenues for
Independence (GAIN) Program, the
t
Work Incentive Demonstration (WIN)
Program, or the Employment
Preparation Program (EPP); or
. Certified by the Employment Develop-
ment Department as eligible for the
federal Targeted Jobs Tax Credit
Program (TJTC).
Individuals who are participants in these
qualifying programs should get Form
DOC-EZ1, Enterprise Zone Hiring Credit
Voucher, from the agency that
administers the JTPA, GAIN, WIN, EPP
or TJTC program.
You may claim up to 50 percent of the
wages paid to a qualified employee as a
credit against tax imposed on enterprise
zone income. The credit is based on the
lesser of the actual hourly wage paid or
150 percent of the minimum hourly wage
established by the Industrial Welfare
Commission.
. Prior to July 1, 1988, the minimum
hou rly wage was $3.35; 150% of
$3.35 is $5.02. The maximum hourly
wage on which this credit may be
based is $5.02.
. On or alter July 1, 1988, the minimum
hourly wage is $4.25; 150% of $4.25
is $6.37. The maximum hourly wage
on which this credit may be based is
$6.37.
The chart below shows the actual
percentage of wages paid that may be
claimed as a credit
Period of
Employment Credit Allowable
1 st 12 months 50% of wages paid
2nd 12 months 40% of wages paid
3rd 12 months 30% of wages paid
4th 12 months 20% of wages paid
5th 12 months 10% of wages paid
After 60 months 0%
Example 1: On January 1, 1988, you
hired a qualified employee who worked
the entire year at your enterprise zone
business. From 1/1/88 through 6/30/88,
the employee worked 900 hours at $4.00
and earned a total of $3,600. From
7/1/88 through 12/31/88, the employee
worked 900 hours at $4.25 (new mini-
mum wage) and earned a total of $3,825.
The amount of the hiring credit available
is $3,713 ($3,600 + $3,825 x 50%).
Example 2: On January 1, 1988, you
hired a qualified employee, who worked
the entire year at your enterprise zone
business. During the year, the employee
earned $11,700 for 1,800 hours at $6.50
an hour. Your hiring credit is computed
as follows:
Step 1: 1/1/88-6/30/88;
$5.02 (not $6.50) x 900 hrs. = $4,518.
Step 2: 7/1/88-12/31/88:
$6.37 (not $6.50) x 900 hrs. = $5,733.
Step 3: $4,518 + $5,733 x 50% = $5,126
maximum credit available.
,
t
Fr8 Pub. 1047 (REV 11-891 PAGE 1
Limitation.:
. The hiring of a qualified employee
must take place aller an area has
been officially designated an enter-
prise zone by the Department of
Commerce:
. At least 90 percent of the qualified
employee's work must be directly
related to a trade or business activity
located in an enterprise zone, and at
least 50 percent of the employee's
work must be performed inside the
boundaries of an enterprise zone;
. A business expense deduction may
not be taken for the wages on which
this credit is based;
. The credit must be reduced by any
federal or state jobs credit claimed;
. The amount of the credit available for
wages paid to all qualified employees
may not exceed the amount of tax
that would be imposed if the income
related to business activity in an enter-
prise zone was your only income;
. II the amount of the credit for employ-
ing qualified persons is greater than
the tax on enterprise zone income in
any year, the excess credit may be
carried over to future years.
Recapture of the credit: If this credit is
allowed for wages paid to a qualified
employee who is terminated within 270
days aller the start of employment, an
additional tax, equal to the credit
allowed, will be due on the return filed
for the year during which the employee
was terminated. This tax will not be
added if the termination was:
. Voluntary on the part of the
employee;
. Caused by the employee becoming
disabled;
. A response to employee misconduct;
. Due to a substantial reduction in
business; or
. Carried out so that other qualified
individuals could be hired, creating
an increase in the number of
qualified employees and their hours
of employment.
Record Keeping
If you hire qualified employees and
claim this credit on your tax return, keep
records including:
. Copies of Form DOC-EZ1, Enterprise
Zone Hiring Credit Voucher, for each
qualified person hired;
. Records of any other federal or state
subsidies you may have received for
hiring qualified individuals; and
. An employment history for each
qualified employee showing the dates
of employment, wages paid, the
duties performed, and the location of
employment.
Important Consideration
Taxpayers who claim both credits
available to enterprise zone business
operators-the sales and use tax credit
and the credit for hiring qualified
employees-may not claim a total credit
amount which exceeds the tax imposed
FTB Pub. 1047 (REV 11-89) PAGE 2
on enterprise zone income in any single
year. However, credits which exceed the
tax imposed on enterprise zone income
may be carried over to offset tax
imposed on enterprise zone income in
subsequent years.
3 Business Expense Deduction
Part of the cost of certain property
purchased for exclusive use in an
enterprise zone may be deducted as a
business expense in the first year it is
placed in service.
The type of property which qualifies for
this special treatment is tangible per-
sonal property (not real estate) which is
used for business purposes and is eligi-
ble for depreciation. This includes most
equipment. furnishings and vehicles
purchased for exclusive use in an
enterprise zone, but not office supplies
or other small items which are normally
ineligible for depreciation.
The maximum amount which can be
deducted ranges from $5,000 to $10,000.
The amount of the deduction depends
on the following two factors:
. The date the property was placed in
service; and
. The date the enterprise zone
received its final designation.
If property is placed in service in the
year the enterprise zone is designated
or the first year aller designation, the
limit of the deduction is $5,000. II
property is first used in the second or
third year after the enterprise zone
designation, the limit of the deduction is
$7,500. II property is fist used four or
more years after the enterprise zone
designation, the limit of the deduction is
$10,000.
The election to treat the cost of qualified
property as a business expense must be
made in the year the property is first
placed in service. However, this election
is not allowed if the property was:
. Transferred between members of an
affiliated group;
. Acquired as a gift or inherited;
. Traded for other property; or
. Received from a personal or
business relation as defined in
Section 267 of the Internal Revenue
Code.
Depreciation
The basis (cost for depreciation
purposes) of the property must be
reduced by the amount allowed as a
deduction.
. Depreciation of the property in
excess of the amount deducted may
be claimed using any method of
depreciation normally allowed.
. The deduction allowed by Section
179 of the Internal Revenue Code,
relating to an election to expense
certain depreciable business assets,
does not apply.
. C:>rporations ma~ not claim
additional first-year depreciation for
these assets.
. The full amount of the deduction
must be included in income if the
property is no longer used in an
enterprise zone during the first two
years after the property was first
placed in service.
Example: Three months after the
location where you do business has
been designated an enterprise zone,
you purchase a baking oven which
costs $20,000. You depreciate the oven
over a ten-year period using the straight
line method. The enterprise zone
business expense deduction you may
claim is $5,000. You may also claim the
normal $125 of depreciation which is
allowed for each month the oven was in
service during the year. ($15,000 + 120
months; $125.)
Note: For equipment placed in service
after 1986, due to recent changes in the
tax law, the depreciation allowed to
individuals, partnerships and S
Corporations typically will provide a
greater deduction using regular
depreciation methods.
Record Keeping
You should maintain information which
will allow you to substantiate your claim
for the first-year business expense
deduction. The records for each item
should show:
. The identity and purchase price;
. The date on which the property was
first placed in service in an enterprise
zone; and
. The location where the property is
used.
4 Net Operating Loss Carryover
Net operating losses (NOlo) of individuals
or corporations doing business in an
enterprise zone may be carried over to
future years to reduce the amount of
taxable enterprise zone income for
those years. The NOL carryover is
determined by computing the business
loss which results strictly from bus;"ess
activity in an enterprise zone.
The following limitations apply to the
enterprise zone NOl carryover:
. NOl carryovers are allowed only for
losses occurring in a year beginning
after the date the area is designated
as an enterprise zone;
. Financial institutions using bad debt
reserve methods may extend the
loss for only five years;
. A NOl may not be applied to years
prior to the year in which the NOl
occurred (no carrybacks);
. Part-year residents of California must
prorate the credit. See form FTB 3805V,
Net Operating Loss Deduction.
If you qualify to claim more than one
type of NOL, you must make an
irrevocable election as to which type of
Noe you claim. This election must be
made on the return filed by. the original
or extended due date.
Example: In your first year of business
in an enterprise lone. the activities in
the enterprise zone show a $5,000 net
operating loss that is the exciusive
result of your enterprise zone activity.
Because of the loss, you owe no tax on
enterprise zone income. In the second
year, your business shows a profit of
$8,000. You may carry over the $5,000
first year loss to reduce your taxable
enterprise zone income for the second
year.
Record Keeping
To support your claim of an NOL
carryover on your California tax return,
you should maintain:
. Records showing the status date
your business activities began in an
enterprise zone;
. Accounting records showing that the
loss was the result of business
activity in an enterprise zone; and
. Financial data indicating that the
income that the carryover is offsetting
is the product of business activity in
an enterprise zone.
5 Net Interest Deduction
for Lenders
A deduction from income is allowed on
the amount of "net interest" earned on
loans made to a trade or business
located in an enterprise lone.
"Net interest" is defined as the full
amount of the interes~ less any direct
expenses incurred in making the loan.
Some examples of direct expenses are:
commissions paid to the loan
representative. the cost of money
incurred in funding the loan and bad
debt expenses.
Types of loans that qualify for this
deduction include business loans,
mortgages and loans from non-
commercial sources.
Requirements
. The loan is made to a trade or
business located solely within an
enterprise lone;
. The money loaned is used strictly for
the business activities within the
enterprise zone;
. The lender has no equity or other
ownership interest in the trade or
business; and
. The loan was made after the
enterprise zone was designated.
Example: You loan $500 to an
enterprise zone business that meets the
requirements listed above. You earn
$550 of interest and incur $300 of
expenses directly related to the loan.
You may deduct $250 ($550-300) of net
interest from your taxable income.
Record Keeping
To support the "net interest" deduction
on your tax return. you should maintain
records for each enterprise zone loan
showing:
. The identity and location of the trade
or business to which you have
loaned the money;
. The amount of your loan, the amount
of interest earned, and the amount of
any direct expenses associated with
the loan: and
. Use of the loan (i.e.. purchase
invoices).
For More Information
Geographic Boundaries
Any information about geographic
boundaries of an enterprise zone, dates
of designation. the Enterprise Zone
Hiring Credit Voucher or other
information not related to the tax
incentives is available from:
California Department of Commerce
1121 L Street, Suite 600
Sacramento, CA 95814-3908
AUention: Enterprise Zone Programs
Telephone: (916) 324-8211
Enterprise Zone Locations and
Designation Dates
Enterprise Zones Designation Dates
Calexico . . .. .. .. . . , . . . .. . ... 10/15/86
Eureka...................... 10/15/86
S.w. Fresno..............,.. 10/15/86
L.A. - Central City.....,...... 10/15/86
Pacolma ....................10/15/86
Porterville ..........,........10/15/86
S.E. San Diego .............. 10/15/86
Yuba City/Marysville ......,..10/15/86
San Bernardino/Riverside
(Agua Mansa) .,.,.........10/15/86
San Jose.. .. . . . . . . . . .. . .,. . . 12/31/86
Tax Incentives
If you have questions about the Cali-
fornia state tax incentives available to
lenders or to businesses operating in a
program area, please call the toll-free
number for your area code listed below:
From Area Codes 213, 619,
714, 805, and 818 call .. 1-800-852-5711
From Area Codes 209, 408. 415, 707,
and 916 (except Sacramento)
call. .. . . . . . . . .. . . . . . . .1-800-852-7050
From the Sacramento Metropolitan
area call .............,...... 369-0500
If a toll call from your Sacramento
location, call .......... 1-800-852-7050
From outside California, call
(not toll-free) ............ 916-369-0500
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FTB Pub. 1047 (REV 12-89) PAGE 3