HomeMy WebLinkAboutBackground -1Attachment 1
BACKGROUND
In 1986 and 1992 the City of San Diego received approval for two enterprise zone (EZ)
designations, the Metro Enterprise Zone (1986) and the South Bay Enterprise Zone
(1992). In 2000 and again in 2004, the South Bay Enterprise Zone was expanded to
include properties along the San Diego Bay front redevelopment areas of the cities of
Chula Vista and National City. In turn, the cities of Chula Vista and National City, in
collaboration with the San Diego United Port District, provided funding to the City of
San Diego to support the cost of managing the program and marketing the zone. The
Metro Enterprise Zone expired on October 14, 2006, and the South Bay Enterprise Zone
was set to expire on January 27, 2007.
In 2006, the City Council approved a resolution authorizing submission of an application
to the State of California Housing and Community Development Department (HCD) for a
regional EZ designation for the cities of San Diego, Chula Vista and National City
("SDREZ Partners"). The Partnership received "Conditional Approval" from HCD on
November 3, 2006. Except for the City of National City authorizing execution of the
HCD Agreement, the Partnership has now completed all the necessary steps for final
approval designation.
The process for EZ designation is competitive and is based on economic need (distressed
communities, need for private investment, high unemployment, and low income census
tracts). The application also had to include realistic yet ambitious marketing and job
development strategies to implement the EZ program along with other local economic
development strategies and tools.
Purpose and Benefits of the SDREZ Program
The legislative purpose of the EZ program is to "stimulate business and industrial growth
in the depressed areas of the State". The other purposes are to establish a program "to
help attract business and industry to the state, to help retain and expand existing state
business and industry, and to create increased job opportunities for all Californians.
Local jurisdictions must provide additional local incentives throughout the 15-year
designation.
Businesses located within the SDREZ may receive individual or corporate state tax
incentives/credits to reduce a company's state tax liability dollar per dollar. Any unused
tax credits may be carried forward to reduce future tax year's liabilities. Attachment 3
(SDREZ Fact Sheet) provides a brief description of the state tax benefits available to
SDREZ businesses. The EZ program has made a significant impact on the local
economy. The SDREZ program is a fifteen (15) year designation and offers tremendous
business incentives and helps the region retain employers and attract new ones
Discussion
In November 2006, the City of San Diego, as the lead agency for the SDREZ, was
notified that it was awarded a conditional EZ designation. Final designation is contingent
upon completion of the conditions imposed for the designation by HCD. Except for the
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Attachment 1
City of National City authorizing execution of the HCD Agreement, the SDREZ Partners
have completed all required conditions and engaged in the task of seeking final
designation of the SDREZ. These tasks included executing the necessary Memoranda of
Understanding (MOU) between the SDREZ Partners outlining administrative roles and
responsibilities as well as the budget for the SDREZ, and the MOU between the SDREZ
Partners and the HCD (Attachment "2" HCD MOU). HCD has accepted all of the
required documents and has awarded final designation subject to the City of National
authorizing execution and final execution of the HCD MOU.
CONCLUSION:
The official designation of the SDREZ by the State HCD will allow a significant
economic and employment incentive program to continue in the cities of San Diego,
Chula Vista and National City. A cooperative framework for managing this unique
opportunity to provide business tax incentives in the region has been formalized in the
Memorandum of Understanding (MOU) between the SDREZ Partners as well as the
SDREZ Partners' commitment to the fifteen (15) year SDREZ designation. The SDREZ
is a special opportunity to continue to implement economic development and job creation
program incentives in areas within the region with significantly high levels of
unemployment and/or help residents of low and moderate income census tract
communities to obtain employment.
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