HomeMy WebLinkAboutBackgroundAttachment A
BACKGROUND
The purpose of a TEA, according to Section 7072(i) of the Government Code of the State
of California, is to encourage EZ businesses to hire eligible residents from these
geographic areas. The incentive for these businesses is the availability of a tax credit for
hiring residents who reside in a TEA. To establish a TEA, an enterprise must submit an
application for TEA designation to the State Housing and Community Development
Department (HCD). The application must clearly identify the census tracts that will
constitute the proposed TEA and demonstrate that they meet the eligibility criteria. In
addition, the application must include certain specified documentation, such as
resolutions and a map of the TEA boundaries.
As required by the Government Code, each local governmental entity that has as
jurisdiction in the enterprise zone may elect to establish a TEA. In order to establish a
TEA, the jurisdiction's must approve, by resolution or ordinance, the boundaries of the
TEA. A TEA may be, but is not required to be, the same as all or part of an enterprise
zone. In addition, its boundaries need not be contiguous nor encompass each eligible
TEA census tract within the jurisdiction. However there are several geographic
restrictions, for example, at least a part of each eligible TEA census tract shall be within
the territorial area of the enterprise zone jurisdictions. Only those census tracts within the
jurisdictions of the entities participating in the enterprise zone may be included in a TEA.
This restriction precludes census tracts from jurisdictions that are not a party to the
enterprise zone from inclusion in the TEA.
The Government Code also requires updates to the TEA within 180 days of updated
United States census data becoming available, each local governmental entity that has
jurisdiction of an enterprise zone shall approve, by resolution or ordinance, the
boundaries of its targeted employment area reflecting the new census data. It is
anticipated that since updated census data will now be made available annually, TEA
boundaries will be assessed on an annual basis to determine if census tracts meet TEA
eligibility requirements and make modifications as need.
San Diego's first regional TEA established in 1998 was for the Metro and South Bay EZs.
HCD approved the current TEA using 2000 census data in April 2012 retroactively to
October 15, 2006, the effective date of the SDREZ . The census tracts incorporating the
SDREZ do not have a high unemployment rate, however, these census tracts do have a
high concentration of extremely low to moderate income level population (Attachment
A). Establishing a new TEA for the SDREZ will encourage SDREZ businesses to hire
residents living in the TEA (Attachment B). One of the goals of the SDREZ is to
increase the income level of residents of the EZ by attracting and expanding industries in
the SDREZ that historically pay higher wages, such as manufacturing and high
technology. In the first five (5) years of the SDREZ designation, over 31,600 workers
were hired by 920 EZ companies and 87% of the workers lived in the TEA. The average
hourly rate for EZ eligible employees was approximately $11.30/hr.