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www.salinasvalleyez.com Background • The Enterprise Zone Program was created in 1986 to aid economically depressed areas by creating a “strong, combined, and business-friendly incentive program” to: •Attract Business and Industry to the State; •Help Retain and Expand Existing Business and Industry; and •Create Increased Job Opportunities. •42 Enterprise Zones in State •The Enterprise Zone offers benefits including: •Hiring Credits •Net Operating Loss Carryover •Sales and Use Tax Credits •Interest Deduction for Lenders •Accelerated Depreciation •Preference on State Contracts Phone: (831) 758-7362 Fax: (831) 775-4258 Address: 65 W. Alisal St Salinas, CA 93901 www.salinasvalleyez.com Salinas Valley Enterprise Zone •Final Designation was awarded on January 30, 2009 •Enterprise Zone includes portions of: •Salinas •Gonzales •Soledad •Greenfield •King City •Unincorporated Monterey County along 101 •Designation is valid for 15 years (until January 29, 2024) Phone: (831) 758-7362 Fax: (831) 775-4258 Address: 65 W. Alisal St Salinas, CA 93901 www.salinasvalleyez.com Hiring Credit • Tax Credit which offsets wages paid to employees. •Business located in Enterprise Zone •“Qualified employee” hired on or after January 30, 2009 •Spends 90% of time on activities directly related to conduct of business within the EZ •Performs at least 50% of work within the boundaries of the EZ •Credit is 50% of wages for first year of employment •Credit declines by 10% for each year thereafter •Limited to 150% of minimum wage (currently $12/hour) •Unused credit may be carried forward to future years Phone: (831) 758-7362 Fax: (831) 775-4258 Address: 65 W. Alisal St Salinas, CA 93901 www.salinasvalleyez.com “Qualified Employees” For Hiring Credit purposes, “Qualified Employees” are one or more of the following: •CalWORKS Eligible •WIA Eligible •WOTC Eligible •Very-Low Income Person •Dislocated Worker •Disabled Individual or Veteran •Vietnam Veteran •Recently Separated Veteran •Ex-Offender •Person Eligible For: •Laid Off and Unable to Return •SSI •Plant Closure •AFDC •Long-Term Unemployed •Food Stamps •Formerly Self-Employed •State/Local General Assistance •DOD employee – closed military site •Native American •Pre-1990 Military/Guard Member •TEA Resident •Seasonally unemployed worker •Laid Off – Clean Air Act Compliance Monterey County OneStop will assist in identifying “qualified employees” Phone: (831) 758-7362 Fax: (831) 775-4258 Address: 65 W. Alisal St Salinas, CA 93901 www.salinasvalleyez.com Sales and Use Tax Credit • Tax credit which allows a business to offset Sales and Use Taxes Paid on “Qualified Property” •Individuals, estates, trusts, and partnerships may claim up the credit for up to $1 million of qualified property •Corporations (excluding S-Corps) may claim up the credit for up to $20 million of qualified property •“Qualified Property” Includes: •Machinery or machinery parts to process or assemble a product, produce renewable energy resources, or control air or water pollution •Data processing and communications equipment (computers, phones, etc.) •Motion picture manufacturing equipment central to production or postproduction •Unused Credit may be carried forward until exhausted Phone: (831) 758-7362 Fax: (831) 775-4258 Address: 65 W. Alisal St Salinas, CA 93901 www.salinasvalleyez.com Accelerated Depreciation • Businesses may treat 40% of the cost of “qualified property” as a business expense rather than a capital expense. •Allows business to deduct portion of cost in one year rather than over several years through depreciation •“Qualified Property” includes •Any recovery property that is Internal Revenue Code (IRC) Section 1245 property, including tangible personal property and most equipment and furnishings •Excludes buildings, office supplies and other nondepreciable property, and property purchased prior to EZ designation Phone: (831) 758-7362 Fax: (831) 775-4258 Address: 65 W. Alisal St Salinas, CA 93901 www.salinasvalleyez.com 15-Year Net Operating Loss Carryover • 100% of losses incurred by a business located within the EZ may be carried forward 15 years to offset future income •Need to designate loss for this type of carryover as the loss is incurred Phone: (831) 758-7362 Fax: (831) 775-4258 Address: 65 W. Alisal St Salinas, CA 93901 www.salinasvalleyez.com Net Interest Deduction for Lenders • Lenders which lend money to businesses within the EZ may deduct the net interest earned on those loans. •Includes business loans, mortgages, and noncommercial loans •The loan must meet the following requirements: •Loan must be made to a business located solely within the EZ •Money must be used strictly for borrower’s business activities within the Enterprise Zone •Lender may not have equity of other ownership interest in borrower’s business •Loan must be made during the active designation of the EZ •Payment must be received prior to expiration of the EZ Phone: (831) 758-7362 Fax: (831) 775-4258 Address: 65 W. Alisal St Salinas, CA 93901 www.salinasvalleyez.com State Contract Preferences • Businesses located within the Enterprise Zone may receive a 5% bid preference in the awarding of state contracts if the following conditions are met: •Service and Commodity Contracts Only (excludes construction) •Contract value is $100,000 or greater •Business work site located in EZ •50% of labor for commodities contracts or 90% of the labor for service contracts is performed at EZ worksite Phone: (831) 758-7362 Fax: (831) 775-4258 Address: 65 W. Alisal St Salinas, CA 93901 www.salinasvalleyez.com For More Information •Visit the Enterprise Zone Website www.salinasvalleyez.com •Franchise Tax Board Form FTB 3805Z •Hiring Credit Application Forms •Required Hiring Credit Documentation •Maps •Links to Other Websites Phone: (831) 758-7362 Fax: (831) 775-4258 Address: 65 W. Alisal St Salinas, CA 93901