Santa Clarita Valley Enterprise Zone
The State of California’s Enterprise Zone program was established in 1984 to stimulate business investment in the State and to create job opportunities for Californians.
Enterprise Zones’ two main benefits are the Employer Hiring Tax Credit and the Sales and Use Tax Credit. The Employer Hiring Tax Credit is the most widely utilized benefit of the Santa Clarita Valley Enterprise Zone. Businesses that hire qualified part-time or full-time employees are eligible to receive up to $37,440 in tax savings per employee.
With the Sales and Use Tax Credit businesses can claim a state tax credit equal to the sales and use tax paid on the purchase of qualified equipment. Qualified equipment or machine parts purchased for exclusive use within the Santa Clarita Valley Enterprise Zone include manufacturing components, data processing, computer equipment, and more.
In 2007, the City of Santa Clarita applied for and was awarded an Enterprise Zone. The Zone encompassed 97% of all commercially zoned properties within the City and was known as the City of Santa Clarita Enterprise Zone. At the end of 2010, 420 people had been hired into newly created jobs, while 2570 had been hired into existing jobs, for a total of 2,990 jobs hired by the 256 businesses utilizing the Zone.
In 2011, the City, in partnership with the County of Los Angeles, applied for and was awarded an expanded enterprise Zone to include businesses in the entire Santa Clarita Valley including the unincorporated Los Angeles County area directly adjacent to the City of Santa Clarita. This new designation resulted in the Santa Clarita Valley Enterprise Zone, and is a partnership between the City and the County with the City of Santa Clarita administering the Zone’s day-to-day operations. This 15-year designation will be active through January 1, 2026.
As of December 31, 2012, 1,309 people have been hired into newly created jobs, while 5401 had been hired into existing jobs, for a total of 6,710 jobs hired at 420 businesses utilizing the Zone.
The Enterprise Zone program nearly ended in 2011 when Governor Jerry Brown eliminated tax credits for Enterprise Zone businesses from his January budget proposal in an attempt to raise revenue. Ultimately, the Enterprise Zone program was left intact without reforms because as a tax issue, most changes to the program would have required a two thirds majority vote in both houses of the state legislature.
The Governor has proposed regulation changes that are expected to significantly lower the amount of tax credits received by businesses. As with any elimination of an existing credit, companies that would have otherwise qualified for the credit will see higher taxes.
With California having relatively high corporate, personal income, and sales tax rates in addition to a high average cost of living, the Enterprise Zone program is one of the few economic development tools available to attract, retain, and expand local businesses in California.