SUBJECT: SUBMITTAL OF SAN JOSE’S ENTERPRISE ZONE EXTENSION APPLICATION TO THE CALIFORNIA TECHNOLOGY TRADE AND COMMERCE AGENCY (CTTCA)
Adoption
of a resolution:
1. Approving
the submittal of Accept the Enterprise Zone five-year
extension application and
2. Making
the necessary findings adopt the
accompanying resolution and findings required by the CALIFORNIA TECHNOLOGY TRADE AND
COMMERCE AGENCY CTTCA.
BACKGROUND
The State of California currently designates 39 Enterprise Zones throughout the state. Enterprise Zones were initiated to attract and retain employers that employ large numbers of people, pay above average wages, or contribute to key industrial clusters in a specific area of a community. The City of San Jose was one of the first twelve zones designated by the State on December 30, 1986. The Enterprise Zone stretches from Old Oakland Road, through Downtown and the Monterey Corridor to Capital Expressway (Attachment A). The Zone encompasses the bulk of San Jose’s heavy and light industrial property in addition to several of San Jose’s Strong Neighborhood Initiative areas.
The Enterprise Zone is scheduled to sunset on December 31,
2001. Assembly Bill 2798, adopted in [year]adopted in 1998 (Machado) authorized the
CTTCA to extend the life of any zone designated prior to 1990 for an additional
five years, to a total of 20 years. The
extension is contingent on the zone passing an audit conducted by the CTTCA,
submitting an extension application outlining the existing and new benefits to
be provided to businesses and residents, required Council resolutions and an
updated economic development plan.
The benefits provided to businesses by the State through the Enterprise Zone program are substantial (Attachment B). The purpose of the five-year extension is to retain companies and jobs in the Enterprise Zone area. The Zone time extension is consistent with the Council’s direction to retain heavy and light industrial companies, particularly those that support San Jose’s high tech cluster and provide relatively high paying wages. The benefits provided by the State are powerful tools that help defray the increasing costs of doing business in Silicon Valley and assist companies to find qualified workers in a tight labor market. Individuals eligible for Workforce Investment Act (WIA) benefits who are hired by Zone businesses thus also make those businesses eligible for Enterprise Zone hiring tax benefits. Enterprise Zone benefits are provided in the form of tax credits.
The California Technology, Trade, and Commerce Agency requires that each city applying for a time extension to the Enterprise Zone designation provide environmental clearance for the project, pass an audit of the Zone and adopt a resolution stating that the City:
1. Finds the application area is in a depressed area and that an extension of the designation of the area as an Enterprise Zone is necessary in order to continue attracting private sector investment to the area.
2. Agrees to complete all actions stated within the application, and
3. Agrees to offer all incentives cited in the updated economic development plan.
The Planning Department has certified that the Enterprise
Zone application project serves to further the goals of the original San Jose
Enterprise Zone Environmental Impact Report (EIR) and does not involve new
significant effects beyond those analyzed in the Final EIR certified for the
original designation in 1986.
Consequently, no
further CEQA action is necessary. (?)
A copy of the certification is attached as Attachment C.
Preparation of the blight study for the Strong Neighborhood Initiative (SNI) Project Area indicates a prevalence of on-going blight in SNI areas that overlap the Enterprise Zone.
A finding that the area is experiencing economic difficulty is consistent with the City’s efforts to revitalize key neighborhoods. The finding also supports the recent Industrial Supplier Study and the City’s efforts to strengthen industrial areas to protect industrial jobs paying higher wages for skilled and semi-skilled labor.
Attached to this report is the Executive Summary from the application. It includes goals and objectives from the Program Management, Job Development, Planning and Local Incentive, Finance, and Marketing sections of the five-year extension application (Attachment D). The information in the Executive Summary represents the updated economic development plan for the five-year extension and satisfies the requirements for findings for 2 and 3 listed above.
The Enterprise Zone application primarily relies on the
extensive programs the City already provides to the Enterprise Zone area. In a few instances reallocation of existing
City funds is incorporated to strengthen the application. An example is a reallocation of Office of
Economic Development non-personal funds to create a $50,000 annual marketing
budget for the Enterprise Zone. The
funds are available in OED’s 2000-2001 budget.
A table listing some new benefits, but representing no new allocation of
funding, is included in this report (Attachment ED). If the Enterprise Zone time extension is
awarded to the City and the staff and operating resources identified are not
sufficient to properly operate the Zone, OED will prepare an investment
proposal for additional resources for the 2002-2003 budget process.
CTTC staff recently notified Office of Economic Development staff (OED) that San Jose passed the required audit with one of the highest scores in the state.
The Enterprise Zone extension application has been developed through formulating strategic partnerships with City Departments, real estate and banking resources and business assistance organizations that will better serve San Jose businesses regardless of whether or not the City obtains the extension application. To that end staff has worked closely with key organizations that can provide resources to the business community and area residents.
A matrix of City and strategic partner
resources is attached to this report (Attachment FE). The matrix indicates that the combined
resources of all entities participating represent over $11 million
annually. The matrix accounts for City
staff and program resources that provide service to Enterprise Zone businesses,
as well as staff and operating budgets of strategic partner organizations.
The Office of Economic Development held a meeting for 15 key business Enterprise Zone businesses that are already taking advantage of Enterprise Zone benefits, and companies that were in the process of beginning to claim Enterprise Zone benefits. Staff met with banking officials from 7 key lending institutions in addition to 20 business and training organizations.
A list of partner organizations is included in Attachment F.
The preparation of the of the Enterprise Zone application has been coordinated with the City Attorney’s Office, the Budget Office and the following City Departments: Planning, Building and Code Enforcement, Finance, Public Works, Transportation, Environmental Services, and Parks Recreation and Neighborhood Services.
Fund
Amount: $50,000
Budget Document: 2000-2001 Operating Budget
Page 728
DARREL DEARBORN,
Senior Deputy City Manager