Hesperia, California- In an economy where businesses are struggling, the City of Hesperia will soon be offering some assistance that very few California cities can, tax incentives. On Wednesday, August 19, 2009, the California Department of Housing and Community Development (HCD) announced that Hesperia, along with Tulare, Pittsburg, Sacramento and Taft, has been conditionally designated an Enterprise Zone (EZ).

“This designation will create many new opportunities for businesses to locate or expand within the City,” said Mayor Thurston “Smitty” Smith, “We are hopeful that the Enterprise Zone will help to spur our local High Desert economy and give some much needed reassurance to potential entrepreneurs.”

The new designations will remain in effect for 15 years and will offer businesses within the Enterprise Zone substantial tax credits and benefits, including: 

·         Firms can earn $37,440 or more in state tax credits for each qualified employee hired.

·         Corporations can earn sales tax credits on purchases of $20 million per year of qualified machinery and machinery parts.

·         Up-front expensing of certain depreciable property.

·         Lenders to Zone businesses may receive a net interest deduction.

·         Unused tax credits can be applied to future tax years, stretching out the benefit of the initial investment.

·         Enterprise Zone companies can earn preference points on state contracts.

·         Up to 100% Net Operating Loss (NOL) carry-forward. NOL may be carried forward 15 years.

“For over 18 months, staff worked diligently on the Enterprise Zone application to ensure limited questions or conditions existed after conditional designation,” said Deputy Director Steven J. Lantsberger. He continued stating, “Of all applications submitted, Hesperia’s received the highest score validating the tremendous effort put forth by the City Council, Hesperia Community Redevelopment Agency, and the scores of organizations who pledged resources to support the on-going implementation of the EZ.  We are now looking ahead at how the EZ will provide the City with a competitive advantage with respect to economic development opportunities and lead to business growth and job generation.”

The California Enterprise Zone Program targets specific economically distressed areas within communities, like those found in certain portions of Hesperia, by offering special state and local incentives to promote business investment and job creation. The positive impacts of this program are visible in a 2006 study that found from 1990-2000, on average Enterprise Zones saw unemployment rates decrease 1.2% and household incomes increased 7.1% more than the rest of the state.

The next step in the designation process will be issuance of a conditional designation letter outlining specific conditions for final designation, including a signed memorandum of understanding with HCD, which will include performance measures and benchmarks.

For more information on the Enterprise Zone Program, visit http://www.hcd.ca.gov/fa/cdbg/ez.

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