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Stanislaus Enterprise Zone OK'd to Expand: Associated Tax Credits can Benefit Business in 4 Cities

(Modesto Bee, The (CA) (KRT) Via Thomson Dialog NewsEdge) Jan. 10--Stanislaus County has received a long-awaited approval from the state to expand its enterprise zone to include the cities of Patterson, Oakdale, Riverbank and Ceres. The expansion of the enterprise zone, which grants tax breaks to businesses to spur economic growth, was designed to include several major industrial parks and businesses.

It adds 3,090 acres to the original zone, which encompasses 67,509 acres in Modesto, Turlock, Ceres and unincorporated Stanislaus County. "We've been anxiously waiting to hear," about news of the approval, Oakdale City Manager Steve Hallam said. The county applied for the expansion in June 2006, but it didn't receive approval from the state department of Housing and Community Development until Monday, about six months later than anticipated. The original zone received its designation on Nov. 16, 2005. "We thought being a player in the county's enterprise zone would be a benefit when businesses explored Oakdale," Hallam said.

The expanded zone includes about 500 acres of developed land in Oakdale, including ConAgra Foods, the Hershey Chocolate plant and the A.L. Gilbert feed company, and 450 acres of undeveloped land that was recently zoned for industrial use. In Patterson, the expanded zone covers the massive Kohl's Corp. and Longs Drug warehouses at the city's western edge, City Manager Cleve Morris said. It also includes Patterson Frozen Foods and 150 acres of undeveloped land in the Keystone Business Park, he said. The expansion effort targeted existing businesses and land that is ripe for development, said Doug Sweetland, director of economic development for the Stanislaus Economic Development and Workforce Alliance, which administers the zone.

All businesses within the zone are eligible for tax benefits that will be retroactive to July 1, 2006, Sweetland said. Of the tax credits, the two most valuable are the hiring tax credit and the sales and use tax credit: Business can earn about $32,000 in tax credits over five years for each "qualified" employee hired. Employees must live within the district or meet certain employment criteria.

The sales and use tax credit offers businesses a tax credit for buying equipment that is essential to the operation of the business, including manufacturing or processing machinery, telephones and fax machines. Sweetland said one of the few ways to measure the success of the enterprise zone is by tracking tax savings of local businesses.

About 500 tax vouchers were issued last year to businesses for hiring qualified employees, he said. "That is very good for the first year of the zone," he said. "In comparison to other zones, we are meeting or exceeding them."

Mike Monschein, co-owner of Monschein Industries Inc. in Riverbank with his father, Frank Monschein, said they have been following the progress of the expansion.

The 113,000-square-foot cabinet manufacturing business, which employs about 240 people, now falls within the enterprise zone boundaries.

Monschein said the company recently installed a flat-line finishing spray system and plans to file for an equipment tax credit. He will evaluate employees hired recently to determine whether any qualify for the hiring tax credit."It helps to be able to invest in equipment and employees," he said. "You have to be able to invest to help everybody out."

Riverbank economic development manager Tim Ogden said about 200 businesses are within the enterprise zone, including Verizon Business Relay Services, Silgan Containers and Galaxy Theaters.Some businesses may be more reluctant than others to apply for the tax credits, Ogden said. "Education is a big component. To obtain the hiring tax credit, they have to reveal things about their hiring practices and have to do an extra annual report," he said. "But if they do a quick analysis, they will realize the return on investment will be a lot greater."

Sweetland said many busi-nesses are unaware the enterprise zone exists or do not want to get involved in a government program. "They think it will have a lot of red tape and may not be worth it," he said. "We're trying to let them know the process is simple, we handle a lot of it and the paperwork is minimum." City officials are meeting to discuss how to best inform business owners about the tax credits, Sweetland said.

Ceres City Manager Brad Kil-ger said the city is working with the Chamber of Commerce to spread the word about the expansion through letters and workshops. Nearly 1,800 acres in Ceres was included in the original zone, mostly along the Mitchell Road corridor. The expansion added 131 acres. At least 50 businesses will be included in the expansion, he said, including a business park under construction.

Kilger said the enterprise zone puts Stanislaus County on a "level playing field" with neighboring regions.

To qualify for an enterprise zone designation, a county must have high unemployment and poverty rates, as well as available commercial and industrial land. There are 42 such zones in the state.

An application is pending to expand the county's enterprise zone to include Hughson, Sweetland said.

For more information, please contact Jarrett Stewart at jstewart@kuhler.com.