salinasvalleyez

1. 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 • Sales and Use Tax Credits • Accelerated Depreciation • Net Operating Loss Carryover • Interest Deduction for Lenders • Preference on State Contracts Phone: (831) 758-7362 Fax: (831) 775-4258 Address: 65 W. Alisal St Salinas, CA 93901

2. 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

3. 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

4. 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 • Laid Off and Unable to Return • Plant Closure • Long-Term Unemployed • Formerly Self-Employed • DOD employee – closed military site • Pre-1990 Military/Guard Member • Seasonally unemployed worker • Laid Off – Clean Air Act Compliance • Disabled Individual or Veteran • Vietnam Veteran • Recently Separated Veteran • Ex-Offender • Person Eligible For: • SSI • AFDC • Food Stamps • State/Local General Assistance • Native American • TEA Resident 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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