Resolution Amending the Merced County Regional Enterprise Zone Targeted Employment Area (TEA).

LIVINGSTON CA / June 17, 2013 —

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10. Resolution Amending the Merced County Regional Enterprise Zone Targeted Employment Area (TEA).

STAFF REPORT

AGENDA ITEM: Resolution Amending the Merced County Regional Enterprise Zone Targeted Employment Area (TEA).

MEETING DATE: June 18, 2013

PREPARED BY: Jose Antonio Ramirez, City Manager

REVIEWED BY: Jose Antonio Ramirez, City Manager

RECOMMENDATION:

City Council adopt Resolution No. 2013-_, amending the Merced County Regional Enterprise Zone Targeted Employment Area (TEA).

BACKGROUND:

The City of Livingston is in a partnership with Merced County and the other cities in the County on a State approved Enterprise Zone Program. On October 16, 2007, by adoption of Resolution No. 2007-54, the Livingston City Council took the necessary action to support the application and provide the necessary approvals and authority to implement the program if awarded. A conditional approval for the program was granted in December 2006 and final approval was awarded in 2009.

The Enterprise Zone Program is one of the few business incentive programs available in the State and is therefore an important tool. The program provides for relief or reduction in State tax liability for hiring qualified employees. Other benefits include a reduction in sales or use taxes on qualified equipment and in some cases advantages to competitive bidding on state contracts. Many Livingston businesses have benefitted from the program in the past and many new ones are now benefitting because of new designated areas.

The State Department of Housing and Community Development (HCD) has recently made a determination which requires the previous TEA boundary to be amended, (EXHIBIT B). Amending the boundary of the TEA requires approval by each of the member cities and Merced County as the program grantee. Each is considering a similar resolution. The State HCD has further set a deadline for July 8, 2013, for the new TEA to be adopted.

DISCUSSION:

The Hiring Tax Credit is one of the most used benefits of the Enterprise Zone Program. A qualified employee could potentially provide in excess of $37,000 in State tax relief to the employer over five years. The City utilizes the services of the Merced County Department of Workforce Investment for all employee verification. As part of their services they issue the Hiring Voucher — eligible employees. The TEA is one of several methods that an employer can qualify to get a hiring tax credit for their employee.

The following are methods used for employee verification:

• A person eligible to be a voluntary or mandatory participant in CalWorks

• A person receiving or eligible to receive subsidized employment, training or services funded by WIA

• A member of a targeted group as defined in the Federal Work Opportunity Tax Credit (WOTC)

• An economically disadvantaged individual 14 years of age or older

• A qualified dislocated worker

• A disabled individual eligible for, enrolled in, or who completed a state rehabilitation program

• A service connected disabled veteran

• A veteran of the Vietnam era

• A veteran who recently separated from military service (48 months prior to hire date)

• An ex-offender

• A person eligible for or recipient of:

o SSI benefits

o Temporary Assistance for Needy Families (TANF)

o State and local general assistance

• A Native American

• A resident of a Targeted Employment Area (TEA)

The program change being required by HCD will reduce the size of the existing TEA. The California Association of Enterprise Zones has appealed their determination; however, HCD has not amended their position. If the local zone does not adopt a new TEA then it will no longer be an available method for determining an employee for the hiring tax credit.

FISCAL IMPACT:

None to the City.

ATTACHMENTS:

I. Resolution No. 2013-

Exhibit A -2013 Census Tracts Exhibit B -2013 TEA Map

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