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HomeMy WebLinkAboutMinutes - April 10, 2012 SSLODI CITY COUNCIL SHIRTSLEEVE SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, APRIL 10, 2012 A. Roll Call by City Clerk An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, April 10, 2012, commencing at 7:25 a.m. Present: Council Member Hansen, Council Member Johnson, Council Member Katzakian, Mayor Pro Tempore Nakanishi, and Mayor Mounce Absent: None Also Present: City Manager Bartlam, City Attorney Schwabauer, and City Clerk Johl B. Topic(s) B-1 Receive Presentation on San Joaquin County Enterprise Zone (CD) Fran Aguilera of the San Joaquin County Enterprise Zone provided a brief PowerPoint presentation regarding the same. Specific topics of discussion included the history of the enterprise zone, an overview of enterprise zones, purpose of the California enterprise zone program, benefits of enterprise zones, hiring tax credits, targeted employment area (TEA), incentive benefits, annual report, presentations and workshops, zone attraction and retention, business contacts, hiring vouchers, return on investment, benefiting businesses, 2011 expansion into Ripon and Escalon, and enterprise zone partners. In response to Council Member Johnson, Mr. Aguilera stated the 36% unemployment figure represents the cumulative unemployment number based on the most distressed areas in the zone. In response to Council Member Hansen, Mr. Bartlam stated the 36% unemployment figure is representative of the worst areas within the shown mapped area of the County. In response to Council Member Hansen, Mr. Aguilera stated the use tax credit for machinery and replacement parts is primarily applicable in the manufacturing industry, is used when equipment is brought in for use from outside of California, and is the equivalent of sales tax. In response to Mayor Mounce, Mr. Aguilera stated staff is continuing its communication efforts with accounting firms and businesses in an attempt to get more businesses to take the actual credit. In response to Council Member Hansen, Mr. Aguilera stated a business may be able to receive the TEA credit if it hires an employee with a misdemeanor or felony background. In response to Mayor Mounce, Mr. Aguilera stated the City should continue to be concerned about the elimination of the TEA program at the Sacramento level. In response to Mayor Mounce, Mr. Aguilera stated there are many ways to qualify for the credit but it can be as simple as providing a statement in the required documentation. In response to Council Member Hansen, Mr. Aguilera stated those who are participating in the enterprise zone programs and receiving the tax credits are not taking away from those who are not in enterprise zones as the program is an incentive for those areas that traditionally are not as Continued April 10, 2012 attractive for businesses. In response to Mayor Pro Tempore Nakanishi, Mr. Aguilera stated the program provides a five- year tax credit for qualifying businesses, each City pays proportionately for the enterprise zone, and the San Joaquin enterprise zone is a County agency. In response to Council Member Katzakian, Mr. Aguilera stated there are 42 enterprise zones in the State of California, including several in surrounding counties, and the program is highly competitive because it is based on a points structure. In response to Council Member Johnson, Mr. Aguilera stated there is a concern that if there is a two-thirds control of the Legislature by either party then enterprise zones may be eliminated because the Legislature has a tendency to vote along party lines. In response to Mayor Pro Tempore Nakanishi, Mr. Aguilera confirmed that the two-thirds requirement comes into play because the removal of a tax credit is considered a tax increase, which requires a two-thirds vote. In response to Ed Miller, Mr. Aguilera stated the tax credit per qualifying employee is approximately $37,500. In response to Sam Karufa, Mr. Aguilera stated contractors may use the tax credit but only if more than 50% of the work is being performed in the zone on an annual basis. Ray Crow of the Chamber of Commerce commended the staff of the San Joaquin County Enterprise Zone on its efforts to communicate the benefits of the program to local businesses. C. Comments by Public on Non -Agenda Items None. D. Adjournment No action was taken by the City Council. The meeting was adjourned at 8:15 a.m ATTEST: Randi Johl City Clerk N AGENDA ITEM B•' itCITY OF LODI COUNCIL COMMUNICATION TM AGENDA TITLE: Receive Presentation on San Joaquin County Enterprise Zone MEETING DATE: April 10, 2012 PREPARED BY: City Manager BACKGROUND INFORMATION: Lodi became part of the San Joaquin County Enterprise Zone on June 22, 2008. All industrial properties and nearly all commercial properties are included in the zone. The major benefits to businesses located in the enterprise zone are the State tax incentives for hiring qualifying employees and purchasing new manufacturing equipment. The tax benefits last for 15 years. The City of Lodi paid $21,464 in the current budget year to support the County's marketing efforts, which have helped to create a significant number of jobs for the community while reducing costs for businesses. Fran Aguilera, manager for the San Joaquin County Enterprise Zone, will brief the Council on the Enterprise Zone's accomplishments and other issues regarding the zone's future. KONRADT BARTLAM City Manager Bartlam, City Manager San Joaquin County Enterprise Zone Lodi City Council April 10, 2012 SAN J O A Q U! N COUNTY ENTERPRISE ZONE San Joaquin County • Stockton • Lathrop • Tracy • Manteca • Lodi • Ripon • Escal®u 0 Economic Development Associati®n 0 SJ Partnership History of Stockton/San Joaquin County Enterprise Zone • 2008 the Zone expired after 15 years • 29 Square miles central & South Stockton • Helped create about 25,000 jobs • In today's dollars about 1 billion in tax credits for local businesses • Very successful collaboration between San Joaquin County and Stockton SAN JOAQUIN COUNTY ENTERPRISE ZONE New San Joaquin County EZ • Only 42 Zones State wide • 2007 Competition for new designation • County joined forces with the cities of Lodi Stockton, Manteca, Tracy & Lathrop to apply for new Zone • 656 Square Miles • We won designation until 2023 SAN JOAQUIN COUNTY ENTERPRISE ZONE Purpose of the California Enterprise Zone program • Stimulate business and industrial growth in economically challenged areas of the State • San Joaquin County Eligible Area • 2007 Over 17% Unemployment now 36% • 2007 Over 25% of the household at or below poverty level income now 10,500 families • Create increased job opportunities SAN JOAQUIN COUNTY ENTERPRISE ZONE What are the Enterprise Zone Benefits? • Hiring Tax Credit • Sales and Use Tax Credit • Business Expense Deduction • Net Interest Deduction for Lenders • Net Operating Loss Carryover SAN JOAQUIN COUNTY ENTERPRISE ZONE Enterprise Zone Hiring Tax Credit • Prior to being hired, the employee must qualify under just one of the following: • Economically disadvantaged • A qualified Veteran: Vietnam era, separated in last 48 months, service connected disabled • Resident of a Targeted Employment Area (TEA) • Disabled SAN JOAQUIN COUNTY ENTERPRISE ZONE Enterprise Zone Hiring Tax Credit • An ex -offender (misdemeanor, felony) • A qualified displaced worker • Enrolled in WIA, Calworks, WOTC (Work Opportunity Tax Credit) • Received public assistance such as food stamps, welfare, etc. 0 Native American Indian, Hawaiian, Samoan SAN JOAQUIN COUNTY ENTERPRISE ZONE Targeted Employment Area (TEA) Enterprise Zone Incentive Benefits Hiring Credit Misconceptions • "We don't hire anyone who qualifies" • "We don't hire entry level employees" • "We're not a manufacturer" • "The employees don't live in the EZ" • "We're already taking the credits" SAN JOAQUIN COUNTY ENTERPRISE ZONE ENTERPRISE ZONE ANNUAL REPORT FY 2010-2011 Report issued by: San Joaquin County Enterprise Zone 56 S. Lincoln Street, Stockton CA, 95203 209.468.3615 • www.sjcez.org Incentives to Grow Business • Over 800 San Joaquin County Business hired eligible workers • 10,099 new employees hired • 3760 businesses contacted • Over 100 presentations and workshops SAN JOAQUIN COUNTY ENTERPRISE ZONE Presentations & Workshops by EZ Specialists Fly 2010 - 2011 Events: 101 Business Districts & Groups State of the City Enterprize Zone Workshops Business Summits Chambers of Commerc( Rotory 1 Kiwanis [Service Club: 0 10 20 30 40 50 ZONE ATTRACTION AND RETENTION 1,3 10 NEW JOBS/130 RETAINED JOBS The Son Joaquin Partnership markets the Enterprise Zone to businesses looking to locate and/or expand in San Joaquin County. Last year the Partnership assisted eight companies by attracting 1,310 new jabs and retaining 130 jobs. One of these companies specifically chose its location to take advantage of the Enterprise Zone expansion area. SAN. JOAQUIN COUNTY ENTERPRISE ZONE 4D Lathrop Lodi Manteca SJG Unincorporated 40 Stockton * Tracy 2010 - 2011 Business Contacts by EZ Specialists 3,760 Contacts Total TAX CREDIT HIRING VOUCHERS Many companies submitted applications in response to on-going outreach activities. 0 Lathrop Lodi i Manteca 40 SJC Unincorporated 0 Stockton 0 Tracy Employers by City • FY 2010 - 2011 Tata) 806 Voucher processing staff experienced a 16% rise in applications this period. Vouchers by city Total 1 * Lathrop 0 Lodi Manteca SJC Unincorporated Stockton Tracy 0 FY 2010 - 2011 0.099 RETURN ON INVESTMENT For Fiscal Year 2010-11 1 Enterprise Zone new hires included over 10,099 persons from targeted demographics. The fundamental goal of an Enterprise Zone is to provide work opportunities for individuals with significant barriers to employment. Many of the eligibility categories for Hiring Credits include individuals who rely on public or government -funded assistance to help meet their basic needs. By hiring individuals in these categories, employers create a positive "return -on - investment" for California, lessening the strain on already over -taxed public systems. Approved Vouchers by Eligibility Category Resident of Targeted Employment Area (high poverty areas) Jul- 10 - Jun -1 1 8,460 Dislocated Worker (recently laid off and receiving or have exhausted Unemployment Benefits) 46 Vietnam Era/Recently Separated Veteran 31 Native American, Samoan, Hawaiian 6 Workforce Investment Act services (recently laid off or long term unemployed or economically disadvantaged) 47 Work Opportunity Tax Credit (food stamp recipient, long term financial aid, disabled veteran) 367 Economically Disadvantaged (family earning at or below poverty levels) 451 Ex -Offender (ex -convict sentenced to jail or parole) 160 Public Assistance/CalWorks (food stamp recipient, cash aid, welfare -to -work participant) 31 HERRICK STEEL In the past year, Stockton company Herrick Steel purchased over $3 million in new manufacturing equipment and anticipates further investments of more than $3 million in the coming year. In 2011, they hired 78 new workers, many of them union jobs. As president Doug Griffin said, "These investments are possible through the Enterprise Zone benefits." COTTAGE BAKERY One of the largest employers in Lodi, California, Cottage Bakery hired 71 Enterprise Zone qualified employees for FY 2010-11. Enterprise Zone benefits help maintain quality staffing levels during these competitive economic times. THE WINE GROUP One of the largest wine producers in the world, The Wine Group (TWG) offers bargain and premium wines, both bottled and boxed. Its brand names include Corbett Canyon, Almaden, Foxhorn, and Fish Eye. It imports wine as well, including Mistrane from France and Austin Vale from Australia. The Wine Group's Franzia, which comes in a box, dominates US boxed wines. TING also operates Underdog Wine Merchants, which offers offbeat wines such as Pinot Evil, Big House, Cardinal Zin, and Tempra Tantrum. TING, headquartered in Tracy, Ca. operates a manufacturing facility in Ripon and a distribution center in Stockton. They have been able to leverage the Enterprise Zone tax credits to expand their operations and increase employment in San Joaquin County. They successfully handle all their vouchering in-house allowing them to put even more money back into their operations. Kris Mesker, Vice President of Human Resources, states, "Credits from the Enterprise Zone program contributed to enabling the company to expand its activities, and add new permanent positions at all three San Joaquin County locations in each of the last four years:' i' � �'�-,� '--fit_ r�i►�, top r . r.. Diamond Pet Foods is a leading manufacturer of super premium, nutritious and natural pet foods; and is the choice of top breeders, kennel owners, sporting enthusiasts, and family pet owners world-wide. Headquartered in Missouri, they located their first West Coast plant in Lathrop, Ca. approximately 12 years ago. When they decided to expand their operations in 2010 they chose ❑ location in the City of Ripon which was, at the time, in the process of joining the San Joaquin County Enterprise Zone. Mark Schell, Executive VP Manufacturing, is quick to note, "The expansion of the San Joaquin County Enterprise Zone was one of the contributing factors on why we decided to locate our second West Coast plant in Ripon. This plant will employ around 120 people once it is fully operational. The construction phase has brought over 200 jobs to the area. The plant should be operational in the first quarter of 2012." r it � SAN JUAQIIIFI COUNTY �NT�RPRISE ZON�,�008 2011 Expansion Ripon & Escalon New Zone June 2008 to June 2011 • 7848 Business Contacts • Connie and Ed show • Over 18,622 Hiring Tax Credit Vouchers • Potential Tax Credit Generated for local Businesses to reinvest in San Joaquin County 0$698)000)000 SAN JOAQUIN COUNTY ENTERPRISE ZONE ENTERPRISE ZONE PARTNERS "sic Jon4a wrCWin% DEVONOMIC ELOPMENTSAN JOAQUIN PARTNERSHIP M ASSOCIATION CITY OF •M05STOCKTON err.' L-oi-- -�*r 4 %.044 / AL TRACY lbw 414 I li �lilil:I{ l7f 4F* - r/ Pr�� � ¢ L[ { Itiltiil• itt I.s HISPANIC Report issued by: San Joaquin County Enterprise Zone 56 S. Lincoln Street, Stockton CA, 95203 209.468.3615 • www.sjcez.org Presentations & Workshops by EZ Specialists FY 2010 - 2011 Events: 101 Business Districts & Groups State of the City Enterprize Zone Workshops Business Summits Chambers of Commerce Rotary / Kiwanis (Service Clubs 0 10 20 30 40 50 The Enterprise Zone website provides updated features responsive to community requests. We are constantly improving our web presence to provide added support for our EZ businesses. If you want to confirm an address in the Enterprise Zone, Targeted Employment Area, or need to find a bank to finance your business, SJCEZ.ORG provides the most current tools to help your business. ZONE ATTRACTION AND RETENTION 1,310 NEW JOBS/ 130 RETAINED JOBS The San Joaquin Partnership markets the Enterprise Zone to businesses looking to locate and/or expand in San Joaquin County. Last year the Partnership assisted eight companies by attracting 1,310 new jobs and retaining 130 jobs. One of these companies specifically chose its location to take advantage of the Enterprise Zone expansion area. SAN JOAQUIN COUNTY ENTERPRISE ZONE ® ANNUAL REPORT 2010 - 2011 Herrick celebrated National Steel Day by inviting the community to tour their facility. Their $3 million equipment investment required 78 new hires, employing many union workers. r c k STEELDAY 2011 Herrick celebrated National Steel Day by inviting the community to tour their facility. Their $3 million equipment investment required 78 new hires, employing many union workers. The third year in San Joaquin County's Enterprise Zone shows strong outreach activity conducted by two specialists covering all participating cities. Outreach activities are often coordinated to include joint site visitations with City representatives. SAN JOAQUIN COUN iY 'N?� RPRISF LONA > ANNUAL REPORT 21010 - 2011 2010 - 2011 Business Contacts by EZ Specialists 3,760 Contacts Total Lathrop Lodi Manteca SJC Unincorporated Stockton Tracy 2010 - 2011 Business Contacts by EZ Specialists 3,760 Contacts Total Many companies submitted applications in response to on-going outreach activities. Voucher processing staff experienced a 16% rise in applications this period. Vouchers by City • FY 2010 - 2011 Total 10,099 Lathrop Lodi Manteca 49 SJC Unincorporated Stockton Tracy Vouchers by City • FY 2010 - 2011 Total 10,099 For Fiscal Year 2010-1 1, Enterprise Zone new hires included over 10,099 persons from targeted demographics. The fundamental goal of an Enterprise Zone is to provide work opportunities for individuals with significant barriers to employment. Many of the eligibility categories for Hiring Credits include individuals who rely on public or government -funded assistance to help meet their basic needs. By hiring individuals in these categories, employers create a positive "return -on - investment" for California, lessening the strain on already over -taxed public systems. SAN JOAQUIN COUN_1Y ENFFRPRISE ZONE ® ANNUAL REPORT 2010 - 2011 SAN JOAQUIN COUNTY ENTERPRISE ZONE - ANNUAL REPORT 2010 - 2011 Resident of Targeted Employment Area (high poverty area 8,960 Dislocated Worker 46 (recently laid off and receiving or have exhausted Unemployment Benefits) Vietnam Era/Recently Separated Veteran 31 Native American, Samoan, Hawaiian 6 Workforce Investment Act services 47 (recently laid off or long term unemployed or economically disadvantaged) Work Opportunity Tax Credit 367 (food stamp recipient, long term financial aid, disabled veteran) Economically Disadvantaged 451 (family earning at or below poverty levels) Ex -Offender 160 (ex -convict sentenced to jail or parole) Public Assistance/CalWorks 31 (food stamp recipient, cash aid, welfare -to -work participant) SAN JOAQUIN COUNTY ENTERPRISE ZONE - ANNUAL REPORT 2010 - 2011 HERRICK STEEL In the past year, Stockton company Herrick Steel purchased over $3 million in new manufacturing equipment and anticipates further investments of more than $3 million in the coming year. In 2011, they hired 78 new workers, many of them union jobs. As president Doug Griffin said, "These investments are possible through the Enterprise Zone benefits." One of the largest employers in Lodi, California, Cottage Bakery hired 71 Enterprise Zone qualified employees for FY 2010-11. Enterprise Zone benefits help maintain quality staffing levels during these competitive economic times. SAN JOAQUIN COUNTY ENTERPRISE ZONE ® ANNUAL REPORT 2010 - 2011 M'kF,A 19 � FOR I'd N THE WINE GROUP One of the largest wine producers in the world, The Wine Group (TWG) offers bargain and premium wines, both bottled and boxed. Its brand names include Corbett Canyon, Almaden, Foxhorn, and Fish Eye. It imports wine as well, including Mistrane from France and Austin Vale from Australia. The Wine Group's Franzia, which comes in a box, dominates US boxed wines. TWG also operates Underdog Wine Merchants, which offers offbeat wines such as Pinot Evil, Big House, Cardinal Zin, and Tempra Tantrum. TWG, headquartered in Tracy, Ca. operates a manufacturing facility in Ripon and a distribution center in Stockton. They have been able to leverage the Enterprise Zone tax credits to expand their operations and increase employment in San Joaquin County. They successfully handle all their vouchering in-house allowing them to put even more money back into their operations. Kris Mesker, Vice President of Human Resources, states, "Credits from the Enterprise Zone program contributed to enabling the company to expand its activities, and add new permanent positions at all three San Joaquin County locations in each of the last four years." SAN JOAQUIN COUNTY ENTERPRISE ZONE ® ANNUAL REPORT 2010 - 2011 ENTERPRISE ZONE PARTNERS Ssican Joaquin County -""Rjmbhl wC!!nT DEVE OPMENT SAN JOAQUIN PARTNERSHIP '"R" ASSOCIATION CITY OF STOCKTON EM TRACY 10,I 'Gkl 4 Greater °. ' �`0 ®®O � $AM JO QUIN Eoa e7r StOCId6n s' HISPANIC Chamber of Commerce -..I CAll-IMA - .IMC. 1.1. Tmty Chamberof Commute CHAMBER 1 COMMERCE John Solis, Executive Director • 209.468.3500 Fran Aguilera, Zone Administrator • 209.468.3512 Nicole Wells, Vouchering 209.468.3513 Connie Rill, Zone Specialist 209.468.3529 Ed Wanket, Zone Specialist 209.468.3613 Employment & Economic Development Department 56 S. Lincoln Street, Stockton CA, 95203 209.468.3615 • www.sjcez.org