Legislation to allow Watsonville’s expired enterprise zone to continue receiving benefits passed the state’s Senate Committee on Transportation and Housing 5-2 this week.
Authored by Assemblymember Luis Alejo (D-Salinas), AB 484 allows Watsonville zone to retain its status, which expired in April. Small and medium sized businesses in these zones receive special benefits such as tax credits on machinery, according to Kurt Overmeyer, Economic Development Manager for the City of Watsonville.
“Enterprise zones are a vital economic development tool that helps maintain competitiveness and attract new business,” said Overmeyer.
The Watsonville Enterprise Zone has 334 participating companies, according to Alejo spokeswoman Marva Diaz.
These businesses have created or retained over 10,000 jobs in the community, with around 10 percent being union jobs. The Zone has helped at least 2,000 employees move off of public assistance, including 150 veterans and 300 ex-offenders.
Several rapidly growing Watsonville companies such Fox Racing Shox and Nordic Naturals have used the Enterprise Zone program to expand employment and to purchase manufacturing equipment, said Diaz.
Fox Racing Shox grew from 75 employees in 1999 to more than 800 employees in 2012. Nordic Naturals had seven employees in 2000, and boasted 250 employees in 2012. Martinelli’s has gone through multiple expansions and now employs over 300 people.
“This legislation could enable Martinelli’s to expand again,” said Overmeyer.
John Martinelli’s of the S. Martinelli & Company testified in support of AB 484 in Sacramento. There, he stated that he employs union workers that other states have been trying to lure away.
Alejo echoed Martinelli’s worries about jobs while in Sacramento.
“I introduced this bill because I fear that without the Enterprise Zone program, my hometown of Watsonville will lose more jobs,” he said, pointing out that four major companies in Watsonville have stated they would be forced to reconsider manufacturing there if they lost tax credits through the program.
The California Department of Housing and Community Development (HCD) put the program on hold it give it a regulatory or administrative review – to be completed at an undetermined date.
In his 2012-2013 budget, Gov. Jerry Brown called for eliminating California's Enterprize Zone Program amid concerns over their effectiveness. HCD is currently working on a regulatory and administrative review of it.