Thousands of businesses on San Francisco’s east side will remain eligible for state tax breaks if The City wins approval from Sacramento in coming weeks.
The goal of a the state tax program, dubbed the Enterprise Zone, is to provide incentives to businesses in areas deemed economically depressed.
The geographical zone program in The City was created in 1992 when the state launched the program allowing businesses to receive tax breaks when employing low-income workers, in addition to other tax credits. San Francisco businesses have received as much as $14 million in tax breaks, according to 2003 data.
San Francisco’s 11-square-mile enterprise zone includes Union Square, the Financial District, Nob Hill, Chinatown and Civic Center. It expires in May of 2007 and city planners are hoping to continue the program and add additional pieces in the Bayview and Potrero Hill.
The program seemed almost forgotten since no one seemed to be promoting it in the last decade, said David Heller, president of the Greater Geary Boulevard Merchants Association.
“It was a great program. Somehow it fell through the cracks,” Heller said. “It was an incredible opportunity for companies to hire people” in need.
Large businesses and those in the financial services sector have reaped the most benefits from the zone, according to a study by the Goldman School of Public Policy at the University of California at Berkeley. The study also found that one-third of the participating businesses operated in areas with above-average incomes.
Some critics say The City’s enterprise zone does not meet the criteria of operating in economically depressed areas.
“San Francisco stands out as an area that doesn’t need taxpayer dollars to further its economic development,” said Jean Ross, executive director of the California Budget Project, a nonprofit that analyzes low-income families and the impact state policies have on them.
Ross said enterprise zones better serve areas such as the Imperial Valley, in southeast California, where unemployment rates remain around 30 percent.
Jennifer Matz, deputy director of business affairs for the Mayor’s Office of Workforce and Economic Development, said The City is simply taking advantage of a program the state has made available.
Matz conceded that the program has not been successfully marketed to employers. San Francisco is expected to hear from California’s Housing and Community Development Department in the next month as to whether it should move forward with its proposed enterprise zone, Matz said.
If the state provides the green light, The City will move forward with the necessary reports for the zone.