The final hurdle for creating enterprise zones in West Berkeley has cleared, paving the way for more than 1,000 local businesses to receive tax credits.
Berkeley’s Economic Development Manager Michael Caplan said the California Department of Housing and Community Development Department announced Dec. 1 that it had approved the expansion of the Oakland Enterprise Zone into West Berkeley, a little over two months after the Berkeley City Council voted in favor of it.
The Oakland City Council has also approved the plan.
Berkeley’s primary motivation to pass the proposal was to keep Bayer Healthcare, the city’s largest private-sector employer, from leaving town. The company had threatened to outsource some of its manufacturing, a move city officials feared would lead to the pharmaceutical giant eventually shutting down its Aquatic Park campus entirely.
As a result, Berkeley agreed to give Bayer $10 million in tax breaks for over two years, including a reduction in PG&E bills, as part of the enterprise zone, in return for which the company will remain in Berkeley and invest $100 million in the facility.
Both parties described the deal as a “win-win.”
Bayer will also qualify to receive about $36,000 in tax credits for each new employee hired who meets particular requirements. Cities issue a hiring tax credit voucher to businesses in its enterprise zones for each qualified employee they hire.
But some Berkeley councilmembers are skeptical about whether the enterprise zone would create new jobs as promised and whether the zones would actually initiate economic development or simply cater to corporate interests.
Caplan said the expansion would include “the area from San Pablo Avenue to the I-80 freeway from the Oakland-Emeryville border to Albany, including all addresses on both sides of San Pablo Avenue.”
“Inclusion in the enterprise zone means that over 1,100 West Berkeley businesses—from large manufacturing companies to small neighborhood restaurants—will be eligible to claim state tax credits that can reduce their state obligation by thousands of dollars,” Caplan said in an e-mail message. “Businesses located in the enterprise zone are automatically eligible for zone benefits, no certification is required.”
The two main benefits of an enterprise zone are:
• A hiring credit of up to $37,440 per eligible employee hired after the area is designated an enterprise zone. Eligible persons include the unemployed, disabled, veterans and individuals receiving public assistance.
• State sales tax credits on purchases of $20 million per year for qualified equipment and machinery parts.
More information on this and other benefits of enterprise zone can be found at: http://EZoakland.com.