Government Spending

EZ Spirit! Is Reason Unfair to Enterprise Zones?

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Hollywood's Enterprise Zone is there when you need it.

Daniel Fitzgerald, manager of the Calexico Enterprise Zone, says my understanding of the EZ marketplace, which I mentioned in a column from the March issue, is extremely poor:

I am only writing regarding the extremely poor research you did in arguing that Enterprise Zones in California should be eliminated, not regarding RDAs. 

Your research only cites two studies, one from 2005 and another from 2002.  There were a number of reforms enacted in 2006 to the Enterprise Zone program.  The 2005 PPIC study, that you cited from the budget report, itself indicates in its conclusions that the reforms enacted in 2006 may solve the problems they noted using their 2005 and older data.  And, the EZ program has done just that.  In 2010 over 118,000 jobs in Enterprise Zones were created or retained.  These jobs are for people who are coming off unemployment, public assistance, veterans, and even ex-offenders.  Imagine the drain on California's budget if just ½ of these people were back on public rolls.

For a reporter that obviously did some homework on the RDA program in Los Angeles, it is unfortunate you chose to not properly research the EZ program and just blindly follow what was put out in the budget report.  I have the 2010 data reported from businesses to the EZ administrators.  I am happy to share it with you or any member of the media.  This data has been provided to the PR firm Wilson-Miller in Sacramento as well.

The 2010 data [pdf] Fitzgerald refers to.

I will confess that my own experience with enterprise zones has made me more rather than less confused about how the things work. A couple years ago I got a good contract to work as a flack for a company in Pasadena. In the process of doing my paperwork, I was told that I should provide some written proof of residence, and learned to my great pride and delight that my shitbag apartment was not just part of the Hollywood Enterprise Zone [pdf] but part of the Hollywood distressed Targeted Employment Area [pdf]. Thus the Pasadena company would receive some extra government benefit for hiring my distressed self.

What didn't make sense to me was why a Pasadena business would be getting a tax credit for hiring in my neighborhood – especially since, I was told, the credit was only available because the office was itself located in some type of hiring-credit area in the City of Roses. For what it's worth, the Pasadena Enterprise Zone [pdf] does* not seem to include the office where I worked, and vast swaths of California real estate are designated as distressed areas or enterprise zones or business  improvement districts or some other preferred-treatment locale. California is a negative Lake Woebegone where all the children are below average. So I have no doubt that the employer incentive was legitimate and properly executed.

But how did this incentive work? Do you hire from the distressed area, into the distressed area, some combination of the two, or something else? Also, Hollywood and Pasadena are really far apart. Shouldn't there be a carbon emissions codicil attached to these hiring incentives, so the government won't be encouraging poor day laborers like me to drive 21 miles each way? Maybe Californians can pass a ballot initiative requiring carpooling by all incentivized workers? Or maybe the company should be required to relocate to Hollywood, then get another tax credit for relocating?

Times being what they were, I took the job. But even if someday I figure out how the hiring incentive worked, I still don't think I'll understand how everybody involved – I; the company that hired me; and the taxpayers of Pasadena, Los Angeles, and California – wouldn't have been better off putting our time and effort into creating value for our customers rather than pursuing nickel and dime government largesse.

* Correction: An earlier version of this post used a previous map [pdf] of the Pasadena EZ. Thanks to Melissa Alva of the Pasadena Enterprise Zone for the correction, and for explaining the procedure: An employer in one EZ is in fact entitled to a credit for hiring from Target Employment Areas in another EZ.