City of Oroville - Enterprise Zone

City of Oroville

E N T E R P R I S E Z O N E

Quick Reference

Enterprise Zone

Contact Information

Phone 530.538.4307
Fax 530.538.2539
E-mail businessassistance@cityoforoville.org

• State Enterprise Zone web site

• California Association of Enterprise Zones (CAEZ)

Program Purpose:
      The Enterprise Zone Program targets economically distressed areas throughout California. Special state and local incentives encourage business investment and promote the creation of new jobs. The purpose of the program is to provide tax incentives to businesses and allow private sector market forces to revive the local economy.

      Oroville is one of the few communities in the State that holds a designation for both a Recycling Zone and Enterprise Zone.

      Enterprise Zones are state-designated economic development areas created to stimulate growth and create jobs and stimulate investments in local communities. Through tax incentives, hiring incentives, financial incentives, etcetera, the Enterprise Zone is designed to add to a business's bottom line.

      Bordered by the Sierra Nevada foothills and Lake Oroville, the Oroville Enterprise Zone is located, in the fast growing Sacramento Valley. Over 5,000 acres comprise the Enterprise Zone, including most of Oroville's commercial and industrial areas. From Oroville, a business has easy access to San Francisco, Reno, Nevada and Los Angeles; by road, air and rail.

      Both large and small businesses can profit from the many opportunities available in the Enterprise Zone. The community's pro-business attitude has resulted in attracting new businesses and retaining established businesses.

Oroville Enterprise Zone
      The Oroville Enterprise Zone was established in 1991 and is one of 39 Zones designated in California. (There are 44 zones currently). The Enterprise Zone boundaries encompass most of the city limits and portions of Butte County.

Enterprise Zone Incentives
      There are five (5) California State Tax related incentives the Enterprise Zone provides:

           • Hiring Tax Credit

           • Sales and use tax credit

           • Business expense deduction for business property

           • Net operating loss carryover deduction

           • Net interest deduction for lenders

Oroville Enterprise Zone Hire Tax Credit
      A qualified business may reduce state income taxes by the amount of wages paid to one or more qualified employees. The local Private Industry Council coordinates the eligibility verification for employers.

      During the first year of employment, up to 50% of a qualified employee's wages may be claimed against your California income tax liability. The credit percentage decreases by 10% annually. The employer's deduction for wages must be reduced by the amount of the credit claimed.

      The hiring tax credit calculation is based on the lesser of:

           • The actual hourly wage paid; or

           • 150% of the California minimum hourly wage, i.e. $8.00 x 1.50 - $12.00.

      Employees must spend at least 90% of their work time on activities directly related to the conduct of business in the enterprise zone and perform at least 50% of the work within the zone boundaries.

Oroville Enterprise Zone Sales and Use Tax Credit
      Businesses located in the Enterprise Zone may reduce state income taxes by the amount of sales or use tax paid on certain machinery purchased for exclusive use within the Enterprise Zone.

      To qualify for the credit, the machinery must be used to manufacture, process, combine or otherwise fabricate a product; produce renewable energy resources; or control air or water pollution. Data processing and communication equipment are also qualified property.

      Individuals and Partnerships may claim a credit equal to the tax paid on the first $1 million of machinery costs.

      Corporations may claim a credit equal to the tax paid on the first $20 million of machinery costs. Special rules apply for S-Corporation shareholders.

Oroville Enterprise Zone Business Expense Deduction
      Businesses operating within the Enterprise Zone may elect to treat 40% of the cost of qualified property as a business expense. The maximum deduction in the Oroville Enterprise Zone is $20,000. Therefore, this particular provision is only of benefit to C-Corporations.

Oroville Enterprise Zone Net Operating Loss Carryover
      If a net operating loss is generated by a business that operates within the Enterprise Zone, 100% of the loss may be carried forward for up to 15 years.

      Oroville Enterprise Zone Net Interest Reduction for Lenders
      Lenders who loan money to an Enterprise Zone business can take a deduction for the net interest earned (interest earned less direct expenses) on the loan.

      The types of loans that qualify for this deduction include: business loans, mortgages, and loans from non-commercial sources.

To Qualify for the Loan Interest Earned Deduction:

           • The loan must be made to a trade or business located solely within the
              boundaries of the Enterprise Zone.

           • The Loan proceeds must be used strictly for the business activities within
              the boundaries of the Enterprise Zone.

           • The lender cannot have an equity or other ownership interest in the
              business.

Enterprise Zone

Enterprise Zone

Enterprise Zone

M O R E I N F O R M A T I O N

| First Time Home Buyer | RDA First Time Home Buyer |
| FTHB In-Fill Construction | Enterprise Zone | Housing Rehabilitation Loan |
| RDA Rehabilitation Program | RMDZ | Landscape Improvement Program |
| Small Business Loan Program | Business Technical Assistance | Credit Counseling |
| Business Resources | Emergency Home Repair Grant | Minor Home Repair Loan |
| Small Business Development Center | Micro-Enterprise Technical Assistance |

Oroville City Hall • 1735 Montgomery Street • Oroville, CA 95965

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