Enterprise zone renewed for west Mesa - East Valley Tribune: East Valley Local News

Enterprise zone renewed for west Mesa

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Posted: Saturday, October 10, 2009 3:04 pm | Updated: 1:02 am, Sat Oct 8, 2011.

Mesa is renewing an incentives package to boost west Mesa’s economy even though the effort helped only two businesses in the last five years. The city renewed the designation of an enterprise zone for a roughly seven-mile area where certain businesses can get tax breaks if they expand or move into the vicinity.

Mesa sees the zone’s incentives as a catalyst to revive west Mesa. Since the area was established in 2005, a senior housing community qualified for benefits and brought 31 new jobs into Mesa. An air-conditioning company brought one new job, but that business has since closed.

The results were a bit surprising to Mesa Councilman Dennis Kavanaugh, who is chairman of the Mesa Enterprise Zone Committee. The city expected more development to take advantage of the incentives, he said, though it didn’t have specific goals.

The enterprise zone got lost in the shuffle when the economy was booming and businesses focused on moving to new developments, he said. Kavanaugh expects better results in the program’s five-year renewal, and that the city will promote it more.

Businesses looking to relocate are interested in moving into enterprise zones around the state, said Patrick Murphy, a program manager in the city’s economic development office.

When companies are scouting locations through the Greater Phoenix Economic Council, about 40 percent will ask about enterprise zones, he said.

The city has tried to encourage existing businesses to expand, Murphy said, by sending letters to all companies that appeared to qualify for the benefits. However, one major problem in getting existing businesses interested is that a large number in the area don’t qualify. Businesses cannot have more than 10 percent of their revenue come from retail sales, and the enterprise zone has a large number of stores.

But Murphy said he’s still encouraged about future prospects because of new buildings in the area and constant interest in the incentives.

“I see a lot of potential for the program,” Murphy said.

The incentives include a 40 to 60 percent property tax break, and tax credits of up to $3,000 per employee for up to three years. To qualify, businesses must employ workers full time, pay at least $9.64 an hour and cover at least half the cost of health insurance. The city pays nothing, as the state covers the costs.

Mesa has just one enterprise zone, which can only be established in areas where the U.S. Census has identified poverty levels of more than 20.85 percent. The rate is slightly higher in Mesa’s zone, which roughly covers the area between Mesa’s western city limits and Stapley Drive, and from Broadway to Brown roads.

The bad economy should help the city get more businesses in the zone, said Terry Benelli, executive director of the Neighborhood Economic Development Corporation.

That nonprofit group provides microloans to businesses in areas of low and moderate incomes, and Benelli said those kinds of companies would look to west Mesa to keep expenses low.

“It’s more attractive now because we have decent rental rates,” Benelli said.

What businesses get

• A 40 to 60 percent property tax break.

• Tax credits up to $3,000 per employee for up to three years.

What they must do

• Employ workers full time.

• Pay at least $9.64 an hour.

• Cover at least half the cost of health insurance.

How areas qualify

• To quality as an enterprise zone, an area must have a poverty level of more than 20.85 percent. The rate in Mesa’s enterprise zone is slightly above that. The state covers the full cost.

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