June 26, 2009
California, CP&DR Staff, Economic development, In Brief, Vol. 24 No. 07 Jul 2009 - 1
There is no evidence that California's enterprise zone program – the state's largest economic development effort – has increased jobs in program areas, according to a Public Policy Institute of California study.
"Our main finding is that, on average, enterprise zones have no effect on business creation or job growth," PPIC researchers Jed Kolko and David Neumark wrote.
The two researchers constructed detailed maps of the 42 enterprise zones and surrounding areas, and matched their employment data with similar data for nearly every business in the state. They then compared employment and business growth within the zones to similar areas outside them. Researchers followed up with surveys of the zones' administrators.
Although the overall program appears to have no effect on economy activity, the PPIC study found that zones with fewer manufacturers of goods and those in which administrators made comparatively stronger marketing efforts did stimulate some job growth.
The state created the enterprise zone program in 1986. It offers a variety of tax benefits to businesses that move to and expand within zone boundaries – incentives that cost the government about 500ドル million annually. Zones were scheduled to begin phasing out three years ago, but state lawmakers have extended zone lifespans.
The PPIC report is not the first to question the program's effectiveness. In 2006, a California Budget Project study – which the PPIC researchers dismissed as flawed – concluded no link existed between enterprise zone tax breaks and job growth. That same year, an Assembly committee called for greater enterprise zone accountability (see CP&DR In Brief, June 2006). Last year, the Legislative Analyst's Office recommended scaling back the program because of its uncertain benefits.
In response to the PPIC study, the California Association of Enterprise Zones releasing a working paper, by University of Southern California business professor Charles Swenson, that concludes enterprise zones reduce unemployment and raise wages.
The PPIC report is available on the think tank's website. Swenson's research is available on the USC website.
The PPIC's enterprise zone report followed a separate PPIC study of local economic development efforts. Undertaken just before the ongoing recession hit, the study contains these findings:
• The number of local economic development activities is increasing.
• The more redevelopment projects a city undertakes, the more likely it will be spearheading other economic development efforts.
• Such local characteristics as jurisdiction size, employment base, resources and needs influence what local governments do for economic development.
• The perception of competition among local communities drives economic development strategies, although the influence of competition may be exaggerated.
• Local officials are influenced by the belief that state fiscal policies favor retail activity over manufacturing.
• Although local government officials feel positively about their efforts, there is little formal evaluation of local program effectiveness.
The report by the PPIC's Max Neiman and Daniel Krimm recommends the state implement a more systematic economic development effort that includes consistent cooperation with local governments. The report, "Economic Development: The Local Perspective," is available on the PPIC website.
Gov. Jerry Brown's proposed state budget will do more than merely plug a 24ドル billion deficit. According to some, it will also lead to shuttered factories, recidivism among ex-convicts, and the flight of companies and jobs to rival states such as Arizona, Nevada, and Texas. Faltering clothing manufacturer American Apparel could be pushed closer to the brink of bankruptcy.
At least if Brown's proposal to do away with Enterprise Zones is adopted along with the proposed elimination of the redevelopment program.
As the popularity of motor sports, especially stock car racing, blossomed during the late 1990s and 2000s, a number of would-be race track developers and local government officials in California pursued high-speed economic dreams. However, actually building a race track in California has proven to be far more difficult than proposing a track and even winning development entitlements.
The nonprofit organization GreenInfo Network has released a newly revised database that attempts to identify every publicly protected parcel of open land in California, ranging from national forest to urban pocket park. The database inventories 49 million acres of protected land composed of 51,500 separate holdings owned by 860 governmental agencies or nonprofit organizations. Downloadable for free, the information should be of use to planners, academics, government agencies, nonprofit organization, businesses and others, said Larry Orman, GreenInfo Network executive director.
Local road and street maintenance needs an additional 71ドル billion investment over the next 10 years, according to a study prepared by the California State Association of Counties and the League of California Cities. The study identified 99ドル.7 billion worth of maintenance needed to roads, streets and their essential components, such as storm drains, sidewalks and signals. However, only 28ドル.3 billion is expected to be available.
It's official: 2009 was the slowest year for new housing construction since the 1940s. Builders pulled permits for only 36,209 housing units in 2009, according to the Construction Industry Research Board. That was a little more than half of the 64,962 housing starts in 2008, which had been the record post-war low.
The California High-Speed Rail Authority business plan released at year's end is inconsistent, unrealistic and potentially illegal, according to a Legislative Analyst's Office (LAO) report to the Assembly Transportation Committee.
The Governor's Office of Planning and Research released updates of two reference documents in December – the 2010 edition of "Planning, Zoning and Development Laws," and the 2010 version of the "Planners' Book of Lists."
About 475,000 residents, major sea ports and airports, thousands of miles of roads and rail lines, power plants and wastewater treatment facilities are at risk of flooding due to sea level rise, according to a new report from the State Lands Commission.