Scramble On To Save Business Luring Zone

Officials rush to save tax incentives for luring new businesses

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In the wake of an historic recession, Rim County leaders are scrambling to keep from dropping one of the best tools available for luring new businesses to the region.

Payson, Gila County and the Northern Gila County Economic Development Corporation just barely made the deadline this week for submitting a request to revive an expired Enterprise Zone.

Businesses that set up shop in an Enterprise Zone can get a big reduction in their property tax bill and a $3,000 per-employee tax credit for their first three to five years, said Ken Volz, executive director of the Northern Gila County Economic Development Corporation.

Gila County once got the whole county included in an Enterprise Zone based on high levels of unemployment. But some years ago, the county reconfigured the Enterprise Zone based on poverty levels by census tract. That resulted in a bizarrely shaped entity that included not only the area around the Payson Airport, but portions of Star Valley, the towns of Winkleman and Hayden and parts of the White Mountain, San Carlos and Tonto Apache reservations.

However, the Southern Gila County Economic Development Corporation essentially let the zone lapse.

Once Northern Gila County officials realized they were about to lose incentives to attract new businesses, they scrambled to file a new application, said Volz.

“The enterprise zone is one of the few incentives for businesses that the state of Arizona provides. It’s quite significant for the right company — literally hundreds of thousands of dollars.”

For instance, new businesses in an Enterprise Zone pay property taxes based on 5 percent of their assessed value rather than the normal 25 percent. In addition, the payroll tax credit can top out at $600,000 per year for three to five years for businesses with 200 or more employees.

However, state law imposes strict conditions — including a limit of 28 Enterprise Zones in the state at any one time, and a limit of six new zones in a single year.

Cities and towns used to have other tools for attracting new businesses, including the establishment of redevelopment areas. However, some years ago the legislature eliminated most of the tax advantages for redevelopment districts, which were normally designed to deal with slums and provide new housing. The Enterprise Zones survived, but they mostly offer short-term tax breaks for commercial and industrial ventures.

Payson council members have been working hard in recent months to attract new businesses — particularly manufacturing firms with stable, year-round payrolls.

Moreover, the town recent approved several hundred acres of commercial zoning around the airport for land recently swapped with the Forest Service. That area atop the airport mesa and within the proposed Enterprise Zone now provides one of the few places in town with large, empty acreage zoned for commercial and residential development.

“We had like three weeks to apply” for the Enterprise Zone, said Volz. “Monday afternoon, we submitted the final piece of information to the Department of Commerce. I’m optimistic we’ll get approved — but all we can do right now is sit and wait. They should start the review on Wednesday and hopefully we’ll know in two or three weeks.”

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