- Industrial Impact Fee Reduction/Elimination Program – Job creating industrial projects may be eligible for a reduction or elimination of police, fire, and traffic impact fees. If you feel your project applies, please fill out an application form.
- PG&E Enhanced Economic Development Rate (E-EDR) – For qualifying businesses expanding or locating in Fresno or Fresno County, Pacific Gas & Electric offers a reduction of industrial electrical rates of up to 25% for up to five years.
- Foreign Trade Zone – Businesses that import or export a significant amount of materials or product in a Foreign Trade Zone are able to delay, reduce, or eliminate customs duties on imported goods. Merchandise stored, manufactured, or assembled within the zone area is considered to be international commerce.
- State Enterprise Zone Program – This program offers numerous tax incentives for businesses located within the zone boundaries who hired new employees or purchased equipment before December 31, 2013. Please note the Enterprise Zone was officially abolished by the State of California as of December 31, 2013.
- Governor’s Economic Development Initiative (GEDI) Program – This three part program includes the following:
- New Employment Credit – which provides a tax credit for up to five years to businesses who hire qualified employees for the wages paid between 150% – 350% of minimum wage. See map here.
- Sales and Use Tax Exemption for Manufacturing, Biotech and R&D – which provides a sales tax exemption to qualified businesses who purchase qualified equipment.
- California Competes Tax Credit – which provides a flexible income tax credit on a competitive basis to qualified businesses. This credit is negotiated between the Governor’s Office of Business and Economic Development (GO-Biz) and businesses who are looking to move to, or stay and grow, in California.
- Historically Underutilized Business Zone (HUBZone) – This program, administered by the U.S. Small Business Administration (SBA), is designed to stimulate economic development and create jobs in urban and rural communities by providing Federal contracting preferences to small businesses. The HUBZone applies to qualified small businesses, located within the zone’s boundaries, with at least 35% of their employees residing in a HUBZone. The City of Fresno’s HUBZone is defined by qualified census tracts.
- Revolving Loan Fund – Business must be within limits of City of Fresno and be unable to obtain full project financing from a conventional lender. Funds can be used for inventory, working capital, equipment purchase, and/or leasehold improvements. There is typically a job creating requirement of 1:$35,000 loaned. For more information, contact the City of Fresno or Cen Cal Business Finance at (559) 227-1158.
- Microloan Program – Loans of up to $50,000 can be made to businesses located anywhere in Fresno County. Funds can be used for inventory, working capital, equipment purchase, leasehold improvements. For more information, contact the City of Fresno or Fresno CDFI at (559) 263-1351.
- SBA-504 Program – Loans of up to $10 million can be made anywhere in the Valley. Funds can be used to buy, build, or buy and remodel an owner-occupied commercial building to house your own business. For more information, contact the City of Fresno or Cen Cal Business Finance at (559) 227-1158.
- SBA-7a Program – Loans of up to $1 million can be made to businesses anywhere in the Valley. Funds can be used to buy an existing operation as an ongoing concern, NOT just the assets. For more information refer to www.sba.gov.
- Hometown Entrepreneur Loan Program “HELP” – Loans of up to $50,000 can be made to businesses in low-to-moderate income census tracts within the City of Fresno. Funds can be used for inventory, working capital, equipment purchase, and/or leasehold improvements. For more information, contact the City of Fresno or Valley Small Business Development Corporation at (559) 438-9680.
The City of Fresno Empowerment Zone expired on 12/31/17.
In January 2002, the City of Fresno received the highly coveted Empowerment Zone designation from the U.S. Department of Housing and Urban Development (HUD). This designation enables area businesses to benefit from federal tax incentives designed to stimulate job growth and promote and promote economic development.
Employment Tax Credit
The most widely used Empowerment Zone tax incentive. A qualified business can earn an employment tax credit of up to $1,500 or $3,000 per year, per qualified employee.
Increased Section 179 Deduction
Allows a qualified business to deduct all or part of the cost of certain property in the year it is placed into service.
Rollover of Gain on Sale of Empowerment Zone Assets
Tax-free rollover of certain gains from the sale of qualified Empowerment Zone assets.
Partial Exclusion of Gain from Sale of Empowerment Zone Stock
Allows a qualified business to exclude 60% of gain on qualified Empowerment Zone stock held for a minimum of five years.
Tax Exempt Bonds
State or local governments can issue Empowerment Zone facility bonds to finance businesses with qualified property.
Bonus points for Federal Grant Applications
Entities with projects/programs impacting the Empowerment Zone can receive bonus points on most federal grant applications.
*Consult your tax advisor for more detailed information on these incentives
Wage Credits = More Jobs
A variety of credits are available to employers for both existing employees and new hires. For example, you can earn an employment tax credit of up to $1,500 or $3,000 per year, per qualified employee.
The City of Fresno Empowerment Zone expired on 12/31/17.
Welcome to the Empowerment Zone’s general question & answers section. If you don’t find the answers to your questions, email Kelly Trevino in the City of Fresno Economic Development Department or call (559) 621-8426.
What is the City of Fresno Empowerment Zone?
It is a Federal tax benefit program for which nearly all businesses, whether large or small, can qualify if they are located within the Zone.
How does the Empowerment Zone affect the HUB or Foreign Trade Zone or the GEDI Program?
It doesn’t. They are designed to complement each other providing greater benefits for businesses who may be in more than one of these areas.
How do I qualify for the tax benefits?
You can qualify for the Empowerment Zone tax benefits by simply being located within the Empowerment zone boundaries and hiring employees who live within the Zone.
Is there a fee or tax that must be paid in order to get the benefits?
No. There are no fees or taxes you must pay in order to take advantage of the benefits.
How long will the program last?
The City of Fresno Empowerment Zone expired on 12/31/17.
What is the first step toward taking advantage of these tax benefits?
To confirm that your business was located in the Empowerment Zone, use the Incentive Zone Address Locator. Once you (or your tax professional) are ready to file, use IRS Publication 954 to determine your benefits and the forms you need to claim them. You will use from 8844 to claim the Empowerment Zone Employment Tax Credit.
A U.S. Foreign-Trade Zone (FTZ or Zone) is a designated area which, for Customs purposes, is considered outside the U.S. Nearly any imported merchandise can be brought into a Zone for almost any kind of manipulation, duty-free.
To find out if your business is located in the Foreign Trade Zone, or one of our other incentive zones, check our Incentive Zone Address Locator.
Foreign-Trade Zone Benefits
Through utilization of an FTZ, imported material avoids any Customs duties under the following scenarios:
- Any previously-imported material Re-exported.
- Rejected, scrapped, destroyed, waste, or returned-to-vendor material.
- Sales to companies operating in other U.S. FTZs. (There are nearly 2500 companies utilizing Zones and nearly 250 manufacturing Subzones.)
Manufacturing in an FTZ: Inverted Tariffs
A manufacturer can sometimes take special advantage of an FTZ to reduce tariff exposure. If the manufacturer is producing a final product which, if imported, would be subject to a lower duty rate than the rate(s) currently being paid on the imported components, then the imported-component rates can be reduced to the final product rate upon making entry of the final product from the Zone into the U.S. If other components are assessed rates lower than that of the final product, the importer has the option of fixing those rates at their lower levels.
Through utilization of a Zone, the manufacturer will be able to reduce the rate on Components A and B from 10% and 6% respectively to the final product rate of 3.5% while “fixing” the rate of Component C at “Free.”
Duty Deferral for High Volume Importers
If a distribution facility is importing in large quantities, holding inventory for long periods of time, or is facing high duty rates, by using a Zone that facility can improve its cash-flow and money management by deferring payment of duties until the time they are removed from the Zone–much closer to the time of actual sale.
Is a Zone Right For Your Operations?
If you are concerned about Zone operational issues or regulations, or you think Zones are only suited to a particular industry, consider this:
Car manufacturing plants, oil refineries, computer manufacturers, and textile distributors are all utilizing Zones. So are companies with as few as 15 employees.
If you are already using another Customs tariff-reduction program, such as Duty Drawback, Temporary Importation Bond, or a Bonded Warehouse, you need to consider U.S. FTZs as a way to streamline your operations, cut down on paperwork, increase your flexibility, and save additional money, all at the same time. Many companies are discovering that Zones more efficiently meet their needs than other Customs programs.
Foreign-Trade Zone Background and Terminology
U.S. FTZs are made possible by the FTZ Act of 1934 as amended. The Act establishes the U.S. Foreign-Trade Zones Board (FTZ Board) as the agency responsible for the establishment and administration of Zones through the Board’s regulations. The Board does not handle day-to-day administration of any Zones, but provides grants to Grantees to establish, operate, and maintain Zones. Grantees are almost always public corporations or governmental agencies. A Grantee will usually enter into an agreement with an Operator or Subzone for actual Zone operation. Customs holds the Operator responsible for compliance with the Customs regulations relating to Zones. A Zone User uses a Zone for its benefits and pays the Grantee or Operator for their services such as rent on facilities, storage, handling, etc.
There are two types of Zone sites: General Purpose sites and Subzones. A General Purpose site is usually run by an Operator with Multiple Users. A Subzone is a special purpose site for operations such as manufacturing which cannot be accommodated within an existing Zone. In a Subzone, the Operator and User are usually the same entity.
Admission, Removal, Activities, and Required Documents
There are only two Customs Forms (CF) specifically related to Zone operations: CF 214 and CF 216. The CF 214 is used for admission of foreign merchandise into the Zone. Under most circumstances, no 214 is necessary for domestic status merchandise. The form is usually handled by a Customs Broker for the Zone User or Operator, but the Operator may take responsibility for execution of 214s. Information included on a 214 is the same as the information on a Customs entry form, except that it may also be used as a delivery ticket.
One additional information item required on the 214 is a declaration of the material’s FTZ status. There are four types of Zone status: domestic, privileged foreign (PF), non-privileged foreign (NPF), and Zone restricted (ZR). Status on material is maintained through its entire stay in the Zone and is critical in determining the amount of duties owed upon entry into the U.S. from the Zone. The 214 and the Operator’s internal Receiving Report together make up the initiation of the inventory control and record-keeping system which must meet Customs requirements.
For any action to be performed on or with the merchandise, a CF 216 is required. The CF 216 is an application for activity; however a blanket 216 may be filed for a period of up to one year covering all types of activity anticipated. The Operator must maintain records, documenting approved activities so as to provide an accounting and audit trail of the merchandise through the approved operation.
To remove material from a Zone, the appropriate Customs document must be filed: either a CF 3461 for Entry into the U.S. or a CF 7512 for Export or transfer to another U.S. Zone. These documents are usually handled by a Customs Broker, unless the Operator also is a licensed Broker and chooses to conduct these operations in-house.
Inventory Control and Record-Keeping
An Operator’s or User’s inventory tracking system (ITS) must be able to account for all merchandise in a Zone and provide enough information to make entry for merchandising being removed from the Zone. Our experience shows that 99 times out of 100, the corporation’s existing MRP, bill of materials or internal inventory tracking system(s) are 80-90% complete and sufficient for Customs purposes. The inventory records must indicate:
- Location of merchandise
- Zone status
- Beginning balance receipts, removals and current balance
- Any destruction, scrap, waste, and byproducts
- Cost or value unless the Operator’s financial records maintain cost or value and are made available for Customs review
Customs requires a physical inventory at least once per year, and an annual reconciliation report. The annual reconciliation report must be available for Customs review and a letter stating that the report has been prepared must be sent to the local Customs District Director.
Customs, by regulation, accepts First-In-First-Out, Foreign-In-First-Out, lot specific, part number, bill of materials, liquid bulk FIFO, serial number specific, and almost any other inventory tracking system that “protects the Revenue of the U.S.” For the 300 operating Zones and Sub-zones of the U.S., there are approximately 300 different ITS and operating systems. Customs also accepts the concept of “Work in Progress” as a “Black Box” that they are not allowed to penetrate. This means that if an Operator can demonstrate raw material balance, inputs to production, finished product balance and some form or correlation between the three, this is satisfactory for Customs.
Confidentiality of Proprietary Information
U.S. Customs is currently under specific legal restrictions against divulging company cost, quantity, and specification data on imported products. Becoming an FTZ makes your firm no more and no less subject to currently gathered and publicly reported trade statistics through the Department of Census, the PIERS network, and other statistical summations. Any application filed with the FTZ Board become public information; however, procedures exist in the regulations to protect sensitive and proprietary information. The protection supersedes the Freedom of Information Act and allows a level of confidentiality which has been acceptable to a large percentage of Fortune 500 companies who currently enjoy FTZ status.
Summary of U.S. Foreign-Trade Zone Benefits
Merchandise which is imported into the U.S. for admission into a Foreign-Trade Zone and later re-exported from the Zone is never assessed any Customs duties.
Reject, Scrap, and “Consumed” Merchandise: Imported merchandise which is admitted into a Zone and then rejected, scraped, or consumed in the Zone, is not assesses any Customs duties whatsoever. Duties are reduced significantly for all merchandise which is scrapped through a manufacturing operation in a Foreign-Trade Zone, and then sold from the Zone as commercial scrap material.
Imported merchandise which is admitted into a Zone and then shipped to another U.S. Foreign-Trade Zone can be shipped duty-free to the receiving Zone with the receiving Zone’s concurrence. As a duty-free transfer, Zone-to-Zone shipments allow both the shipping Zone and the receiving Zone to reduce their duty exposure. Duties are eliminated completely on imported components which are transshipped through several Zones and eventually re-exported.
While duties are eventually assessed on imported merchandise shipped to U.S. locations from Foreign-Trade Zones, these duties are deferred while the merchandise remains in the Zone. The time that duty is paid is moved from the date of importation to the date of shipment from the Zone. The cost-of-money savings on the duty deferral can be significant for large-volume distributors, or operations with long inventory turnover periods.
When components are imported and admitted into a Foreign-Trade Zone, they can be manufactured into a new product for re-export or sale in the U.S. In these cases, the importer may elect to apply the finished product duty rate, or the component duty rate, whichever is lower. When the finished product rate is lower than the imported component rate, the importer can save the difference between the two rates.
In states that assess taxes on business inventories, all imported merchandise, and even domestic merchandise when held for export, can be stored in a Foreign-Trade Zone without having to pay business inventory taxes.
Merchandise Processing Fee:
Customs assesses a “Merchandise Processing Fee” (MPF) per entry which is calculated as 0.21% (.0021) of the full declared value of the merchandise, up to a maximum of $485. Foreign-Trade Zones are only required to submit one entry per week for all shipments from the Zone, thus ensuring a maximum MPF of only $485 per week, reducing MPF costs to importers who currently file several entries per week, and pay more than $485 total per week for all entries.
These are just some of the benefits of U.S. Foreign-Trade Zones. To discuss how your operation could benefit from the U.S. Foreign-Trade Zones program, call IMS Worldwide, Inc. at (713) 286-0008, or FAX us at (713) 286-0009.
The Historically Underutilized Business Zone (HUBZone) is administered by the U.S. Small Business Administration (SBA) and was designed to stimulate economic development and create jobs in urban and rural communities by providing Federal contracting preferences to small businesses. The HUBZone applies to qualified small businesses (by SBA standards) located within the zone’s boundaries with at least 35% of their employees residing in a HUBZone. The City of Fresno’s HUBZone is defined by qualified census tracts.
To find out if your business is located in the HUBZone, or one of our other incentive zones, check our Incentive Zone Address Locator.
How does a Business Qualify?
- Must be a small business by SBA size standards.
- Principal office must by located within a HUBZone, which includes land on federally recognized Indian reservations.
- Must be owned and controlled by one or more U.S. citizens, Community Development Corporation or Indian Tribe.
- At least 35% of the employees must reside in a HUBZone.
There are Four Types of HUB Zone Contracts:
Competitive – Contracts can be set aside for HUBZone competition when the contracting officer has a reasonable expectation that at least two qualified HUBZone small businesses will submit offers and that the contract will be awarded at fair market price.
Sole Source – can be awarded if the contracting officer determines that:
- Only one qualified HUBZone business is responsible to perform the contract;
- Two or more qualified HUBZone businesses are not likely to submit offers; and
- The anticipated award price of the proposed contract, including options, will not exceed $5 million (for manufacturing requirements) or $3 million (for all other requirements).
Full and Open – can be awarded with a price evaluation preference. The offer of the HUBZone small business will be considered lower than the offer of a non-HUBZone/non small business providing that the offer of the HUBZone small business is not more than 10 percent higher.
Subcontracting – all subcontracting plans for large business Federal contractors must include a HUBZone subcontracting goal.
Other Forms of Specialized Assistance:
Eligible HUBZone firms can qualify for higher SBA-guaranteed surety bonds on construction and service contract bids
Firms in Federal Empowerment Zones and Enterprise Communities (EZ/EC) can also benefit from employer tax credits, tax-free facility bonds, and investment tax deductions.
These are just some of the benefits of the Fresno HUBZone. For more information, please contact the City of Fresno Downtown and Community Revitalization Division at (559) 621-8350 or email us, or your local U.S. Small Business Administration office.
The Tax Cuts and Jobs Act of 2017 established Opportunity Zones as a mechanism to provide tax incentives for investment in designated census tracts. Investments made by individuals through a Qualified Opportunity Fund in these zones would be allowed to defer or eliminate federal taxes on capital gains.
For more information, please visit the IRS “Opportunity Zone Frequently Asked Questions”
Or the State of California Department of Finance Opportunity Zone Info Page
PG&E Enhanced Economic Development Rate (E-EDR)
For qualifying businesses expanding or locating in Fresno or Fresno County, Pacific Gas & Electric offers a reduction of industrial electrical rates of up to 30% for up to five years.
Business Energy Tune-up
A no-cost comprehensive analysis of business energy use with a focus on opportunities to save energy and money.
PACE Energy Efficiency Loans
Property-based assessment financing to improve energy efficiency and reduce energy costs for commercial property owners.
The Fresno Energy Watch program helps lower electricity bills to improve the bottom line for businesses. This public service program is offered by the Pacific Gas and Electric Company (PG&E) and its partners to educate utility customers in energy efficiency and provides ways to save energy through the direct installation of energy efficient measures.
None at this time
The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law. That law provides that for the purpose of local sales tax adopted pursuant to that law, all retail sales are consummated at the place of business of the retailer unless otherwise specified. As of January 1, 2016, the law has been revised to prohibit a local agency from entering into any form of agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of Bradley-Burns local tax revenues to any person, as defined, for any purpose, if the agreement results in a reduction in the amount of Bradley-Burns local tax revenues that, in the absence of the agreement, would be received by another local agency and the retailer continues to maintain a physical presence within the territorial jurisdiction of that other local agency, with specified exceptions.
The latest law also requires any local agency to post such an agreement on its website, including any agreements entered into prior to January 1, 2016, that are still in effect.
The current sales and use tax agreements may be accessed by the following links:
For more information regarding each of these agreements, please contact the City of Fresno’s Economic Development Department at (559) 621-8000.