Some of these benefits include:

* Zone Investment Tax Credit (ITC), which yields a greater benefit than the standard 5 percent New York state credit. What’s more, new businesses can derive both a credit and cash disbursement from the ITC.

* Employment Incentive Credit — an additional 30 percent of the Zone ITC upon attaining stable employment levels.

* Wage Tax Credit for both targeted and non-targeted employees within the zone.

* Sales/Use Tax Exemption on property and services used within the zone.

Besides these incentives, the Empire Zone program offers a substantial tax credit or refund for property taxes paid by businesses that own a facility in an Empire Zone.

Philips invested more than $250 million in the chip plant in 2001 and 2002, and the company employs nearly 1,000 workers at the plant.

Nearly 40 states have one or more enterprise zone programs in place, according to KPMG LLP, an accounting and tax firm. Businesses that locate or expand their operations into an enterprise zone can get a host of benefits, including reimbursements for job training and tax abatements.

For Capture Resource Inc., tax benefits were the icing on the cake when the firm, a high-volume mail processor and document scanner, set up shop in an enterprise zone in Millville, N.J.

“Cumberland County officials screened job applicants based on tests that we custom-designed,” said Larry Anastasi, executive director of Capture Resource. “The county really stepped up in helping us get employees on board.”

The Millville enterprise zone’s biggest assets are the community’s high-quality labor pool, and the county’s efforts to help Capture Resource tap that pool, Anastasi said.

“The tax benefits became a bonus after that,” he pointed out.

Some of those benefits include no sales taxes for equipment purchased for use in the zone, as well as an income tax rebate after reaching a set employment level.

Businesses interested in opening an operation in an enterprise zone need to make the right contacts, Anastasi said.

“Find the government administrator who is in charge, and the official responsible for attracting businesses,” he noted. “For us, it was a city employee in economic development. He greased the chutes everywhere for us. He made the connection with the county and the appropriate state officials, and facilitated the real estate connection.”

Job Retention Incentives

Governments are making job retention incentives available in enterprise zones as a way to mitigate offshore investments, said Karin Richmond, practice leader, business incentives, for Ryan & Co., an Austin, Texas-based state and local tax consultancy.

Under the program, businesses can obtain refunds of sales taxes paid when they’ve retooled a plant so that net production capacity remains the same, in spite of decreasing or terminating a product line.

“These refunds of sales taxes paid are not insignificant — they can be up to $3.75 million,” said Richmond, adding that six states have enacted some form of job retention incentive.

Midway Moving and Storage, an independently owned moving company, is in the process of obtaining enterprise zone job training and tax incentives for its warehouse in Chicago.

Midway Moving, which employs 500 workers, has been in the zone since earlier this year.

It’s important to work with the right people in putting together your enterprise zone application, said Jerry Siegel, president of Midway Moving.

Enterprise zone applicants need consultants and experts who “are familiar with the city where the zone is located, understand the process and paperwork, and can effectively present the application to the city council.” Siegel said.

Build your knowledge base early in the application process, urged John Gremer, a partner in the Chicago office of KPMG LLP.

“It’s crucial to understand the enterprise zone benefits available in each jurisdiction under consideration,” Gremer said. “Companies need to understand those benefits before they start negotiating to close a transaction on the land or buy options for the site. They should look to negotiate from a position of strength, so they can get these types of issues on the table early enough to make a difference in the project economics.”

The city of San Diego expanded the South Bay Enterprise Zone to include part of National City. Through this collaboration, businesses located in certain areas of National City, including property on San Diego Bay, have been offered the largest array of business incentives available in the region.

This move marks the second time the city of San Diego agreed to work with the state to expand its enterprise zone to another municipality. In 2000, parts of Chula Vista were added.

The expanded South Bay Enterprise Zone consists of nearly 7,100 acres of commercial and industrial land.

“The expansion of San Diego’s Enterprise Zone to National City was key to our decision to expand our business by investing more than $2.5 million into new equipment and facilities and by creating 50 new jobs,” said Sam Brown, president and CEO of Knight & Carver, a yacht construction and repair business located on San Diego Bay. “Our business is thriving here and these new incentives will help us improve our facilities and remain a leader in our industry.”

Also in California, Fitness Products International, a manufacturer of physical fitness equipment, decided to remain in Sun Valley, near Los Angeles, as the result of receiving enterprise zone tax credits.

The company, citing the high cost of workers’ compensation costs in California, was set to relocate to Las Vegas.

Those costs went from $170,000 in 2001 to $450,000 in 2003.

The tax credits, which can amount to as much as 50 percent of the wages of each worker, will compensate for a significant portion those costs.

Michael Keating is senior research editor of Expansion Management. He can be reached at mkeating@penton.com