POLITICS: Four Years Later, Empowerment Zone Projects Finally Get Off the Ground

Howald Fine

Staff Reporter

The first projects in the city’s empowerment zone are set to get underway, four years after the area was established.

Four projects will tap a new $230 million pool of tax exempt bond authorizations that become available on Jan. 1 as part of the program. They include a consolidated facility in South-Central Los Angeles for freight logistics firm Daylight Transport Inc. and a shopping center/office complex proposed for the South-Central neighborhood around Vermont and Slauson avenues.

Officials acknowledge that a sluggish economy may keep other companies from tapping into the pool anytime soon as they put off expansion plans and find it more difficult to obtain letters of credit from banks, a requirement to participate in the program.

Assuming the first four projects pass a number of approvals, the city will issue $35 million in bonds shortly after Jan. 1. Proceeds from the bond sales will go to the borrowing companies or organizations to fund their projects, which will then repay bondholders over terms of up to 20 years.

These city-issued bonds are tax-exempt, which means the interest rates to repay the bonds are roughly half the market rate.

Until now, city officials had to compete for scarce state dollars to issue bonds for empowerment zone projects, which has sharply limited both the number and size of projects that can receive this low-interest, tax-exempt bond financing.

“With these bond authorization funds that become available Jan. 1, we can look at larger scope deals with much more significant employment impacts,” said Carey Jenkins, manager of the city’s Industrial Development Authority.

This new pool of authorizations was part of a multibillion-dollar bond package for inner city development enacted by President Bill Clinton during the waning days of his administration.

The L.A. zone covers roughly 20 square miles in patches through Downtown, South-Central L.A. and Pacoima. Besides bond authorizations, companies locating or expanding in this zone are eligible for employment tax credits, among other benefits. The one requirement: 35 percent of the employees at the facility receiving the benefits must live within the empowerment zone.