Daily Business Report-June 14, 2013
Gov. Brown, Business Leaders Call for Action on Economic Development Plan
Brown rips the Enterprise Zone program
“California’s 30-year-old Enterprise Zone program is not enterprising, it’s wasteful. It’s inefficient and not giving taxpayers the biggest bang for their buck,” said Gov. Brown Thursday in calling for a revamping of the state’s economic development program. “There’s a better way and it will help encourage manufacturing in California,” said Brown, who joined business leaders and workers in a call for action.
The governor’s plan builds on the framework of existing, targeted programs by redirecting about $750 million annually from the current flawed Enterprise Zone program to three new economic development programs:
• Sales tax exemption: A statewide sales tax exemption on manufacturing equipment or research and development equipment purchases by firms engaged in manufacturing or biotechnology research and development. The proposal is estimated to provide sales tax exemptions worth over $400 million annually.
• Hiring credit: A hiring credit targeted to businesses located in areas with the highest unemployment rate and poverty. This credit will be available for the hiring of long-term unemployed workers, unemployed veterans and people receiving the federal earned income tax credit. The credit will only be allowed to taxpayers who have a net increase in jobs. The proposal is expected to provide approximately $100 million annually in hiring credits.
• Investment incentive: The California Competes Credit based on specified criteria including the number of jobs to be created or retained and a set job retention period. This component of the proposal is expected to provide between $100 million and $200 million per year in tax credits.
Studies on enterprise zones show that the current program, established nearly three decades ago, is ineffective, wasteful and expensive. Research from the Public Policy Institute of California indicates the program has no overall effect on job growth, while a recent California Budget Project report
showed the program has cost California $4.8 billion since its inception and has primarily benefited less than half of 1 percent of the state’s corporations.
The governor’s economic development proposal has support from a variety of businesses, including Northrop Grumman Corp.; IBM; Biocom; Bloom Energy; California Healthcare Institute; California Labor Federation; Genentech; Intel; Webcor Builders and the Wine Institute.
For an overview of the plan, visit: http://gov.ca.gov/docs/ED_Plan.pdf
Support in San Diego for Enterprise Zones
Supporters in San Diego have said enterprise zones have generated $1.7 billion and brought 20,000 jobs to the San Diego region. National City Mayor Ron Morrison says the enterprise zones brought Jenson’s Meats to National City. “They said our only opportunity is going to be to go to Colorado or Texas,” said Morrison. “We talked to them and said, wait a minute, here’s what can be done with the enterprise zone. They moved to Otay Mesa and are now employing an additional 100 employees. That’s 250 employees that we were going to lose from the state.”
“We’re trying to look at what tools are in our toolbox and the state has basically eliminated one tool after another,” Morrison complained. “Redevelopment, it took that away. We’re sitting in limbo right now because they eliminated it before they figured it out. Now, they want to do the same thing here. They haven’t sat down with anybody. We’re asking them, if there is problems, sit down with us.”
Supreme Court Gene Patenting Ruling Could Affect San Diego Biotech Industry
The U.S. Supreme Court ruled Thursday to invalidate patents on naturally occurring human genes. That’s good news for women wanting to get tested for their genetic risk of breast and ovarian cancer, KPBS reports. Utah-based company Myriad Genetics no longer owns the specific genes, BRCA1 and BRCA2, these tests look for. Mutations on these genes strongly predict a woman’s likelihood of developing certain cancers. Just hours after the court’s unanimous decision came through, rival companies stepped in to offer the gene tests at a much lower cost. Academic researchers also cheered the decision. They can now study these genes without fear of attracting a cease-and-desist letter from Myriad.
But how will this decision affect San Diego’s biotech industry, the second largest life sciences cluster in the United States? Joe Panetta, president of San Diego trade group BIOCOM, says local biotech professionals weren’t fazed by the decision. “I think biotech in San Diego isn’t particularly surprised by the ruling,” Panetta said between panels at this week’s CALBIO conference. “I don’t think there was any expectation that it was going to be anything different and that there would be any significant negative impact as a result.”
For more on this, visit www.kpbs.org/news/2013/jun/13/ruling-gene-patents-good-and-bad-biotech-community
State Insurance Commissioner Wants to Bar Anthem from Small Business Exchange
California Insurance Commissioner Dave Jones wants to exclude Anthem Blue Cross from Covered California, the state’s small business exchange, because of what he calls a pattern of excessive rate hikes, KPBS reports. Anthem is imposing a 7.6 percent increase on small business customers on July 1. It’s the third rate hike in the last seven months. Within the last year, premiums have risen more than 17 percent. “It’s frustrating for me as the insurance commissioner, it’s frustrating for small businesses in California and it’s frustrating for individuals and families who are paying time and time again increases that are simply unsustainable,” the commissioner said. Anthem representatives defend the increases. They’ve said health care costs continue to escalate and that its rates are highly competitive. Operators of the exchange will make the final decision about whether Anthem will be included in the system.
Evergreen Pharmaceutical to Move into Sorrento Valley Business Park
Evergreen Pharmaceutical of California has signed an 86-month lease with Commonwealth REIT for 13,819 square feet of research and development space located within the Sorrento Valley Business Park at 5601 Oberlin Drive, Suite 124, in San Diego. The total value of the lease is $1,468,554. Evergreen Pharmaceutical plans to move into the new space in January 2014. Colliers International and Jones Lang LaSalle brokered the dea.
Improvements to Neil Good Day Center Made With $13,549 Contribution from Todd Gloria
Installation of synthetic landscape grass and a cleanup of the entire outdoor space of the Neil Good Day Center for the homeless has been made possible by a contribution of $13,549 from San Diego City Council President Todd Gloria. “The Neil Good Day Center was in need of physical improvements to support its mission of providing a safe place for our homeless neighbors to spend the day off the streets, shower, do laundry, and obtain necessary services,” said Gloria. “This center is a critical piece of our system to solve homelessness, and I’m proud of the contribution I was able to make through savings in my office budget.” The center, located on 17th Street east of Downtown, is operated by the Alpha Project. Gloria has also used his office budget for improvements at Fire Station 3 in Little Italy, the Starlight Bowl and the North Park Community Association’s Citizens Patrol.