Inside the EEZ Part 3: A closer look at the program

May 11, 2012

In February, Regional Economic Development, Inc. proposed an Enhanced Enterprise Zone in Columbia. Facing a public backlash, city council has thrown out the original proposal, and will possibly start the process over, this time with more community input.  In part three of her three part series, KBIA’s Sarah Redohl tells us some of the EEZ statute is tough to explain.

Mike Brooks is president of REDI, and the Enhanced Enterprise Zone his group is behind has been highly controversial, but Brooks has one thing in mind. Jobs.

“Our interest is in job creation. We want to be in a position to support entrepreneurial opportunities. That’s my vision for the future,” Brooks said.

Much of the controversy stems from the method by which areas qualify for the program. To be part of an EEZ an area must be declared blighted based on a number of characteristics, including poverty, infrastructure and safety. Before the EEZ program began in 2004, there was a similar tax abatement program known as the enterprise zone. It’s similar to the EEZ, but with a key difference. A percentage of the tax revenue from those companies was earmarked for reinvestment to improve the area and remove the blight.

While president of the Economic Development Corporation in Lafayette, Indiana, Brooks helped set up a similar program, known in Indiana as an Urban Enterprise Zone. Dennis Carson is the director of the economic development department in Lafayette. One quarter of Lafayette is within the Urban Enterprise Zone, and more than 1000 jobs have been created by companies receiving incentives.

“We’ve attracted more money in the area, more investment and it’s had a physical effect that’s been very positive. So we view that as something very good here in Lafayette,” Carson said.

For the EEZ proposed in Columbia, no such reinvestment or removal of blight is required. In Missouri it’s simply a job program, but the blight clause remains. The Department of Economic Development, which created the program, declined to comment for this series.

Nevertheless, the Missouri Tax Credit Review Commission recently deemed the Enhanced Enterprise Zone an effective tax credit. The commission was created in 2010 to assess tax credits in Missouri, after the use of all state tax credits more than quadrupled from 1998 to 2010. Pete Levi co-chaired the group that looked at the EEZ program.

“It was creating somewhere in the neighborhood of 800 to 1,000 new jobs each year that it was implemented, and it resulted in a significant investment,” Levi said.

The commission found that after 10 years, every state dollar invested into the EEZ program returned a little less than $5 to the state. Levi says that’s a good return on investment. The commission suggested only a couple changes to the program in 2010. It recommended changing the language about distressed communities so more areas would qualify.

“The legislature should consider ways to make the definitions broader. That was put in there so that  it would have greater applicability around the state so more areas could take advantage of it,” Levi said.

But that language hasn’t been changed yet. Barbara Hoppe is the 6th ward representative to Columbia city council. She says the criteria for becoming an EEZ isn’t logical, but some measure to determine EEZ qualifications must exist. Now, that’s blight.

 “By its nature it’s not a logical process, it’s a political process, which means you can have laws and statutes that don’t necessarily make sense,” Hoppe said.

Now, city council would have to pass an ordinance to start the process over again in Columbia. Hoppe would like to see the zone narrowly tailored to a couple places that are already zoned industrial.

 I would like to see it, at the most, Route B and Discovery Ridge. I think that’s plenty. If nothing happens there, then maybe it just isn’t going to happen and we should pursue other methods,” Hoppe said.

In the meantime, Columbia city council members are working with representatives at the state level to try to change the statue to eliminate the requirement for a blight designation.