Ken Davey, Moab city’s economic development specialist, said in a presentation to the council that the program is designed for small, rural areas that tend to have higher unemployment combined with lower wages than urban areas. Cities with a population of less than 10,0000 people and counties with a population below 50,000 are eligible for the designation.
The state-run program is administered by the Utah Governor’s Office of Economic Development. The enterprise zone program provides additional tax credits to businesses located within the designated areas and which do not collect sales tax or are not construction related. Davey said those credits are meant to encourage businesses to pay slightly higher wages to employees.
According to the Utah Office of Economic Development’s website, the program offers a $750 credit when a qualifying business creates a new, full-time position that is filled for at least six months of the year. There is an additional $500 credit available if that position pays at least 125 percent of the area’s average monthly wage for that industry. There are also credits available for employer-sponsored health insurance programs, donations made to nonprofit organizations engaged in economic development, and for costs associated with rehabilitating a vacant building.
Grand County is applying separately to renew its status as an enterprise zone, but the Moab city designation covers all areas located within city limits, Davey said.
“It includes any zone that allows commercial activity,” Davey said. “So that’s all zones.”
Davey said that most businesses in Moab do not qualify for the enterprise zone credits, due to the fact that retail businesses are not included in the program.
“We’re trying to convince them that retail is a form of economic development,” Davey said.
Moab Mayor David Sakrison said he expects that retail businesses will eventually be included.
“We’ve seen some movement on it,” he said.
Moab’s unemployment rate is nearly twice the rate for the state, Davey said. He noted that Utah’s current unemployment rate is 4.6 percent while Moab’s seasonally adjusted rate is at 8.4 percent. However, Davey said that rate will go up as the winter progresses and many businesses close for the season.
“We get up to around 15 or 16 percent,” he said.
Davey said many businesses in the city are staying open later into the year, while other businesses are choosing to stay open throughout the winter. Those changes have the potential to draw the unemployment rate down, he said.
“Some businesses are realizing that they actually lose less money by staying open and laying fewer employees off,” Davey said.
He said that by laying off a large number of employees, businesses end up paying more money for their unemployment insurance the following year.
More information about the enterprise zone tax credits is available at the Utah Office of Economic Development website: http://business.utah.gov/programs/incentives/enterprise-zones/tax-credits/.