Hub Zone Info

The U.S. Small Business Administration (SBA) regulates and implements the program, determines which businesses are eligible to receive HUBZone contracts, maintains a listing of qualified HUBZone small businesses Federal agencies can use to locate vendors, adjudicates protests of eligibility to receive HUBZone contracts, and reports to the Congress on the program's impact on employment and investment in HUBZone areas. Publication of Final Rule

The final rule for the HUBZone Empowerment Contracting Program was published on June 11, 1998. The interim Federal Acquisition Regulation (FAR) FAC 97-10, FAR Case 97-307 was published on December 18, 1998 to give effect to the contracting component of the program on January 4, 1999. The comment period for the FAR expired on February 18, 1999. The final rule is expected to be published in mid to late April. 

Eligibility

A small business meets all of the following criteria to qualify for the Hubzone program:

  • it must be located in a "historically underutilized business zone,"
  • it must be owned and controlled by one or more U.S. Citizens, and
  • at least 35% of its employees must reside in a HUB Zone.

Historically Underutilized Business Zone

A "HUBZone" is an area that is located in one or more of the following:

  • a qualified census tract (as defined in section 42(d)(5)(C)(i)(I) of the Internal Revenue Code of 1986);
  • a qualified "non-metropolitan county" (as defined in section 143(k)(2)(B) of the Internal Revenue Code of 1986) with a median household income of less than 80 percent of the State median household income or with an unemployment rate of not less than 140 percent of the statewide average, based on U.S. Department of Labor recent data; or
  • lands within the boundaries of federally recognized Indian reservations.

What is an Enterprise Zone?

Enterprise Zone were created in California in the 1980's to stimulate business investment in areas traditionally slow in obtaining its fair share of private investment dollars and to increase jobs opportunities in areas of high unemployment. The legislative purpose of the Enterprise zone Porgram is to "stimulate business and industrial growth in the depressed areas of the State." Additinally the program was established to help attract business and industry to the state, to help retain and expand existing state business and industry, and to create increased job opportunites for all Californians. San Diego is home to one of 42 Enterprise Zones statewide.

California Enterprise Zone Benefits

The major benefits of the Enterprise Zone Program are the tax savings on California business income tax. These include:

  • Sales or Use Tax Credit
    A tax credit against the purchase of new manufacturing, assembly, data processing or communications equipment equivalent to the amount of sales or use tax.
  • Hiring Credit
    A tax credit on the wages to qualified new employees over a five year period (up to 50 percent in the first year, 40 percent in the second year, etc.). This credit could exceed $34,000 per eligible employee.
  • Accelerated Depreciation Deduction
    The option to accelerate depreciation on business property.
  • Net Interest Deduction for Lenders
    Allows lenders a deduction on the net interest earned from loans made to Enterprise Zone businesses. Qualified loans include business loans, mortgages and loans from noncommercial sources.
  • Preference Points
    Priority for various state programs, such as state contracts/grants.

Other Benefits:

  • The state will give priority for Industrial Development Bond applications.
  • Assistance with recruitment and hiring targeted employees recruitment, hiring, and tax credits
  • Expedited permit processing for commercial projects
  • Access to capital through financial assistance programs
  • Access to specialized technical assistance programs

Enterprise Zone Location

The City of San Diego was originally home to two different Enterprise Zones: the Metropolitan Enterprise Zone and the South Bay Enterprise Zone. In 2006 and 2007, the two zones expired and the Cities of San Diego, Chula Vista, and National applied for and received a new Enterprise Zone, the San Diego Regional Enterprise Zone. This new zone includes portions of San Diego in the Third, Fourth, Seventh and Eighth Council Districts, as well as parts of the City of Chula Vista and National City. Parts of the zone overlap with the Foreign Trade Zone , the Recycling Market Development Zone, the Federal Renewal Communities and the HUB Zone Programs which may offer additional benefits to Enterprise Zone companies.

For more information on other business programs, click on the City partner links to visit their websites. Information about the HUBZones is available on the U.S. SBA Office website at www.sba.gov.