By following through with plans to lay off more than 400 food service workers and then replace them, the Honda Center's management company will qualify for job creation tax credits that could be worth millions of dollars, according to Anaheim city officials.
The company, Anaheim Arena Management, can take advantage of the state tax break because it is within the city's enterprise zone, a state program designed to spur investment and job growth in economically depressed areas.
Last week, the workers were given notice, effective June 30, that they will lose their jobs when the company ends its contract with Aramark, the Honda Center's longtime food service concessionaire.
On Tuesday, the company announced it will hire 500 new workers for food jobs at the city-owned arena, which is home to the National Hockey League’s Anaheim Ducks.
The city has authority over the enterprise zone and has contracted with the Anaheim Chamber of Commerce to administer it.
At Tuesday's City Council meeting, city officials confirmed that the new hires — as long as they meet certain criteria such as being a veteran or a resident of certain neighborhoods in the city — would qualify the company for a tax credit worth up to $37,000 per employee over five years.
Based on the formula, the credit could be worth millions to the company, given how many workers it is hiring.
“The Honda Center is within the enterprise zone, and there is nothing that we’ve been able to identify that would make them ineligible for tax credits if they were to hire eligible employees through the termination of the contract with Aramark,” said city Planning Director Sherry Vander Dussen in response to a question by Councilwoman Gail Eastman.
The workers’ union on Wednesday called the move “absolutely shameful.”
“Make no mistake, this is an attempt by Anaheim Arena Management to undercut workers’ rights, reduce wages and cut benefits,” said Ada Briseno, secretary-treasurer of Unite Here Local 11. “And because the Honda Center is in an enterprise zone, they will receive millions in tax breaks for firing the workers and hiring replacements. It is corporate welfare at its worst, and taxpayers will foot the bill.”
Anaheim Arena Management didn’t return a call seeking comment.
According to the union, for weeks arena management refused to meet with workers or explain whether they’ll keep their jobs. That prompted an outcry from the workers, who lobbied Anaheim Ducks fans directly for support.
The enterprise zone hiring credits are designed to “encourage business investment and promote the creation of new jobs,” according to the California Association of Enterprise Zones.
But they’ve proven to be highly controversial.
“Most rigorous research has found that EZs do not create a net increase in jobs or increase the rate of job creation,” the state legislative analyst's office stated this year. “Because they are expensive and not shown to be effective, we recommend that the area programs be eliminated.”
Meanwhile, supporters of the zones argue that they’re well worth the cost.
“California’s successful enterprise zone program continues to drive economic development in our state’s minority and underserved communities,” declared the zones’ trade association.
You can reach Nick Gerda at email@example.com, and follow him on Twitter: @nicholasgerda.