INTRODUCTION KEY FINDINGS AND RECOMMENDATIONS Finding 1: The Cost of the Enterprise Zone Program Has Increased Substantially The cost of tax credits and deductions has increased substantially since the beginning of the EZ Program. [...] Finding 3: The Enterprise Zone Hiring Tax Credit Rewards Businesses That Do Not Hire Workers with Barriers to Employment or Create New Jobs The high cost of the EZ Program is primarily attributable to the hiring tax credit.8 In 2003, hiring credits cost the state $275.8 million, 92.2 percent of the total cost of EZ tax breaks. [...] The value of the tax credit per individual hired is 50 percent of wages paid in the first year employees are hired; 40 percent in the second year after hire; 30 percent in the third; 20 percent in the fourth; and 10 percent in the fifth. [...] • An analysis of California's EZ Program, performed for the enterprise zone trade association and based on the findings of the CRB study, found the program to have a net benefit to the state; however, this analysis has the same drawbacks as the CRB study since it does not examine whether job growth occurred in firms that claimed the program's tax breaks.18 In addition, the analysis did not estimat. [...] In addition, regulations broaden the definition of a distressed area and require 14 1514 15 A Case Study: San Francisco EZ Does Not Meet Economic Distress Standard The San Francisco Enterprise Zone accounts for the largest usage of tax breaks among the state's 42 zones and includes some of the most valuable real estate in the state.29 The San Francisco EZ was designated in 1992 and covers a large.