Within the past year, a company was considering Fresno for a manufacturing plant that could create 150 high-paying jobs.

With the company eyeing a specific 25-acre site, the prospects appeared good.

"But the deal breaker is that [the site] wasn't in the enterprise zone," said City Council Member Larry Westerlund in public testimony Monday.

Cherished by economic developers and businesses alike, the state's enterprise zone program allows companies locating in distressed areas to qualify for tax breaks and other incentives.

But despite its popularity, the 21-year-old program needs some changes, economic developers and municipal leaders say.

Officials offered some suggestions Monday during a meeting in Fresno of the Assembly Committee on Jobs, Economic Development and the Economy. The committee, led by Assembly Member Juan Arambula, D-Fresno, is conducting hearings on the program to examine its effectiveness.

Pending legislation would alter the program, possibly changing qualification thresholds such as household income and unemployment rates. Meanwhile, 18 of the designated 42 zones, including Fresno's zone, is set to expire by the end of 2006.

The term of some of the zones can be extended by five years, and pending legislation would do just that. But the zone in Fresno would need to be extended through separate legislation because the zone has already been extended once.

Most officials testifying Monday believe the zones are worth keeping.

"We have been showing results, and I think many of the [zones] throughout California will continue to show results," said Paul Salda?a, chief executive of Tulare County Economic Development Corp.

Under the program, companies hiring low-income residents or other disadvantaged employees can get tax credits of up to $34,000 per employee over a five-year term.

Other benefits include tax credits when buying new machinery or pollution-control devices.

Tulare County's zone, Salda?a said, was a key factor in helping the county recently lure the West Coast distribution center for VF Corp., the world's largest clothing company. The county competed with Nevada for the center, which is expected to employ 350 people.

Despite the successes, the zone program needs to be tweaked, some officials testifying Monday said.

Dave Spaur, chief executive of the Economic Development Corp. serving Fresno County, would like to see greater flexibility in how the zones are drawn.

Fresno's zone includes downtown, parts of the airport area and industrial area along the southern Freeway 99 corridor. But Spaur said there are swaths in between that are economically distressed but don't have the zone designation.

That became a problem when the city was trying to lure the 150-employee manufacturing plant referred to by Westerlund.

The company wanted to locate in a spot that was just about across the street from the city's enterprise zone.

But because the zone couldn't be expanded to cover the area, the company went elsewhere, Westerlund said.

The zone, he said, "would have been the winning ticket."

The reporter can be reached at eschultz@fresnobee.com or (559) 441-6637.