HomeMy WebLinkAbout8.1 Econ Dev Incentive Program r
1 1. '82 STAFF REPORT CITY CLERK
% I File #470-50
GciFOU�`�� CITY COUNCIL
(400--30
DATE: March 5, 2013
TO: Honorable Mayor and City Councilmembers
FROM: Joni Pattillo, City Manager ,
SUBJECT: Participation Requests for Economic Development Incentive Programs
Prepared by Hazel L. Wetherford, Economic Development Analyst
EXECUTIVE SUMMARY:
The City received a request from Fresh Millions to participate in the City's Sewer Capacity
Assistance Program, and a request from C & J Cox Corporation to participate in the City's Sales
Tax Reimbursement Program. Fresh Millions is in contract to lease a commercial suite located
in the Tralee Village project and would propose to use the assistance to offset the costs for the
improvements in the new restaurant. C & J Cox Corporation is in negotiations to construct a
new gas station/car wash proposed for the Fallon Gateway project and would propose to use
the assistance to offset the costs for the construction of the station.
FINANCIAL IMPACT:
CIf the City Council provides direction to Staff to proceed, there could be legal fees associated
with the review of the agreement for sewer capacity and sales tax reimbursement.
RECOMMENDATION:
Staff recommends that the City Council provide direction regarding each request for
participation in the City's economic development incentive programs.
///
/
Submitted By Reviewed By
Economic Development Director Assistant City Manager
DESCRIPTION:
Sewer Capacity Assistance Request
On May 4, 2010, the City Council adopted Resolution 53-10 approving a Letter Agreement with
the Dublin San Ramon Services District (DSRSD) for the Administration of Unused Sewer
Capacity for the City of Dublin.
Commonly referred to as the Sewer Capacity Assistance Program, the Program allows the City
to market its excess sewer capacity as an economic development incentive program to help
stimulate economic growth in the community. The Program is designed to support large and
Page 1 of 4 ITEM NO. 8.1 1(J
small businesses and encourage the recruitment, renovation or re -use of properties in Dublin.
The Program allows the City to provide a credit of up to twenty -five percent (25 %) of the DSRSD
connection fees that would otherwise be paid by the applicant. The Program currently has 44
Dwelling Unit Equivalents (DUE) available.
The City received a request to participate in the program from Fresh Millions (Attachment 1),
who is in contract to lease a commercial suite located in the Tralee Village project. The City
Council is being asked to consider this request seeking sewer capacity assistance for the
construction of a restaurant. DSRSD has estimated a requirement of 3.0 DUE for this tenant.
The program was initiated with 66.2 DUE. Since the program's adoption, the City has made the
following DUE commitments:
Initial City DUE Holdings:
66.2
Allocated:
Stanforth Holdings, LLC (BJ's Restaurant) -6.0
Red Mountain Retail Group -2.0
Pending:
Regency Centers -14.0
Remaining DUE Holdings: 44.2
Through the Program, the City would be able to assist Fresh Millions with the allocation of
approximately 0.75 DUEs (value: approximately $13,052 in DSRSD fees) of the 44.2 DUEs of
excess sewer capacity that the City has unreserved. The 0.75 DUE is 25% of the 3.0 DUE
estimated by DSRSD.
Staff believes that the investment of sewer capacity at this location will further assist in the City's
economic development efforts to bring high quality retail and restaurants to the Dublin
community that will likely result in higher sales tax revenues to the City.
Staff presented this request to the Standing Economic Development Committee on February 11,
2013 and they were supportive of the request. This request falls under the Committee's purview
to provide policy guidance and direction on economic development activities. The Committee is
requesting that the full City Council consider the request.
Staff is seeking City Council direction at this time before investing a significant amount of Staff
time and associated legal fees in drafting the necessary agreement. Prior to entitlement, Staff
will prepare the necessary agreements between the City, DSRSD, and the property
owner /applicant for the City Manager to execute per Resolution 53 -10 (Attachment 2).
Sales Tax Reimbursement Agreement
On January 6, 2009, the City Council adopted Resolution 09 -09 approving the Sales Tax
Reimbursement Program. The Program was later amended on October 6, 2009 by Resolution
149 -09 and then again on July 17, 2012 by Resolution 135 -12 to meet the current economic
development needs for the City. The July 17, 2012 modifications added a new section to
provide Staff with the flexibility to consider extending some form of sales tax reimbursement
relief for improvements related to the construction of new buildings and structures.
Page 2 of 4
In summary, the Sales Tax Reimbursement Program assists developers, property owners
and /or business owners to help offset costs associated with improvements to the property or
improvements relating to construction of new buildings and structures.
For businesses generating $100,000 or more in new sales tax revenue to the City annually, the
Program allows a reimbursement for the improvement costs of up to 50 percent of that annual
revenue. This amount is payable for up to five years but for no more than the amount of the
eligible improvement costs.
For a business generating $500,000 in new sales tax revenue to the City annually, the Program
allows reimbursement for the improvement costs of up to 50 percent of that annual revenue for
a period of 10 years. Table 1 provides an example of the Program's financial structure.
F17 L-='1<i
Tenant A
Expected Annual Sales Tax Generation
$100,000
Eligible Improvement Costs
$250,000
Expected Reimbursements (50% for 5 years - $50,000 /year x 5 years =
$250,000) — not to exceed Eligible Improvement Costs
$250,000
Tenant B
Expected Annual Sales Tax Generation
$500,000
Eligible Improvement Costs
$1,000,000
Expected Reimbursements (50% for 10 years - $250,000 x 5 = $1,250,000) —
not to exceed Eligible Improvement Costs
$1,000,000
The City received a request to participate in the Program from C & J Cox Corporation
(Attachment 3), who is looking to occupy a yet -to -be constructed gas station /car wash at Fallon
Gateway (located on the southwest corner of Dublin Blvd. and Fallon Rd.). The City Council is
being asked to consider this request to provide financial assistance to help offset the
construction costs associated with the new building.
Staff presented this request along with a request to participate in the Sewer Capacity Assistance
Program to the Standing Economic Development Committee on January 15, 2013. The
Committee directed Staff to review other options before making a recommendation. On
February 11, 2013, Staff brought back the request to participate in the Sales Tax
Reimbursement Program to the Standing Economic Development Committee and they are
supportive of the request. This request falls under the Committee's purview to provide policy
and guidance direction on economic development activities. The Committee is requesting that
the full City Council consider the request.
Staff is seeking City Council direction at this time before investing a significant amount of Staff
time and associated legal fees in drafting the necessary agreement. If the City Council desires,
Staff will work with the applicant to draft the necessary agreements, and will bring back the
agreement for City Council action at a future date.
NOTICING REQUIREMENTS /PUBLIC OUTREACH: None.
Page 3 of 4
ATTACHMENTS: 1. Request letter from Fresh Millions
2. Resolution 53 -10
3. Request letter from C & J Cox Corporation
Page 4 of 4
Fresh
^mom�A Ways h) Eat ne�` and xmuhy°
Execupreneu/lALbC
Dba Fresh Millions
469G Chabot Drive, Ste. 200
Pleasanton, CA94S88
February 8, 2013
Ms. Linda Smith
City ofDublin
100 Civic Plaza
Dublin, CA94568
Re: Sewer Capacity Assistance Program
Fresh Millions atTra|ee Village —659y Dublin Blvd., Dublin
Dear Ms. Smith,
Thank you for the opportunity to speak to you by phone about our upcoming project. We are the
franchisor of Fresh MiUionsO restaurant and are very pleased to have a completed lease agreement for a
commercial suite located inT/a|eeVillage.
The Fresh Millions franchise started in the valley three years ago and this new location in Dublin will be
our second location. We are proud to hire locally, use food purveyors from the Bay Area and support our
local community by giving back. Our food is fresh, healthy and made to order. We are successful in
satisfying a full range of diners — vegan/vegetarian, gluten free, health conscious, and anyone looking for
quality food at a good value. We are open every day and feature a variety of Hot BowlsO, hand-tossed
salads, and paninis. Our motto is Millions of Ways to Eat Fresh and Healthy. VVe are eager to open by
late Spring 2OI3 and begin serving the Dublin community.
Please accept this letter as our formal application to he considered for participation in this program.
Included herein is the estimate for our sewer usage as determined by the DSRSD.
If you have any questions or require additional information, please contact me directly.
Thank you for your consideration.
Sincerely,
Lydia Moore
Director, Business Operation
RESOLUTION NO. 53 -10
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
* * * * * * * * * **
APPROVING A LETTER OF AGREEMENT WITH
THE DUBLIN SAN RAMON SERVICES DISTRICT (DSRSD) FOR THE
ADMINISTRATION OF UNUSED CITY OF DUBLIN SEWER CAPACITY
WHEREAS, the City Council of the City of Dublin (the "City ") is desirous of improving the
economic viability of the community through the establishment of certain economic incentive
programs; and
WHEREAS, in an attempt to attract new businesses or retain and /or expand existing
businesses that will provide additional jobs and generate additional tax revenues for the City,
as well as for certain residential projects that will likely result in greater economic activity in
Dublin, Staff is requesting City Council consideration of an agreement with the Dublin San
Ramon Services District (DSRSD) that will allow the City to provide unused City sewer capacity
rights to new and /or existing businesses and /or projects; and
WHEREAS, the proposed program would require the City, DSRSD, property owner and
applicant to enter into a agreement permitting the re- allocation of regional and local sewer
capacity rights, and the agreement will be recorded with the Alameda County Recorder's Office,
and
WHEREAS, the City Council finds it is in the public interest to enter into this agreement
because the City and its residents will benefit from increased revenues received from both sales
tax revenue that it may not otherwise receive, and from the increase in the property taxes as a
result of improvements to the property; and
WHEREAS, the City Council further finds that the City and its residents may also benefit
from the creation of new jobs in the City that will occur when a new business is established or
an existing business is expanded; and
WHEREAS, the City Council further finds that the City and its residents may also benefit
from the creation of construction jobs created from residential projects that are developed.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does
hereby approve the Letter of Agreement with the Dublin San Ramon Services District (DSRSD)
for the Administration of Unused City of Dublin Sewer Capacity (attached as Exhibit A).
BE IT FURTHER RESOLVED that the City Manager is authorized to execute the
agreement substantially in the form attached hereto and to undertake such action as may be
necessary and desirable to carry out the intent of this resolution.
Page 1 of 2
PASSED, APPROVED AND ADOPTED this 4th day of May, 2010, by the following vote:
AYES: Councilmembers Biddle, Hart, Scholz, and Mayor Sbranti
NOES: None
ABSENT: Councilmember Hildenbrand
ABSTAIN: None
ATTES
City Clerk
Reso No. 53 -10, Adopted 5 -4 -10, Item 8.1 Page 2 of 2
Mayor
DUBLIN
SAN RAMON
SERVICES
DISTRICT
Ms. Joni Pattillo
City Manager
City of Dublin
100 Civic Plaza
Dublin, CA 94568
April 21, 2010
Subject: Letter of Agreement for the Administration of
Unused City of Dublin Sewer Capacity
Dear Joni:
-31621
7051 Dublin Boulevard
DubBn, California 94568
Phone: 925 828 0515
FAX: 925 829 1180
w .dsrsd.aom
As you are aware, at the request of the City of Dublin (City), on March 2, 2010, the Board of
Directors of Dublin San Ramon Services District (District) adopted Resolution No. 9 -10
(Attachment A) authorizing the City to transfer unused sewer capacity allocated to City
properties to commercial properties where the City would like to stimulate economic growth.
The resolution requires a Letter of Agreement between the City and District to define the
administrative procedures for the administration of the program. In addition, on April 20, 2010,
the District Board of Directors adopted Resolution No. 14 -10 (Attachment B) authorizing the
City to also transfer unused sewer capacity to residential development. Upon the City's approval
and acceptance, evidenced by your signature below, this letter will serve as the required Letter of
Agreement.
The procedures for administering the unused capacity transfer program shall be as follows:
City shall provide to District Engineer, David A. Requa, a letter providing the name of
(and contact information for) the applicant for the new, expanding, or relocating business
(hereinafter, "commercial project's or residential development project (hereinafter,
"residential project" or collectively "project ") the City is supporting, the name of (and
contact information for) the owner(s) of the property on which the project is located (if
different than the applicant for the project) and the number of dwelling unit equivalents
( "DUEs ") the City desires to allocate to the project.
The District Engineer shall have the discretion to determine whether the number of DUEs
the City desires to allocate to the project are consistent with the wastewater flow
characteristics, including volume and strength in terms of BOD and SS, for the proposed
use. Such determination will be based, in the sole discretion of the District Engineer, on
anew s,n a,,,,,,, sawn, nilvM is a WNk Enttry EXMBIT A
Ms. Toni Patillo
Page 2
April 21, 2010
Y^?/
• information concerning the wastewater flow characteristics provided by the Applicant,
and/or on a schedule of wastewater flow characteristics for the category or categories of
use classifications determined by the District Engineer to be most applicable to the
proposed use.
• The Applicant shall be responsible for complying with the District Code' with respect to
commencing wastewater service, including the acquisition of all additional DUEs
determined to be necessary, the application for a Sewer Permit and compliance with all
conditions thereto, and for paying all fees and charges attributable to the project.
Prior to and as a condition of District issuance of a Sewer Permit authorizing a
commercial project to proceed, City shall sign an agreement with the District, the
applicant, and the landowner (if a person different from the applicant) regarding
management of the DUEs allocated for the project, which agreement shall be in the form
attached hereto as Attachment C, which form of agreement shall be revised to conform to
changes made from time to time to pertinent portions of the District Code.
• City shall provide District written notification should the applicant's commercial project
fail and the City desires to transfer the allocated DUEs back to the City from the owner of
the property.
• The aggregate total of DUEs allocated under this program shall not exceed sixty -six and
two- thirds (66 2/3) DUEs at any time.
• No letter request dated after December 31, 2011 by the City to allocate DUES will be
honored by District unless approved by the District Board of Directors.
If this Letter of Agreement is satisfactory to the City, please sign and return one copy to the
District. The District is pleased to have this opportunity to assist the City in these challenging
economic times.
ACCEPTED for CITY OF DUBLIN
JONI PATTILLO
City Manager
Sincerely,
'L
BERT L. MICHALCZYK
General Manager
Date
1. 11ds is the District Code of the Dublin San Ramon Services District, which contains the pertinent rules and
regulations as adopted by the District's Board of Directors from time to time.
Ms. Joni Patillo
Page 3
April 21, 2010
Attachments:
(A) DSRSD Board Resolution No. 9 -10
(B) DSRSD Board Resolution No. 14 -10
(C) Dublin Sewer Capacity Transfer Agreement
cc: D. Requa
H- 1F.NGDFPTFIea Oem< \FN6MRR \AI IqI IMN IF elle.o6n.0 ....,,f e....... n.w�:- c:—, a.. e.,..
6� a
J C 0 X C 0 I'l P 0 R AK |0 N
November 21, 2012
Ms. LindmSmith
Economic Development Director
City ofDublin
1$O Civic Plaza
Dublin, CA945b8
RE: Economic Incentives PrlorJ!KIp Site Decision
Ms. Smith:
C&] Cox Corporation is interested |n|wcatmganew*ervicertadvmlntheCkyef Dublin in the Fallon Gateway
Shopping Center. |n support of that project, we have requested \m participate in the City of Dublin's Sa|esTax
Reimbursement Program. VVe took into consideration our conversations with the Economic Development Staff that
we would be eligible for this benefit when we initially approved this significant investment. This program will help
to Justify the significant capital investment to develop the location that would be difficult for our [ompanywithout
the incentive.
We would like to express the critical importance of this benefit to us in this tough economic climate, particularly
considering the associated traffic impact fees, and development fees.
Thank you for Your kind consideration to our request.
Carl A.Cox
President
cc Jim Tong
4431 Stmnoddgo Ddwm Pleasanton, CA 94588 (925) 4174000 Fax: (925) 417-1001