HomeMy WebLinkAboutItem 8.1 Econ Dev Incentive Program
STAFF REPORT CITY CLERK
File #470-50
CITY COUNCIL
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:
If 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
ITEM NO. 8.1
Page 1 of 4
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.
Table 1
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
$250,000) – not to exceed Eligible Improvement Costs
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) –
$1,000,000
not to exceed Eligible Improvement Costs
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
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DUBLIN
I 7051 Dublin Boulevard
SAN RAMON p" " ' " Dublin,California 94568
Phone:925 828 0515
SERVICES ,t id<2'a a,,,,, FAX:925 829 1180
DISTRICT • �` � " www.dsrsd.com
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April 21, 2010
Ms. Joni Pattillo
City Manager
City of Dublin
100 Civic Plaza
Dublin, CA 94568
Subject: Letter of Agreement for the Administration of
Unused City of Dublin Sewer Capacity
Dear Joni:
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") 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
Dublin San Ramon Services OisvM is a Public Entity EXHIBIT A
Ms.loniPetitlo (� d/ 4 Page 2 I o1
April 21,2010
• 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.
Sincerely,
i ✓!mil °
BERT L. MICHALCZYK
General Manager
ACCEPTED for CITY OF DUBLIN
JONI PA 1DLLO Date
City Manager
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1. This 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 cQ
Page 3
Apri121,2010
Attachments:
(A)DSRSD Board Resolution No. 9-10
(B)DSRSD Board Resolution No. 14-10
(C)Dublin Sewer Capacity Transfer Agreement
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cc: D. Requa
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