HomeMy WebLinkAboutItem 8.5 Sales Tax Reimb Programor
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DATE:
TO:
FROM:
STAFF REPORT
CITY COUNCIL
August 21, 2012
Honorable Mayor and City Councilmembers
Joni Pattillo City Manager""'
CITY CLERK
File #470 -50
SUBJECT: Request for Participation in the Sales Tax Reimbursement Program
Prepared by Linda Smith, Economic Development Director and Public Information
Officer
EXECUTIVE SUMMARY:
The City received a request from Dick's Sporting Goods to participate in the City's Sales Tax
Reimbursement Program. Dick's Sporting Goods is looking to occupy a 55,000 sq. ft. building
at Fallon Gateway (located on the southwest corner of Dublin Blvd. and Fallon Rd.), and would
propose to use the assistance to offset the costs for the construction of improvements in the
new retail store.
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 sales tax reimbursement.
RECOMMENDATION:
Staff recommends that the City Council provide direction regarding the request for participation
in the Program.
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Submitted By
Economic Development Director
DESCRIPTION:
Reviewed By
Assistant City Manager
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.
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
Page 1 of 2 ITEM NO. 8.5
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) —
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 Dick's Sporting Goods
(Attachment 1), who is looking to occupy a yet -to -be constructed 55,000 sq. ft. building 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 with the cost of
constructing tenant improvements in this new retail location.
Staff presented this request to the Standing Economic Development Committee on July 27,
2012. This request falls under the Committee's purview to provide 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.
ATTACHMENTS: 1. Request letter from Dick's Sporting Goods
Page 2 of 2
345 Court Street • Coraopolis, PA 15108
www.DicksSportingGoods.com Main Phone: 724 - 273 -3400
May 15, 2012
Ms. Linda Smith
Economic Development Director
City of Dublin
100 Civic Plaza
Dublin, California 94568
RE: Economic Incentives Priority in Site Decision
Dear Ms. Smith:
As discussed, Dick's Sporting Goods would like to locate a new retail location in the City of Dublin and in
support of that project we have requested to participate in the City's Sales Tax Reimbursement
Program. Dick's initially approved this investment based on feedback from the City's Economic
Development Board that we would be eligible for this benefit, which helps us to justify the significant
capital investment to develop the location that would be difficult for our Company without the
incentive.
We understand the policy is under review by the City and would like to express the critical importance of
this benefit to attracting new development in today's tough economic climate, particularly considering
the associated development fees. Please contact me at (724) 273 -3180 or Elaine Marr with CBRE at
(858) 750 -2264 and let us know if information would be helpful to the City Council in considering this
issue. We appreciate your consideration.
Sincerely,
Todd Hipwell
Vice President - Tax