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HomeMy WebLinkAboutItem 7.2 - 3420 Fallon-East EDZ Part 2 (2) Page 1 of 5 STAFF REPORT CITY COUNCIL DATE: October 20, 2020 TO: Honorable Mayor and City Councilmembers FROM: Linda Smith, City Manager SUBJECT: Fallon-East Property Framework: Program Update and Economic Development Zone Overview Prepared by: Hazel L. Wetherford, Economic Development Director & John Stefanski, Assistant to the City Manager EXECUTIVE SUMMARY: The City Council will receive a second report on the proposed Fallon-East Property Planning and Development Framework. The City Council has identified in their Two- Year Strategic Plan the objectives of establishing an Economic Development Zone to prioritize commercial and industrial development east of Fallon Road, and working with area property owners in conjunction with the Dublin Boulevard Extension project on issues such as road and project mitigation, entitlements as well as supporting infrastructure. This second report on this project will provide clarifying details as well as an initial framework for the creation of an Economic Development Zone. STAFF RECOMMENDATION: Receive the report and provide feedback on the proposed Economic Development Zone and accompanying incentives proposal package. FINANCIAL IMPACT: None. DESCRIPTION: Background On September 15, 2020, the City Council received an initial report on the Fallon-East Property Planning and Development Framework. The City Council was supportive of the Staff recommendation to create a hybrid land use designation to provide flexibility desired by the existing landowners while also supporting the City’s goal of these properties developing with economic and job-rich developments. This report will provide: • Clarification on residential development capacities, and Page 2 of 5 • An overview of incentive programs to attract development of: o Life Science o Advanced Manufacturing o Clean/Green Technology o Automation and Robotics o Technology Startups and Incubators Clarifying Context The primary focus of the proposed Development Framework and Economic Development Zone is to target the development of job-producing commercial and industrial uses through hybrid land uses and economic incentives. There have been no discussions nor plans to make changes to the existing residential and open space land uses. However, for clarifying context, Table 1 below illustrates the allowed and assumed residential densities for the subject properties: Table 1: Residential Development Capacity Property General Plan Land Use Size Minimum Density Maximum Density Assumed Density GH PacVest (Chen) Medium-High Density (14.1-25 du/ac) 6.0 ac. 85 150 130 GH PacVest (Anderson) Medium-High Density (14.1-25 du/ac) 7.0 ac. 99 175 108 Righetti Medium Density (6.1- 14 du/ac) 9.6 ac. 59 134 96 Branaugh Medium Density (6.1- 14 du/ac) 9.7 ac. 59 136 97 Total Units 302 595 431 The assumed density of 431 units includes the General Plan Amendment, related Planned Development Stage 2 and Site Development Review for the Anderson property. These approvals changed the land use from Medium Density to Medium-High Density, contemplating 108 units on the site. This was an increase of 38 units above the 70 units originally studied under the Fallon Village Supplemental Environmental Impact Report. Lastly, the residential land uses in these four properties are included in the current Housing Element with the GH PacVest properties identified for moderate-income housing and the Righetti and Branaugh properties identified for above moderate-income housing. As of the City Council’s last meeting, the Council provided direction to maintain these units for the next Housing Element through a by-right strategy with objective development standards. Proposed Establishment of an Economic Development Zone The proposed creation of an Economic Development Zone (EDZ) could provide several benefits to the City in establishing a designated area for the attraction of private investment in the following industries: life science, advanced manufacturing, clean/green tech, automation and robotics, and technology startups and incubators. The goal of the EDZ would be to transform the area into a thriving corridor that capitalizes on its location along the I-580 freeway, and create opportunities for new uses and services in the community, generating new jobs and tax revenues to support Page 3 of 5 City services and programs. Similar initiatives can be seen throughout the state in various communities. For example, the City of Vacaville has launched a similar initiative, creating a biotech zone to attract potential biotech tenants and make zoning changes to help smooth their entry, among other things. Another example would be the City of Pleasanton with the creation of the Johnson Drive EDZ which was created to help spur investment in 40 acres of underutilized vacant land near I-680. Lastly, the City of Emeryville has streamlined their process for biotech companies, amending their zoning ordinance to allow for research and development uses in mixed-use areas. The proposal to create the EDZ would include an incentives package that is specific to the industries mentioned above. The proposed incentives package will help promote the following economic development goals and objectives: • Assist the City in attracting key targets across industries. • Increase the local tax base, including sales and use tax, transient occupancy tax and/or property tax. • Diversify the local economy. • Attract, grow and advance employers that create or provide sustainable, living wage jobs. • Repair, expand, and improve City infrastructure as needed to attract high quality private development. The incentives package proposal includes local incentives unique to the EDZ and the targeted industries as well as other state and federal programs. Incentives could be provided in the form of financial assistance, grants, loans, matches, or forgiveness, and could be used to offset financial or regulatory impediments to high quality private development. Staff is recommending the following local incentives that would be unique to the EDZ and the targeted industries. • Property Tax Use Sharing Program This incentive program would share a portion of the applicant’s annual property tax for the construction of a new building in one of the targeted industry sectors. • Building Permit and Inspection Fee Reductions or Forgiveness (case-by-case basis) This incentive program would allow the City to consider waiving a percentage of building permit fees and building inspection fees on new development in one of the targeted industry sectors. • Planning Entitlement Processing Cost Reduction or Forgiveness (case-by-case basis) This incentive program would allow the City to consider waiving time and materials expenses related to Planning approvals such as Planned Development Zoning, Site Development Review, Use Permits, and review under the California Environmental Quality Act (CEQA). Page 4 of 5 o Green Construction Incentive This incentive program would allow the City to waive a percentage of applicable City development and entitlement fees for green construction that will be LEED-certified based on a tiered incentive system. Tier LEED Project Classification % of Fees to be Waived Tier 1 LEED Certified 40% Tier 2 LEED Silver 60% Tier 3 LEED Gold 80% Tier 4 LEED Platinum 100% • Expedited Streamlining This incentive program would allow the City to initiate programs such as the modification of land use, zoning or other land use restrictions that affect the feasibility of developments, the expedited processing of entitlements and consistent regulations, and staff level approval of Site Development Review Permits and Use Permits. In addition to these unique and targeted incentives, the City’s other programs would apply such as the Business Concierge and Sales Tax Use Sharing programs. There are also state and federal incentive programs available to all businesses, not just businesses within the EDZ, that would be included in the incentive proposal package. State Incentives • Advanced Transportation and Manufacturing Sales and Use Tax Exemption The California Alternative Energy and Advanced Transportation Financing Authority offers a full sales and use tax exclusion to advanced manufacturers and manufacturers of alternative energy source and advanced transportation products, components, or systems. • California Competes Tax Credit The California Competes Tax Credit is an income tax credit available to businesses who want to relocate, stay, or grow in California. • Economic Development Rate Program This program gives special utility discounts for businesses that require high- energy loads to operate or continue operating in California. • Employment Training Panel The Employment Training Panel provides funding to employers for training that upgrades the skills of their workers. • Research & Development Tax Credit A business may qualify for an income tax credit if it paid for or incurred qualified research expenses while conducting qualified research activity in California. Page 5 of 5 Qualified research expenses include wages, supplies, and contract research costs. • Manufacturing and Research & Development Exemption Manufacturers, researchers, and developers may qualify for a partial sales and use tax exemption which allows them to pay a lower sales or use tax rate on qualifying equipment purchases and leases. Federal Incentives • Work Opportunity Tax Credit The Work Opportunity Tax Credit is a Federal tax credit available to employers for hiring individuals from certain targeted groups who have consistently faced significant barriers to employment. Next Steps Staff is proposing that the City establish an Economic Development Zone and an accompanying incentives package. Staff recommends the incentives package return to the City Council’s Economic Development Committee for further review and to flesh out these ideas more specifically. The City-initiated creation of the hybrid land use, as described in the September 15th Staff Report, will require further environmental review as well as review through the City’s normal processes, including the Planning Commission and City Council. STRATEGIC PLAN INITIATIVE: Strategic Plan Strategy #5 - Large Land Tract Development and Open Space: Objective A. Look to Establish an Economic Development Zone to prioritize commercial and industrial development east of Fallon Road. Objective B. Work with the area property owners in conjunction with the Dublin Boulevard extension project on issues such as road and project mitigation, entitlements, as well as supporting infrastructure. NOTICING REQUIREMENTS/PUBLIC OUTREACH: None. ATTACHMENTS: None. Item 7.2 Fallon-East Framework: Economic Development Zone Overview October 20, 2020 Background •September 15 City Council Report –Council supportive of establishing a hybrid land use designation with the goals of: •Providing flexibility to property owners •Encouraging economic and jobs-rich developments •Desired uses include: –Life Sciences –Advanced Manufacturing –Clean/Green Tech. –Automation & Robotics –Tech. Startups & Incubators •Incentives programs targeted for these uses. Clarifying Residential Context •Primary focus of this work is to target job- producing commercial and industrial uses. •No discussions and no plans to address residential as a part of this effort. •Clarifying from the previous presentation: –Allowed density range: 302-595 units –Assumed density: 431 units Economic Development Zone •Establishing the designated area east of Fallon Rd. as an Economic Development Zone could provide several benefits to the City: –Transform the area into a thriving corridor –Creates opportunities for new uses and services –Generate new jobs –Generate tax revenues Economic Development Zone •Goal: Attract and spur private investment in the following industries: –Life Sciences –Advanced Manufacturing –Clean/Green Tech –Automation and Robotics –Technology Startups and Incubators Economic Development Zone •Similar initiatives include: –City of Vacaville –City of Pleasanton –City of Emeryville Economic Development Zone •Proposed Incentives Package unique to the EDZ and the targeted industries would include: –Property Tax Use Sharing Program –Building Permit and Inspection Fee Reductions or Forgiveness (case-by-case basis) –Planning Entitlement Processing Cost Reduction or Forgiveness (case-by-case basis) –Expedited Streamlining –Other State and Federal Incentives Next Steps •Staff proposes establishing an Economic Development Zone and accompanying incentives package. –Return to the Economic Development Committee for further review. •City initiated creation of hybrid land use, will require further environmental review and review through normal processes –Planning Commission and City Council. 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