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HomeMy WebLinkAbout7.1 Establishment of an Economic Development Zone and the Creation of an IncentivesSTAFF REPORT CITY COUNCIL Page 1 of 5 Agenda Item 7.1 DATE:May 18, 2021 TO:Honorable Mayor and City Councilmembers FROM:Linda Smith, City Manager SUBJECT:Establishment of an Economic Development Zone and the Creation of an Incentives Package for Properties East of Fallon Road Prepared by: Hazel L. Wetherford, Economic Development Director and Suzanne Iarla, Management Analyst II EXECUTIVE SUMMARY: The City Council will consider establishing an Economic Development Zone for properties east of Fallon Road to encourage private investment in the targeted industry sectors as prioritized by the City Council. The City Council will also consider an Incentives Package to assist with the attraction of job-rich and/or high-wage businesses within the Economic Development Zone’s targeted industries. STAFF RECOMMENDATION: Adopt the Resolution Approving the Establishment of the Fallon East Economic Development Zone Map and Incentives Package. FINANCIAL IMPACT: There is no financial impact associated with the approval of establishing the Fallon East Economic Development Zone and associated incentives package. Requests to participate in any of the incentives will be brought to the Economic Development Committee and the City Council in the future, as needed. DESCRIPTION: Background The City’s Two-Year Strategic Plan includes the objective of looking to establish an Economic Development Zone to prioritize commercial and industrial development east of Fallon Road. 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 799 Page 2 of 5 existing landowners while supporting the City’s goal of these properties developing with economic and job-rich uses such as Life Science, Advanced Manufacturing, Clean/Green Technology, Automation and Robotics, Technology, Startups, and Incubators. On October 20, 2020, the City Council received a second report on the Fallon-East Property Planning and Development Framework that provided the initial framework for the creation of an Economic Development Zone. On March 16, 2021, the City Council received a third report on the Fallon-East Property Planning and Development Framework and initiated a General Plan Amendment Study for approximately 73 acres east of Fallon Road on the GH Pac Vest and Alameda properties. The Study will evaluate changing the existing General Plan land use designation from General Commercial to General Commercial/Campus Office. This action taken by the City Council furthers the strategic priority to establish an Economic Development Zone to prioritize commercial and industrial development east of Fallon Road. Establishment of an Economic Development Zone for Properties East of Fallon Road The establishment and 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 targeted industries. Those targeted industry sectors prioritized by the City Council include: Life Sciences1 Advanced Manufacturing Clean/Green Technology Automation and Robotics Technology Startups and Incubators The goal in creating 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 City services and programs. The City would leverage the tools within its control for the benefit of attracting investment and thus adding value to the property benefitting the overall Dublin community. Examples of such tools include zoning and land use designations, incentive programs, and standards and guidelines that streamline the development approval process (a portion of which has been initiated by the City Council through the General Plan Amendment Study). Staff is proposing the creation of an Economic Development Zone area for those parcels identified in the Fallon-East Property Planning and Development Framework as shown in Figure 1 below and to name the EDZ, the Fallon East Economic Development Zone. Attachment 2 provides a detailed description of the parcels. 1 The life sciences sector includes but is not limited to companies operating in the fields of biotechnology (including genetics), pharmaceutical, medical device and diagnostics, food science/food processing, and other efforts towards the discovery, development and delivery of products to improve the lives of organisms. 800 Page 3 of 5 Figure 1. Fallon East EDZ Area (parcels included are outlined in black) As previously reported in the October 10, 2020 Staff Report (Attachment 4), 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. Another example is 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. The creation and designation of the Fallon East EDZ also includes an incentives package to further promote the City’s economic development goals and objectives as outlined in the following section. Fallon East EDZ Incentives Package Proposal In an effort to attract job-rich and high-wage businesses within the City Council’s targeted industries, Staff has developed an Incentives Package specific to the Fallon East EDZ. The proposed Package will help promote the following economic development goals and objectives: Assist the City in attracting businesses in the targeted industries as prioritized by the City Council. Increase the local tax base, including sales and use tax, transient occupancy tax and/or property tax. 801 Page 4 of 5 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 following is a summary of the proposed Package that would be unique to the Fallon East EDZ and the City Council’s targeted industries, followed by descriptions of the programs offered. City Programs: 1. Property Tax Sharing 2. Streamlined Development Review and Fee Deferral 3. Reimbursement of Building Permit and Inspection Fee Cost 4. Green Construction Incentive Marketing of State/Federal Financing Programs: 5. Industrial Development Bond Program and Statewide Community Infrastructure Program 6. Assistance with Federal and State Incentives/Tax Exemptions 1. Property Tax Sharing Offer a property tax sharing incentive on a case-by-case basis between 30% to 50% for a period of either five or 10 years. Annual reimbursement would be based on a cap of total capital investment, net new job creation, and incurred costs of eligible expenses such as: New building construction Purchase of new machinery and equipment Construction or improvement of infrastructure required for new location or expansion 2. Streamlined Development Review and Fee Deferral Offer Business Concierge Program services to provide streamlining of the approval process through a cross-departmental team available to work with the developer and their design/construction teams throughout the process. Offer expedited review by Staff for planning entitlements (on a case-by-case basis). Create a special Fallon East EDZ pre-application process and increase the number of hours that Staff provides at no charge to applicant (on a case-by-case basis). Offer deferred payment of City Impact Fees to the issuance of the first utility meter (or two years, whichever is shorter). 3. Reimbursement of Building Permit and Inspection Fee Cost (case-by-case basis) Reimburse 20% of the cost of City Building Permit and Inspection Fees for new building construction or tenant improvement (the cost of Staff time would then be absorbed by the General Fund). 4. Green Construction Incentive Reimburse a portion of the cost for LEED certification if building is owned by or at least 50% leased to one or more tenant(s) in targeted industries by the time of LEED certification: 802 Page 5 of 5 LEED Gold: Up to $15,000 LEED Platinum: Up to $20,000 5. Industrial Development Bond Program and the Statewide Community Infrastructure Program Provide marketing and information on the State’s Industrial Development Bond program and the Statewide Community Infrastructure program. 6. Assistance with Federal and State Incentives/Tax Exemptions Utilize the services of the City’s state and federal advocacy consultant, Townsend Public Affairs, to host educational workshops and assist new eligible businesses to apply for relevant programs, such as: o Manufacturing and Research and Development Partial Sales and Use Tax Exemption o State Sales and Use Tax Exclusion o State Research & Development Tax Credit o California Competes Tax Credit o Employment Training Panel o Federal Work Opportunity Tax Credit Attachment 3 to this report provides a detailed description of the Package’s suite of incentives. On April 20, 2021, the City Council’s Economic Development Committee (EDC) received a presentation on the proposed Package, and supported it as presented. This recommendation falls under the EDC’s purview to provide policy guidance and direction on economic development activities. STRATEGIC PLAN INITIATIVE: 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. NOTICING REQUIREMENTS/PUBLIC OUTREACH: The City Council Agenda was posted, and a copy of the Staff Report was provided to all of the property owners included in the Fallon East Economic Development Zone. ATTACHMENTS: 1) Resolution Approving the Establishment of the Fallon East Economic Development Zone Map and Incentives Package 2) Exhibit A to Resolution – Fallon East Economic Development Zone Map 3) Exhibit B to Resolution – Fallon East Economic Development Zone Incentives Package 4) October 10, 2020 Staff Report 803 Attachment 1 Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 1 of 2 RESOLUTION NO. XX – 21 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN APPROVING THE ESTABLISHMENT OF THE FALLON EAST ECONOMIC DEVELOPMENT ZONE MAP AND INCENTIVES PACKAGE WHEREAS,the City Council has made economic development a high priority and has initiated a General Plan Amendment Study for approximately 73 acres east of Fallon Road; and WHEREAS,the Study is evaluating changing existing General Plan land use designations; and WHEREAS,one of the goals in changing the existing land use is the creation and designation of an Economic Development Zone to attract job-rich and/or high-wage businesses in the targeted industries. Those targeted industry sectors prioritized by the City Council include: life sciences, advanced manufacturing, clean/green technology, automation and robotics, technology, and startups and incubators; and WHEREAS,Staff is proposing the establishment of the Fallon East Economic Development Zone (Fallon East EDZ) as depicted in the attached map; and WHEREAS,Staff has also evaluated possible incentives to assist with the attraction of job-rich and/or high-wage businesses in the above-mentioned targeted industries; and WHEREAS,the Fallon East EDZ Incentives Package is designed to encourage private investment in the development of new high-quality buildings for use by businesses in the above- mentioned targeted industries; and WHEREAS,the Package is designed to promote the following public purposes: increase the local tax base; diversify the local economy; attract, grow and advance employers that create or provide sustainable, living wage jobs in the above-mentioned targeted industries; and repair, expand and improve City infrastructure; and WHEREAS,the City Council desires to develop the Fallon East EDZ. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin approves the Establishment of the Fallon East Economic Development Zone Area as depicted in the map attached hereto as Exhibit A and the Fallon East Economic Development Zone Incentives Package attached hereto as Exhibit B. BE IT FURTHER RESOLVED that the City Council does hereby authorize the City Manager, from time to time, to amend, interpret, and implement the guidelines for the Fallon East Economic Development Zone Incentives Package as may be necessary and desirable to carry out the intent of this Resolution. PASSED, APPROVED AND ADOPTED this 18th day of May 2021, by the following vote: 804 Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 2 of 2 AYES: NOES: ABSENT: ABSTAIN: ______________________________ Mayor ATTEST: _________________________________ City Clerk 3753001.1 805 Attachment 2 Exhibit A to the Resolution Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 1 of 1 Fallon East Economic Development Zone Map Name Acreage Alameda 1.25 Acres Branaugh 40.2 Acres EBJ Partners 1.1 Acres GH PacVest (formerly Anderson)50.3 Acres GH PacVest (formerly Chen)140.1 Acres Monte Vista 9.3 Acres Pleasanton Ranch Investments 0.4 Acres Righetti 49.6 Acres Total 292.25 Acres 806 Fallon East Economic Development Zone Incentives Package PURPOSE: To establish an Incentives Package (Package) to further promote the City’s economic development goals and objectives for the Fallon East Economic Development Zone (Fallon East EDZ). This Incentives Package is limited only to those targeted industries in the Fallon Road EDZ. Those targeted industry sectors prioritized by the City Council for the Fallon East EDZ include: Life Sciences1 Advanced Manufacturing Clean/Green Technology Automation and Robotics Technology Startups and Incubators The Package will help promote the following economic development goals and objectives: Assist the City in attracting businesses in the targeted industries as prioritized by the City Council. 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 Package includes both City specific programs and the marketing of state and federal financing programs. City Programs: 1.Property Tax Sharing 2.Streamlined Development Review 3.Fee Reimbursement 4.Green Construction Incentive Marketing of State/Federal Financing Programs: 5.Industrial Development Bond Program and Statewide Community Infrastructure Program 6.Assistance with Federal and State Incentives/Tax Exemptions 1 The life sciences sector includes but is not limited to companies operating in the fields of biotechnology (including genetics), pharmaceutical, medical device and diagnostics, food service/food processing, and other efforts towards the discovery, development and delivery of products to improve the lives of organisms. Attachment 3 Exhibit B to the Resolution 807 CITY PROGRAMS 1. Property Tax Sharing The Property Tax Sharing Incentive provides sharing of a portion of the City’s property tax revenue received that is attributable to the parcel in the range of between 30% to 50% for a period of either five or 10 years. Annual reimbursement is based on a cap of total capital investment, net new job creation, and actual incurred costs of eligible expenses such as: New building construction Purchase of new machinery and equipment Construction or improvement of infrastructure required for new location or expansion Eligibility: Offered on a case-by-case basis. Applicant may be property owner, ground leaseholder (with a lease of at least 10 years or longer), or developer of projects exclusively or primarily for end-user(s) in targeted industries. 2. Streamlined Development Review and Fee Deferral In addition to the Business Concierge Program services offered citywide, developers and end-user businesses are offered: Streamlined Approval Process through a cross-departmental team available to work with developer and their design/construction teams throughout the process. Expedited Review with priority review by Staff for planning entitlements (on a case-by-case basis). Special EDZ pre-application process, including increased number of hours that staff provides at no charge to applicant (on a case-by-case basis). Deferred payment of City Impact Fees to first utility meter (or two years, whichever is shorter). Eligibility: As noted above. Applicant may be property owner, ground leaseholder (with a lease of at least 10 years or longer), developer or end-user business. For end-user business undertaking tenant improvements, business must have lease of three or more years and at least five full-time equivalent employees to be eligible for incentive. 3. Reimbursement of Building Permit and Inspection Fee Cost This incentive provides a reimbursement of 20% of the cost of City Building Permit and Inspection Fees for new building construction or tenant improvement projects (on a case-by-case basis). For project with known end-user tenant (i.e. build to suit), reimbursement to be issued after certificate of occupancy has been received. For project with unknown end-user tenant(s) at time of application (i.e. spec development), reimbursement to be issued after certificate of occupancy has been issued and tenancy requirement (50% leased to tenants in targeted industries within eight months of completion) has been met. For end-user business undertaking tenant improvements, business must have lease of three or more years and at least five full-time equivalent employees to be eligible for incentive; reimbursement to be issued after certificate of occupancy has been received. 808 Eligibility: Applicant may be property owner, ground leaseholder (with a lease of at least 10 years or longer), developer or end-user business. 4. Green Construction Incentive This incentive reimburses a portion of the cost for LEED certification if building is owned by or at least 50% leased to one or more tenant(s) in targeted industries by the time of LEED certification: LEED Gold: Up to $15,000 LEED Platinum: Up to $20,000 LEED certification is handled by Green Business Certification Inc., not the City of Dublin. Amount of reimbursement would not exceed 50% of the actual application cost paid by developer to GBCI and will only be reimbursed after successful certification. Eligibility: All projects that are certified as LEED Gold or Platinum. Applicant may be property owner, ground leaseholder (with a lease of at least 10 years or longer), or developer of projects exclusively or primarily for end-user(s) in targeted industries. MARKETING OF STATE/FEDERAL FINANCING PROGRAMS 5. Industrial Development Bond Program and Statewide Community Infrastructure Program Staff will market and provide information on the State’s Industrial Development Bond Program and the Statewide Community Infrastructure Program. Eligibility: This incentive is offered to all projects. 6. Assistance with Federal and State Incentives/Tax Exemptions Staff can provide information on various State and Federal incentive programs and tax exemptions, or utilize the services of the City’s state and federal advocacy consultant to host educational workshops and assist new end-user businesses to apply for certain State and Federal programs, such as: Manufacturing and Research and Development Partial Sales and Use Tax Exemption State Sales and Use Tax Exclusion State Research & Development Tax Credit California Competes Tax Credit Employment Training Panel Federal Work Opportunity Tax Credit Eligibility: This incentive is offered on a case-by-case basis for projects and end-user businesses. APPLICATION PROCESS As part of the application process, applicants shall be required to agree that, as required by California Labor Code Section 1720 et seq., if project is determined to be a “public work” as that term is used in Section 1720 of the California Labor Code, then the project shall include prevailing wages and otherwise comply with the all-other applicable laws and regulations with respect to prevailing wage. Participants in any of the incentive programs will be responsible for ensuring that the improvements are in compliance with the Prevailing Wage Law. 809 Applicants will also be required to agree that, if required by Assembly Bill 562 (2013), applicant will follow all procedures including prevailing wage, public hearings and reporting requirements. Furthermore, applicants will be required to demonstrate that, but for the respective incentive, the development or improvement would not occur. Upon receipt of a complete application for one or more of the package incentives, the request will be presented to the Economic Development Committee for review and recommendation. Requests approved by the Economic Development Committee will then be presented to City Council for final approval when applicable. 810 $WWDFKPHQW 811 812 813 814 815 Establishment of an Economic Development Zone and the Creation of an Incentives Package May 18, 2021 Item 7.1 816 Background •City Council Two-Year Strategic Plan –Strategy 5, Objective A •September 15, 2020 –City Council received an initial report •October 20, 2020 –City Council received a second report and initial framework for an Economic Development Zone •March 16, 2021 –City Council received a third report and initiated a GPA Study 817 Establishment of Economic Development Zone •Provides several benefits for the attraction of private investment •Location •Job creation •Targeted industries: -Life Sciences -Advanced Manufacturing -Clean/Green Technology -Automation and Robotics -Technology -Startups and Incubators 818 Economic Development Zone Map 819 EDZ Incentives Package Goals •Attract businesses in the targeted industries •Increase the local tax base •Diversify the local economy •Focus on employers that create or provide sustainable, living wage jobs •Improve City infrastructure to attract high quality private development 820 EDZ Incentives Package Overview City Programs: 1.Property Tax Sharing 2.Streamlined Development Review and Fee Deferral 3.Reimbursement of Building Permit and Inspection Fee Cost 4.Green Construction Incentive Marketing of State/Federal Financing Programs: 5.Industrial Development Bond Program and Statewide Community Infrastructure Program 6.Assistance with Federal and State Incentives/Tax Exemptions 821 1. Property Tax Sharing •Offer annual reimbursement between 30% to 50% for up to 10 years •Considerations: –total capital investment –net new job creation –incurred costs of eligible expenses •Case-by-case basis 822 2. Streamlined Development Review and Fee Deferral •Offer Business Concierge Program services •Offer deferred payment of City Impact Fees Case-by -case basis: •Offer expedited review by Staff for planning entitlements •Create a special Fallon East EDZ pre- application process 823 3. Reimbursement of Building Permit and Inspection Fee Cost •Reimburse 20% of the cost of City Building Permit and Inspection Fees for new building construction or tenant improvement •Case-by -case basis 824 4. Green Construction Incentive •Reimburse a portion of the cost for LEED certification for eligible projects: –LEED Gold: Up to $15,000 –LEED Platinum: Up to $20,000 825 Marketing of State and Federal Financing Programs: 5. Provide marketing and information on the State’s: •Industrial Development Bond program •Statewide Community Infrastructure program 6. Host educational workshops and assist businesses to apply for various incentive and/or tax exemption programs (on a case-by -case basis) 826 Recommendation •Adopt the Resolution Approving the Establishment of the Fallon East Economic Development Zone Map and Incentives Package 827 828