REPORT TO THE CITY COUNCIL
January 15, 2015
FROM: BRUCE RUDD, City Manager
BY: LARRY WESTERLUND, Director of Economic Development
SUBJECT
Title
***RESOLUTION - Continuing the policy authorizing the City Manager to reduce or eliminate selected citywide impact fees for industrial development projects
Body
RECOMMENDATION
Adopt a resolution authorizing the continuation of Industrial Development Impact Free Elimination/Reduction ("iDIFER") Program that provides the City Manager the authority to reduce and/or eliminate selected citywide development impact fees in order to incentivize the expansion and/or attraction of qualified industrial projects.
EXECUTIVE SUMMARY
On January 30, 2014, the City Council unanimously approved Resolution 2014-18 that adopted a one-year policy that authorized the City Manager to reduce and/or eliminate selected citywide development impact fees in order to incentivize industrial development projects that created jobs, increased property valuations, and promoted economic development. Shortly thereafter, the Administration implemented the iDIFER program, which resulted in seven projects qualifying for the reduction or elimination of the associated impact fees. More importantly, these seven projects were responsible for retaining 374 local jobs and the creation of another 170 new jobs.
BACKGROUND
While California and rest of the country continues to recover from the "great recession", this is not the case in the San Joaquin Valley, which still lags behind rest of California when it comes to the number of jobs created. Nationally, the unemployment rate, as of November 2014, was 5.5% with California's unemployment rate at 7.3%. Unfortunately, Fresno County continues to struggle with an unemployment rate of approximately 11.2%. It should be noted that this figure reflects the number individuals who are actually looking for work and does not include those who have given up job searching; meaning the actual percentage of unemployed in Fresno County is substantially higher.
Industrial employment, particularly related to valley agriculture, is the bedrock of Fresno's economic structure. The ability to either expand or attract industrial development is key when it comes to increasing the number of living-wage jobs for citizens of Fresno, which in turn, afford our residents the ability to provide for their families and the opportunity to move up the economic ladder. Industrial development includes food processing plants, baking and cooking facilities, packaging factories, fabrication facilities, laboratories, warehouses and distribution centers, just to name a few.
Over the last year, there were seven projects that qualified under the iDIFER program, resulting in $383,778 in impact fees being waived. These seven projects (see attached) represent a total capital investment of $16,977,300 and resulted in the retention of 374 jobs and are anticipated to create 170 new jobs. The new capital investment will generate an additional $169,773 in property tax to all taxing agencies ($16,977,300 x .01 = $169,773). The City of Fresno portion of property tax is 21% of the total new property tax for a total of $35,652.
The forgoing analysis does not include the additional sales tax that will be generated by several of the expanded businesses nor the additional economic benefits related to the number of indirect jobs that are created.
Furthermore, the continuation of the iDIFER program is important as it signals to potential investors that Fresno recognizes that it is competing with other cities that have implemented similar programs in order to stimulate economic development. Previously, the absence of such a program has made it difficult for Fresno to retain, expand or attract new industrial development, due to a number of factors, including the cost of citywide impact fees.
The following are some of notable programs being offered within the region:
County of Fresno
· Two year moratorium on all development fees
City of Clovis
· Reduce industrial development fees for the southern half of the city by 70%
City of Sanger
· 18-month suspension of sewer and water development fees for certain commercial and industrial projects
City of Hanford
· 18-month program, 30% reduction in development impact fees for new buildings
Therefore, in an effort to provide incentives required to expand or attract industrial development within Fresno and remain competitive with other areas within and outside of California, it is recommended that Council authorize the continuation of the iDIFER program and the reduction or waiver of various impact fees, with the exception of water connection and sewer connection charges, if the following conditions are met:
· The development is for an industrial project that leverages, or creates expansion opportunities for Fresno's existing industrial base;
· The development is owner-occupied or subject to a long term lease;
· The expansion will create or retain jobs that are a good match for the available workforce in the four-county Fresno commute shed;
· The project site is located in an area of the city where public infrastructure needed to support the proposed industrial development already exists;
· The project site is currently zoned for industrial development; and
· The project will result in an increase in assessed property valuation, with the possible increase in sales tax revenue or other revenue streams resulting from job creation and additional economic activity.
ENVIRONMENTAL FINDINGS
N/A
LOCAL PREFERENCE
N/A
FISCAL IMPACT
It is anticipated that iDIFER program, if successful, will result in less than $600,000 in forgone impact fees. As has been the case with other impact fee waivers, other non-General Fund resources (e.g., federal grants) will be used to offset the loss of impact fees.
Attachments:
iDIFER Program Report
Resolution