TO: Budget, Finance, and Economic Development Committee
FROM: Jennifer Byers, Interim Director, Economic & Community Development
DATE: January 24, 2024
SUBJECT: EOA Program Update
This report includes staff recommendations to update the Economic Opportunity Area (EOA) Plan and related incentive program, proposed changes to EOA boundaries, and future financing.
Goals. The initial purpose of EOA Plan was to develop and encourage new business, promote existing business retention and expansion, and provide other economic development opportunities with funds allocated toward economic development activities in areas that were selected based on their need for supp lemental economic development activities. The program currently supports the following:
Support New and Existing Development : Infill, rehabilitation and renovation of buildings, demolition and site preparation, and property acquisition.
Infrastructure Improvements: Upgrades to storm drains, streets and alleys, curb and gutter, and landscape enhancements.
Financial Incentives : Loans, grants, and development fee and public improvement reimbursements.
Since development of the EOA Plan, the city has adopt ed an Economic Development Strategic Plan, participated in the B3K Prosperity Initiative, and set aside other funding for larger redevelopment projects and incentives, which has significantly changed the overall approach for the EOA program. Based on Council guidance, staff recommends a new set of goals that includes the following:
Support Existing Development with rehabilitation and renovation of buildings, site and landscape enhancements, and related development fees.
Support Future Development with demolition, site preparation, and property acquisition.
Support Business Growth and Expansion with costs to start -up new businesses or existing businesses that want to expand.
Attached is a draft updated EOA Plan in line with the revised goals and proposed changes to the program. The incentive programs will continue to implement plan goals that include g rants for site and building improvements, demolition, site preparation and property acquisition, business relocation and expansion, and continue to seek partnerships with financial institutions to provide up-front loans to support EOA grant applicants.
Revising Boundary Areas. With the updated goals within the EOA plan, staff recommends revising the existing areas based on commercial corridors and d ensity of business licenses and proposes to remove large vacant parcels, larger industrial parcels, and parcels where significant private investment has already occurred. Staff also recommend the addition of parcels where investment is still needed. In the attached maps are the recommended areas to remove and add to each EOA area , see map attached. A key change is removing Hwy 58/Mt. Vernon EOA and moving the Brundage Lane corridor into the Southeast EOA. Also adding a Hwy 99 Corridor EOA.
Please note that changing the boundaries of the EOA will modify the parcels included in the TIF calculations. The TIF starting in 2024 will use the new boundaries. If removed the Hwy 58/Mt.
Vernon EOA TIF will not be included in the FY 24/25 Budget.
Financing. The creation of the EOA plan identified two sources to finance the program: the allocation of property tax revenue through the ongoing reinvestment of tax increment and additional funding through an annual allocation of PSVS. Since fiscal year 19 -20, EOA revenues have consisted of an annual allocation of $100,000 for each of the seven EOAs. In fiscal years 21- 22 and 22 -23, additional funding was added for all EOAs as needed: PSVS ( $500,000 FY21-22, $700,000 FY22-23) and ARPA ($1,000,000 FY22-23). Due to the demand all additional funding to date has gone to the Downtown, Old Town Kern and Southeast EOAs. In the proposed FY24-25 budget will include $100,000 for each EOA and $700,000 in all EOAs fund.
Although the tax increment funding (TIF) has been tracked since the base year in 2014, no TIF funding has been allocated into the EOA budget other than a single allocation of property taxes made in FY 2021-22 consisting of $9,594.
The EOA plan provides an example of how to assume the tax increment, but provides a conflicting figure. In the eight years since the base year, the EOAs have averaged a total of $145,200.03 in TIF, with the Hwy 58/Mt. Vernon as the lowest ( $59,694.27) in TIF generated and the Southeast the highest ($297,162.07) in TIF generated. The total amount in TIF generated in all seven areas is $1,016,400.20.
Using an adjusted methodology of calculating the tax increment each year from the base year in 2014 the total EOA TIF is $3,747,215.65, a difference of $2,730,815.45. Since EOAs have only been active since 2018 with the passage of PSVS, staff recommends a revised base year of 2019. See all EOA TIF revenue scenarios in the table below.
Summary Table
EOA TIF Adjusted TIF
Adjusted Base
Year (2019)
Estimated FY 2 4/25
Adjusted TIF Budget
DOWNTOWN $144,652.47 $427,634.13 $320,032.73 $48,985.28 OLD TOWN KERN $147,837.71 $593,207.25 $445,982.75 $85,549.25 SOUTHEAST $297,162.07 $1,138,303.02 $878,767.54 $181,893.21 34th ST CORRIDOR $168,731.12 $564,662.14 $404,764.46 $101,332.70 EAST HILLS $150,847.31 $721,576.71 $509,533.97 $77,756.56 AIRPORT $47,475.25 $135,186.02 $111,099.86 $31,483.07
HWY 58 / MT VERNON $59,694.27 $166,646.38 $124,430.41 $28,216.68 Average $145,200.03 $535,316.52 $399,230.25 $79,316.68
Total $1,016,400.20 $3,747,215.65 $2,794,611.72 $555,216.75 Difference $2,730,815.45 $1,778,211.52
At Council’s direction, for the next FY budget, staff could include TIF recommendations using the adjusted methodology from the base year. The estimated budget is for the current EOA boundaries.
Budget Recommendations. Due to the recommended changes to the areas, staff recommends the following fund balance changes and budget for each EOA in fiscal year 24/25, the table below does not include the TIF funds shown above.
EOA Budget Notes
34th Street Corridor $580,880 Includes previous fund balances Bakersfield Airport $600,000 Includes previous fund balances Downtown $400,000 $300,000 from all EOA fund, plus FY 23/24 fund balances East Hills $600,000 Includes previous fund balances
Old Town Kern $200,000 $100,000 from 58/Mt. Vernon, plus FY 23/24 fund balances Southeast $200,000 $100,000 from 58/Mt. Vernon, plus FY 23/24 fund balances Hwy 99 Corridor $300,000 58/Mt. Vernon balance
All EOA Fund $400,000 Used in all EOAs (excluding Downtown) based on demand
All fiscal FY 23/24 fund balances for the actively used EOAs will be carried over to next fiscal year, for Old Town Kern that is currently $227,264.66 and for Southeast it is currently $237,541.78. The current Downtown EOA fund balance is part of the compe titive process with a total budget of $978,986.23.
Due to the additional funding sources used in the program, Staff recommends text amendments to the EOA plan adding other sources of funding including ARPA and other federal and state funding to support small businesses and community non-profits.
Updated Downtown Guidelines. With a successful Downtown competitive process , staff proposes to continue a competitive process once a year to fund larger impactf ul projects over $25,000. Staff proposes to request the ability to fund projects of $25,000 or less on a first come first served basis. When funds are available, a one bonus grant for businesses on key redevelopment corridors: 18 th and 19 th Streets and Chester Avenue. The grant amounts will be
determined during the annual budget process.
Marketing Plan. Staff worked with Finance and Technology Services to geo reference all business licenses in the EOA areas to come up with a targeted marketing plan. Staff will work on marketing the program to target neighborhoods /commercial corridors where we have not received applications and in new areas added to the program. The methods for marketing will include:
Community meetings
Attend community/neighborhood events
Direct mailers
Updated website with online story-map on EOA program with success stories
Attachments:
Updated EOA Plan
Proposed EOA Maps