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SUMMARY REPORT PURSUANT TO
CALIFORNIA GOVERNMENT CODE SECTION 53083
ON A
AMENDED AND RESTATED PARKING LICENSE AGREEMENT
BY AND BETWEEN
THE CITY OF CULVER CITY
AND
CULVER PUBLIC MARKET, LLC
The following “Summary Report” sets forth certain details of the proposed Amended and Restated Parking License Agreement (Parking Agreement) proposed to be executed by and between the City of Culver City, a municipal corporation (City) and Culver Public Market, LLC, a Delaware Limited Liability Company (Developer). This Summary Report describes how the economic development subsidy proposed to be provided under the terms of the Contract complies with the requirements imposed by California Government Code Section 53083 (Section 53083).
A number of terms are capitalized and defined within this Summary Report. Any capitalized terms in this Summary Report that are not herein defined have the same meaning as set forth in the Contract.
BACKGROUND
Disposition and Development Agreement (DDA)
On October 8, 2018, the Successor Agency to the Culver City Redevelopment (Successor Agency) and the Developer entered into a DDA for the conveyance of property that was assembled by the City of Culver City Redevelopment Agency (Agency) in 2007 using Property Tax Increment funds. This assembled property was transferred to the Successor Agency by operation of law when the Culver City Redevelopment Agency was dissolved on February 1, 2012. The properties owned by the Successor Agency can be described as follow:
1. Site A encompasses a total of approximately 53,022 square feet of land area, and includes the following properties:
a. 12403-12423 Washington Boulevard;
b. 4064 Colonial Avenue;
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c. 4063 Centinela Avenue; and
d. 4061 Centinela Avenue.
2. Site B encompasses approximately 19,736 square feet of land area, and includes the property located at 12337-12343 Washington Boulevard.
The Successor Agency-owned properties were subsequently conveyed on to the following entities:
1. An approximately 39,650 square foot portion of Site A was conveyed to the City. This site is identified as “Site A-1”.
2. The approximately 13,372 square foot remaining balance of Site A, which is identified as “Site A-2”, was conveyed to the Developer.
3. Site B, at 19,736 square feet was conveyed to the Developer.
Site A-2 and Site B are to be developed with the following uses:
1. An anchor retail tenant of approximately 12,300 square feet of leasable area; and
2. Inline shops and food service totaling approximately 13,700 square feet of leasable area.
Development and Construction Contract (Contract)
Under the terms of the Contract, Site A-1 will be subdivided into a Public Parking Condominium and a Retail Condominium:
1 1. The Public Parking Condominium will be developed with a 2-1/2-level parking structure that contains approximately 180 parking spaces.
2. The Retail Condominium will be transferred by the City to the Developer and developed with loading, storage, restrooms and other uses identified by the Developer.
The following Summary Report is based upon the information contained within the Contract and the Agreement. This Summary Report adheres to the restrictions imposed by Section 53083 on the City’s provision of economic development subsidies.
1 A condominium plan will be prepared and, if applicable, recorded in the Official Records of Los Angeles County for the purposes of legally separating the Public Parking Condominium and the Retail Condominium. 2305003.CC Page 3
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I. Identity of the Recipient of the Economic Development Subsidy: This section provides the name and address of the Developer.
II. Project Description: This section describes the scope of development of the Project.
III. Economic Development Subsidy: This section details the economic development subsidy proposed to be provided, and the cost to the City associated with fulfilling the Contract and Parking Agreement terms.
IV. Schedule of Economic Development Subsidy: This section describes the start and end dates and schedule for the economic development subsidy.
V. Public Purpose of Economic Development Subsidy: This section describes the public purpose of the economic development subsidy.
VI. Tax Revenue Projected to be received by the City: This section provides projections of the property tax, sales tax and business license tax revenues to be received by the City as a result of the proposed economic development subsidy.
VII. Job Creation: This section provides estimates of the temporary and permanent jobs anticipated to be generated by the proposed economic development subsidy.
This Summary Report and the Parking Agreement are to be made available for public inspection prior to the approval of the Parking Agreement.
I. IDENTITY OF THE RECIPIENT OF THE ECONOMIC DEVELOPMENT SUBSIDY The recipient of the economic development subsidy is:
Culver Public Market, LLC
c/o Regency Centers Corporation
Attention: Mr. John Mehigan
915 Wilshire Boulevard, Suite 2200
Los Angeles, California 90017
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II. PROJECT DESCRIPTION
The Contract requires the following to be developed (Project):
1. The Public Parking Condominium will be owned by the City. The Public Parking Condominium consists of the fee simple ownership interest in the 39,650 square foot Site A-1, and the Public Parking Improvements.
2. The following interests will be owned by the Developer:
a. The Retail Condominium, which consists of the airspace rights to the portion of Site A-1 that is improved with ancillary uses; and
b. The “Common Elements,” which are defined as all improvements located outside the boundaries of either the Public Parking Condominium and the Retail Condominium, other than structural elements, shared utility facilities, and other shared facilities.
3. The Public Parking Condominium will be developed with a 2-1/2-level parking structure that contains approximately 180 parking spaces that will be allocated as follows:
a. The private development being constructed on Site A-2 is required by the City’s parking code to be served by 137 parking spaces; and
b. The remaining 43 spaces are available to the general public.
4. The Retail Condominium will be developed with loading, storage, restrooms and other uses identified by the Developer.
III. ECONOMIC DEVELOPMENT SUBSIDY
The City must provide an economic development subsidy to the Developer that is comprised of the following components:
A. Economic Development Subsidy: Contribution to the Public Parking Improvements The City is required to contribute $6.6 million to the construction of the parking structure on Site A-2.. This component of the economic development subsidy was included in the Contract that was approved in 2019.
The economic subsidy associated with this contribution is calculated in the following table:
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Economic Development Subsidy to the Public Parking Improvements I. Estimated Parking Structure Costs
Estimated Total Construction Cost $10,630,000
Total Number of Parking Spaces ÷ 180
Estimated Cost Per Parking Space $59,060
Spaces Available to the General Public x 43
Estimated Cost for the Public Parking Spaces $2,540,000
II. City Contribution to the Public Parking Improvements $6,600,000
III. Estimated Economic Development Subsidy
City Contribution to the Public Parking Improvements $6,600,000 (Less) Estimated Cost for the Public Parking Spaces (2,540,000) Total Estimated Economic Development Subsidy $4,060,000
B. Economic Development Subsidy: Public Parking Improvements Revenue Contribution Under the terms of the executed Parking License Agreement, the City and the Developer agreed to set the parking rates each year based on the amount estimated to generate a breakeven between revenue and expenses. The proposed Parking Agreement provides for the City and the Developer to agree on a budget each year that sets the parking rates at an amount projected to achieve the following revenues:
1. The cost to manage and operate the parking structure;
2. Capital repairs costs incurred in excess of the amount available in the capital reserve fund;
3. A budgeted amount to be paid to the Developer to partially offset the increased cost being incurred by the Developer to construct the Project (Developer Assistance);
4. A budgeted amount to be paid to the City to partially offset the cost being incurred by the City (City Assistance); and
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5. Contributions to a capital reserve fund.
Developer Assistance payments will be made each year until the earlier of:
1. The cumulative total of the payments equals $15 million; or
2. The year in which the term of the Declaration of Covenants, Conditions and Restrictions (Condominium CC&Rs) expire.
C. Other Economic Development Subsidies to the Project
The following economic development subsidies were agreed to as part of the approval process for the Contract in 2019:
1. The City is required to waive the building permit fees associated with the Public Parking Improvements. These fees are currently estimated at $18,000. This fee waiver was contemplated in the DDA.
2. The City will provide $120,000 to the Developer in the form of cash assistance or fee waivers.
3. The City agreed to accept a corporate financial guarantee in place of a performance bond related to the construction of the Public Parking Improvements. This modification is anticipated to generate an $80,000 savings to the Developer.
D. Total Economic Development Subsidy
The total expenditure of City funds and foregone parking revenue resulting from the economic development subsidy are presented in the following table:
City Expenditures and Foregone City Revenues
Contribution to the Public Parking Improvements $4,060,000 Building Permit Fees Waiver – Public Parking Improvements 18,000 Cash Assistance or Fee Waivers 120,000
Developer Savings – Corporate Financial Guarantee 80,000 Foregone Parking Revenue 15,000,000
Total City Expenditures and Foregone City Revenues $19,278,000
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IV. SCHEDULE OF ECONOMIC DEVELOPMENT SUBSIDY
A. Upfront Economic Development Subsidy Components
The following components of the economic development subsidy will be provided to the Developer in accordance with the terms set forth in the Contract and/or the proposed Parking Agreement:
1. In 2019, the City deposited the Contribution to Public Parking Improvements into an escrow account to be disbursed in accordance with the Disbursement Procedures set forth in the Contract;
2. Building permits fees waiver for the public parking improvements;
3. Cash assistance or fee waivers; and
4. Developer savings related to the corporate financial guarantee.
B. Economic Development Subsidy Received Over Time
The Parking Agreement allows the Developer to receive a 50% share of net parking revenue (up to a maximum amount of $15 million) throughout the term of the Condominium CC&Rs. The term of the Condominium CC&Rs is set as follows:
1. The base term of the Condominium CC&Rs is set at 99 years.
2. The Condominium CC&RS will be renewed automatically for successive ten (10) year periods, unless members holding at least sixty-seven percent (67%) of the voting power of the Association vote not to automatically renew the term following the expiration of the initial term or the expiration of any extension period.
V. PUBLIC PURPOSE FOR THE ECONOMIC DEVELOPMENT SUBSIDY
The City Council of the City of Culver has determined that encouraging economic development along the West Washington Boulevard corridor serves an important public purpose. The development of the Public Parking Improvements required by the Contract will allow for the commercial development of Site A-2 and Site B at the intersection of West Washington Boulevard and Centinela Avenue.
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Important goals and objectives that are satisfied by the development are:
1. Potential increases in private investment in properties along the West Washington Boulevard corridor as a result of this public investment in this catalytic Project;
2. Attraction of new retail and restaurant tenants to Culver City;
3. Increased number of visitors to Culver City, who will spend money on dining, retail and entertainment activities in Culver City;
4. Direct and indirect increases in revenues received by the City’s General Fund; and
5. Increased employment through the additional jobs created by the Project.
VI. TAX REVENUE PROJECTED TO BE RECEIVED BY THE CITY
The commercial development proposed to be developed in Site A-2 and Site B is the beneficiary of the proposed economic development subsidy. Keyser Marston Associates, Inc. (KMA), the City’s financial consultant prepared tax revenue projections for this proposed commercial development. The projections follow this Summary Report in Attachment I, and the results are summarized in the following tables:
Total Tax Revenue to be Received by the City
Years of Operation
10 20 30
Property Tax $606,000 $1,296,000 $2,138,000
Sales Tax 3,399,000 7,966,000 14,104,000
Business Tax 213,000 499,000 884,000
Total $4,218,000 $9,761,000 $17,126,000
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Net Present Value of the City Tax Revenue 2
Years of Operation
10 20 30
Property Tax $404,000 $654,000 $824,000
Sales Tax 2,195,000 3,842,000 5,078,000
Business Tax 137,000 241,000 318,000
Total $2,736,000 $4,737,000 $6,220,000
VII. JOB CREATION
It is estimated that 142 temporary jobs will be created during the construction period. At stabilized operation, it is estimated that the Project will generate approximately 200 jobs on site. It is not currently possible at this time to allocate the jobs would between full-time jobs and part-time jobs.
2 The projected City tax revenues are discounted to present value using a 6% discount rate.
CULVER CITY, CALIFORNIA
ATTACHMENT I
STABILIZED CITY TAX REVENUE ESTIMATES (2023 $)
SECTION 53083 REPORT
CITY TAX REVENUE ANALYSIS
Prepared by: Keyser Marston Associates, Inc.
File name: 5 8 23 City Tax Projection; Title
ATTACHMENT I: APPENDIX A
SUMMARY TABLE
SECTION 53083 REPORT
CITY TAX REVENUE ANALYSIS
CULVER CITY, CALIFORNIA
I. Stabilized Tax Revenue Estimates (2023 $)
Property Tax Revenue $48,300
Sales Tax Revenue 263,400
Business Tax Revenue 16,500
Total Annual Revenue $328,200
II. Years 2023 - 2034
A.
Property Tax Revenue $606,000
Sales Tax Revenue 3,399,000
Business Tax Revenue 213,000
Total Revenue $4,218,000
B.
Property Tax Revenue $404,000
Sales Tax Revenue 2,195,000
Business Tax Revenue 137,000
NPV @ 6% Discount Rate $2,736,000
III. Years 2023 - 2044
A.
Property Tax Revenue $1,296,000
Sales Tax Revenue 7,966,000
Business Tax Revenue 499,000
Total Revenue $9,761,000
B.
Property Tax Revenue $654,000
Sales Tax Revenue 3,842,000
Business Tax Revenue 241,000
NPV @ 6% Discount Rate $4,737,000
IV. Years 2023 - 2054
A.
Property Tax Revenue $2,138,000
Sales Tax Revenue 14,104,000
Business Tax Revenue 884,000
Total Revenue $17,126,000
B.
Property Tax Revenue $824,000
Sales Tax Revenue 5,078,000
Business Tax Revenue 318,000
NPV @ 6% Discount Rate $6,220,000
Total
NPV @ 6% Discount Rate
Total
NPV @ 6% Discount Rate
Total
NPV @ 6% Discount Rate
Prepared by: Keyser Marston Associates, Inc.
File name: 5 8 23 City Tax Projection; Sum 2 of 5
ATTACHMENT I: APPENDIX B
ANNUAL CITY TAX REVENUES
STABILIZED CITY TAX REVENUE ESTIMATES (2023 $)
SECTION 53083 REPORT
CITY TAX REVENUE ANALYSIS
CULVER CITY, CALIFORNIA
I. Property Tax Revenue
Assessed Value $36,760,000
Property Tax Rate 1.0%
Total Property Tax Revenue $367,600
City Share of Property Tax Revenue 13.13%
City Property Tax Revenue $48,300
II. Sales Tax Revenue
A. Taxable Sales
Market Hall Space
Sf of Building Area 11,483 Sf
Taxable Sales Per Square Foot of Leasable Area 1 $375 /Sf Taxable Sales - Market Hall Space $4,306,100
Restaurant/Food Service Space
Sf of Building Area 15,352 Sf
Taxable Sales Per Square Foot of Leasable Area 2 $700 /Sf Taxable Sales - Restaurant/Food Service Space $10,746,400 Total Taxable Sales $15,052,500
B. City Share of Taxable Sales 1.75%
Total Sales Tax Revenue $263,400
III. Business Tax Revenue
A. Gross Sales
Market Hall
Sf of Building Area 11,483
Gross Sales /Sf of Building Area $500
Total Gross Sales $5,741,500
Restaurant/Food Service
Sf of Building Area 15,352
Gross Sales /Sf of Building Area $700
Total Gross Sales $10,746,400
Total Gross Sales $16,487,900
B. Business Tax Rate ($1.00/$1,000 Gross Sales) 0.1%
Total Business Tax Revenue Rounded $16,500
1 Assumes that 75% of the gross sales are taxable.
2 Assumes that 100% of the gross sales are taxable.
Prepared by: Keyser Marston Associates, Inc.
File name: 5 8 23 City Tax Projection; Rev Calcs
ATTACHMENT I: APPENDIX C - TABLE 1
PROPERTY TAX REVENUE 1
TAX REVENUE TO BE RECEIVED BY THE CITY
SECTION 53083 REPORT
CITY TAX REVENUE ANALYSIS
CULVER CITY, CALIFORNIA
Assessed Value
Total Property Tax
Revenue
City Share of Property
Tax Revenue
2 2023 $9,190,100 $91,901 $12,067
2024 27,570,300 275,703 36,200
2025 1 33,084,400 330,844 43,440
2026 2 40,168,645 401,686 52,741
2027 3 40,972,017 409,720 53,796
2028 4 41,791,458 417,915 54,872
2029 5 42,627,287 426,273 55,970
2030 6 43,479,833 434,798 57,089
2031 7 44,349,429 443,494 58,231
2032 8 45,236,418 452,364 59,395
2033 9 46,141,146 461,411 60,583
2034 10 47,063,969 470,640 61,795
2035 11 48,005,249 480,052 63,031
2036 12 48,965,354 489,654 64,292
2037 13 49,944,661 499,447 65,577
2038 14 50,943,554 509,436 66,889
2039 15 51,962,425 519,624 68,227
2040 16 53,001,673 530,017 69,591
2041 17 54,061,707 540,617 70,983
2042 18 55,142,941 551,429 72,403
2043 19 56,245,800 562,458 73,851
2044 20 57,370,716 573,707 75,328
2045 21 58,518,130 585,181 76,834
2046 22 59,688,493 596,885 78,371
2047 23 60,882,263 608,823 79,938
2048 24 62,099,908 620,999 81,537
2049 25 63,341,906 633,419 83,168
2050 26 64,608,744 646,087 84,831
2051 27 65,900,919 659,009 86,528
2052 28 67,218,937 672,189 88,258
2053 29 68,563,316 685,633 90,024
2054 30 69,934,582 699,346 91,824
Total NPV 3
Years 2023 - 2034 $606,179 $404,000
Years 2023 - 2044 $1,296,350 $654,000
Years 2023 - 2054 $2,137,664 $824,000
1 Based on a 1% property tax rate and a City share of 13.13%. The statutory increase of 2% per year is applied. 2 The projection period starts during construction.
3 Based on a 6% Discount Rate.
Year
Prepared by: Keyser Marston Associates, Inc.
File Name: 5 8 23 City Tax Projection; CF Page 4 of 5
ATTACHMENT I: APPENDIX C - TABLE 2
OTHER REVENUE SOURCES 1
TAX REVENUE TO BE RECEIVED BY THE CITY
SECTION 53083 REPORT
CITY TAX REVENUE ANALYSIS
CULVER CITY, CALIFORNIA
Sales Tax Revenue Business Tax Revenue
2 2023
2024
2025 1 $296,459 $18,571
2026 2 305,353 19,128
2027 3 314,513 19,702
2028 4 323,949 20,293
2029 5 333,667 20,902
2030 6 343,677 21,529
2031 7 353,988 22,175
2032 8 364,607 22,840
2033 9 375,545 23,525
2034 10 386,812 24,231
2035 11 398,416 24,958
2036 12 410,369 25,706
2037 13 422,680 26,478
2038 14 435,360 27,272
2039 15 448,421 28,090
2040 16 461,873 28,933
2041 17 475,730 29,801
2042 18 490,002 30,695
2043 19 504,702 31,616
2044 20 519,843 32,564
2045 21 535,438 33,541
2046 22 551,501 34,547
2047 23 568,046 35,584
2048 24 585,088 36,651
2049 25 602,640 37,751
2050 26 620,719 38,883
2051 27 639,341 40,050
2052 28 658,521 41,251
2053 29 678,277 42,489
2054 30 698,625 43,764
Years 2023 - 2034
Total $3,398,570 $212,895
NPV 3 $2,195,000 $137,000
Years 2023 - 2044
Total $7,965,965 $499,007
NPV 3 $3,842,000 $241,000
Years 2023 - 2054
Total $14,104,161 $883,518
NPV 3 $5,078,000 $318,000
1 2 The projection period starts in the first year of operation. The cash flow is discounted back to 2023 for NPV purposes. 3 Based on a 6% Discount Rate.
Year
See ATTACHMENT I: APPENDIX B for base year estimates in 2023 dollars. The base year estimates are escalated at 3.0% per year for three years to reach the projected revenues in 2025. Annual inflation at 3.0% thereafter is applied in the projections.
Prepared by: Keyser Marston Associates, Inc.
File Name: 5 8 23 City Tax Projection; CF Page 5 of 5