Attachment C: Economic Development Subsidy Report
ECONOMIC DEVELOPMENT SUBSIDY REPORT
PURSUANT TO GOVERNMENT CODE SECTION 53083
FOR AN ECONOMIC INCENTIVE AGREEMENT BY AND BETWEEN
THE CITY OF MILPITAS
AND
RIVIAN, LLC
CITY OF MILPITAS AND RIVIAN LLC
ECONOMIC DEVELOPMENT SUBSIDY REPORT PAGE 1 | 6
Pursuant to Government Code Section 53083, the City Council of the City of Milpitas must hold a noticed public hearing and, prior to the public hearing, provide all of the following information in written form and available to the public and through the City Internet website, regarding a proposed economic development subsidy to be provided by the City pursuant to an Economic Development Incentive Agreement (“Agreement”) by and between the City of Milpitas (“City”) and Rivian, LLC (“Rivian”). The Agreement provides an economic development subsidy from the City to Rivian to incentivize the leasing of an existing, approximately 97,000 square-foot industrial property located at 755 Yosemite Drive in Milpitas, California (“Property”), for the sales and leasing, vehicle delivery and inspections, and servicing of all-electric, zero-emission vehicles manufactured off-site and delivered by Rivian to customers from the Property (“Last Mile Hub”).
Notice was published on the City Internet website on February 21, 2025, for a public hearing to be held on March 4, 2025.
The purpose of this Economic Development Subsidy Report (“Report”) is to provide the information required pursuant to Government Code Section 53083 regarding the Agreement. This Report shall remain available to the public and posted on the City Internet website until the end date of the economic development subsidy, as further described in Item 2 below.
1. The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy, if applicable.
The Agreement is with Rivian, LLC, a Delaware corporation (“Rivian”). Rivian is the sole beneficiary of the economic development subsidy.
Rivian, LLC
13250 N. Haggerty Road
Plymouth, MI 48170
[email protected]
[email protected]
2. The start and end dates and schedule, if applicable, for the economic development subsidy.
The Agreement, and the obligations of the parties therein, will not become effective Attachment C: Economic Development Subsidy Report
ECONOMIC DEVELOPMENT SUBSIDY REPORT
PURSUANT TO GOVERNMENT CODE SECTION 53083
FOR AN ECONOMIC INCENTIVE AGREEMENT BY AND BETWEEN
THE CITY OF MILPITAS
AND
RIVIAN, LLC
CITY OF MILPITAS AND RIVIAN LLC
ECONOMIC DEVELOPMENT SUBSIDY REPORT PAGE 2 | 6
until the date on which all the following are true (“Effective Date”):
a) The Agreement has been approved and executed by an authorized signatory of Rivian and delivered to the City;
b) Following all legally required notices and hearings, the Agreement has been approved by the City Council;
c) The Agreement has been executed by the appropriate authorities of the City and delivered to Rivian;
d) Rivian has entered into an agreement to lease a Last Mile Hub within the City; and e) The Last Mile Hub is generating sales and/or use tax revenues for the City.
The term will begin on the Effective Date of the Agreement and continue for eight (8) years. The first Agreement Payment will be paid following the first Computation Quarter (as defined in Section 7 herein) in which Rivian has performed its covenants and other obligations pursuant to the Agreement, including that the Last Mile Hub has begun generating sales and/or use tax revenues for the City.
3. A description of the economic development subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the local agency as a result of the economic development subsidy.
The economic development subsidy shall be the sum of an amount equal to the annual percentages of the Sales Tax Revenues, as shown in Table 1. Agreement Computation Percentages, attributable to annual taxable sales and leases at the Last Mile Hub quarterly received by the City following the Effective Date.
Table 1. Agreement Computation Percentages
Years 1 to 3: 35% to Rivian, 65% to City
Years 4 to 8: 50% to Rivian, 50% to City
The City estimates the annual Agreement Payments to Rivian as follows:
•in Year 1, the Agreement Payments to Rivian are estimated to total $1,037,190 with $1,926,210 to the City;
•in Year 2, the Agreement Payments to Rivian are estimated to total $1,037,190 with $1,926,210 to the City;
•in Year 3, the Agreement Payments to Rivian are estimated to total $1,728,650 with Attachment C: Economic Development Subsidy Report
ECONOMIC DEVELOPMENT SUBSIDY REPORT
PURSUANT TO GOVERNMENT CODE SECTION 53083
FOR AN ECONOMIC INCENTIVE AGREEMENT BY AND BETWEEN
THE CITY OF MILPITAS
AND
RIVIAN, LLC
CITY OF MILPITAS AND RIVIAN LLC
ECONOMIC DEVELOPMENT SUBSIDY REPORT PAGE 3 | 6
$3,210,350 to the City;
•in Years 4 to 8 combined, the Agreement Payments to Rivian are estimated to total $12,347,500 with $12,347,500 to the City;
The City estimates the total amount of revenue gain for the City, over the 8-year term of the agreement to be $19,410,270.
The City estimates the total amount of the expenditure of public funds, or of revenue loss, because of the economic development subsidy will be up to $16,150,530 over the 8-year term of the agreement.
4. A statement of the public purposes for the economic development subsidy.
The economic development subsidy in this Agreement is intended to incentivize the leasing of an existing, approximately 97,000 square-foot industrial property located at 755 Yosemite Drive in Milpitas, California for the sales and leasing, vehicle delivery and inspections, and servicing of all-electric, zero-emission vehicles manufactured off-site and delivered by Rivian to customers from the Property (“Last Mile Hub”), and support the Rivian Last Mile Hub remaining in Milpitas for no less than eight (8) years.
Founded in 2009 and headquartered in Irvine, California, Rivian is an American manufacturer specializing in all-electric, zero-emission vehicles. Rivian employs 4,000 people in California and has a total workforce of over 16,000 across the U.S. and is known for its designs and production of vehicles such as the R1T pickup, R1S SUV, and commercial delivery vans, all aimed at reducing pollution from traditional vehicles.
The Property is located in the Heavy Industrial Zone (M2). The Property currently is vacant and typically would be occupied by light industrial and warehouse uses which provide few jobs and limited revenues to the City. Through the Agreement, Rivian will lease the Property to be occupied as a Last Mile Hub within the City subject to the Economic Development Incentive Agreement. Once operational, this Last Mile Hub will generate new Local Sales Taxes for the City, which will support community-wide public services. The Last Mile Hub will also generate secured and unsecured property taxes from the improvements constructed to support the operations, and establish a business that –for public, transportation, and environmental benefit – strategically utilizes the railway proximity, whereas that proximity may otherwise be contrary to attracting the highest, best use for this property.
Attachment C: Economic Development Subsidy Report
ECONOMIC DEVELOPMENT SUBSIDY REPORT
PURSUANT TO GOVERNMENT CODE SECTION 53083
FOR AN ECONOMIC INCENTIVE AGREEMENT BY AND BETWEEN
THE CITY OF MILPITAS
AND
RIVIAN, LLC
CITY OF MILPITAS AND RIVIAN LLC
ECONOMIC DEVELOPMENT SUBSIDY REPORT PAGE 4 | 6
The City has determined that the establishment by Rivian of a Last Mile Hub as described that participates in sales tax generating business activities within the City will generate substantial new revenue for the City, create approximately twenty-five (25) permanent, high-skilled jobs that meet the City Council priorities of Economic Development and Job Growth and fulfill Economic Development Strategy implementation actions. Additionally, the establishment of the Last Mile Hub supports the Milpitas 2040 General Plan’s Economic Development Element Goals to attract businesses focusing on emerging technologies including artificial intelligence and automotive technology, facilitates the development of projects that provide sales and/or use tax receipts among other revenues, and leverages public investments to enhance the City’s economic vitality. This Agreement supports the City commitment to fostering a business-friendly environment, stimulating economic growth, and generating new job opportunities and revenue sources that will enhance services for residents and the community. Further, Rivian’s commitment to zero emissions vehicles is consistent with and tends to forward the City’s Climate Action Plan.
5. Projected tax revenue to the local agency as a result of the economic development subsidy.
Rivian Covenants to the City will cause Rivian Sales Taxes to be paid to the City, which is estimated to total $35,560,800 over the eight (8) year term of the Agreement. The projected net tax revenue accruing to the City as a result of the economic development subsidy proffered in the Agreement is estimated to total $19,410,270 ($2.43 million average per year).
Rivian’s planned tenant improvements of $3-$3.5 million are contemplated to enhance the base valuation of the Property upon reassessment, with a potential increase of real property taxes of $4,878 to $8,130 per annum which will compound over time.
In addition, the City will receive permitting fees in Year 1 of the Agreement, and ongoing annual business license fees from Rivian for the Last Mile Hub.
6. Estimated number of jobs created by the economic development subsidy, broken down by full-time, part-time, and temporary positions.
The Rivian Last Mile Hub within the City is anticipated to result in the creation of approximately twenty-five (25) permanent, full-time, highly skilled and benefitted jobs.
While Rivian does not contemplate part-time jobs to be available at the Last Mile Hub Attachment C: Economic Development Subsidy Report
ECONOMIC DEVELOPMENT SUBSIDY REPORT
PURSUANT TO GOVERNMENT CODE SECTION 53083
FOR AN ECONOMIC INCENTIVE AGREEMENT BY AND BETWEEN
THE CITY OF MILPITAS
AND
RIVIAN, LLC
CITY OF MILPITAS AND RIVIAN LLC
ECONOMIC DEVELOPMENT SUBSIDY REPORT PAGE 5 | 6
at this time, approximately 23,000 to 28,000 person hours of temporary construction jobs will be created to complete the planned leasehold improvements.
As expressed in the Agreement, Rivian acknowledges that a goal of the City in entering into this Agreement is to foster employment opportunities for City residents. To that end, Rivian will use commercially reasonable efforts to recruit and hire City residents for any employment opportunities as determined by Rivian in its sole discretion. The City shall be authorized to post and advertise any job recruitment information provided to the City on the City website and other jobs available and job recruitment sites within the region. Any offers of employment will be at Rivian's sole discretion. Nothing in the Agreement will require Rivian to offer employment to individuals who are not otherwise qualified for such employment.
(a) A description and total value of any state or federal subsidies in the process of being applied for, or received by, the Last Mile Hub.
None.
(b) A description of any accountability measures, including, but not limited to, claw backs of subsidies, provided in the Agreement if the Last Mile Hub does not meet the goals outlined in the Agreement for an economic development incentive subsidy.
If Rivian does not meet any of the Covenants required by the Agreement, the City may terminate its obligations with respect to Agreement Payments without cost, expense or liability, after providing Rivian an opportunity to cure. Rivian’s contractual covenants include an operating and use covenant for the new Last Mile Hub, a required designation of City as point of sale for the Last Mile Hub, economic subsidy reporting obligations, and obligations against solicitation or acceptance of financial assistance, as defined. Rivian also covenants the Last Mile Hub shall not be used for any purpose outside of that set forth in the Agreement as the Last Mile Hub.
7. Terms Used in This Notice.
As used in this notice, the following terms have the following meanings:
(a) "Agreement Payment" means the consideration to be paid to Rivian in exchange for the Covenants and Rivian's performance of its obligations as set forth in the Agreement, and subject to satisfaction of all conditions precedent thereto.
Attachment C: Economic Development Subsidy Report
ECONOMIC DEVELOPMENT SUBSIDY REPORT
PURSUANT TO GOVERNMENT CODE SECTION 53083
FOR AN ECONOMIC INCENTIVE AGREEMENT BY AND BETWEEN
THE CITY OF MILPITAS
AND
RIVIAN, LLC
CITY OF MILPITAS AND RIVIAN LLC
ECONOMIC DEVELOPMENT SUBSIDY REPORT PAGE 6 | 6
(b) "Computation Quarter" means each three-month period within the Agreement Term beginning on the first day of each Fiscal Quarter and ending on the last day of such Fiscal Quarter.
(c) "Covenants" means those covenants described in the Agreement. (d) "Economic development subsidy” means any expenditure of public funds or loss of revenue to a local agency in the amount of one hundred thousand dollars ($100,000) or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, including, but not limited to, bonds, grants, loans, loan guarantees, enterprise zone or empowerment zone incentives, fee waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax credits. “Economic development subsidy” shall not include expenditures of public funds by, or loss of revenue to, the local agency for the purpose of providing housing affordable to persons and families of low or moderate income, as defined in Section 50093 of the Health and Safety Code.
(e) Eligibility Period" means the period commencing as of the first (1st) day of Computation Quarter 1 and ending the last day of the final Computation Quarter contemplated by the lease of the Last Mile Hub, but not less than Computation Quarter 32.
(f) "Fiscal Quarter" means one three-month period, or portion thereof, within the Agreement Term and commencing on January 1, April 1, July 1, or August 1, and ending on, as applicable, the immediately following March 31, June 30, September 30, or December 31.
(g) “Local agency” means a city, including a charter city, county, or city and county.