Attachment BAttachment B
Attachment B
Attachment B
ECONOMIC DEVELOPMENT SUBSIDYANNUAL REPORT 2021ECONOMIC DEVELOPMENT SUBSIDYANNUAL REPORT 2021
ECONOMIC DEVELOPMENT SUBSIDY
ANNUAL REPORT 2021
ECONOMIC DEVELOPMENT SUBSIDY
ANNUAL REPORT 2021
APRIL 2022
CITY OF STOCKTON
COMMUNITY DEVELOPMENT DEPARTMENT
ECONOMIC DEVELOPMENT DEPARTMENT
2021 ECONOMIC DEVELOPMENT SUBSIDIES ANNUAL REPORT
Effective January 1, 2014, Assembly Bill 562 (Williams) added section 53083 to the Government Code, which requires local agencies to annually report subsidies for economic development purposes. Government Code §53083 requires the report to include a description of each business entity that is a beneficiary of a subsidy, description of each program and total amount of the expenditure of public funds or of revenue lost as a result of the subsidy, statement of public purpose of the subsidy, net tax revenue as a result of the subsidy, and estimated number of jobs created by the subsidy. “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.
QUALIFYING CITY PROGRAMS
City Programs that provide “economic development subsidies” as defined by Assembly Bill 562 include:
Stockton Economic Stimulus Plan (SESP)
Public Facility Fee (PFF) Reduction for Non-residential Projects Greater Downtown Stockton Residential Development Public Facilities Exemption Downtown Infill Infrastructure Program
Storefront Beautification Microgrant Program
Stocked Full of Produce Grant Program
Industrial Development Bonds (IDBs)
Lien Forgiveness Program (Commercial)
Commercial Emergency Grant Program
Commercial Façade Improvement Forgivable Loan Program
Office and Industrial Sales Tax Incentive Program
Small Business Relief Grant Program
Downtown Financial Incentive Program (DFIP)
STOCKTON ECONOMIC STIMULUS PLAN (SESP)
The SESP program provides a Public Facility Fees (PFF) fee reduction for qualifying single-family residential, multi-family residential, commercial, and industrial projects in Stockton.
PFF reduction amounts to the categories above are as follows:
Up to a total of $19,997 or 100% (whichever is less) for single-family residential. $14,080 per unit for multi-family residential.
50% reduction for commercial and industrial.
Fee reductions are applied to the following PFF fee categories:
PFF Category
Residential
Commercial / Industrial
City Office Space
Libraries
Fire Stations
Parkland
Community
Recreation Centers
Police Stations
Street Improvements
The Fee Reduction applies to Single-family residential, multi-family residential, and non-residential (commercial/industrial) permits issued citywide for builders/developers who comply with terms of the program.
To participate in the single-family residential component of SESP, a developer must comply with the local hire and disadvantaged individual requirements. Only units within the existing City Limits as described in 2008 General Plan Settlement Agreement are eligible to meet the local hire requirement of the program. The commercial/industrial component, formerly the Public Facilities Fee Reduction Program (established in 2010), was folded in to the SESP program in 2015; reporting of local hiring is not a requirement.
The SESP program will remain in place until the City conducts a nexus study for the Public Facility Fees (Development Impact Fee) program and adopts new fees.
SESP Single-family Fee Waiver Recipients
2021
KB Home
4830 Business Center Dr, Suite 150
Fairfield, CA 94534
$2,919,759
D.R. Horton CA2 Inc
2260 Douglas Blvd, Suite 110
Roseville, CA 95661
$1,809,124
Lennar Homes of California
15131 Alton Pkwy #345
Irvine, CA 92618
$1,419,505
K. Hovnanian California Operations Inc
3721 Douglas Blvd., Suite 130
Roseville, CA 95661
$1,097,022
LGI Homes-California LLC
2251 Douglas Blvd, Suite 100
Roseville, CA 95661
$1,000,792
Caresco Builders Corp
3350 Deer Park Dr, Suite C
Stockton, CA 95219
$533,722
Richmond American Homes
One Harbor Center
Suisun, CA 94585
$481,150
Affordable Luxury Homes
5711 N El Dorado St
Stockton, CA 95207
$384,779
Medina & Associates
5830 E Ashley Ln
Stockton, CA 95212
$153,968
NEWFH, Inc
1701 W. March Ln
Stockton, CA 95207
$134,722
Fees waived under $100k
$789,086
Total Single-family
$10,723,629
SESP Multi-family Fee Waiver Recipient
2021
DESCOR INC
3164 GOLD CAMP DRIVE STE 250
RANCHO CORDOVA, CA 95670
$2,365,440
TOTAL Multi-family
$2,365,440
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – 3,063 (1,595 Stockton residents)
PUBLIC FACILITY FEE (PFF) REDUCTION FOR NON-RESIDENTIAL PROJECTS In September 2010, the City Council adopted resolution #10-0308 which authorized the reduction of fees for residential and non-residential projects. The program was extended and evolved with adoption and extension of the SESP program in 2019. The PFF Reduction to Non-Residential Projects program will remain in place until the City conducts a nexus study for the Public Facility Fees (Development Impact Fee) program and adopts new fees.
Non-residential projects located anywhere in the City receive a 50% reduction for PFF components for the following PFF categories:
City Office Space
Libraries
Fire Stations
Police Stations
Street Improvements
Recipients
Amount
CRP/PDC TIDEWATER OWNER LLC
3400 E EIGHT MILE RD STE A
STOCKTON, CA 95212
$1,871,626
GILL HOSPITALITY, LLC, & SETHI HOLDINGS, LP
8657 RANCH RD
TRACY, CA 95304
$538,164
I&T PROPERTIES LLC & SETHI GAURAV ETA
8657 RANCH RD
TRACY, CA 95304
$538,164
DPML ARCH ROAD LLC
5500 EQUITY AVE
RENO, NV 89502
$432,012
BUZZ OATES CONSTRUCTION INC, 5
55 CAPITOL MALL STE 900
SACRAMENTO, CA 95814
$238,857
Fees WAIVED Under $100K
$475,732
TOTAL
$4,094,555
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – Not applicable.
GREATER DOWNTOWN STOCKTON RESIDENTIAL DEVELOPMENT PUBLIC FACILITIES EXEMPTION The Greater Downtown Stockton Residential Development Public Facilities Fees Exemption Program provides fee exemptions for qualifying residential developments within the greater downtown area to encourage housing production. The PFF Exemption Program will remain in place until the City conducts a nexus study for the Public Facility Fees (Development Impact Fee) program and adopts new fees. Eligible development projects will receive an exemption for the following Public Facilities Fees (PFF) categories:
City Office Space
Libraries
Fire Stations
Parkland
Community Recreation Centers
Police Stations
Street Improvements
Recipient
2021
OTT CONSTRUCTION for
KCL WORLDWIDE PROPERTIES LLC
$118,890
TOTAL
$118,890
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – Not applicable.
DOWNTOWN INFILL INFRASTRUCTURE PROGRAM
The Downtown Infill Infrastructure Program provides a financial incentive to eligible parties interested in developing new market-rate residential, commercial, or mixed-use projects in Downtown Stockton. In Stockton’s downtown area, aging infrastructure, such as sewer and water lines, as well as the rehabilitation of older structures can significantly increase project costs and serve as barriers to infill development.
Under the Downtown Infill Infrastructure Program, eligible development projects may receive a reimbursement for certain public infrastructure improvements. Examples of eligible public infrastructure improvements include sewer and water; storm drain; street improvements, including crosswalks, bike lanes, striping, and medians; traffic signals; streetlights; and landscaping.
To qualify for the program, the developer must meet these criteria:
Develop a minimum of 35 new market-rate residential units and/or develop a minimum of 30,000 square feet of new, or newly renovated retail or commercial space.
Be located within the program boundary, which includes Center Street to the west, Park Street to the north, ACE Rail/Union Pacific Railroad to the east, and Washington Street to the south.
Make a capital investment of at least $500,000.
Eligible public infrastructure improvements must equal $100,000 or more.
Applicants must submit a request for funding to the Economic Development Department for review and consideration. If deemed eligible under the program guidelines, a Reimbursement Agreement requiring Council approval will be executed between the City and applicant. The City will reimburse the applicant within six (6) months of completion of the public improvements included within the reimbursement agreement of up to $900,000 annually. The program was approved by Council on July 7, 2015 and is scheduled to sunset in July 2025.
During 2021, no applicants received an economic development subsidy under the Downtown Infill Program.
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – Not applicable.
STOREFRONT BEAUTIFICATION MICROGRANT PROGRAM
In 2018, the City Council adopted a micro grant program to provide Community Development Block Grant (CDBG) funds for minor storefront improvements for businesses located within specific commercial corridors within Stockton city limits. The program offers commercial property owners and/or business owners up to $2,000 for the replacement and/or improvements of windows, signs, paint, awnings, lighting, planters, and trellises in order to transform commercial corridors into neighborhood destinations. There is no expiration date for this program.
During 2021, no applicants received economic development subsidies under the Storefront Beautification Microgrant Program.
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – Not applicable.
STOCKED FULL OF PRODUCE GRANT PROGRAM
In 2018, the City implemented the Stocked Full of Produce Grant Program that provides Community Development Block Grant (CDBG) funds for corner and convenience stores to make necessary improvements to sell fresh, healthy food options. The program offers store owners, located within designated food deserts, up to $10,000 to purchase equipment or make infrastructure improvements to support the sale and storage of healthy food options. Eligible improvements include items such as the installation of cold storage refrigeration, electrical or other infrastructure improvements to accommodate such cold storage, shelving or other food storage, and cosmetic improvements to the structure to improve overall store layout which increases the visibility of healthier food options thereby encouraging customer purchases. There is no expiration date for this program.
During 2021, no applicant received an economic development subsidy under the Stocked Full of Produce Grant Program.
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – Not applicable.
INDUSTRIAL DEVELOPMENT BONDS (IDBs)
Small- and medium-sized manufacturers may benefit from Industrial Development Bonds, a low-cost source of financing. (Bond financing can be as low as 75% of prime.) The City may discount the packaging fee by 50%, resulting in substantial up-front savings. The City did not issue any Industrial Development bonds in 2021. Applications are accepted on a rolling basis and there is no end date to the program.
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – Not applicable.
LIEN FORGIVENESS PROGRAM (COMMERCIAL)
The Lien Forgiveness Program alleviates the burden of code enforcement liens on certain properties to allow for successful rehabilitation. The program permits forgiveness for certain liens imposed by the City for the public purpose of facilitating substantial investment, improvements, and blight abatement to eligible properties.
To be considered for the program, the property must meet all the following:
Commercial property.
Liens must exceed $5,000.
Applicant must provide a letter verifying financial need.
Improvements to the property must further the objectives of the Economic Development Strategic Plan, Urban Land Institute Report, Council goals, or other related City plans, as well as bring the property into compliance.
Applicant must demonstrate that the proposed improvements will have a significant effect on the neighborhood and encourage additional investment.
Applicant must demonstrate the ability to undertake and complete the proposed improvements.
Applicant cannot be the party responsible for causing, maintaining, or allowing the violations, fines, fees, or liens at the subject property.
Liens will only be forgiven if the improvements are completed upon City inspection and the property is maintained. If the subject property maintains compliance during the term of the five-year agreement, the applicant may request the City remove the applicable lien(s) from the property.
This program was approved by Council on November 4, 2008, and there is no set date for expiration of the program. During 2021, no applicant received this economic development subsidy under the Lien Forgiveness Program.
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – Not applicable.
COMMERCIAL EMERGENCY GRANT PROGRAM
The Commercial Emergency Grant Program provides grant funding for commercial property owners or business owners for immediate relief of emergency conditions. The program grants up to $7,500 to property owners or business owners for the purpose of repairing code violations, where the health and safety of employees or the general public are in jeopardy, and for which private funds are not readily available. To be eligible, the business must be located within City limits and the applicant must demonstrate a financial need.
This program was approved by Council on December 8, 1986, and there is no set date for expiration of the program. During 2021, no applicant received $100,000 or more of his economic development subsidy. The total subsidies funded by the Commercial Emergency Grant Program are as follows:
Recipient
2021
Arunee Phongphanchuen
$7,000
TOTAL
$7,000
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – Not applicable.
COMMERCIAL FAÇADE IMPROVEMENT FORGIVABLE LOAN PROGRAM
The Commercial Façade Improvement Forgivable Loan Program provides funding for exterior commercial improvement projects in Stockton. The program offers up to $20,000 per 50 linear feet of building street frontage, with a maximum of $100,000, to commercial property owners to enhance the exterior façade of commercial, nonresidential properties (including nonprofit facilities), for the purpose of reducing blight and stimulating economic development.
The program requires property owners to work with a licensed architect and ensure that the proposed improvements adhere to the City’s Design Guidelines. The loan amount requires a matching component from the property owner. Funds are granted in the form of a loan with a lien placed on the property during the term of the six-year loan. The loan is forgiven, and the lien is removed if the property is kept free of graffiti and blight.
This program was approved by Council on December 8, 1986. During 2021, no applicant received $100,000 or more of his economic development subsidy. The total amount of subsidies funded by the Commercial Façade Improvement Forgivable Loan Program are as follows:
Recipients
2021
Ruhl Building
$37,900
Star Property
$43,577
TOTAL
$81,477
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – Not applicable.
OFFICE AND INDUSTRIAL SALES TAX INCENTIVE PROGRAM
The Office and Industrial Sales Tax Incentive Program provided an annual sales tax rebate to new or expanding office and industrial businesses located within Stockton city limits. Examples of the types of office and industrial businesses that would have been eligible under the program include eCommerce businesses, fuel distributors, high-tech equipment manufacturers or software developers, medical device manufacturers, and business-to-business sales. To qualify for the program, the business must have met the following criteria:
Generate net new annual gross taxable sales of $25 million of more.
Generate sales tax to the City corresponding with the gross sales tax amount.
Create a minimum of ten full-time equivalent jobs.
Make a capital investment of $50,000 or more.
The sales tax rebate is based on the annual net new sales tax revenue received by the City and is restricted to the Bradley-Burns tax. The rebate amount is based on the following tiers:
Net New Sales Tax Revenue
% of Sales Tax Revenue Rebated to the Business
% of Sales Tax Revenue Retained by the City
Less than $250,000
0%
100%
$250,000 - $500,000
50%
50%
More than $500,000
65%
35%
Qualifying businesses must have executed an agreement with the City, which required Council approval. The term of the agreement is 10 years, with options to extend for up to an additional 10 years.
This program was approved by Council on June 24, 2014, and sunset in June 2019 for new applications. During 2021, four companies continued to receive subsidies under prior agreements. The 2021 subsidies for each company are as follows:
Recipients
2021
Valley Pacific Petroleum
152 Frank W Cir, Ste 100
Stockton, CA 95206
$1,597,194
Diesel Direct West
3861 Duck Creek Dr
Stockton, CA 95215
$1,467,252
Retail Development West (Bed Bath and Beyond)
650 Liberty Av
Union, NJ 07083
$167,520
Bed Bath and Beyond BBBYCF, LLC
3610 S. Airport Way
Stockton, CA 95206
$2,008,066
TOTAL
$5,240,032
During 2021, the City rebated more than $5,240,032 in net new sales tax revenue as a result of the Office and Industrial Sales Tax Incentive Program. A minimum of 40 full-time equivalent new jobs were created as a result of this program.
SMALL BUSINESS RELIEF GRANTS
The Small Business Relief Grant program’s goal is intended to advance economic development in the City of Stockton with grant funds for local small businesses for the stabilization and expansion of Stockton’s economic base affected by COVID-19. This program was created as a response to the Covid-19 pandemic and included funding from a source that has been augmented as funding has become available. The program expired in 2021. No participant received $100,000 or more of this economic development subsidy. This program helped to retain 563 part-time jobs and 706 full-time jobs.
Funding Source
Amount
Grant Awards
CDBG-CV
$843,000
281
TOTAL
$843,000
281
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – Not applicable.
Downtown Financial Incentive Program (DFIP)
The Downtown Financial Incentive Program (DFIP) encourages the economic reuse of structures within Downtown Stockton that have been vacant for a period of six months or longer. The City of Stockton will grant to the owner of eligible structures a sum equal to certain City imposed fees required to be paid in order to secure a building permit for tenant improvements with the purpose of eliminating blight and/or blighting influences. Residential or commercial structures located within the Downtown Stockton Property Based Improvement District (a/k/a Downtown Stockton Alliance) that have been vacant for six months or more are eligible to apply.
This program was approved by Council on December 14, 1999 and there is no set date for expiration of the program. During 2021, no applicant received $100,000 or more of this economic development subsidy.
Recipients
2021
CalMain
$94,242
TOTAL
$94,242
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – Not applicable.
SUMMARY
City Programs that provided “economic development subsidies” in 2021:
Program
Eligible Subsidies
Non-Eligible Subsidies
1. Stockton Economic Stimulus Plan (SESP)
$9,934,543
(Single-family)
$2,365,440
(Multi-family)
$789,086
2. Public Facility Fee (PFF) Reduction for Non-residential Projects $3,618,823
$475,732
3. Greater Downtown Stockton Residential Development Public Facilities Exemption $118,890
-
4. Downtown Infill Infrastructure Program
-
-
5. Storefront Beautification Microgrant Program
-
-
6. Stocked Full of Produce Grant Program
-
-
7. Industrial Development Bonds (IDBs)
-
-
8. Lien Forgiveness Program (Commercial)
-
-
9. Commercial Emergency Grant Program [CDBG]
-
$7,000
10. Commercial Façade Improvement Forgivable Loan Program [CDBG] -
$81,477
11. Office and Industrial Sales Tax Incentive Program
$5,240,032
-
12. Small Business Relief Grant Program [CDBG-CV]
-
$843,000
13. Downtown Financial Incentive Program (DFIP)
-
$94,242
$23,568,242 TOTAL
$21,277,705
$2,290,537
1 Attachment B
Attachment B