APRIL 2023
CITY OF STOCKTON
COMMUNITY DEVELOPMENT DEPARTMENT
ECONOMIC DEVELOPMENT DEPARTMENT
ECONOMIC
DEVELOPMENT
SUBSIDY
ANNUAL REPORT
2022
Attachment B
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Table of Contents
2022 ECONOMIC DEVELOPMENT SUBSIDY ANNUAL REPORT ....................................... 3 QUALIFYING CITY PROGRAMS .................................................................................. 3 STOCKTON ECONOMIC STIMULUS PLAN (SESP) .................................................................................................3 PUBLIC FACILITY FEE (PFF) REDUCTION FOR NON-RESIDENTIAL PROJECTS .......................................................5 GREATER DOWNTOWN STOCKTON RESIDENTIAL DEVELOPMENT PUBLIC FACILITIES EXEMPTION .................7 DOWNTOWN INFILL INFRASTRUCTURE PROGRAM ...........................................................................................7 OFFICE AND INDUSTRIAL SALES TAX INCENTIVE PROGRAM ..............................................................................8 SUMMARY ............................................................................................................... 9
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2022 ECONOMIC DEVELOPMENT SUBSIDY ANNUAL REPORT
The purpose of the Economic Development Subsidy Report is to fulfill the annual reporting requirements as outlined in California Assembly Bill 562. Effective January 1, 2014 , Assembly Bill 562 (Williams) , chapter 740, 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 identifiable information (name & address) of each business enti ty 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.
An “economic development subsidy” is defined as 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. Furthermore, “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.
This report will provide the necessary information for the qualifying programs to remain in compliance with Assembly Bill 562.
QUALIFYING CITY PROGRAMS
City Programs that provide “economic development subsidies” as defined by Assembly Bill 562 include:
1. Stockton Economic Stimulus Plan (SESP)
2. Public Facility Fee (PFF) Reduction for Non-residential Projects
3. Greater Downtown Stockton Residential Development Public Facilities Exemption
4. Downtown Infill Infrastructure Program
5. Office and Industrial Sales Tax Incentive Program
STOCKTON ECONOMIC STIMULUS PLAN (SESP)
In November of 2015, City Council adopted Resolution 2015- 11-17-1602 – Stockton Economic Stimulus Program (SESP) superseding existing PFF reduction programs for residential and non-residential projects.
The program launched in January 2016 to reduce eligible PFFs on qualifying single -family residential, multi-family residential, commercial, and industrial projects in the C ity of Stockton. In July 2018, City Council passed Resolution 2018-07-17-1302 to extend SESP for residential & non-residential projects and increase developer permit limitations in non-disadvantage areas.
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SESP eliminates/waives the following PFF categories:
PFF Category Residential Commercial / Industrial
City Office Space
Libraries
Fire Stations
Parkland
Community Recreation Centers
Police Stations
Street Improvements
City Office Space, Community Recreation Centers, Libraries, Police Stations, Fire Stations, Street Improvements, and Parks are reduced to a total of $19,997 or 100%, whichever is less, for single-family residential, $14,080 per unit for multi-family residential, and 50% reduction for commercial & industrial projects.
For single -family residential, multi- family residential, and non -residential (commercial/industrial) permits issued citywide for builders/developers must comply with the terms of the program.
Participation in the single-family residential component of SESP requires a developer to comply with the local hire and disadvantaged individual requirements. Participants must agree to the program conditions to receive the incentives of the program for residential development. Additionally, only units within the existing City limits as described in the 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 incorporated into the SESP program in 2015; reporting of local hiring is not a requirement.
The SESP program will remain in place until t he City conducts a nexus study for the Public Facility Fees (Development Impact Fee) program and adopts new fees per motion 2019-08-20-1405.
3%2%2%
7%
22%
11%18%
15%
14%
1%
4%
SESP - Single-family Fees Waived 2022
Affordable Luxury Homes - 3%
D.R. HORTON CA2 INC - 2%
Florsheim Homes - 2%
K. Hovnanian California Operations Inc - 7%
KB Homes - 22%
Lennar Homes of California - 11%
LGI Homes-California LLC - 18%
Meritage Homes California - 15%
Richmond American Homes - 14%
Trinity Development & Construction - 1%
Fees Waived < $100k - 4%
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Reciepient that received $100,000 or greater:
SESP Single-family Fee Waiver Recipients 2022
AFFORDABLE LUXURY HOMES
5711 N. EL DORADO ST.
STOCKTON, CA 95207
$230,952
D.R. HORTON
2260 DOUGLAS BLVD., STE 110
ROSEVILLE, CA 95661
$211,706
FLORSHEIM HOMES
1701 W. MARCH LN., STE D
STOCKTON, CA 95207
$192,460
K. HOVNANIAN CALIFORNIA OPERATIONS INC.
3721 DOUGLAS BLVD., STE 130
ROSEVILLE, CA 95661
$635,118
KB HOMES
4830 BUSINESS CENTER DR., STE 150
FAIRFIELD, CA 94535
$1,924,600
LENNAR HOMES OF CALIFORNIA INC.
15131 ALTON PKWY #345
IRVINE, CA 92618
$923,808
LGI HOMES-CALIFORNIA LLC
2251 DOUGLAS BLVD., STE 110
ROSEVILLE, CA 95661
$1,592,252
MERITAGE HOMES OF CALIFORNIA INC.
860 STILLWATER RD., STE 200A
WEST SACRAMENTO, CA 95605
$1,270,236
RICHMOND AMERICAN HOMES
1 HARBOR CENTER, STE 100
SUISUN CITY, CA 94585
$1,250,990
TRINITY DEVELOPMENT & CONSTRUCTION INC.
119 E WEBER AVE
STOCKTON, CA 95202
$115,476
Total Single-family $8,347,598
Multi-family SESP participants did not exceed the $100,000 threshold, therefore no reporting is required per AB 562.
Net Tax Revenue Accrued as a Result of Subsidy – Not applicable.
Number of Jobs Created by Subsidy – 4,880 (2,590 Stockton Residents)
PUBLIC FACILITY FEE (PFF) REDUCTION FOR NON-RESIDENTIAL PROJECTS On September 14, 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.
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For non -residential new development, the following Public Facilities Fees shall be reduced by fifty percent (50%) citywide. The following fee categories apply:
• City Office Space
• Community Recreation Centers
• Libraries
• Fire Stations
• Police Stations
• Street Improvements
Recipients that received $100,000 or greater:
Recipients Amount
2222 SINCLAIR OWNER LP
19700 S VERMONT AVENUE, STE 101
TORRANCE, CA 90502
$533,920.38
ASPIRE PUBLIC SCHOOLS
1001 22ND AVENUE, STE 100
OAKLAND, CA 94606
$179,929.59
BARANOF HOLDINGS LAND DEVELOPMENT
2850 N. HARWOOD STREET, STE 1000
DALLAS, TX 75201
$121,996.78
BUZZ OATES CONSTRUCTION, INC.
555 CAPITOL MALL, STE 900
SACRAMENTO, CA 95814
$140,742.72
DPML ARCH RD. LLC
5500 EQUITY AVENUE
RENO, NV 89502
$308,851.54
DPML MARIPOSA ROAD LLC
5500 EQUITY AVENUE
RENO, NV 89502
$563,811.64
FIRST INDUSTRIAL LP $620,563.99
13%
4%
3%
4%
8%
14%
15%
20%
9%
3% 6%
Non-Residential Public Facility Fee
Reduction
2222 Sinclair Owner LP - 13%
Aspire Public School - 4%
Baranof Holding Land Development - 3%
Buzz Oates Construction, Inc. - 4%
DPML Arch R. LLC - 8%
DPML Arch R. LLC - 14%
First Industrial LP - 15%
MC Shane Construction Company LLC - 20%
Niagara Bottling, LLC - 9%
SAFStor Turnpike, LLC - 3%
Fees Waived < $100k - 6%
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ONE N. WACKER DRIVE, STE 4200
CHICAGO, IL 60606
MC SHANE CONSTRUCTION COMPANY LLC
9500 W BRYAN MAWR AVENUE, STE 200
ROSEMONT, IL 60018
$804,965.26
NIAGARA BOTTLING, LLC
1440 BRIDGEGATE DRIVE
DIAMOND BAR, CA 91765
$371,834.38
SAFSTOR TURNPIKE, LLC
444 SEABREEZE BL, STE 840
DAYTONA BEACH, FL 32118
$125,364.80
TOTAL $3,771,981.08
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 (Dev elopment 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
There were no eligible subsidies to report in 2022.
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.
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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:
1. 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.
2. 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.
3. Make a capital investment of at least $500,000.
4. 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 2022, 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.
OFFICE AND INDUSTRIAL SALES TAX INCENTIVE PROGRAM
The Office and Industrial Sales Tax Incentive Program provide s 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, fu el 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:
1. Generate net new annual gross taxable sales of $25 million or more.
2. Generate sales tax to the City corresponding with the gross sales tax amount.
3. Create a minimum of ten full-time equivalent jobs.
4. 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:
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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 2022, four companies continued to receive subsidies under prior agreements. The 2022 subsidies for each company are as follows:
Recipients 2022
VALLEY PACIFIC PETROLEUM
152 FRANK W CIR, STE 100
STOCKTON, CA 95206
$1,627,973
DIESEL DIRECT WEST
3861 DUCK CREEK DR
STOCKTON, CA 95215
$1,278,237
BED BATH AND BEYOND
BBBYCF, LLC
3610 S. AIRPORT WAY
STOCKTON, CA 95206
$1,139,705.22
TOTAL $4,045,915.22
During 2022, the City rebated more than $4,045,915.22 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.
SUMMARY
City Programs that provided “economic development subsidies” in 2022 are as follows:
Program Eligible Subsidies
1. Stockton Economic Stimulus Plan (SESP) $8,347,598
(Single-family)
2. Public Facility Fee (PFF) Reduction for Non-residential Projects
$3,771,981
3. Greater Downtown Stockton Residential Development Public Facilities Exemption
-
4. Downtown Infill Infrastructure Program -
5. Office and Industrial Sales Tax Incentive Program $4,045,915 TOTAL $16,165,494