Loading...
HomeMy WebLinkAbout2013/05/07 Item 09CITY COUNCIL AGENDA STATEMENT ,~ , ~~-r~ "" ~ "~"CHUTAVISTA MAY 7, 2013, Item ITEM TITLE: RESOLUTION OF THE COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE APPLICATION TO THE STATE OF CALIFORNIA DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT TO UPDATE THE TARGETED EMPLOYMENT AREA FOR THE SAN DIEGO REGIONAL ENTERPRISE ZONE RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE EXPANSION OF THE BOUNDARY OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE AND AUTHORIZING THE CITY MANAGER TO SIGN AND SUBMIT ALL REQUIRED DOCUMENTS TO THE STATE HOUSING AND COMMUNITY DEVELOPMENT DEPARTMENT SUBMITTED BY: ECONOMIC DEVELOP ENT DIRECTOR REVIEWED BY: CITY MANAGER 4/STAS VOTE: YES ~ NO ~X SUMMARY State regulations now require that Enterprise Zones annually update established Target Employment Areas (TEA). This year's update is the first since the 2010 census and it will expand the Chula Vista portion of the TEA by four census tracks or approximately 3,800 households. That expands the application of the employment tax credit to employment eligible members of those households, and it expands the incentive for businesses within the Enterprise Zone to employ them. Once an Enterprise Zone (EZ) has been granted final approval, it is eligible to expand its boundary by 15% of the original Zone. The Council has previously authorized staff to expand the boundary by up to 700 acres. This action will allow the City to submit to HCD for expansion of up to 337 acres for the City and 1,654 acres for the SDREZ. 9-1 MAY 7, 2013, Item ~ Page 2 of 6 ENVIRONMENTAL REVIEW Resolution No. 2006-248 adopted by City Council in August 2006, states that the City's Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act and has determined that the proposed action was adequately covered in the previously adopted Final General Plan Update EIR. Thus, no further environmental review or documentation was necessary from Chula Vista. In March 2009 Council accepted the certified EIR for the San Diego Regional Enterprise zone (SDREZ), as required by the State of California Housing and Community Development Department (HCD) for final EZ designation. RECOMMENDATION Council adopt the resolutions. BOARDS/COMMISSION RECOMMENDATION N/A DISCUSSION State law currently authorizes forty-two Enterprise Zone (EZ) designations in California with two stated legislative purposes for the Program: 1) To "stimulate business and industrial growth in the depressed areas of the State"; and 2) To establish a program "to help attract business and industry to the state, to help retain and expand existing state business and industry, and to create increased job opportunities for all Californians." Essentially, EZs are competitively designated based upon distress criteria (primazily poverty and unemployment levels) and the local government's capacity to carry out an economic development program and provide additional local incentives. EZs aze designated for 15 years. The San Diego Regional Enterprise Zone (SDREZ), a collaborative designation with the cities of Chula Vista, National City and San Diego (Partnership), was approved by the State Housing and Community Development Department (HCD) effective October 15, 2006. The City of San Diego is the lead agency and administrator of the SDREZ and the Port of San Diego is a participating member of the SDREZ Partnership. A "Targeted Employment Area" (TEA) is an area within a city, county, or city and county that is composed solely of those census tracts that have at least 51 percent of its residents of low- or moderate-income levels. The purpose of the TEA is to encourage EZ businesses to hire eligible residents from these geographic areas. To establish a TEA, an enterprise zone must submit an application for TEA designation to HCD. The application must clearly identify the census tracts that will constitute the proposed TEA and demonstrate that they meet the eligibility criteria. In addition, the application must include certain specified documentation, such as resolutions and a map of the TEA boundazies. The Government Code also requires updates to the TEA within 180 days of updated United States census data becoming available, each local governmental entity that has jurisdiction of an enterprise zone shall approve, by resolution or ordinance, the boundazies of its targeted employment area reflecting the new census data. 9-2 MAY 7, 2013, Item Page 3 of 6 Businesses located within the SDREZ may receive individual or corporate state tax incentives/credits to reduce a company's state tax liability on a dollar per dollar basis. Any unused tax credits may be carried forward to reduce future tax year's liabilities. Exhibit "C" (SDREZ Fact Sheet) provides a brief description of the state tax benefits available to SDREZ businesses. The EZ program has made a significant impact on the local economy. The SDREZ program is a fifteen (15) year designation and offers tremendous business incentives and helps the region retain employers and attract new ones. In Calendar Year 2012, local Chula Vista businesses, utilizing the Hiring Tax Credit, hired over 1,400 employees. These tax credits represent over $22 million in savings available to local businesses. Chula Vista staff and its partner agencies will continue to conduct outreach efforts to inform businesses and potential employees of EZ program benefits. Over the past two years staff has promoted the EZ program door-to-door with each eligible business, emailed information to every business in the EZ and conducted symposiums for CPA's and other consultants to help promote the EZ benefits. Local business associations including South County Economic Development Council and the Chamber of Commerce have assisted with the door-to-door effort and have distributed the information to their members and prospects year-round. Staff has also distributed press releases, feature stories and met with, emailed and/or telephoned every major commercial property manager, commercial real estate broker and business operator more than once each of the past two years. Staff has also increased efforts to reach out to employment agencies, employment centers, Human Resource professionals and individuals that are under employed or unemployed. The Chula Vista EZ had its largest increase in approved employment vouchers and participating businesses last year. Chula Vista staff and its partner agencies will continue to conduct outreach efforts to inform businesses and potential employees of EZ program benefits. Targeted Employment Areas As required by the Government Code, each local governmental entity that has a jurisdiction in the enterprise zone may elect to establish a TEA. In order to establish a TEA, the jurisdictions must approve, by resolution or ordinance, the boundaries of the TEA. A TEA may be, but is not required to be, the same as all or part of an enterprise zone. In addition, its boundaries need not be contiguous nor encompass each eligible TEA census tract within the jurisdiction. Only those census tracts within the jurisdictions of the entities participating in the enterprise zone may be included in a TEA. This restriction precludes census tracts from jurisdictions that are not a party to the enterprise zone from inclusion in the TEA. HCD approved the current TEA using 2000 census data in April 2012 retroactively to October 15, 2006, the effective date of the SDREZ. The census tracts incorporating the SDREZ do not have a high unemployment rate; however, these census tracts do have a high concentration of extremely low to moderate income level population (Attachment 9-3 MAY 7, 2013, Item_~ Page 4 of 6 A). Establishing a new TEA for the SDREZ will encourage SDREZ businesses to hire residents living in the TEA (Attachment B). One of the goals of the SDREZ is to increase the income level of residents of the EZ by attracting and expanding industries in the SDREZ that historically pay higher wages, such as manufacturing and high technology. In the first five (5) years of the SDREZ designation, over 31,600 workers were hired by 920 EZ companies and 87% of the workers lived in the TEA. The average hourly rate for EZ eligible employees was approximately $11.30/hr. For Chula Vista, the proposed TEA map boundary includes four additional census tracts that are not in the current TEA boundary. The inclusion of these census tracts will allow an additional 3,800 households to qualify for the EZ Hiring It is anticipated that since updated census data will now be made available annually, TEA boundaries will be assessed on an annual basis to determine if census tracts meet TEA eligibility requirements and make modifications as needed. Enterprise Zone Expansion The State EZ Act (California Government Code sections 7070, et seq.) allows the expansion of the EZ by an aggregate amount not to exceed fifteen (15) percent of the geographic area within the boundaries of the EZ as originally designated by HCD at any time during the fifteen year designation after final EZ designation is awarded. Expansions are effective the date HCD approves the expansion request. The expansion must meet the EZ Act expansion requirements and comply with the economic strategies stated in the SDREZ application. The expansion capacity for the entire SDREZ is approximately 5,500 acres. Of this total, the City is eligible to expand its portion of the Zone by 1,037 acres. The City Council previously authorized staff to expand the zone by up to 700 acres. In September 2012, HCD approved the City's initial Round 1 Expansion request of 600 acres (Exhibit D). City staff is currently processing the necessary application documents to submit to HCD for an additional 100 acres of expansion (Exhibit E -Round 2 Expansion). Enterprise Zone law requires each jurisdiction in an Enterprise Zone to authorize the total expansion acreage of each of its members. The expansion request at this time shall not exceed 1,700 acres, of which the expansion for the City of San Diego will not exceed 1,654 acres and the Chula Vista expansion will not exceed 337 acres (Exhibit F Round 3 Expansion and Exhibit G Round 4 Expansion). This will be the final action required for the City Council in regards to the expansion of the EZ. In accordance with the EZ Act, the original EZ boundary was required to consist of contiguous properties. For expansion areas, a noncontiguous area may be acceptable if HCD finds that: a. The noncontiguous area is needed to implement the EZ's economic development strategy; and 9-4 MAY 7, 2013, Item_~ Page 5 of 6 b. The excluded areas between the proposed new boundaries would not, based on the EZ's economic development strategy, also benefit from the expansion. [See, California Government Code section 7074(e).] The Round 3 Expansion will include the remaining contiguous commercial acreage in western Chula Vista. In eastern Chula Vista, the expansion would include all the remaining existing office properties in the City and one existing shopping center (Exhibit F). The office properties in eastern Chula Vista are noncontiguous with the current EZ boundary. In addition to meeting the noncontiguous criteria stated above, the proposed expansion includes azeas that meet some or all of the following economic strategic priorities: 1) identified as "Employment Land" in the City's adopted 2006 General Plan; 2) are areas of the City's business districts that are underutilized or are experiencing high vacancy rates; and/or 3) meet stated strategic economic development goals and objectives for California HCD, Chula Vista and the SDREZ. Lastly, Round 4 Expansion (Exhibit G) will be the City's final expansion effort. These areas would include areas in and around the SeaWorld Aquatica property, the Millenia project and the Otay Ranch Town Center. These properties are undeveloped or underdeveloped. They have the long term ability to become major employment areas in the City and are identified as employment areas in the City's General Plan. In addition, certain yet to be identified commercial centers will be included for expansion. Because the City is limited on its amount of expansion acreage, not every commercial center in the City can be included in the EZ. The areas chosen for inclusion have the greatest ability to be redeveloped, employ significant numbers of employees and generate significant investment in the City. Both Rounds 3 and 4 will be submitted to the State HCD by the end of 2013, ensuring that the properties can fully utilize the EZ designation prior to its expiration in 2021. The timing and location of expansion. areas is subject to property owners and developers finalizing their parcel maps to target employment-lands that meet the state and local objectives. DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council members and has found that Councilmembers Bensoussan, Salas and Ramirez have property holdings within 500 feet of the boundaries of the proposed expanded Enterprise Zone. However, to the extent this decision may have a material effect on those economic interests, it will not impact those interests differently than it will those of the public generally. Accordingly, pursuant to California Code of Regulations Section 18707.1, the economic effect on the public officials is considered indistinguishable from that of the public generally; thus, no disqualifying conflict exists. CURRENT YEAR FISCAL IMPACT The City of San Diego administers the SDREZ on behalf of the Partnership. In addition, Chula Vista Economic Development staff expends time marketing and promoting the program to local businesses. The Partners share the administrative costs for San Diego's staff time required to administer the program, during this fiscal yeaz. The Operating 9-5 MAY 7, 2013, Item_~_ Page 6 of 6 MOU requires the City to pay annually its proportionate share of for the City of San Diego's administrative costs. Those costs include the EZ costs for processing employment voucher applications for Chula Vista. The Economic Development Division's Fiscal Year 2013 budget includes $48,500 from the General Fund for its proportional share of the costs for the current program year. ONGOING FISCAL IMPACT The operating agreement between the Partners requires re-examining the administrative costs of the program every five years. The continual improvement in the number of businesses utilizing the EZ program has resulted in increased revenue for the program. It is anticipated that the cost to the City to operate the program in FY14 may be reduced to approximately $25,000 from the General Fund. ATTACHMENTS A. TEA Census Tracts B. TEA Map C. SDREZ Fact Sheet D. Expansion Map -Round 1 E. Expansion Map -Round 2 F. Expansion Map -Round 3 G. Expansion Map -Round 4 Prepared by: Craig Ruiz, Principal Economic Development Specialist, Administration/Economic Development Department 9-6 RESOLUTION NO.2013- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE APPLICATION TO THE STATE OF CALIFORNIA DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT TO UPDATE THE TARGETED EMPLOYMENT AREA FOR THE SAN DIEGO REGIONAL ENTERPRISE ZONE. WHEREAS, the City Council adopted Resolution No 2006-248 authorizing submission of an application to the State of California Housing and Community Development Department [HCD] for a San Diego Regional Enterprise Zone [SDREZ] designation including the cities of Chula Vista, San Diego and National City [Partners], and directing the City Manager or his designee to execute the necessary documents and agreements related to the application process; and WHEREAS, HCD approved the Partners' application for the Enterprise Zone designation; effective October 15, 2006; and .WHEREAS, the Partners have an approved Targeted Employment Area [TEA] incorporating eligible low and moderate income 2000 Census Tracts within the cities of Chula Vista, San Diego and National City as designated areas approved by HCD to encourage Enterprise Zone businesses to hire TEA residents and therefore receive state tax credits on wages paid to these employees; and WHEREAS, the City Council of Chula Vista adopted Resolution No. 2010-024 authorizing the City Manager to submit an application to HCD establishing the aforementioned TEA; and WHEREAS, the California Enterprise Zone Act requires Enterprise Zone jurisdictions to update TEA boundazies as new United States census data is made available and to approve by resolution or ordinance said boundaries by its governing body; and WHEREAS, the Partners shall make application for a new TEA incorporating eligible low and moderate income Census Tracts based on the most recent census data available as set forth in the eligible Census Tract table and the map (Attachments A and B, respectively, to the accompanying Agenda Statement presented to the City Council), which is geographically consistent with the State TEA eligibility criteria so as to maximize job creation opportunities for SDREZ business that hire TEA residents so they can receive state tax credits on wages paid to these employees. NOW, THEREFORE BE IT RESOLVED, the City Council of the City of Chula Vista does hereby approve the Targeted Employment Area (TEA) and TEA Application Area 9-7 Boundaries, in the form presented in Attachments A and B, respectively, to the City Council Agenda Statement, and authorizes the City of San Diego, on behalf of the Partners, to submit the appropriate application to the State of California Department of Housing and Community Development establishing a new TEA for the SDREZ consistent with the information set forth in those Attachments. Presented by James D. Sandoval City Manager Approved as to form by R. Googins City Attorney 9-8 RESOLUTION NO. 2013 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE EXPANSION OF THE BOUNDARY OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE AND AUTHORIZING THE CITY MANAGER TO SIGN AND SUBMIT ALL REQUIRED DOCUMENTS TO THE STATE HOUSING AND COMMUNITY DEVELOPMENT DEPARTMENT WHEREAS, in 1986 and 1992 the City of San Diego received approval for two enterprise zone designations to offer business incentives to retain employers and attract new ones to the area; and WHEREAS, in 2000 and again in 2004, the South Bay Enterprise Zone was expanded to include properties along the San Diego Bayfront azeas of the cities of Chula Vista and National City, and the cities of Chula Vista and National City, in collaboration with the San Diego Unified Port District, provided funding to the City of San Diego to support the cost of managing the program and marketing the zone; and WHEREAS, the City Council adopted Resolution No. 2006-248, authorizing submission of an application to the California Department of Housing and Community Development [HCD] for a San Diego Regional Enterprise Zone [SDREZ] designation for the cities of San Diego, Chula Vista, and National City [SDREZ Partners], which is competitive and based on economic need (e.g., distressed communities, need for private investment, high unemployment, and low- income census tracts); and WHEREAS, in November 2006, the SDREZ Partners were notified tYtat it was awarded a conditional enterprise zone designation; and WHEREAS, as grantee of the SDREZ designation, the City of San Diego is the lead- agency responsibility for the administration, and environmental review, of the SDREZ; and WHEREAS, California Government Code Sections 7073 and 7074 allow for each California designated enterprise zone area to be expanded by an aggregate amount not to exceed fifteen (15) percent of the geographic area within the boundaries of the EZ as originally designated by HCD; and WHEREAS, the SDREZ, as originally designated by HCD encompassed an area of 34,380 acres; and WHEREAS, the SDREZ could be expanded by an amount not to exceed 5,517 acres; and 9-9 Resolution No. Page 2 WHEREAS, In July 2012, the City Council approved Resolution 2010-175 authorizing an expansion within the cities of San Diego and National City, combined, not to exceed 2,800 acres; and WHEREAS, Resolution 2010-175 further authorized an expansion within the City of Chula Vista will not exceed 700 acres and to include portions of areas of the Otay Valley Redevelopment Project Area, the Eastlake. Business Park, the Otay Ranch Town Center, and those areas of western Chula Vista; and WHEREAS, at this time, a planned expansion within the cities of San Diego and Chula Vista, combined, will not exceed 2,017 acres; and WHEREAS, the SDREZ agrees to submit a written request to HCD to have its current enterprise zone boundaries expanded; and WHEREAS, land included in the proposed expansion is zoned for industrial or commercial use; and WHEREAS, the SDREZ will provide the same or equivalent local incentives to the expanded and modified areas as those currently provided to the existing SDREZ properties; and WHEREAS, basic infrastructure, including, but not limited to, gas, water, electrical services and sewer systems, is available to the proposed expansion azea; and WHEREAS, the expansion area includes azeas that aze both contiguous and non- contiguous to the existing enterprise zone and (a) the non-contiguous area is needed to implement the SDREZ's economic development strategy; and (b) the excluded areas between the proposed new boundaries would not, based on the SDREZ's economic development strategy, also benefit from the expansion. NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, as follows: 1. That it approves the submission of a requested Boundary Expansion for the SDREZ in an amount not to exceed 337 acres for the City of Chula Vista and 1,680 acres for the City of San Diego, as reflected in the documents presented to the City Council, and on file in the office of the City Clerk; and 2. That it authorizes the City Manager to execute all documents necessary to modify and expand the boundary of the SDREZ, accordingly. Presented by roved as to form by i James D. Sandoval l~ nn gins CityManager ~i Attorney 9-10