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Home My WebLink About2010/02/02 Item 4 CITY COUNCIL AGENDA STATEMENT ITEM TITLE: SUBMITTED BY: REVIEWED BY: FEBRUARY 2, 2010, Item~ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE (SDREZ) PROGRAM (OPERATING MOU) AND BUDGET BETWEEN THE CITIES OF CHULA VISTA, SAN DIEGO, NATIONAL CITY AND THE SAN DIEGO UNIFIED PORT DISTRICT, COLLECTIVELY REFERRED TO AS THE "PARTNERSHIP", APPROVING THE TARGET EMPLOYMENT AREA (TEA), AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE MOU BETWEEN THE CITY OF CHULA VISTA AND THE STATE OF CALIFORINA HOUSING AND COMMUNITY DEVELOPMENT DEPARTMENT FINALIZING THE SDREZ. /'.l.4/ DEVELOPMENT SERVICES DIRECT~EPUTY CITY MANAGER CITY MANAGE? 4/STHS VOTE: YES D NO 0 SUMMARY In 1992 the City of San Diego received approval for the South Bay Enterprise Zone. In 2000 and again in 2004, the South Bay Enterprise Zone was expanded to include properties along the Bayfront redevelopment areas of the cities of Chula Vista and National City. In August 2006, Council approved a resolution supporting and authorizing the submittal of a joint application to the State of California Housing and Community Development Department for a new San Diego Regional Enterprise Zone (SDREZ) designation, with the cities ofChula Vista, San Diego and National City. This partnership was "Conditionally Approved" on November 3, 2006 and the partners have been engaged in the task of completing the remaining conditions including certification of an Environmental Impact Report (EIR). The old South Bay Enterprise Zone expired on January 27, 2007. The certified ErR was completed in July 2008. On March 24, 2009, Council adopted a resolution accepting the certified EIR and approving a SDREZ boundary modification. Final designation by the State requires that the City execute the Memorandum of Understanding (MOU) between the State of California and the cities of Chula Vista, San Diego and National City. 4-1 FEBRUARY 2, 2010, Item~ Page 2 of 4 Adoption of this resolution accepts the Operating MOU and Budget for the Partnership, approves the Target Employment Area (TEA) for the SDREZ and authorizes the City Manager to execute the MOU between the cities of Chula Vista, San Diego and National City and the State of California Department of Housing and Community Development (HCD) to finalize the SDREZ. 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 Protection 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 SDREZ, as required by the State of Cali fomi a HCD. RECOMMENDATION Council adopt the resolution. BOARDS/COMMISSION RECOMMENDATION Not applicable. DISCUSSION This resolution will approve the Operating MOU and budget for the SDREZ Partnership, approve the TEA and authorize the City Manager to execute the MOU between the cities of Chula Vista, San Diego and National City and the State of California HCD confirming [mal designation of the SDREZ. This new designation is a long-term (IS-year) partnership between local governments and private companies to generate new private sector investment and growth with the state providing performance-based tax credits and incentives to Enterprise Zone businesses. The purpose of the SDREZ is to: I) promote "smart growth" by revitalizing chronically deteriorated areas; 2) hire the most difficult to hire residents in private sector jobs; and 3) retain, expand, and reward businesses that participate in these objectives. On November 3, 2006, the Partnership was awarded conditional designation by the California HCD, effective October 15, 2006, pending completion of the EIR and adoption of the Operating MOU. The [mal EIR was certified in July 2008. The Operating MOU identifies roles and responsibilities for the Partner agencies including but not limited to administrative services, data collection, reporting, and meetings requirements to evaluate program effectiveness for the SDREZ (see Attachment #1). The SDREZ is significantly larger than the previous South Bay Enterprise Zone. The previous South Bay Enterprise Zone covered 447 acres. The SDREZ covers approximately 6400 acres. Because of this significant increase in acreage, the City will assist many more businesses than were assisted under the previous Enterprise Zone. 4-2 FEBRUARY 2, 2010, Item~ Page 3 of 4 During 2008, the City's first full year participating in the SDREZ, approved hiring tax credits greatly increased from the totals of2007, rising from 96 to 453. In 2009, the total number of hiring credit vouchers was 845. Assembly Bill 1550 requires enterprise zones that received a Target Employment Area (TEA) prior to the availability of the 2000 Unites States census data to review and update their TEA boundaries to reflect the most recent census data. HCD required enterprise zones to submit the updated TEA application by November 2, 2007, which includes a cover letter requesting TEA designation, a certified resolution from each government entity with a jurisdiction in the enterprise zone, a map of the TEA boundaries, a table of census tract assessments, and supporting documentation. Section 7072(i) of the Government Code defines "Target Employment Area" as an area within a city, county or city and county that is composed solely of those census tracts that have at least 51 % of its residents of low- or moderate- income levels. The purpose of the TEA is to encourage businesses in an enterprise zone to hire eligible residents from these geographic areas. The businesses receive a hiring tax credit for employees they hire who reside in a TEA. HCD requires that each jurisdiction in the enterprise zone approve, by resolution, the boundaries of the updated TEA, including the specific census tracts that will encompass the TEA. HCD had changed the methodology for reporting eligible census tracts. The applicant (SDREZ partners) may use. the median household income for the county, rather than for the state. In instances in which the median household income for the county is less than the State's median household income, which was $47,493 in 1999, that applicant may use the State's median in its calculations. The TEA may be, but is not required to be, the same as all or part of the enterprise zone. Its boundaries need not be contiguous. Moreover, the TEA does not need to encompass each eligible census tract within the jurisdiction. The SDREZ identifies those census tracts that it considers most in need of TEA status. Following approval of the Operating MOU, Budget and TEA, staff will work with the SDREZ partners to submit all documentation to the State of CA Department of HCD in order to obtain final designation. The MOU between the State and the cities of Chula Vista, San Diego and National City will identify specific activities and reporting requirements that were identified in the EZ application submitted by the Partners. These activities must be met in order to comply with the State EZ program including SDREZ data collection, marketing plans and activities, job creation and retention activities, periodic meetings to evaluate program effectiveness, and more. The EZ designation will be valid until October 2021. The Enterprise Zone regulations allow the Partners to expand the acreage of the Zone by 15%, once the final designation has been granted. Staff is currently in the process of identifying new acreage for possible expansion of Chula Vista's SDREZ boundaries. Staff anticipates seeking Council's approval to expand during this fiscal year. 4-3 FEBRUARY 2, 2010, Item~ Page 4 of 4 DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found that Councilmembers Bensoussan, Castaneda, Ramirez and Thompson each have property holdings within 500 feet of the boundaries ofthe new Targeted Employment Area (TEA). However, as this decision will affect ten percent or more of all property owners or all residential property owners in the jurisdiction of the official's agency, pursuant to California Code of Regulations section 18707.1(b)(l)(B)(i), the economic effect on the public official is considered indistinguishable from that of the "public generally"; thus, no disqualifying conflict exists. CURRENT YEAR FISCAL IMP ACT 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 year. The Operating MOU requires the City to pay its proportionate share of $48,500 annually for the City of San Diego's administrative costs. The Economic Development Divisions Fiscal Year 20 I 0 budget includes the $48,500 costs for the current program year. ONGOING FISCAL IMP ACT As mentioned above, the Operating MOU requires the Partners to re-examine the terms and conditions of the MOU, including the administrative costs, every five years. The City of San Diego recently increased the administrative fees for hiring tax credit vouchers from $50 per voucher to $90 per voucher. It is anticipated the increased number of vouchers and the fee increases will create a funding source to lower costs for all of the Partners, thus reducing the impact to the City's General Fund in future years. ATTACHMENTS 1. Operating MOD for the SDREZ Program 2. SDREZ Program Budget and Partnership Contributions 3. State of CA Department of HCD letter of conditional EZ designation (dated 1/17/2007) 4. Target Employment Area (TEA) Map Prepared by: Lynette Jones, Sr. Project Coordinator, Development Services 4-4 Attachment 1 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM THIS MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM ("OPERATING MOU") is made by and between THE CITY OF SAN DIEGO, a California municipal corporation ("SAN DIEGO"), the CITY OF CHULA VISTA, a California municipal corporation ("CHULA VISTA"), the CITY OF NATIONAL CITY, a California municipal corporation ("NATIONAL CITY"), and the SAN DIEGO UNIFIED PORT DISTRICT ("DISTRICT"), (each of whom may be referred to individually as a "PARTNER," and collectively as the "PARTNERSHIP" or "PARTNERS") to be effective as of July 1, 2007 (the "Effective Date") when signed by the PARTNERS and approved by their respective City Attorneys and Attorney for the District, as follows: RECITALS WHEREAS, on August 31, 2006, SAN DIEGO, CHULA VISTA and NATIONAL CITY executed a First Memorandum of Understanding ("2006 MOU") for purposes of identifying the original partnership (which at that point did not include the DISTRICT), setting forth the original partnership's intended goals, and allocating financial responsibility for consulting services necessary only for the submittal of the application to the California Housing and Community Development Department ("HCD") for designation of the San Diego Regional Enterprise Zone ("SDREZ"); and WHEREAS, in the 2006 MOU the original partners agreed that upon conditional approval of the SDREZ they would negotiate a second memorandum of understanding, setting forth each original partner's specific areas of responsibility and financial obligation from that point forward for the duration of the SDREZ; and WHEREAS, the California ("State") State Legislature established enterprise zones for the purpose of creating jobs and stimulating private investment in economically distressed areas or jurisdictions; and WHEREAS, SAN DIEGO's City Planning & Community Investment Department had administrative and reporting responsibilities to HCD for two prior California enterprise zones (namely, the Metro Enterprise Zone and the South Bay Enterprise Zone), and has 20 years of technical experience with the enterprise zone program, including a successful Enterprise Zone Job Referral/Placement Service involving issuance of over 25,000 hiring vouchers to enterprise zone companies through a collaboration with the California Employment Development Department, the Metro Career Center, the South County Career Center, the South Metro Career Center, the San Diego Workforce Partnership, and various other job placement agencies; consequently, SAN DIEGO has the collaborative capacity to seek Regional Enterprise Zone designation; and 1 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-5 WHEREAS, since 2000, SAN DIEGO has had a partnership with NATIONAL CITY and CHULA VISTA to enhance job creation and private investment in the region resulting in regional economic development programs such as the South Bay Enterprise Zone, and the San Diego Regional Revolving Loan Fund; and WHEREAS, the PARTNERSHIP would like to further expand opportunities for regional economic development collaboration including waterfront based Port tenants; and WHEREAS, the SDREZ consists of a regional, multi-jurisdictional partnership that contains within its boundaries a variety of industry types (e.g., light industrial/manufacturing, Mexican cross border assembly plants, retail/entertainment, commercial, research and development, and maritime industries), as well as other small businesses eligible for enterprise zone business incentives; and WHEREAS, on November 3, 2006, HCD awarded conditional SDREZ designation, and in a January 17,2007, letter (the "HCD Letter," attached hereto as Attachment A), set forth conditions to be satisfied prior to the final SDREZ designation; and WHEREAS, on September 10,2008, San Diego accepted the certified Environmental Impact Report and authorized the submittal of an application to HCD to establish a Targeted Employment Area ("TEA") and on November 19, 2008, approved the submittal of an amendment to the SDREZ application expanding the boundaries of the SDREZ to be included in the final SDREZ designation; and WHEREAS, on March 24, 2009, Chula Vista accepted the certified Environmental Impact Report and approved the submittal of an amendment to the SDREZ application expanding the boundaries of the SDREZ to be included in the final SDREZ designation; and WHEREAS, on April 21, 2009, the City of National City accepted the certified Environmental Impact Report for the San Diego Regional Enterprise Zone Program and on July 21, 2009 approved the submittal of an amendment to the SDREZ application expanding the boundaries of the SDREZ to be included in the final SDREZ designation and accepted the revised TEA (approved on July 1, 2008); WHEREAS, SAN DIEGO currently has an approved Targeted Employment Area ("TEA") incorporating eligible low and moderate income 1990 Census Tracts within San Diego and Chula Vista 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, upon HCD approval and final designation of the SDREZ, the PARTNERSHIP shall make application for a new TEA that is geographically consistent with the State TEA eligibility criteria so as to maximize job creation opportunities for SDREZ businesses that hire TEA residents so they can receive State tax credits on wages paid to those employees; and 2 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-6 WHEREAS, the PARTNERSHIP supports regional economic development that benefits all citizens and businesses of the SDREZ; NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the sufficiency of which is hereby acknowledged, the PARTNERS agree as follows: Section 1: Regional Enterprise Zone Collaboration. Upon an invitation from HCD, the PARTNERSHIP submitted an application for a new SDREZ to the State by the application deadline of September 6, 2006. On November 20, 2006, HCD approved a "conditional" designation, which pursuant to State legislation (AB 1550) allows for the availability of enterprise zone incentives within the SDREZ as of the October IS, 2006, designation date. The PARTNERS shall work together in good faith to complete all conditions set forth by HCD in the HCD Letter to obtain final approval and designation for the SDREZ. Each PARTNER shall deliver such further documents and take such further action as may be reasonably necessary to obtain final designation from HCD for the SDREZ. The PARTNERS shall continue working together in good faith after approval and final designation of the SDREZ, and shall continue their mutual collaboration for the life of the SDREZ as set forth in this OPERATING MOU. Contingent upon final approval and designation by HCD, the SDREZ shall contain acreage by jurisdiction as set forth at the time HCD awards final designation. In accordance with California Government Code section 7074, expansion capacity for the SDREZ is 15% of the original area at the time of final designation. Expansions shall be in accordance with Section 8 of this OPERATING MOU. Section 2: Compliance with Laws and Regulations. PARTNERSHIP represents and warrants, unless otherwise noted, it has trained and experienced personnel capable, qualified, and authorized to undertake the activities described in: (I) the application submitted to HCD for SDREZ designation (the "SDREZ Application"), (2) the conditions set forth by HCD in the HCD Letter; and (3) all the activities and conditions subscribed to it in this OPERATING MOU. Each PARTNER shall comply with all applicable State, federal and local laws and regulations. Section 3: PARTNERSIDP Responsibilities. The PARTNERS shall collaborate to comply with HCD's administrative, programmatic and reporting requirements for the SDREZ, and agree the following are general actions to be taken to implement and administer the SDREZ: 3 MEMORANDUM OF UNDERSTANDING FOR OPERA nON OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-7 PARTNERS: I) Each PARTNER, except the DISTRICT, shall request from its respective governing body a resolution authorizing acceptance of final designation for the SDREZ trom HCD and confirming its commitment to obtaining final designation for the SDREZ, as well as its adherence to HCD administrative, programmatic and reporting requirements. Notwithstanding the above, the DISTRICT acknowledges it has received a copy of the SDREZ Application and understands the purpose and intent of the State Enterprise Zone program. 2) Each PARTNER's Mayor/Manager/ChiefExecutive Officer or designee, as applicable, shall ensure compliance with HCD's requirement to effectively staff its local SDREZ office for purposes of local program continuity as set forth in the SDREZ Application. 3) Each PARTNER's Mayor/Manager/ChiefExecutive Officer or designee, as applicable, shall ensure compliance with HCD requirements to establish and work to meet "benchmarks," "performance measures," and program goals as set forth in the SDREZ Application and in the State Memorandum of Understanding. 4) Each PARTNER's Mayor/Manager/ChiefExecutive Officer or designee, as applicable, shall ensure compliance with HCD's requirement of a "unified, coherent marketing strategy," which promotes the SDREZ as "One Zone" containing regional partners, consistent with the SDREZ Marketing Plan as set forth in the SDREZ Application. 5) Within their respective jurisdictions, each PARTNER shall market the benefits of the SDREZ to existing and prospective businesses to attract and retain businesses and jobs in the SDREZ. 6) Each PARTNER's Mayor/Manager/ChiefExecutive Officer or designee, as applicable, shall ensure compliance with HCD requirements to maintain accurate boundary-area street address ranges, and to perform periodic "self-assessments" and reporting commitments as set forth in the SDREZ Application. 7) The PARTNERSHIP shall conduct economic development activities for the SDREZ in mutual cooperation and coordination with all PARTNERS to encourage the development of new businesses, including attracting and assisting businesses with location decisions. 8) Within their respective jurisdictions, each PARTNER shall provide timely staff support to serve existing and new businesses in the SDREZ. 9) Each PARTNER, where applicable, shall maintain and continue to provide to the other PARTNERS currently-updated, relevant data respective to their jurisdictions of the following: (a) land use laws, regulations and policies; (b) infrastructure upgrades and planning; (c) zoning regulations within the SDREZ, where applicable; (d) fee structure(s); and (e) any other jurisdictional actions affecting the SDREZ. Each PARTNER shall notify SAN DIEGO, as the lead agency, in writing, of regulatory and 4 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF TIlE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-8 policy changes that may impact that PARTNER's ability to assist existing or new businesses located or locating in the SDREZ or affect the PARTNERSHIP's ability to carry out one or more of the obligations set forth in a memorandum of understanding with HCD. 10) Within their respective jurisdictions, each PARTNER shall encourage its elected or appointed officials to engage in active support of business development and job creation within the SDREZ. II) Within their respective jurisdictions, each PARTNER shall facilitate access and provide assistance to SDREZ businesses with permit, infrastructure, expansion, and general business issues as they relate to the operation and benefits of the SDREZ. 12) The PARTNERS shall gather pertinent low and moderate income census tract information to establish the SDREZ TEA in accordance with Section 7 of this OPERATING MOD. 13) The PARTNERS agree to work collaboratively on business retention, expansion and attraction efforts in the following manner. SDREZ PARTNERSHIP staffwill immediately communicate with PARTNERS when staff is aware of an SDREZ company that is considering relocating from one SDREZ location to a PARTNER's jurisdiction. When this occurs, staff shall notify via telephone, email or at the next scheduled SDREZ Team meeting of the imminent situation. The SDREZ PARTNERSHIP agrees to prioritize business retention/expansion efforts for existing SDREZ companies in the following manner: Priority I: Retain companies within the current SDREZ jurisdiction; Priority 2: If it is not possible for the company to remain within the jurisdictional boundaries of its existing location, the PARTNERSHIP shall collaborate to retain the company within the SDREZ boundaries; and Priority 3: When neither of the aforementioned priorities are an option, the SDREZ PARTNERSHIP shall notify other San Diego region jurisdictions and economic development organizations in order to provide site selection assistance to retain the company in the County of San Diego. 14) Provided that all Enterprise Zone Act requirements are met, each PARTNER shall submit requests to its governing body within sixty (60) days after submission for review of all amendments and updates to the SDREZ and TEA and shall take prompt action via resolution. A PARTNER having reasonable concerns must identify and substantiate the concerns in writing within thirty (30) days after submission for review to each PARTNER. Expansions to zone boundaries shall comply with Section 8 of this Operating MOD. 5 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF TIlE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-9 SAN DIEGO: I) SAN DIEGO shall be lead agency in the administration of the SDREZ, and will coordinate all aspects of the SDREZ with regular input from the PARTNERS. 2) SAN DIEGO, as the lead agency of the PARTNERSHIP, will negotiate a Memorandum of Understanding on behalf of the PARTNERSHIP with HCD for the final SDREZ designation. 3) SAN DIEGO will coordinate business attractions and local business outreach programs with all PARTNERS to include objectives, deliverables, and expected outcomes with quarterly progress reports concerning SDREZ activities. 4) SAN DIEGO will coordinate and provide current reports relative to the progress of implementing the SDREZ, and will monitor various levels of benefits as generated by the businesses located in the SDREZ. 5) SAN DIEGO will act as the Vouchering Agency for the SDREZ and will provide direct staff assistance in the vouchering of all eligible new hires as submitted by businesses located within the SDREZ, including full documentation for verification of eligibility. 6) SAN DIEGO will assist SDREZ businesses with screening, job placement, and hiring credit eligibility screening so that individuals can be certified as "qualified employees" for vouchering purposes. 7) SAN DIEGO staff will coordinate and provide technical assistance to the PARTNERSHIP in preparing required documentation for the TEA, and fmal SDREZ designation. 8) SAN DIEGO staff, in collaboration with the PARTNERSHIP, will submit all pertinent documentation to the HCD for final SDREZ designation. 9) SAN DIEGO, as lead agency, will initiate and submit a request to HCD to establish a TEA to include low and moderate income census tracts in the SDREZ in accordance with state requirements. Section 4: Term This OPERATING MOU shall be effective as of the SDREZ Designation Date and shall expire October 14, 2021. The PARTNERS acknowledge thatthe State designation for the SDREZ is a 15-year term and is set to expire October 14,2021. The PARTNERS therefore agree to the term of this OPERATING MOU. This OPERATING MOU is contingent upon the approval offunding contributions to the SDREZ program by the governing boards of all of the PARTNERS. 6 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF TIlE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-10 Prior to the expiration of this OPERATING MOD, the PARTNERS shall decide whether to continue to issue SOREl hiring tax credit vouchers to SOREl companies and shall develop a plan for how SOREZ businesses shall receive this service. Current California law permits the issuance of hiring tax credit vouchers retroactively and allows businesses to amend tax returns in order to claim earned tax credits not previously claimed. For this reason, hiring tax credit vouchers may be issued for several years after the expiration of the SOREZ. Section 5: Renegotiation Any PARTNER may make a written request to the other PARTNERS to renegotiate the terms ofthis OPERATING MOD. Dpon such request, the PARTNERS shall participate in good faith negotiations regarding the terms of this OPERATING MOD. All changes, modifications or amendments to this OPERATING MOD must be in writing, must comply with all then-current laws, regulations and policies, and must be signed by all PARTNERS. Section 6: Zone Administration As grantee of the SOREl designation, SAN DIEGO will continue to assume lead-agency responsibility for the administration of the SOREl, which includes without limitation coordinating collection of program data, the submittal of reports to HCO, overseeing the employee certification and vouchering process, and administering the job placement/referral service. The PARTNERSHIP will collaborate on the following: 1) Implementing goals and objectives for the SOREl as set forth in the SOREl Application. 2) Oeveloping and implementing a marketing plan for the SOREl as set forth in the Marketing Plan in the SOREl Application, including without limitation workshops, direct mailings, press releases, marketing materials, trade shows and business outreach. The "OneZone" marketing program will be developed and administered cohesively with the marketing programs of the individual agencies as well as with local and regional economic development organizations. 3) PARTNERSHIP representatives shall meet monthly to discuss such issues as policy changes affecting this OPERATING MOD, existing and new work plans, and the progress and tracking of the SOREl program, including without limitation economic development, job creation/placement, marketing and performance goals and objectives, joint administrative issues, and annual reporting requirements as set forth in the SOREl Application. 4) Establishing an advisory (working group) committee from regional economic development organizations to consult and advise on implementation of the SOREl as set forth in the SOREl Application, including but not limited to marketing of the SOREl as "Onelone." 7 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-11 5) Providing current and relevant data, as it relates to the PARTNERS' respective jurisdictions, related to changes in land-use laws, regulations or policies, infrastructure upgrades and planning, zoning within the SDREZ, fee structure(s), and any other jurisdictional actions that could impact the ability to assist existing or new businesses located or locating in the SDREZ. 6) Conducting SDREZ business attraction activities, and responding to SDREZ site selection requests from economic development organizations and/or businesses whenever possible, as set forth in the SDREZ Application. The PARTNERS further agree all SDREZ promotional materials for distribution to the public, businesses and economic development organizations shall include information that reflects the multi-jurisdictional, regional make-up of the SDREZ, yet continues to promote a "OneZone" marketing approach, and these materials shall be reviewed and mutually agreed to by designated PARTNER representatives at the outset, and whenever such materials require updating. The PARTNERS shall collect and maintain their respective pertinent data as required by HCD for annual reports and State audits, and as required by their respective Mayors, City Councils/Commission, City Managers, and/or Chief Executive Officers. Such information includes without limitation: 1) A list of existing businesses within the SDREZ. 2) A list of new businesses locating into the SDREZ. 3) The number of companies receiving vouchers. 4) The number of vouchers issued. 5) The number of jobs created and/or retained within the SDREZ. 6) The number of commercial/industrial/residential building permits issued and valuation of structures for which building permits were issued. 7) The value and nature of incentives provided to companies within the SDREZ. 8) The number of business inquiries requesting information on SDREZ incentives. Each PARTNER shall have an assigned employee responsible for responding to inquiries concerning the SDREZ program benefits, collecting and updating data for reporting purposes, and for additional support to the SDREZ program as reasonably required. These assigned positions shall be the SDREZ Manager for SAN DIEGO, the Business Assistance Manager for CHULA VISTA, and the Business Assistance Manager for NATIONAL CITY, all as set forth in the SDREZ Application. The DISTRICT shall assign an employee from a department it deems appropriate to work with the other PARTNERS' representatives as provided in this OPERATING MOO. SAN DIEGO shall also have a designated employee responsible to support SDREZ businesses with employee hiring credit application certification and vouchering in a manner consistent with the "V ouchering Plan" set forth in the SDREZ Application. 8 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRlSE ZONE PROGRAM 4-12 Section 7: Targeted Employment Area The PARTNERSHIP shall establish and update its TEA in accordance with California Government Code section 7072 (i)(1) of the Enterprise Zone Act. SAN DIEGO, as the lead agency, shall identify eligible census tracts. Upon concurrence of the PARTNERSHIP, the PARTNERS, with the exception of the DISTRICT, shall approve by resolution the boundaries of the TEA. Section 8: Program Expansions All SDREZ expansions shall be in accordance with California Government Code section 7074 of the Enterprise Zone Act. Each PARTNER shall have the ability to expand its acreage up to 15%, up to a total increase to the SDREZ acreage of 15%, as allowed by the Enterprise Zone Act. Each PARTNER may work with other PARTNERS in providing support for expansions in their respective jurisdictions, including allowing a PARTNER to reduce its expansion capacity to allow another PARTNER to increase their expansion capacity. Prior to any request or application to HCD for SDREZ expansion, each PARTNER shall have the opportunity to review the expansion request. Provided the requirements for expansions as outlined in the Enterprise Zone Act are met, each PARTNER shall submit the expansion request to its governing body within sixty (60) days after submission for review, and shall take prompt action via resolution on whether findings for an expansion are met as stipulated in the Enterprise Zone Act. A PARTNER having reasonable overriding concerns must identify and substantiate a substantial negative regional economic impact for not supporting the requested expansion. Expansion requests shall not be submitted to HCD unless and until each PARTNER'S governing body has adopted a resolution approving the expansion. The expansion capacity for each PARTNER may not exceed 15% of its designated SDREZ area as determined at the time of fmal designation. If at any time during the designation period of the SDREZ, a PARTNER is incapable of utilizing its entire expansion capacity, or has declared itself unwilling to utilize its entire expansion capacity, then the remaining balance of that PARTNER'S expansion capacity shall be available for expansions by the remaining PARTNERS. To fully utilize the entire SDREZ expansion capacity prior to zone expiration, the remaining expansion capacity acreage for the SDREZ shall be recalculated after the fifth year (i.e., in 2011) and the tenth year (i.e., in 2016). To the extent each PARTNER is able and willing to utilize the remaining expansion capacity of the SDREZ, each such PARTNER shall receive an equal share of the expansion capacity; however, if applying such expansion capacity will result in a PARTNER'S acreage exceeding the area for its original capacity at the time of final designation, then the excess acreage shall be divided equally among the remaining PARTNERS. Any amendments to the SDREZ expansion capacity shall require an amendment of this OPERATING MOD, signed by all the PARTNERS. The PARTNERS shall work together and act in good faith after approval and final designation of the SDREZ in the best interests of the zone. 9 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF mE SAN DIEGO REGIONAL ENTERPRJSE ZONE PROGRAM 4-13 Section 9: Compensation and Resources In consideration of SAN DIEGO's lead agency position and agreement to administer the SDREZ Program, to coordinate workforce development services for businesses located in the SDREZ, to submit quarterly voucher reports, and other SDREZ program related services and reports as stipulated in Sections 3 and 6, the PARTNERS shall be responsible for compensation of an annualized amount of program funding to SAN DIEGO to provide additional administrative support for the SDREZ for Fiscal Years 2008-2022 in the amounts identified in Attachment B attached hereto (i.e., the "San Diego Regional Enterprise Zone Program Budget and Partnership Contributions Fiscal Years 2008-2012," referred to herein as the "Administrative Budget"). Each PARTNER is committed to the SDREZ program for the term of this OPERATING MOD. However, the PARTNERS agree to budget only through Fiscal Year 2012, and shall review and update each PARTNER's monetary commitment in Fiscal Year 2011, and from time to time on an as-needed basis thereafter. Fiscal responsibility for the SDREZ after Fiscal Year 2012 shall be assumed by the cities ofChula Vista, National City and San Diego unless the Operating MOD is amended. Program Administration will include without limitation those activities in support of the Enterprise Zone Program provided by SAN DIEGO for the entire SDREZ Program. SAN DIEGO staff shall provide administrative support for the program which includes coordinating and submitting all annual reports to HCD, responding to inquiries from the PARTNERS, assisting with hiring credit certification imd vouchering, assisting with other related workforce development services and maintaining all hiring credit records for the PARTNERSHIP. Administration, data collection, systematic record keeping, and reporting requirements include without limitation: (a) hiring credit vouchers issued; (b) wages paid; (c) employers receiving vouchers; (d) area resident placements (including TEA residents); (e) collecting fees; (f) issuing fee invoices; (g) complying with State reporting requirements; and (h) coordinating programmatic marketing efforts. SAN DIEGO shall invoice each PARTNER for Administrative Budget obligations on an annual basis for FY 2007/08 to FY 2008/09 and on a quarterly basis going forward. The PARTNERSHIP shall reimburse the aforementioned annualized amount of program funding to SAN DIEGO. Payment is due to SAN DIEGO within forty-five (45) days from the date of the invoice. Each PARTNER in the PARTNERSHIP shall track its own marketing expenditures annually and submit a report itemizing its marketing expenditures to SAN DIEGO at the end of each Fiscal Year for monitoring and reporting purposes only. Invoices shall be mailed as follows: For CHULA VISTA; The City of Chula Vista Economic Development Division ATTN: Small Business Services Coordinator 276 Fourth Avenue, Chula Vista, CA 91910 10 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-14 For NATIONAL CITY; The City of National City Community Development Commission of National City ATTN: Community Development Coordinator 1243 National City Blvd National City, CA 91950 For DISTRICT; San Diego Unified Port District A TTN: Real Estate Department 3165 Pacific Highway San Diego, Ca 92101-1128 The PARTNERSHIP shall reimburse the annualized amount of program funding to SAN DIEGO through Fiscal Year 2022 as set forth in Attachment B and in accordance with this section~ Attachment B provides the annualized amount of program funding for the first five (5) years of this OPERATING MOU. Payments shall be made payable to City Treasurer and mailed to: City of San Diego Office of the Mayor, Economic Growth Services ATTN: Government Incentives Team Program Manager 202 C Street, MS 4A San Diego, CA 92101 The compensation and budget may be adjusted up only by no more than 5% per year and such adjustment must be approved in writing by the respective program administrators for the PARTNERSHIP. The PARTNERSHIP may renegotiate this OPERATING MOU in accordance with Section 5. Additional adjustments and amendments can be made to this OPERATING MOU and must be approved in writing by all the PARTNERS. Non-fiscal adjustments to the SDREZ program and/or program administration may be approved administratively by concurrence of the SDREZ program administrators. In 2004, the State approved legislation mandating that every EZ remit $10 for each EZ Hiring Tax Credit application reviewed to offset HCD program costs associated with the statewide administration of the EZ program. In order to comply with the State mandate, SAN DIEGO, as the SDREZ lead agency and vouchering agent, must collect and remit a $10 fee for each EZ Hiring Tax Credit application received on a monthly basis. Local jurisdictions may charge an additional application fee to help offset the local cost of effectively administering E Z program. The initial EZ Hiring Tax Credit application fee as approved by San Diego City Council Ordinance (R-3002l4) is $50 per application. The fee recovers some of SAN DIEGO's EZ administrative expenses including those associated with collecting and processing the State's $10 fee. II MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGiONAL ENTERPRISE ZONE PROGRAM 4-15 SAN DIEGO's EZ staff has been challenged to find sufficient revenue to fully cover costs associated with the administration of the SDREZ program in addition to the contributions by the PARTNERS as referenced in this section. In order to fully staff the SDREZ program, and effectively and efficiently administer the SDREZ program, the application fee may be increased in accordance with applicable local and state requirements. The revenue generated by the application fee shall be used solely to cover administrative costs directly associated with the EZ program, including without limitation, personnel and non-personnel expenses, i.e. EZ software, marketing, etc. Should the application fee generate sufficient revenue to cover the lead agency's EZ administrative costs, the PARTNERSHIP shall define the most equitable manner in which to distribute such revenue in order to reduce impacts to the PARTNERSHIP's general fund supporting the SDREZ program. Any such amendments shall be in accordance with Section 5 of this OPERATING MOD. If State legislation is approved to allow for extensions, and an extension is awarded to the SDREZ, this OPERATING MOD shall be renegotiated in the manner stipulated in Section 5. Section 10: Hold Harmless Each PARTNER ("Indemnifying PARTNER") shall protect, defend, indemnify and hold each of the other PARTNERS and their elected officials, officers, representatives, agents and employees harmless from and against any and all claims asserted, and liability for damages or injuries to any person or property, including without limitation injury to the Indemnifying PARTNER's elected officials, officers, representatives, agents and employees, which arise out of or are in any manner directly or indirectiy connected with this OPERATING MOD or the Indemnifying PARTNER's performance hereunder, and all expenses of investigating and defending against same; provided, however, that the Indemnifying PARTNER's duty to indemnify and hold harmless shall not include any claims or liability arising from the established active negligence, sole negligence, or sole willful misconduct of another PARTNER, its elected officials, officers, representatives, agents and employees. Section 1: Superseding Memorandum of Understanding This OPERATING MOD supersedes only the 2006 MOD. Section 12: General Provisions I) Program Administrators. For purposes of this OPERATING MOD, the initial program administrators shall be: a. For SAN DIEGO: Lydia Moreno, Government Incentives Team Manager b. For CHULA VISTA: Lynette Jones, Small Business Services Coordinator; c. For NATIONAL CITY: Alfredo Ybarra, Community Development Coordinator; and d. For DISTRICT: William Winchell, Real Estate Manager 12 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF TIJE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-16 2) Recitals. All Recitals herein are true and correct to the PARTNERS' best knowledge and belief, and are fully incorporated into this OPERATING MOO. 3) Exhibits. All Exhibits to this OPERATING MOO are incorporated herein. 4) Assignment. This OPERATING MOO may not be assigned by any PARTNER. 5) Entire Understanding. This OPERATING MOO is the sole and entire understanding between the PARTNERS relating to the subject matter hereof. In signing this OPERATING MOO, each PARTNER agrees there is no other written or verbal understanding between the PARTNERS with respect to the subject matter of this OPERATING MOO. Except as otherwise provided herein, any modification to this OPERATING MOO must be in writing and signed by all the PARTNERS. 6) Drafting Ambiguities. Each PARTNER acknowledges and agrees it has the opportunity to be advised by counsel with respect to the negotiation of the terms, covenants and conditions of this OPERATING MOO, and the decision to seek or not seek advice of counsel with respect to this OPERATING MOO was a decision made solely by each PARTNER. This OPERATING MOO shall not be construed in favor of or against any PARTNER by reason of the extent to which the PARTNER participated in the drafting of this OPERATING MOO. 7) Governing Law. This OPERATING MOO shall be governed, construed, and enforced in accordance with the laws of the State of California. 8) Time is of Essence; Provisions Binding on Successors. Time is ofthe essence of each term, covenant and condition of this OPERATING MOO. Except as otherwise provided in this OPERATING MOO, all of the terms, covenants and conditions of this OPERATING MOO shall apply to, benefit, and bind the successors of the respective PARTNERS, jointly and individually. 9) Counterparts. This OPERATING MOO may be executed in any number of counterparts, each of which when executed shall be deemed an original, but all of which together shall constitute one and the same instrument. 10) Authority. Each individual executing this OPERATING MOO on behalf of another person or legal entity represents and warrants that they are authorized to execute and deliver this OPERATING MOO on behalf of such person or entity in accordance with duly adopted resolutions or other authorizing actions necessary and proper and under such legal entity's articles, charter, bylaws, or other written rules of conduct or governing agreement, and that this OPERATING MOO is binding upon such person or entity in accordance with its terms. 11) Administrative Claims Requirements and Procedures. No suit or arbitration shall be brought arising out of this agreement, against a PARTNER unless a claim has first been presented in writing and filed with that PARTNER and acted upon by 13 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-17 .I , that PARTNER in accordance with the procedures set forth in that respective PARTNER's municipal code, as same may from time to time be amended, the provisions of which are incorporated by this reference as if fully set forth herein, and such policies and procedures used by the PARTNER in the implementation of same. Upon request by the PARTNER against whom a claim is filed, the affected Partner(s) shall meet and confer in good faith with each other for the purpose of resolving any dispute over the terms of this Agreement. IN WITNESS WHEREOF, each PARTNER shall abide by the terms of this OPERATING MOU and hereby executes the same by and through its duly authorized representative. THE CITY OF SAN DIEGO, a California municipal corporation BY: Julie Dubick, Deputy Chief of Staff Office of the Mayor corporation CITY OF NATIONAL CITY, a California municipal corporation BY: Chris Zapata, City Manager SAN DIEGO UNIFIED PORT DISTRICT BY: Charles Wurster, President! Chief Executive Officer 14 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF mE SAN DIEGO REGIONAL ENTERPRJSE ZONE PROGRAM 4-18 APPROVED AS TO FORM AND LEGALITY: JAN I. GOLDSMITH, City Attorney for San Diego BY: Brock Ladewig, Deputy City Attorney BART MIESFELD, City Attorney for Chula Vista BY: GEORGE H ElSER, III, City Attorney for National City BY: DUANE BENNETT, San Diego Unified Port District Attorney BY: David Catalina, Deputy Port Attorney 15 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF TIlE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-19 Attachment 2 San Diego Regional Enterprise Zone Program Budget and Partnership Contributions Fiscal Years 2008-2012 ADMINISTRATIVE FY FY FY FY 2013- Partnership BUDGET FY 2008 FY 2009 2010(1) 2011(1) 2012(1) 2021 Contribution City of Chula Vista $48,500 $48,500 $48,500 $48,500 $48,500 See (2) $242,500 City of National City $48,500 $48,500 $48,500 $48,500 $48,500 See (2) $242,500 City of San Dieoo $422,361 $422,361 $422,361 $422,361 $422,361 See (2) $2,111,805 Port of San Dieoo $97,000 $97,000 $97,000 $97,000 $97,000 See (2) $485,000 TOTAL $616,361 $616,361 $616,361 $616,361 $616,361 $3,081,805 Note: Does not Include State HCD EZ Hiring Credit Application fee MARKETING FY FY FY FY 2013- Partnership BUDGET(3\ FY 2008 FY 2009 2010(1) 2011(1) 2012(1) 2021 Contribution City of Chula Vista $4,500 $4,500 $4,500 $4,500 $4,500 See (2) $22,500 City of National City $2,500 $2,500 $2,500 $2,500 $2,500 See (2) $12,500 City of San Dieoo $4,500 $4,500 $4,500 $4,500 $4,500 See (2) $22,500 Port of San Dieoo $1,500 $1,500 $1,500 $1,500 $1,500 See (2) $7,500 TOTAL $13,000 $13,000 $13,000 $13,000 $13,000 $65,000 TOTAL ANNUALIZED FY FY FY FY 2013- Partnership PRGRAM BUDGET FY 2008 FY 2009 2010(1) 2011(1) 2012(1) 2021 Contribution City of Chula Vista $53,000 $53,000 $53,000 $53,000 $53,000 See (2) $265,000 City of National City $51,000 $51,000 $51,000 $51,000 $51,000 See (2) $255,000 City of San DieQo $426,861 $426,861 $426,861 $426,861 $426,861 See (2) $2,134,305 Port of San Dieoo $98,500 $98,500 $98,500 $98,500 $98,500 See (2) $492,500 TOTAL $629,361 $629,361 $629,361 $629,361 $629,361 $3,146,805 In consideration of SAN DIEGO'S lead agency position, and agreement to administer the SDREZ Program, to coordinate workforce development services for businesses located in the SDREZ, submit quarterly voucher reports, and other Zone program related services and reports, as stipulated in Sections 3 and 6 of the OPERATING MOV, the PARTNERSHIP shall be responsible for compensation of an annualized amount of program funding to SAN DIEGO to provide administrative support for the SDREZ for Fiscal Years 2008-2022. SAN DIEGO shall invoice each PARTNER for Administrative Budget obligations on a quarterly basis. The PARTNERSHIP shall reimburse the aforementioned annualized amount of program funding to SAN DIEGO. Payment is due to SAN DIEGO within thirty days from the date of the invoice. The PARTNERSHIP shall track its own marketing expenditures annually and submit a report itemizing its marketing expenditures to San Diego at the end of each fiscal year. Notes: (1) The budget may be adjusted by no more than 5% per year and such adjustment must be approved in writing by the respective contract administrators for the PARTNERSHIP. (2) The PARTNERSHIP may renegotiate this MOV in accordance with Section 5 of the OPERATING MOV. Ifno amendments occur, funding levels shall remain the same as the previous fiscal year. (3) Marketing budget expenses include hard and soft costs associated with marketing the SDREZ. SDREZ OPERATING MOV Budget.doc 4-20 Attachment 3 ~...QF CAlIFORNIA -BIJ.'t;INFSS TRAN::;P'ORTATION AND.1:iO..u.5lliG...A.GENCY LJEPA~TMENT OF HOUSING AND COMMUNITY DEVELOPMENT DIVISION OF FINANCIAL ASSISTANCE STATE ENTERPRISE ECONOMIC DEVELOPMENT SECTION Enterprise Tax Incentive Programs 1800 Third Slreet. Suite 390 P. O. Box 952054 Sacramento,CA 94452-2054 (916) 322-1554 FAX (916) 327-6660 ArnQjd~czenerJgfL...G.o'LernQf ~~: .' January 17, 2007 Scott Kessler Deputy Director City of San Diego 600 B Street, Fourth Floor, MS-904 San Diego, CA 92101-4506 Dear Mr. Kessler: On November 3, 2006, the Department of Housing and Community Development (Department) awarded a conditional Enterprise Zone designation to the City of San Diego The enclosed table, Conditions for the San Diego Enterprise Zone, specifies the conditions that the Enterprise Zone must satisfy in order to obtain the final designation. The Enterprise Zone must complete and submit to the Department its responses to these conditions by 5 p.m. on March 2, 2007. Upon receipt of the responses, the Department will determine whether the Enterprise Zone has satisfied all of the specified conditions. If the Department accepts the responses as satisfactory, it will issue to the Enterprise Zone the Final Designation Letter. This letter represents the Conditional designation letter for your new designation. Because your enterprise Zone's previous designation recently expired, this letter grants your new enterprise zone, in accordance with Section 7074.2(c) of the Government Code, the option to offer eligible taxpayers doing business within the geographic boundaries of the new zone all enterprise zone benefits until the Department makes a final designation or declines to redesignate the zone. The Department shall make the effective date of the new zone the date of expiration of the previous designation and the term of the new zone shall begin on that dale. The geographic boundaries of the new zone are described on the enclosed document titled Geographic Boundaries of the San Diego Enterprise Zone. According to the California Code of Regulations, TiUe 25, Article 8, Section 8445.2, a conditionally-designated enterprise zone may request an extension of time to satisfy the conditions_ The Department must receive in writing the request for an extension of the time by March 2, 2007. 4-21 < .Jf you have any questions, ple.ase contact me at (916) 327-2862. Sincerely, fTl.l~~' . ~~""aW;ef State Enterprise and Economic Development 4-22 Conditions for Designation Fer The San Diego Enterprise Zone # Condition(s) Authoritv 1. Describe the specific steps the multj.jurisidictional enterprise Page 12 zone will take to ensure that th conomic development and marketing plan contained in its Applicallon TOr ueslgnatlon represents a unified, coherent plan, which addresses the needs , Qf the entire application area, and th<;!t the employment. economic, and physical infrastructure commitments proposed serverne entire application area. . 2. Provide explicit, quantifiable goals that will be accomplished in Page 20 the firs! five years of the proposed enterprise zone. 3. Describe how performance of the activities in the Financing Page 24 Plan will be self-evaluated. 4. Describe the self-evaluation process to be used to evaluate the Page 28 perfonmance of each Local Incentive offered to zone businesses. . 5. Submit two copies of the certified Environmental Impact Report Page 32 addressing the environmental impacts of designation of the !..r..rjf'- ?1K proposed zone and of the Notice Of Completion as described in CEQA Guidelines, Section 15085. ~",:., , p IIlJiAJ/u' ~. . Unless othmvise stated, the a.uthority cited is the page numberfTom the DepartmentofHousing and Community Development's Application for Designation-2006 (Handbook). 4-23 ATTACHMENT 4 CHULA VISTA ENTERPRISE ZONE AND TARGET EMPLOYMENT AREAS ,.. "" .,," 0 1500 3000 - - .~~ r-~f ,J ~_ -iL~' _. _ ~~~ i_=,r_''::o/ LEGEND _N<1I"I, _.....~_..........,.... .._""'..,........--~ "'-'''''''............_to mo...(or_l_o,.Tho OOr"""""''''_'''''"""",. "".......,,---.. ,..~..-....__......", """'~_''''"''- "__'.......1101<\ -_1.....1 ......_...... _'$,""".0'''00''" ~Irc- -fi- b= ana< CHUlA VISTA :::::; Enterprise Zone D City of Chula Vista .. WaterBody D TEA Census Tract Street - Stream CW"..""'''C ,"'OIIMA'K'" ''''n'' RESOLUTION NO. RESOLUTION OF THE CITY OF CHULA VISTA APPROVING THE MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE (SDREZ) PROGRAM (OPERATING MOU) AND BUDGET BETWEEN THE CITIES OF CHULA VISTA, SAN DIEGO, NATIONAL CITY AND THE SAN DIEGO UNIFIED PORT DISTRICT, COLLECTIVELY REFERRED TO AS THE "PARTNERSHIP", APPROVING THE TARGET EMPLOYMENT AREA (TEA), AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE MOU BETWEEN THE CITY OF CHULA VISTA AND THE STATE OF CALIFORINA HOUSING AND COMMUNITY DEVELOPMENT DEPARTMENT FINALIZING THE SDREZ WHEREAS, the California Housing and Community Development Department (HCD) oversees the Enterprise Tax Incentives Program whose goal is to stimulate growth in economically depressed areas of the State; and WHEREAS, the City of Chtila Vista (City) joined with the Cities of San Diego and National City (Partnership) to be designated as a regional Enterprise Zone; and WHEREAS, the City Council adopted Resolution No. 2006-248, authorizing submission of an application to the HCD for a San Diego Regional Enterprise Zone (SDKEZ) designation, which would include the Partnership, and directing the City Manager to execute the necessary documents and agreements related to the application process; and WHEREAS, on November 3, 2006, HCD awarded conditional SDREZ designation, and in a January 17, 2007 letter set forth conditions to be satisfied prior to the final SDREZ designation (Conditions); and WHEREAS, an Environmental Impact Report (EIR) was considered and certified by City of San Diego; and WHEREAS, the EIR for the SDREZ has been completed and is on file in the Office ofthe City Clerk; and WHEREAS, the Conditions required the City to accept the ErR and approve the modified boundaries of the SDREZ; and 4-25 WHEREAS, on March 24, 2009 the City Council adopted Resolution No. 2009- 005 adopting the modified boundaries of the SDREl and accepting the certified ErR; and WHEREAS, Chula Vista desires to approve the Target Employment Area (TEA) for the SDREl; and WHEREAS, the City Council is authorizing the City Manager to execute the MOD between the State of CA and the cities of Chula Vista, San Diego and National City. NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, as follows: 1. That it adopts the Resolution approving the Operating MOD and Budget for the SDREl Partnership. 2. That it approves the Target Employment Area (TEA) for the SDREl. 3. That it authorizes the City Manager to execute the MOD between the State of California HCD and the cities of Chula Vista, San Diego and National City that finalizes the SDREl. Presented by Gary Halbert, AICP, PE Deputy City ManagerlDirector of Development Services 4-26 THE A TT ACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPR L BY THE ITY C UNCIL MEMORANDUM OF UNDERSTANDING FOR THE OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM BETWEEN THE CITY OF SAN DIEGO, THE CITY OF CHULA VISTA, THE CITY OF NATIONAL CITY, AND THE SAN DIEGO UNIFIED PORT DISTRICT 4-27 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM THIS MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM ("OPERATING MOU") is made by and between THE CITY OF SAN DIEGO, a California municipal corporation ("SAN DIEGO"), the CITY OF CHULA VISTA, a California municipal corporation ("CHULA VISTA"), the CITY OF NATIONAL CITY, a California municipal corporation ("NATIONAL CITY"), and the SAN DIEGO UNIFIED PORT DISTRICT ("DISTRICT"), (each of whom may be referred to individually as a "PARTNER," and collectively as the "PARTNERSHIP" or "PARTNERS") to be effective as of July 1,2007 (the "Effective Date") when signed by the PARTNERS and approved by their respective City Attorneys and Attorney for the District, as follows: RECITALS WHEREAS, on August 31, 2006, SAN DIEGO, CHULA VISTA and NATIONAL CITY executed a First Memorandum of Understanding ("2006 MOU") for purposes of identifying the original partnership (which at that point did not include the DISTRICT), setting fortb the original partnership's intended goals, and allocating financial responsibility for consulting services necessary only for the submittal of the application to the California Housing and Community Development Department ("HCD") for designation of the San Diego Regional Enterprise Zone ("SDREZ"); and WHEREAS, in the 2006 MOU the original partners agreed that upon conditional approval of the SDREZ they would negotiate a second memorandum of understanding, setting fortb each original partner's specific areas of responsibility and financial obligation from that point forward for the duration ofthe SDREZ; and WHEREAS, the California ("State") State Legislature established enterprise zones for the purpose of creating jobs and stimulating private investment in economically distressed areas or jurisdictions; and WHEREAS, SAN DIEGO's City Planning & Community Investment Department had administrative and reporting responsibilities to HCD for two prior California enterprise zones (namely, the Metro Enterprise Zone and the South Bay Enterprise Zone), and has 20 years of technical experience with the enterprise zone program, including a successful Enterprise Zone Job Referral/Placement Service involving issuance of over 25,000 hiring vouchers to enterprise zone companies tbrough a collaboration with the California Employment Development Department, the Metro Career Center, the South County Career Center, the South Metro Career Center, the San Diego Workforce Partnership, and various other job placement agencies; consequently, SAN DIEGO has the collaborative capacity to seek Regional Enterprise Zone designation; and . 1 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-28 WHEREAS, since 2000, SAN DIEGO has had a partnership with NATIONAL CITY and CHULA VISTA to enhance job creation and private investment in the region resulting in regional economic development programs such as the South Bay Enterprise Zone, and the San Diego Regional Revolving Loan Fund; and WHEREAS, the PARTNERSHIP would like to further expand opportunities for regional economic development collaboration including waterfront based Port tenants; and WHEREAS, the SDREZ consists of a regional, multi-jurisdictional partnership that contains within its boundaries a variety of industry types (e.g., light industriaVmanufacturing, Mexican cross border assembly plants, retaiVentertainment, commercial, research and development, and maritime industries), as well as other small businesses eligible for enterprise zone business incentives; and WHEREAS, on November 3, 2006, HCD awarded conditional SDREZ designation, and in a January 17,2007, letter (the "HCD Letter," attached hereto as Attachment A), set forth conditions to be satisfied prior to the final SDREZ designation; and WHEREAS, on September 10,2008, San Diego accepted the certified Environmental Impact Report and authorized the submittal of an application to HCD to establish a Targeted Employment Area ("TEA") and on November 19,2008, approved the submittal of an amendment to the SDREZ application expanding the boundaries of the SDREZ to be included in the final SDREZ designation; and WHEREAS, on March 24, 2009, Chula Vista accepted the certified Environmental Impact Report and approved the submittal of an amendment to the SDREZ application expanding the boundaries of the SDREZ to be included in the final SDREZ designation; and WHEREAS, on April 21, 2009, the City of National City accepted the certified Environmental Impact Report for the San Diego Regional Enterprise Zone Program and on July 21, 2009 approved the submittal of an amendment to the SDREZ application expanding the boundaries of the SDREZ to be included in the final SDREZ designation and accepted the revised TEA (approved on July 1,2008); WHEREAS, SAN DIEGO currently has an approved Targeted Employment Area ("TEA") incorporating eligible low and moderate income 1990 Census Tracts within San Diego and Chula Vista 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, upon HCD approval and final designation of the SDREZ, the PARTNERSHIP shall make application for a new TEA that is geographically consistent with the State TEA eligibility criteria so as to maximize job creation opportunities for SDREZ businesses that hire TEA residents so they can receive State tax credits on wages paid to those employees; and 2 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-29 WHEREAS, the PARTNERSHIP supports regional economic development that benefits all citizens and businesses of the SDREZ; NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the sufficiency of which is hereby acknowledged, the PARTNERS agree as follows: Section 1: Regional Enterprise Zone Collaboration. Upon an invitation from HCD, the PARTNERSHIP submitted an application for a new SDREZ to the State by the application deadline of September 6, 2006. On November 20, 2006, HCD'approved a "conditional" designation, which pursuant to State legislation (AB 1550) allows for the availability of enterprise zone incentives within the SDREZ as of the October 15, 2006, designation date. The PARTNERS shall work together in good faith to complete all conditions set forth by HCD in the HCD Letter to obtain final approval and designation for the SDREZ. Each PARTNER shall deliver such further documents and take such further action as may be reasonably necessary to obtain final designation from HCD for the SDREZ. The PARTNERS shall continue working together in good faith after approval and final designation of the SDREZ, and shall continue their mutual collaboration for the life of the SDREZ as set forth in this OPERATING MOU. Contingent upon [mal approval and designation by HCD, the SDREZ shall contain acreage by jurisdiction as set forth at the time HCD awards final designation. In accordance with California Government Code section 7074, expansion capacity for the SDREZ is 15% of the original area at the time of final designation. Expansions shall be in accordance with Section 8 of this OPERATING MOU. Section 2: Compliance with Laws and Regulations. PARTNERSHIP represents and warrants, unless otherwise noted, it has trained and experienced personnel capable, qualified, and authorized to undertake the activities described in: (1) the application submitted to HCD for SDREZ designation (the "SDREZ Application"), (2) the conditions set forth by HCD in the HCD Letter; and (3) all the activities and conditions subscribed to it in this OPERATING MOU. Each PARTNER shall comply with all applicable State, federal and local laws and regulations. Section 3: PARTNERSHlP Responsibilities. The PARTNERS shall collaborate to comply with HCD's administrative, programmatic and reporting requirements for the SDREZ, and agree the following are general actions to be taken to implement and administer the SDREZ: 3 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF TIJE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-30 .' PARTNERS: I) Each PARTNER, except the DISTRICT, shall request from its respective governing body a resolution authorizing acceptance of fmal designation for the SDREZ from HCD and confirming its commitment to obtaining final designation for the SDREZ, as well as its adherence to HCD administrative, programmatic and reporting requirements. Notwithstanding the above, the DISTRICT acknowledges it has received a copy of the SDREZ Application and understands the purpose and intent of the State Enterprise Zone program. 2) Each PARTNER's Mayor/Manager/ChiefExecutive Officer or designee, as applicable, shall ensure compliance with HCD's requirement to effectively staff its local SDREZ office for purposes of local program continuity as set forth in the SDREZ Application. 3) Each PARTNER's Mayor/Manager/ChiefExecutive Officer or designee, as applicable, shall ensure compliance with HCD requirements to establish and work to meet "benchmarks," "performance measures," and program goals as set forth in the SDREZ Application and in the State Memorandum of Understanding. 4) Each PARTNER's MayorlManager/Chief Executive Officer or designee, as applicable, shall ensure compliance with HCD's requirement of a "unified, coherent marketing strategy," which promotes the SDREZ as "One Zone" containing regional partners, consistent with the SDREZ Marketing Plan as set forth in the SDREZ Application. 5) Within their respective jurisdictions, each PARTNER shall market the benefits of the SDREZ to existing and prospective businesses to attract and retain businesses and jobs in the SDREZ. 6) Each PARTNER's Mayor/Manager/ChiefExecutive Officer or designee, as applicable, shall ensure compliance with HCD requirements to maintain accurate boundary-area street address ranges, and to perform periodic "self-assessments" and reporting commitments as set forth in the SDREZ Application. 7) The PARTNERSHIP shall conduct economic development activities for the SDREZ in mutual cooperation and coordination with all PARTNERS to encourage the development of new businesses, including attracting and assisting businesses with location decisions. 8) Within their respective jurisdictions, each PARTNER shall provide timely staff support to serve existing and new businesses in the SDREZ. 9) Each PARTNER, where applicable, shall maintain and continue to provide to the other PARTNERS currently-updated, relevant data respective to their jurisdictions of the following: (a) land use laws, regulations and policies; (b) infrastructure upgrades and planning; (c) zoning regulations within the SDREZ, where applicable; (d) fee structure(s); and (e) any other jurisdictional actions affecting the SDREZ. Each PARTNER shall notify SAN DIEGO, as the lead agency, in writing, of regulatory and 4 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-31 .' policy changes that may impact that PARTNER's ability to assist existing or new businesses located or locating in the SDREZ or affect the PARTNERSHIP's ability to carry out one or more of the obligations set forth in a memorandum of understanding with HCD. 10) Within their respective jurisdictions, each PARTNER shall encourage its elected or appointed officials to engage in active support of business development and job creation within the SDREZ. 11) Within their respective jurisdictions, each PARTNER shall facilitate access and provide assistance to SDREZ businesses with permit, infrastructure, expansion, and general ibusiness issues as they relate to the operation and benefits of the SDREZ. 12) The PARTNERS shall gather pertinent low and moderate income census tract information to establish the SDREZ TEA in accordance with Section 7 of this OPERATING MOD. 13) The PARTNERS agree to work collaboratively On business retention, expansion and attraction efforts in the following manner. SDREZ PARTNERSHIP staff will immediately communicate with PARTNERS when staff is aware of an SDREZ company that is considering relocating from One SDREZ location to a PARTNER's jurisdiction. When this occurs, staff shall notify via telephone, email or at the next scheduled SDREZ Team meeting of the imminent situation. The SDREZ PARTNERSHIP agrees to prioritize business retention/expansion efforts for existing SDREZ companies in the following manner: Priority 1: Retain companies within the current SDREZ jurisdiction; Priority 2: If it is not possible for the company to remain within the jurisdictional boundaries of its existing location, the PARTNERSHIP shall collaborate to retain the company within the SDREZ boundaries; and Priority 3: When neither of the aforementioned priorities are an option, the SDREZ PARTNERSHIP shall notify other San Diego region jurisdictions and economic development organizations in order to provide site selection assistance to retain the company in the County of San Diego. 14) Provided that all Enterprise Zone Act requirements are met, each PARTNER shall submit requests to its governing body within sixty (60) days after submission for review of all amendments and updates to the SDREZ and TEA and shall take prompt action via resolution. A PARTNER having reasonable cOncerns must identify and substantiate the concerns in writing within thirty (30) days after submission for review to each PARTNER. Expansions to zOne boundaries shall comply with Section 8 of this Operating MOD. 5 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF TI-IE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-32 " SAN DIEGO: I) SAN DIEGO shall be lead agency in the administration of the SDREZ, and will coordinate all aspects of the SDREZ with regular input from the PARTNERS. 2) SAN DIEGO, as the lead agency of the PARTNERSHIP, will negotiate a Memorandum of Understanding on behalf of the PARTNERSHIP with HCD for the final SDREZ designation. 3) SAN DIEGO will coordinate business attractions and local business outreach programs with all PARTNERS to include objectives, deliverables, and expected outcomes with quarterly progress reports concerning SDREZ activities. 4) SAN DIEGO will coordinate and provide CUITent reports relative to the progress of implementing the SDREZ, and will monitor various levels of benefits as generated by the businesses located in the SDREZ. 5) SAN DIEGO will act as the Vouchering Agency for the SDREZ and will provide direct staff assistance in the vouchering of all eligible new hires as submitted by businesses located within the SDREZ, including full documentation for verification of eligibility. 6) SAN DIEGO will assist SDREZ businesses with screening, job placement, and hiring credit eligibility screening so that individuals can be certified as "qualified employees" for vouchering purposes. 7) SAN DIEGO staff will coordinate and provide technical assistance to the PARTNERSHIP in preparing required documentation for the TEA, and final SDREZ designation. ',," 8) SAN DIEGO staff, in collaboration with the PARTNERSHIP, will submit all pertinent documentation to the HCD for final SDREZ designation. 9) SAN DIEGO, as lead agency, will initiate and submit a request to HCD to establish a TEA to include low and moderate income census tracts in the SDREZ in accordance with state requirements. Section 4: Term This OPERATING MOU shall be effective as of the SDREZ Designation Date and shall expire October 14, 2021. The PARTNERS acknowledge that the State designation for the SDREZ is a 15-year term and is set to expire October 14, 2021. The PARTNERS therefore agree to the term of this OPERATING MOU. This OPERATING MOU is contingent upon the approval of funding contributions to the SDREZ program by the governing boards of all of the PARTNERS. 6 MEMORANDUM OF UNDERSTANDING FOR OPERATION OFTIiE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-33 Prior to the expiration of this OPERATING MOU, the PARTNERS shall decide whether to cOlltinue to issue SOREZ hiring tax credit vouchers to SOREZ companies and shall develop a plan for how SOREZ businesses shall receive this service. Current California law permits the issuance of hiring tax credit vouchers retroactively and allows businesses to amend tax returns in order to claim earned tax credits not previously claimed. For this reason, hiring tax credit vouchers may be issued for several years after the expiration of the SDREZ. Section 5: Renegotiation Any PARTNER may make a written request to the other PARTNERS to renegotiate the terms of this OPERATING MOU. Upon such request, the PARTNERS shall participate in good faith negotiations regarding the terms of this OPERATING MOU. All changes, modifications or amendments to this OPERATING MOU must be in writing, must comply with all then-current laws, regulations and policies, and must be signed by all PARTNERS. Section 6: Zone Administration As grantee of the SOREZ designation, SAN OIEGO will continue to assume lead-agency responsibility for the administration of the SDREZ, which includes without limitation coordinating collection of program data, the submittal of reports to HCD, overseeing the employee certification and vouchering process, and administering the job placement/referral service. The PARTNERSHIP will collaborate on the following: 1) Implementing goals and objectives for the SOREZ as set forth in the SDREZ Application. 2) Developing and implementing a marketing plan for the SOREZ as set forth in the Marketing Plan in the SDREZ Application, including without limitation workshops, direct mailings, press releases, marketing materials, trade shows and business outreach. The "OneZone" marketing program will be developed and administered cohesively with the marketing programs of the individual agencies as well as with local and regional economic development organizations. 3) PARTNERSHIP representatives shall meet monthly to discuss such issues as policy changes affecting this OPERATING MOU, existing and new work plans, and the progress and tracking of the SOREZ program, including without limitation economic development, job creation/placement, marketing and performance goals and objectives, joint administrative issues, and annual reporting requirements as set forth in the SOREZ Application. 4) Establishing an advisory (working group) committee from regional economic development organizations to consult and advise on implementation of the SDREZ as set forth in the SOREZ Application, including but not limited to marketing of the SOREZ as "OneZone." 7 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF mE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-34 5) Providing current and relevant data, as it relates to the PARTNERS' respective jurisdictions, related to changes in land-use laws, regulations or policies, infrastructure upgrades and planning, zoning within the SDREZ, fee structure(s), and any other jurisdictional actions that could impact the ability to assist existing or new businesses located or locating in the SDREZ. 6) Conducting SDREZ business attraction activities, and responding to SDREZ site selection requests from economic development organizations and/or businesses whenever possible, as set forth in the SDREZ Application. The PARTNERS further agree all SDREZ promotional materials for distribution to the public, businesses and economic development organizations shall include information that reflects the multi-jurisdictional, regional make-up of the SDREZ, yet continues to promote a "OneZone" marketing approach, and these materials shall be reviewed and mutually agreed to by designated PARTNER representatives at the outset, and whenever such materials require updating. The PARTNERS shall collect and maintain their respective pertinent data as required by Hcn for annual reports and State audits, and as required by their respective Mayors, City Councils/Commission, City Managers, and/or Chief Executive Officers. Such information includes without limitation: 1) A list of existing businesses within the SDREZ. 2) A list of new businesses locating into the SDREZ. 3) The number of companies receiving vouchers. 4) The number of vouchers issued. 5) The number of jobs created and/or retained within the SDREZ. 6) The number of commercial/industrial/residential building permits issued and valuation of structures for which building permits were issued. 7) The value and nature of incentives provided to companies within the SDREZ. 8) The number of business inquiries requesting information on SDREZ incentives. Each PARTNER shall have an assigned employee responsible for responding to inquiries concerning the SDREZ program benefits, collecting and updating data for reporting purposes, and fur additional support to the SDREZ program as reasonably required. These assigned positions shall be the SDREZ Manager for SAN DIEGO, the Business Assistance Manager for CHULA VISTA, and the Business Assistance Manager for NATIONAL CITY, all as set forth in the SDREZ Application. The DISTRICT shall assign an employee from a department it deems appropriate to work with the other PARTNERS' representatives as provided in this OPERATING MOD. SAN DIEGO shall also have a designated employee responsible to support SDREZ businesses with employee hiring credit application certification and vouchering in a manner consistent with the "Vouchering Plan" set forth in the SDREZ Application. 8 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF mE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-35 " Section 7: Targeted Employment Area The PARTNERSHIP shall establish and update its TEA in accordance with California Government Code section 7072 (i)(I) of the Enterprise Zone Act. SAN DIEGO, as the lead agency, shall identify eligible census tracts. Upon concurrence of the PARTNERSHIP, the PARTNERS, with the exception ofthe DISTRICT, shall approve by resolution the boundaries of the TEA. Section 8: Program Expansions All SDREZ expansions shall be in accordance with California Government Code section 7074 of the Enterprise Zone Act. Each PARTNER shall have the ability to expand its acreage up to 15%, up to a total increase to the SDREZ acreage of 15%, as allowed by the Enterprise Zone Act. Each PARTNER may work with other PARTNERS in providing support for expansions in their respective jurisdictions, including allowing a PARTNER to reduce its expansion capacity to allow another PARTNER to increase their expansion capacity. Prior to any request or application to HCD for SDREZ expansion, each PARTNER shall have the opportunity to review the expansion request. Provided the requirements for expansions as outlined in the Enterprise Zone Act are met, each PARTNER shall submit the expansion request to its governing body within sixty (60) days after submission for review, and shall take prompt action via resolution on whether findings for an expansion are met as stipulated in the Enterprise Zone Act. A PARTNER having reasonable overriding concerns must identify and substantiate a substantial negative regional economic impact for not supporting the requested expansion. Expansion requests shall not be submitted to HCD unless and until each PARTNER'S governing body has adopted a resolution approving the expansion. The expansion capacity for each PARTNER may not exceed 15% of its designated SDREZ area as determined at the time of final designation. If at any time during the designation period of the SDREZ, a PARTNER is incapable of utilizing its entire expansion capacity, or has declared itself unwilling to utilize its entire expansion capacity, then the remaining balance of that PARTNER'S expansion capacity shall be available for expansions by the remaining PARTNERS. To fully utilize the entire SDREZ expansion capacity prior to zone expiration, the remaining expansion capacity acreage for the SDREZ shall be recalculated after the fifth year (i.e., in 2011) and the tenth year (i.e., in 2016). To the extent each PARTNER is able and willing to utilize the remaining expansion capacity of the SDREZ, each such PARTNER shall receive an equal share of the expansion capacity; however, if applying such expansion capacity will result in a PARTNER'S acreage exceeding the area for its original capacity at the time of final designation, then the excess acreage shall be divided equally among the remaining PARTNERS. Any amendments to the SDREZ expansion capacity shall require an amendment of this OPERATING MOU, signed by all the PARTNERS. The PARTNERS shall work together and act in good faith after approval and final designation of the SDREZ in the best interests of the zone. 9 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-36 Section 9: Compensation and Resources In consideration of SAN DIEGO's lead agency position and agreement to administer the SDREZ Program, to coordinate workforce development services for businesses located in the SDREZ, to submit quarterly voucher reports, and other SDREZ program related services and reports as stipulated in Sections 3 and 6, the PARTNERS shall be responsible for compensation of an annualized amount of program funding to SAN DIEGO to provide additional administrative support for the SDREZ for Fiscal Years 2008-2022 in the amounts identified in Attachment B attached hereto (Le., the "San Diego Regional Enterprise Zone Program Budget and Partoership Contributions Fiscal Years 2008-2012," referred to herein as the "Administrative Budget"). Each PARTNER is committed to the SDREZ program for the tenn ofthis OPERATING MOD. However, the PARTNERS agree to budget only through Fiscal Year 2012, and shall review and update each PARTNER's monetary commitment in Fiscal Year 2011, and from time to time on an as-needed basis thereafter. Fiscal responsibility for the SDREZ after Fiscal Year 2012 shall be assumed by the cities ofChula Vista, National City and San Diego unless the Operating MOO is amended. Program Administration will include without limitation those activities in support of the Enterprise Zone Program provided by SAN DIEGO for the entire SDREZ Program. SAN DIEGO staff shall provide administrative support for the program which includes coordinating and submitting all annual reports to HCD, responding to inquiries from the PARTNERS, assisting with hiring credit certification and vouchering, assisting with other related workforce development services and maintaining all hiring credit records for the PARTNERSHIP. Administration, data collection, systematic record keeping, and reporting requirements include without limitation: (a) hiring credit vouchers issued; (b) wages paid; (c) employers receiving vouchers: (d) area resident placements (including TEA residents); (e) collecting fees; (f) issuing fee invoices; (g) complying with State reporting requirements; and (h) coordinating programmatic marketing efforts. SAN DIEGO shall invoice each PARTNER for Administrative Budget obligations on an annual basis for FY 2007/08 to FY 2008/09 and on a quarterly basis going forward. The PARTNERSHIP shall reimburse the aforementioned annualized amount of program funding to SAN DIEGO. Payment is due to SAN DIEGO within forty-five (45) days from the date of the invoice. Each PARTNER in the PARTNERSHIP shall track its own marketing expenditures annually and submit a report itemizing its marketing expenditures to SAN DIEGO at the end of each Fiscal Year for monitoring and reporting purposes only. Invoices shall be mailed as follows: ForCHULA VISTA; The City of Chula Vista Economic Development Division ATTN: Small Business Services Coordinator 276 Fourth Avenue, Chula Vista, CA 91910 10 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-37 For NATIONAL CITY; The City of National City Community Development Commission of National City A TTN: Community Development Coordinator 1243 National City Blvd National City, CA 91950 For DISTRICT; San Diego Vnified Port District ATTN: Real Estate Department 3165 Pacific Highway San Diego, Ca 92101-1128 The PARTNERSHIP shall reimburse the annualized amount of program funding to SAN DIEGO through Fiscal Year 2022 as set fortb in Attachment B and in accordance with this section: Attachment B provides the annualized amount of program funding for the first five (5) years of this OPERATING MOV. Payments shall be made payable to City Treasurer and mailed to: City of San Diego Office of the Mayor, Economic Growtb Services ATTN: Government Incentives Team Program Manager 202 C Street, MS 4A San Diego, CA 92101 Tbe compensation and budget may be adjusted up only by no more than 5% per year and such adjustment must be approved in writing by the respective program administrators for the PARTNERSHIP. The PARTNERSHIP may renegotiate this OPERATING MOV in accordance with Section 5. Additional adjustments and amendments can be made to this OPERATING MOV and must be approved in writing by all the PARTNERS. Non-fiscal adjustments to the SDREZ program and/or program administration may be approved administratively by concllrrence of the SDREZ program administrators. In 2004, the State approved legislation mandating that every EZ remit $10 for each EZ Hiring Tax Credit application reviewed to offset HCD program costs associated with the statewide administration of the EZ program. In order to comply with the State mandate, SAN DIEGO, as the SDREZ lead agency and vouchering agent, must collect and remit a $10 fee for each EZ Hiring Tax Credit application received on a monthly basis. Local jurisdictions may charge an additional application fee to help offset the local cost of effectively administering E Z program. The initial EZ Hiring Tax Credit application fee as approved by San Diego City Council Ordinance (R-3002l4) is $50 per application. The fee recovers some of SAN DIEGO's EZ administrative expenses including those associated with collecting and processing the State's $10 fee. II MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL EN1ERPRISE ZONE PROGRAM 4-38 SAN DIEGO's EZ staff has been challenged to find sufficient revenue to fully cover costs ,associated with the administration of the SDREZ program in addition to the contributions by the PARTNERS as referenced in this section. In order to fully staff the SDREZ program, and effectively and efficiently administer the SDREZ program, the application fee may be increased in accordance with applicable local and state requirements. The revenue generated by the application fee shall be used solely to cover administrative costs directly associated with the EZ program, including without limitation, personnel and non-personnel expenses, i.e. EZ software, marketing, etc. Should the application fee generate sufficient revenue to cover the lead agency's EZ administrative costs, the PARTNERSHIP shall define the most equitable manner in which to distribute such revenue in order to reduce impacts to the PARTNERSHIP's general fund supporting the SDREZ program. Any such amendments shall be in accordance with Section 5 of this OPERATING MOV. If State legislation is approved to allow for extensions, and an extension is awarded to the SDREZ, this OPERATING MOV shall be renegotiated in the manner stipulated in Section 5. Section 10: Hold Harmless Each PARTNER ("Indemnifying PARTNER") shall protect, defend, indemnify and hold each of the other PARTNERS and their elected officials, officers, representatives, agents and employees harmless from and against any and all claims asserted, and liability for damages or injuries to any person or property, including without limitation injury to the Indemnifying PARTNER's elected officials, officers, representatives, agents and employees, which arise out of or are in any manner directly or indirectly connected with this OPERATING MOV or the Indemnifying PARTNER's performance hereunder, and all expenses of investigating and defending against same; provided, however, that the Indemnifying PARTNER's duty to indemnify and hold harmless shall not include any claims or liability arising from the established active negligence, sole negligence, or sole willful misconduct of another PARTNER, its elected officials, officers, representatives, agents and employees. Section 1: Superseding Memorandum of Understanding This OPERATING MOV supersedes only the 2006 MOV. Section 12: General Provisions 1) Program Administrators. For purposes of this OPERATING MOV, the initial program administrators shall be: a. For SAN DIEGO: Lydia Moreno, Government Incentives Team Manager b. For CHULA VISTA: Lynette Jones, Small Business Services Coordinator; c. For NATIONAL CITY: Alfredo Ybarra, Community Development Coordinator; and d. For DISTRICT: William Winchell, Real Estate Manager 12 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF TIlE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-39 2) Recitals. All Recitals herein are true and correct to the PARTNERS' best knowledge and belief, and are fully incorporated into this OPERATING MOD. 3) Exhibits. All Exhibits to this OPERATING MOD are incorporated herein. 4) Assignment. This OPERATING MOD may not be assigned by any PARTNER. 5) Entire Understanding. This OPERATING MOD is the sole and entire understanding between the PARTNERS relating to the subject matter hereof. In signing this OPERATING MOD, each PARTNER agrees there is no other written or verbal understanding between the PARTNERS with respect to the subject matter of this OPERATING MOD. Except as otherwise provided herein, any modification to this OPERATING MOD must be in writing and signed by all the PARTNERS. 6) Drafting Ambiguities. Each PARTNER acknowledges and agrees it has the opportunity to be advised by counsel with respect to the negotiation of the terms, covenants and conditions of this OPERATING MOD, and the decision to seek or not seek advice of counsel with respect to this OPERATING MOD was a decision made solely by each PARTNER. This OPERATING MOD shall not be construed in favor of or against any PARTNER by reason of the extent to which the PARTNER participated in the drafting of this OPERATING MOD. 7) Governing Law. This OPERATING MOD shall be governed, construed, and enforced in accordance with the laws of the State of California. 8) Time is of Essence; Provisions Binding on Successors. Time is of the essence of each term, covenant and condition of this OPERATING MOD. Except as otherwise provided in this OPERATING MOD, all of the terms, covenants and conditions of this OPERATING MOU shall apply to, benefit, and bind the successors of the respective PARTNERS, jointly and individually. 9) Counterparts. This OPERATING MOD may be executed in any number of counterparts, each of which when executed shall be deemed an original, but all of which together shall constitute one and the same instrument. 10) Authority. Each individual executing this OPERATING MOD on behalf of another person or legal entity represents and warrants that they are authorized to execute and deliver this OPERATING MOD on behalf of such person or entity in accordance with duly adopted resolutions or other authorizing actions necessary and proper and under such legal entity's articles, charter, bylaws, or other written rules of conduct or governing agreement, and that this OPERATING MOD is binding upon such person or entity in accordance with its terms. 1 I) Administrative Claims Requirements and Procedures. No suit or arbitration shall be brought arising out of this agreement, against a PARTNER unless a claim has first been presented in writing and filed with that PARTNER and acted upon by 13 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-40 that PARTNER in accordance with the procedures set forth in that respective PARTNER's municipal code, as same may from time to time be amended, the provisions of which are incorporated by this reference as if fully set forth herein, and such policies and procedures used by the PARTNER in the implementation of same. Upon request by the PARTNER against whom a claim is filed, the affected Partner(s) shall meet and confer in good faith with each other for the purpose of resolving any dispute over the terms of this Agreement. IN WITNESS WHEREOF, each PARTNER shall abide by the terms ofthis OPERATING MOU and hereby executes the same by and through its duly authorized representative. THE CITY OF SAN DIEGO, a California municipal corporation BY: Julie Dubick, Deputy Chief of Staff Office of the Mayor icipal corporation CITY OF NATIONAL CITY, a California municipal corporation BY: Chris Zapata, City Manager SAN DIEGO UNIFIED PORT DISTRICT BY: Charles Wurster, President! Chief Executive Officer 14 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF TIlE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-41 APPROVED AS TO FORM AND LEGALITY: JAN I. GOLDSMITH, City Attorney for San Diego BY: Brock Ladewig, Deputy City Attorney BART MIESFELD, City Attorney for Chula Vista BY: GEORGE H ElSER, III, City Attorney for National City BY: DUANE BENNETT, San Diego Unified Port District Attorney BY: David Catalino, Deputy Port Attorney 15 MEMORANDUM OF UNDERSTANDING FOR OPERATION OF THE SAN DIEGO REGIONAL ENTERPRISE ZONE PROGRAM 4-42