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HomeMy WebLinkAbout06 TUSTIN LEGACY LAMBRA BIENNIAL REPORTReviewed: AGENDA REPORT City Manager Finance Director MEETING DATE: NOVEMBER 20, 2012 TO: JEFFREY C. PARKER, CITY MANAGER FROM: CITY MANAGER'S OFFICE -- I SUMMARY Biennially, the City is required to submit a report to the California State Department of Housing and Community Development (HCD), updating HCD and the State Legislature on Tustin Legacy Local Agency Military Base Recovery Area (LAMBRA) activities. • 9-1 •, I It is recommended the City Council take the following actions: • Receive and file the Tustin Legacy LAMBRA Biennial Report; and • Direct a copy of the Biennial Report for FY 2010-11 and FY 2011-2012 to be submitted to HCD. FISCAL IMPACT The only fiscal impact of this action has been the staff time necessary to prepare the Biennial Report. On September 10, 2001, the City of Tustin entered into a Memorandum of Understanding (MOU) with the California Technology, Trade and Commerce Agency designating the former Tustin Marine Corps Air Station as Local Agency Military Base Recovery Area (LAMBRA) Zone. The Tustin Legacy LAMBRA is known as a Government Targeted Economic Development Area (G-TEDA) and it became effective September 1, 2001. HCD became responsible for LAMBRA oversight when the California Technology, Trade and Commerce Agency was eliminated in 2004. All G- TEDAs are required to report their activities relative to their goals and objectives and commitments as stated in their original applications for designation and in the MOU to HCD. Although the MOU states the Tustin Legacy LAMBRA Zone expires August 31, 2009, the Governor signed AB 2875 on September 18, 2002, extending the Agenda Report November 20, 2012 Page 2 designation of LAMBRAs. AB 2875 defines the LAMBRA's effective starting date for the eight-year time period as beginning when the latter of the two following conditions are met: 1. All economic development parcels within the LAMBRA have been conveyed to the City from the Department of Navy; and 2. The Tustin Legacy LAMBRA has issued a Hiring Tax Credit Voucher. The City of Tustin has not met either of these conditions. When both have occurred, then the eight-year designation period will begin. The Biennial Report requires an update as to the progress that has been made these past two fiscal years relative to the goals, objectives and commitments set forth in our original application and MOU. In addition, the Report identifies the plans for the current and following fiscal year. When the City entered into the MOU in 2001, the following objectives were listed: 1. The City will market and promote the LAMBRA Zone Program as an aid for business attraction. 2. The City will provide the necessary staff and funding to implement all programs and plans identified in the final application. 3. The City will endeavor to secure the timely completion of necessary infrastructure development for the build-out of the Tustin Legacy LAMBRA Zone. 4. The City will provide annual written updates to the Agency and at other times as required by the Agency, to include information about the number of new businesses and their employees, employment changes to existing businesses, benefits being used by companies, projections of new businesses and any other information determined by the Agency to be necessary to effectively monitor the progress of the Tustin Legacy LAMBRA Zone. At this time, the only commercial development within Tustin Legacy is "The District at Tustin Legacy". In April 2011, the City Council adopted the Disposition Strategy for the former Master Developer Tustin Legacy Footprint. As commercial development begins to occur, staff will increase marketing efforts and promote LAMBRA tax incentives as an aid for business attraction. During these past two years, staff has responded to inquiries from tax consultants requesting information about our LAMBRA, produced and mailed Tustin Legacy LAMBRA brochures to each business within "The District", and conducted three business outreach visits with the Tustin Chamber of Commerce to retailers located at "The District". During those visits, information about LAMBRA's tax incentive was provided. In addition, on October 18, 2011, the City Council adopted Resolution No. 11-73, passing a fee schedule for the processing of Hiring Tax Credit Vouchers. The processing fee provides the City the ability to recover the costs Agenda Report November 20, 2012 Page 3 associated with processing the vouchers, including the HCD fee charged to the City for each voucher processed. Although the dissolution of Redevelopment has eliminated a major funding source for LAMBRA, the City is making a major investment through in-kind funding for personnel responsible for infrastructure development and the disposition of property. A Program Manager is assigned, as needed, the responsibility of performing LAMBRA duties and activities. The Program Manager is the point of contact for inquiries from businesses and tax consultants and provides support to the Office of the City Manager with any developer requests. The Program Manager is also responsible for providing monthly reports to HCD. Given the nature of inquiries recently, staff anticipates requests for Hiring Tax Credit Vouchers in the next year. The processing fee will provide the funding for the additional staff time spent reviewing and approving requests. Staff is available for any questions the City Council may have. Jerry Craig Program MaR 'er a , g Tustin Legacy LAMBRA Zone MOU Tustin Legacy Biennial Report (FY 2010-11 & 2011-12) MENORANDUM OF UNDERSTANWG between the City of Tustin — Tustin Legacy LAMBRA Zone and the California Technology, Trade and Commerce Agency 1 ii LEGAL AUTHORITY The City of Tustin ("City") has proposed the designation of the former Tustin Marine Corps. Air Station, now known as the Tustin Legacy, as a Local Area Military Base Retention Act ("LAMBRA") Zone, pursuant to §§ 7105 through 7117 of the California Government Code, for the purpose of stimulating and maintaining employment and investment in this economically depressed area. The California Technology, Trade and Commerce Agency ("Agency") reviewed the City's LAMBRA Zone application pursuant to California Government Code §7105 and the Application Guidelines, and granted a conditional approval of designation. BACKGROUND The LAMBRA Zone Program provides for the designation of regions in California for an eight-year period. The State of California has agreed to provide certain incentives to businesses located within these areas as specified in §§17053.45, 17053.46, 17268, 17276.5, 23645, 23646, 24356.8, and 24416.5 of the California Revenue and Taxation Code with the purpose of stimulating new investment and employment in said area. The Agency awarded conditional designation to the City of Tustin for the Tustin Legacy LAMBRA Zone based upon its application to the Agency. The application showed commitment to encourage and facilitate job maintenance as well as business and job development in the proposed LAMBRA Zone through a series of local incentives, projects and programs. The Agency had notified the City of its conditional designation effective June 17, 1997, and specified the additional conditions that must be met prior to the award of final designation. The City has addressed these additional conditions and the Agency now finds that the former Tustin Marine Corps. Air Station is eligible for final designation as the Tustin Legacy LAMBRA Zone. STATEMENT OF PURPOSE The Agency and the City enter into this Memorandum of Understanding ("MOU") for the purpose of assuring their mutual and common understanding of the intent of each party to use their best efforts, subject to the availability of financing, to continue and complete long-term projects and programs to attract private sector investment and employment to the Tustin Legacy LAMBRA Zone. Execution of this MOU by the undersigned representative of the Agency shall constitute final designation as set forth in California Government Code §7113. City of Tustin M01-0053 Page 2 of 2 OBJECTIVES It is mutually agreed that: 1. The City will market and promote the LAMBRA Zone Program as an aid for business attraction. 2. The City will provide the necessary staff and funding to implement all programs and plans identified in the final application. 3. The City will endeavor to secure the timely completion of necessary infrastructure development for the build-out of the Tustin Legacy LAMBRA Zone. 4. The City will provide annual written updates to the Agency and at other times as required by the Agency, to include information about the number of new businesses and their employees, employment changes to existing businesses, benefits being used by companies, projections of new businesses and any other information determined by the Agency to be necessary to effectively monitor the progress of the Tustin Legacy LAMBRA Zone. 5. This MOU may only be amended by the mutual written agreement of both parties. 6. This MOU will commence September 1, 2001. 7. This MOU and any amendments thereof, shall remain in effect until August 31, 2009, unless revoked earlier by the Agency in accordance with Government Code § 7116(d), terminated by the Agency, or until such time as the designation of the Tustin Legacy LAMBRA Zone is no longer binding, in force or effect. IN WITNESS THEREOF, the parties agree to have executed this MOU on the day, month and year noted. City of Tustin Christine A. Shingleton, stant City Manager Date City of Tustin V California Technology, Trade and Commerce Agency c8 Grogan, Dbpoty- Secretary Dite �alifornia Technology, Trade and Commerce Agency REQUIRED INFORMATION 1. Detailed reports of the progress the G- TEDA is making toward the goals and objectives and commitments set for the original designation or MOU. Tustin Legacy LAMBRA MOU: M01 -0053 Effective September 1, 2001 MOU OBJECTIVES PROGRESS — (FY 2010 -11 & 2011 -12) PLANS — (FY 2012 -13 & 2013 -14) The City will market and promote the LAMBRA Zone Program as an aid for business attraction. • The City has been marketing and promoting the LAMBRA Zone Program through City brochures and the following websites: HCD; California Association of Enterprise Zones; City of Tustin Redevelopment Agency (RDA); and Tustin Legacy. During this time, the City has not issued a Hiring Tax Credit Voucher. The City provides State of California Franchise Tax Board LAMBRA materials and a Tustin LAMBRA map to businesses and tax consultants seeking information about and the location of the LAMBRA. The City terminated an agreement with its Master Developer on 820 acres of the site due to the developer's default under the agreement and lack of any progress. On April 25, 2011, the City Council approved the Disposition Strategy for the former Master Developer Footprint at Tustin Legacy. A Request for Proposal (RFP) was issued in March 2012 for the development of the first commercial parcel (22.67 gross acres) since development of "The District at Tustin Legacy" in 2007. The City entered into an Exclusive Agreement to Negotiate in August 2012. The Developer proposes to construct approximately 184,640 square feet to include a commercial neighborhood center and medical offices. The City produced and distributed a Tustin Legacy LAMBRA brochure to all "The District at Tustin Legacy" businesses. The City has partnered with the Tustin Chamber of Commerce to conduct Business Outreach Visits to local Tustin businesses, including businesses located at "The District ". There have been three (3) visits conducted with retailers located in "The District ", during which time information about LAMBRA tax incentives was shared. • Although a one million square foot lifestyle retail center, "The District at Tustin Legacy ", has been built, there is still over 234 acres of property available for private non - residential development which would permit up to 6.7 million square feet of non - residential uses. • As substantial progress towards the development of the proposed 6.7 million square feet of non - residential space occurs, the City will prepare marketing materials to aid City and developer(s) efforts to attract businesses /targeted industries to Tustin Legacy. • The City recently participated in the International Council of Shopping Centers - Western Division Conference and will seek additional opportunities to connect with businesses through trade conferences. • The City will continue to update the City of Tustin and Tustin Legacy websites with additional LAMBRA materials. • The City will continue to partner with the Tustin Chamber of Commerce in conducting Business Outreach Visits to businesses located at "The District" and sharing information about the benefits of LAMBRA. Tustin Legacy LAMBRA MOU: M01 -0053 Effective September 1, 2001 1: MOU OBJECTIVES PROGRESS — (FY 2010 -11 & 2011 -12) PLANS — (FY 2012 -13 & 2013 -14) The City will provide the • The City has a Program Manager responsible for • Although the City funding has been significantly necessary staff and LAMBRA duties and activities. The Program impacted by the dissolution of Redevelopment, a funding to implement all Manager was the point of contact for inquiries from Program Manager will continue to be assigned the programs and plans businesses and tax consultants and provided responsibility of performing LAMBRA duties and identified in the final support to the Assistant City Manager with any activities. The Program Manager will be the point of application. developer requests. The Program Manager was also contact for inquiries from businesses and tax responsible for responding to HCD requests for consultants and provide support to the Office of the reports and networking with the California City Manager with any developer requests. The Association of Enterprise Zones (CAEZ). A Program Manager will also be responsible for Management Analyst was assigned to the LAMBRA responding to HCD requests for reports. An to assist the Program Manager. Administrative Secretary is assigned to assist the • In addition to the Program Manager identified for Program Manager with processing Hiring Tax Credit LAMBRA services, the City has committed Voucher Applications. tremendous staff resources with the Assistant City • In addition to the Program Manager identified for Manager, another Program Manager, and Project LAMBRA services, the City will continue to commit Manager assigned to the Tustin Legacy Project tremendous staff resources in planning for the working with Public Works and Community disposition and development of the remaining vacant Development staff in planning for the disposition parcels to be developed for private sector uses along and private use development of the vacant non- with the construction of infrastructure necessary to residential parcels along with the construction of facilitate development. backbone infrastructure. MOU OBJECTIVES The City will endeavor to secure the timely completion of necessary infrastructure development for the build out of the Tustin Legacy LAMBRA Zone. Tustin Legacy LAMBRA MOU: M01 -0053 Effective September 1, 2001 PROGRESS — (FY 2010 -11 & 2011 -12) PLANS — (FY 2012 -13 & 2013 -14) • The City has completed 155 million dollars of Tustin • The City will work with the DoF to meet the conditions Legacy Backbone Infrastructure, including a variety outlined in AB 1484 in order to receive a finding of of backbone storm drains, water and sewer facilities, completion. Once the City is issued a finding of dry utilities, traffic signals, and roadways. completion, the Tax Allocation Bonds can be used for • The City has been working diligently with the the purposes for which they were issued, to construct Department of Navy (DoN) to address remediation major backbone infrastructure at Tustin Legacy, issues in order to facilitate the conveyance of the infrastructure necessary to facilitate commercial remaining 126 acres of parcels committed to Tustin development. under its Navy- approved Economic Development • The City will continue to commit tremendous staff Conveyance Agreement, which is not anticipated to resources in working with DoN to expedite the conveyance of the remaining properties still belonging to the DoN, and planning for the disposition and development of the City -owned parcels along with the construction of infrastructure. The City Council has approved Disposition and Development Agreements for the development of two residential parcels and is currently negotiating development of two additional parcels, one residential and the other commercial. Developers will be required to construct infrastructure improvements and contribute towards the Tustin Legacy Fair Share Infrastructure Obligation. Although most of the current development is residential, the infrastructure being constructed and funded will facilitate the timely development of commercial parcels as they become available under the adopted Disposition Strategy. be complete until at least 2015. The City coordinated with DoN on its review of a Project Environmental Review Form (PERF) for mass grading, utility and building demolition, and erosion control on Navy -owned property under the current • lease to the City and ultimately to be conveyed to the City. The City continued a coordinated response in reviewing and disseminating appropriate documents to the Base Cleanup Team (BCT) and the Restoration Advisory Board (RAB) with City's special Washington D.C. counsel and the following agencies: DoN; the Environmental Protection Agency (EPA); the Department of Toxic Substances Control (DTSC); and the Regional Water Quality Control Board (RWQCB). • The City Council authorized the issuance and sale of Tax Allocation Bonds for the construction of priority major backbone infrastructure at Tustin Legacy, including the completion of a major north -south arterial, Tustin Ranch Road. Construction of Tustin Ranch Road commenced in the Fall of 2011 and will be completed in the Summer of 2013. Due to a Department of Finance (DoF) determination that existing contracts were not enforceable obligations as defined by AB 1X 26 and 1484, the DoF has denied the City's use of Tax Allocation Bonds. Tustin Legacy LAMBRA MOU: M01 -0053 Effective September 1, 2001 MOU OBJECTIVES PROGRESS — (FY 2010 -11 & 2011 -12) PLANS — (FY 2012 -13 & 2013 -14) The City will provide • As required by HCD's State Enterprise and Economic • The City will continue to submit the G -TEDA Monthly annual updates to the Development Section (SEEDS) Memo 8 -03, the City Report as well as respond to other HCD inquiries. Agency and at other times has been submitting the G -TEDA Monthly Report by • The City will be working with future developers to as required by the Agency, the 25th of each month as well as preparing other identify potential companies to outreach to for to include information reports as requested by HCD. commercial development as property is available for about the number of new • The City monitors lease and employment activity at development. businesses and their the only completed private development, "The employees, employment District ", within the LAMBRA and for a number of changes to existing public agencies operating within the project, businesses, benefits being including Rancho Santiago Community College used by companies, District, South Orange County Community College projections of new District, and the County of Orange and responds to businesses and any other concerns /issues when appropriate. information determined by the Agency to be necessary to effectively monitor the progress of the Tustin Legacy LAMBRA Zone. 2. Details of the prior two years' funding including in -kind funding. The previous two years' funding levels shall be compared to the funding levels identified in its original application and the department's memorandum of understanding with the G -TEDA, and the amount identified in the previous year's biennial report. The Report must provide an explanation of any meaningful discrepancies in these amounts. LAMBRA PROGRAM BUDGET 1997 -98 Pcrcnnncl Ass't City Mgr Senior RDA Project Mgr Senior Project Mgr - Planning Project Mgr - Contracts Support Staff SUBTOTAL Program Advertising Brochure Video Billboard Direct Mail Open House Mayor's Events Mini Van (tours) Miscellaneous Incentive Programs SUBTOTAL TOTAL $25,780 $39,000 $26,000 $35,000 $10,600 $136,380 $10,000 $15,000 $11,000 $3,500 $2,000 $2,500 $1,000 $12,000 $3,000 $20,000 $80,000 LAMBRA PROGRAM BUDGET 2010 -11 PROJECTED Personnel $20,400 In -Kind Personnel $381,600 Program Costs $57,600 TOTAL $459,600 ACTUAL Personnel $20,400 In -Kind Personnel $381,600 Program Costs $18,862 LAMBRA PROGRAM BUDGET 2011 -12 PROJECTED Personnel $28,160 In -Kind Personnel $381,840 Program Costs $63,600 TOTAL $473,600 ACTUAL Personnel $28,160 In -Kind Personnel $381,840 Program Costs 8 716 TOTAL 1 $420,862 1 TOTAL I $418,716 The majority of the costs the City has been contributing towards LAMBRA are in -kind personnel costs of former Redevelopment Agency staff working towards the development of the former Marine Corps Air Station (Tustin Legacy). The City has been making a major investment towards the development of Tustin Legacy that not only includes Agency personnel, as shown, but also includes personnel costs from Community Development and Public Works staff and consultants assigned to the project that are not shown. The City has been marketing the LAMBRA through Agency economic development efforts, tours of the former base, the City and Tustin Legacy websites, and the production of a Legacy video and exhibit. ILAMBRA PROGRAM 0 3 BUDGET I LAMBRA PROGRAM BUDGET I Personnel $216,380 In -Kind Personnel Program Costs $19,260 Personnel $495,130 In -Kind Personnel 4 150 Program Costs $19,260 $495,130 4 150 TOTAL 1 $518,540 1 TOTAL 1 $518,540 In the next two Fiscal Years (FY 2012 -13 & FY 2013 -14), the City will continue to invest heavily towards the development of Tustin Legacy and the majority of the costs the City will be contributing towards LAMBRA will be in -kind personnel costs. The City's investment in program activities has been significantly impacted by the dissolution of Redevelopment. As commercial development occurs in late FY 2013 -14 and during the next biennial reporting period (FY 2014 -15 & FY 2015 -16), the City will identify the necessary resources to market the LAMBRA benefits to prospective businesses. The City continues to be committed to the LAMBRA and will aggressively market the LAMBRA in cost effective methods not prevalent (i.e., Internet, flash drives, YouTube, Twitter, Facebook) when the City submitted our 1997 -98 LAMBRA program budget as well as through printed materials.