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ACCEPT THE 2023 ECONOMIC DEVELOPMENT SUBSIDY ANNUAL REPORT
recommended action
RECOMMENDATION
It is recommended that the City Council, by motion:
1. Accept the 2023 Economic Development Subsidy Annual Report, which includes all City-provided subsidies to developers for economic development purposes over $100,000; and
2. Authorize the City Manager to take appropriate and necessary actions to carry out the purpose and intent of this motion.
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Summary
Effective January 1, 2014, California Government Code Section 53083 (Attachment A) requires local governments to report any economic development subsidy exceeding $100,000 and to provide specific information to the public before approving any economic development subsidy of $100,000 or more. The City is compliant with these requirements and provides information to the public through reports to the City Council on a per-project basis for City programs.
Under this statute, the local agency is required to adopt the first economic development subsidy report within five years of granting an economic development subsidy. All subsequent reports must be prepared and adopted annually. The City adopted the first report, the 2014-2019 Economic Development Subsidy Report, on October 6, 2020, and has continued to adopt reports each year. The 2023 Annual Report (Attachment B) has been prepared to meet statutory requirements.
For the 2023 calendar year, the City provided $13,187,968.30 in eligible subsidies (over $100,000 per subsidy).
Background
On October 11, 2013, Assembly Bill (AB) 562 - Chapter 740 was approved by Governor Brown and became effective January 1, 2014. The bill created a new section of the Government Code requiring local governments to report on any economic development subsidy over $100,000. The term “economic development subsidy” is defined as any expenditure of public funds or loss of revenue to a local agency in the amount of one hundred thousand dollars ($100,000) or more for the purpose of stimulating economic development within the jurisdiction of a local agency, including, but not limited to, bonds, grants, loans, loan guarantees, enterprise zone or empowerment zone incentives, fee waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax credits. Affordable housing projects do not require economic development subsidy reporting.
The following information is required by AB 562:
Before approval of subsidy
1. The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy, if applicable.
2. The start and end dates and schedule, if applicable, for the economic development subsidy
3. A description of the economic development subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the local agency as a result of the economic development subsidy.
4. A statement of the public purposes for the economic development subsidy.
5. Projected tax revenue to the local agency as a result of the economic development subsidy.
6. Estimated number of jobs created by the economic development subsidy, broken down by full-time, part-time, and temporary positions.
This information is provided to the public through reports to the City Council on a per-project basis.
Within five years after granting subsidy:
1. The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy, if applicable.
2. The start and end dates and schedule for the economic development subsidy.
3. A description of the economic development subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the local agency as a result of the economic development subsidy.
4. The net tax revenue accruing to the local agency as a result of the economic development subsidy.
5. The net number of jobs created by the economic development subsidy, broken down by full-time, part-time, and temporary positions.
This information is provided to the public through the annual Economic Development Subsidy Report.
Present Situation
Local agencies are required to provide an annual report of all economic development subsidies no later than five (5) years after the action granting an economic development subsidy. The City has prepared the 2023 Annual Report (Attachment B) to meet statutory requirements.
The 2023 Annual Report indicates that the City provided $13,187,968.30 in economic subsidies for “qualifying” criteria, which includes projects that received over $100,000 in economic development subsidy and are either bonds, grants, loans, loan guarantees, enterprise zone or empowerment zone incentives, fee waivers, land price subsidies, matching funds, tax abatement, tax exemptions, and tax credits.
For the 2023 calendar year, the City Programs that require reporting on the annual AB 562 report are:
• Stockton Economic Stimulus Plan (SESP) Program for Public Facility Fee (PFF) waivers
• Public Facility Fee Reduction to Non-Residential Projects
• Office and Industrial Sales Tax Incentive Program
Financial Summary
Total 2023 subsidies are as follows:
|
Program |
Eligible Subsidies |
|
Stockton Economic Stimulus Plan (SESP) for PFF Waivers |
$8,764,165.49 (SF) |
|
Public Facility Fee (PFF) Reduction for Non-residential Projects |
$1,463,165.81 |
|
Greater Downtown Stockton Residential Development PF Exemption |
- |
|
Downtown Infill Infrastructure Program |
- |
|
Office and Industrial Sales Tax Incentive Program |
$2,960,637.00 |
|
TOTAL |
$13,187,968.30 |
There is no financial impact with the filing of the 2023 Economic Development Subsidy Annual Report. However, during the 2023 calendar year, the City provided $13,187,968.30 in eligible subsidies (over $100,000 per subsidy). As a result, $10,227,331.30 in PFF funds were not available to fund development-related Capital Improvement Plan (CIP) projects.
Public Notice
A public hearing notice was published in the Stockton Record on May 14, 2024. To date, no comments have been received.
Attachment A - Government Code 53083
Attachment B - Economic Development Subsidy 2023 Annual Report