title
PUBLIC HEARING TO ACCEPT ASSEMBLY BILL 562 ECONOMIC DEVELOPMENT SUBSIDY 2014 - 2019 ANNUAL REPORT
recommended action
RECOMMENDATION
It is recommended that the City Council, by motion:
1. Accept the Assembly Bill 562 Economic Development Subsidy 2014 - 2019 Annual Report, which includes all subsidies the City has provided 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.
body
Summary
Assembly Bill (AB) 562 (Williams, Attachment A) requires local governments to report any economic development subsidy exceeding $100,000 beginning January 1, 2014, 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. The statute also requires a report to be provided to the public on an annual basis. The first report must be provided no later than five years after the action granting an economic development subsidy. Therefore, the City has prepared the 2014 - 2019 Annual Report (Attachment B) to meet the requirements of the statute.
DISCUSSION
Background
On October 11, 2013, Assembly Bill (AB) 562 was approved by Governor Brown and became effective January 1, 2014. The bill requires local governments to report on any economic development subsidy over $100,000. According to the statute, an “economic development subsidy” means 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.
The following information is required as a part of the report:
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.
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.
According to AB 562, affordable housing projects do not require economic development subsidy reporting.
Present Situation
Local agencies are required to provide an annual report of all economic development subsidies no later than five years after the action granting an economic development subsidy. The City has prepared the 2014 - 2019 Annual Report (Attachment B) to meet the requirements of the statute.
The 2014 - 2019 Annual Report indicates the City provided approximately $30.8 million in economic subsidies for “qualifying” criteria based upon AB 562, 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. The City provided a total of approximately $30.8 million for all qualifying economic subsidies within 2014 - 2019.
The City Programs that qualify to report on the annual AB 562 report are:
• Stockton Economic Stimulus Plan (SESP) Program
• Public Facility Fee Reduction to Non-Residential Projects
• Greater Downtown Stockton Residential Development Public Facilities Fee Exemption
• Downtown Infill Infrastructure Program
• Commercial Façade Improvement Forgivable Loan Program
• Office and Industrial Sales Tax Incentive Program
The City Programs that do not meet the AB 562 reporting qualifications but were included in the report for transparency purposes are:
• Storefront Beautification Microgrant Program
• Stocked Full of Produce Grant Program
• Industrial Development Bonds (IDBs)
• Lien Forgiveness Program (Commercial)
• Commercial Emergency Grant Program
Financial Summary
Total subsidies are as follows:
|
PROGRAM |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
|
SESP |
- |
- |
3,749,554 |
4,057,950 |
5,106,852 |
5,374,616 |
|
Non-Residential PFF Fee Reduction |
- |
- |
917,351 |
2,714,019 |
998,174 |
1,535,113 |
|
GDA Res. PFF Exemption |
- |
- |
- |
718,080 |
- |
29,145 |
|
Downtown Infill Pgm. |
- |
- |
- |
- |
400,000 |
- |
|
Storefront Microgrant Pgm. |
- |
- |
- |
- |
- |
7,873 |
|
Fresh Produce Grant Pgm. |
- |
- |
- |
- |
- |
19,803 |
|
Industrial Development Bonds |
- |
- |
- |
- |
- |
- |
|
Lien Forgiveness Pgm. |
33,018 |
13,504 |
- |
71,000 |
85,236 |
|
|
Emergency Grant Pgm. |
- |
- |
7,735 |
- |
- |
- |
|
Façade Loan Pgm. |
- |
189,687 |
161,639 |
182,420 |
52,797 |
- |
|
Sales Tax Reimbursement Program |
- |
210,139 |
371,597 |
1,678,119 |
1,325,792 |
2,367,091 |
|
TOTAL |
33,018 |
413,330 |
5,207,876 |
9,421,588 |
7,968,851 |
9,333,641 |
For the period of 2014-2019, the City provided $30.8 million in AB 562 eligible subsidies (i.e. over $100,000 per subsidy) and an additional $1.5 million in non-eligible subsidies (less than $100,000 per subsidy) for a total of $32.3 million.
The City has generated more than $5.9 million in net new sales tax revenue as a result of the Office and Industrial Sales Tax Incentive Program (listed as the “Sales Tax Reimbursement Program” above) between the 2014 and 2019 reporting period.
Additional program and subsidy information is within the Annual Report.
There is no financial impact with the filing of the AB 562 Economic Development Subsidy 2014 - 2019 Annual Report (Attachment B).
Attachment A - Assembly Bill 562
Attachment B - AB 562 Economic Development Subsidy 2014 - 2019 Annual Report