HomeMy WebLinkAbout7.5 CJC Fallon Gatewy Sales Tax Reimbor
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DATE:
TO:
FROM:
SUBJECT
STAFF REPORT
CITY COUNCIL
July 16, 2013
Honorable Mayor and City Councilmembers
Joni Pattillo City Manager""'
CITY CLERK
File #600 -30
Sales Tax Reimbursement Agreement with CJC Fallon Gateway LLC
Prepared by Hazel L. Wetherford, Economic Development Analyst
EXECUTIVE SUMMARY:
In January 2009, the City Council adopted the Sales Tax Reimbursement Program as one way
to stimulate economic investment in Dublin. Representatives of CJC Fallon Gateway LLC
requested participation in the Sales Tax Reimbursement Program to offset a portion of the
$399,750 in construction costs for certain improvements associated with a new gas station /car
wash at Fallon Gateway (located on the southwest corner of Dublin Blvd. and Fallon Rd.).
FINANCIAL IMPACT:
Under the terms of the proposed Agreement, CJC Fallon Gateway LLC would be eligible to
receive up to $382,000 over a five -year period, based on the taxable revenue generated from
the project of $10 million or more annually. The amount of reimbursement is dependent on the
performance of the gas station /car wash facility and would not exceed 50 percent of the center's
eligible sales tax revenue. As proposed, the Agreement would be revenue positive to the City.
RECOMMENDATION:
Staff recommends that the City Council adopt the proposed Resolution approving an Agreement
for Reimbursement of Sales and Use Tax Revenue with CJC Fallon Gateway LLC relating to
construction costs to be performed on a property located at Fallon Gateway (located on the
southwest corner of Dublin Blvd. and Fallon Rd.).
Submitted By
Economic Development Director
DESCRIPTION:
Reviewed By
Assistant City Manager
Background
At the January 6, 2009 City Council meeting, the City Council approved the Sales Tax
Reimbursement Program as the first element of the Economic Incentive Program. The Program
was later amended on October 6, 2009 by Resolution No. 149 -09 and then again on July 17,
Page 1 of 2 ITEM NO. 7.5
2012 by Resolution No. 135 -12 to meet current economic development needs for the City. The
most recent modifications added a new section to the Program giving additional flexibility to the
City to consider sales tax reimbursements relating to the cost of certain construction
improvements of new buildings and structures.
On March 5, 2013, Staff presented a request from CJC Fallon Gateway LLC to the City Council
for participation in the City's Sales Tax Reimbursement Program (Attachment 3). The City
Council provided Staff direction to work with the representatives from CJC Fallon Gateway LLC
on an agreement.
Request for Reimbursement
Staff has been working with CJC Fallon Gateway LLC on the structure of the proposed
agreement for the past few months. Eligible improvement costs consist of those associated with
construction of masonry columns and parapets for a convenience store and car wash structure,
a tower element associated with the convenience store, brick planter boxes and a trash
enclosure. The total construction valuation of those improvements is approximately $399,750.
Of this amount, CJC Fallon Gateway LLC is seeking reimbursement for up to $382,000 of
construction costs. This was the gap amount identified by CJC Fallon Gateway's
representatives as being needed in order to bring the project to Dublin vs. another site in a
locality nearby.
The proposed Agreement (Exhibit A to Attachment 1) provides CJC Fallon Gateway LLC with
fifty (50) percent of the City's portion of new sales tax revenue generated at the Dublin site for a
period of five (5) years. However, no payments will be made if CJC Fallon Gateway LLC does
not generate at least $10 million in taxable sales annually, which is equivalent to one hundred
thousand dollars ($100,000) of new sales tax revenue to the City in each of those years. The
Agreement, as proposed, meets the criteria established in the Sales Tax Reimbursement
Program.
The Sales Tax Reimbursement Program was designed to ensure that the sales tax
reimbursement agreements will benefit the public. In addition to meeting the Program criteria of
improving new, existing and vacant buildings in Dublin, there are other financial benefits to the
City. First, the City will be receiving a new, ongoing source of sales tax revenue that is likely to
exist beyond the time -frame of the proposed agreement. Additionally, the improvements to the
property will result in a reassessment of the property's value, increasing the City's property tax
revenue.
In addition to the tax benefits to the City and its residents, this agreement will also result in
improvements to the appearance of the property, thus enhancing the character of the
neighborhood, to the benefit of City residents. Finally, CJC Fallon Gateway LLC will generate
new jobs in the City and the employees are likely to spend money at other business
establishments in the City, thus generating additional sales tax revenue for the City.
NOTICING REQUIREMENTS /PUBLIC OUTREACH: None.
ATTACHMENTS: 1. Resolution Approving the Sales and Use Tax Reimbursement
Agreement
2. Exhibit A to Attachment 1 — Sales and Use Tax Reimbursement
Agreement
3. March 5, 2013 Staff Report (Request for Participation in the Sales
Tax Reimbursement Program)
Page 2 of 2
RESOLUTION NO. -13
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING THE SALES TAX REIMBURSEMENT AGREEMENT WITH CJC
FALLON GATEWAY LLC
WHEREAS, the City Council of the City of Dublin adopted Resolution No.
9 -09 on January 6, 2009 establishing a Sales Tax Reimbursement Program
( "Program ") for a period of two years for a five (5) year reimbursement period for
participants, which would be made available to businesses that would generate
ten million dollars ($10,000,000) in taxable sales annually, which is equivalent to
one hundred thousand dollars ($100,000) of new sales tax revenue to the City
each year; and
WHEREAS, the City Council adopted Resolution No. 149 -09 on October
6, 2009, revising and restating the Program to permit the option of a ten (10) year
reimbursement period for participants that generate five million dollars
($5,000,000) in taxable sales annually, which is equivalent to five hundred
thousand dollars ($500,000) of new sales tax revenue to the City each year; and
WHEREAS, the City Council adopted Resolution No. 135 -12 on July 17,
2012, revising and restating the Program to include improvement costs made by
businesses that are constructing new structures on undeveloped property sites or
that may be tenants in such new structures, and extending the term of the
Program until January 5, 2015; and
WHEREAS, the Program authorizes the City of Dublin to enter into
agreements with property owners and businesses, in certain circumstances,
wherein the City agrees to reimburse the owner or business for the actual costs
of certain pre- approved improvements to business properties utilizing sales tax
revenue attributable to the businesses operating on the property; and
WHEREAS, the Program provides for reimbursements to be made in
annual payments over five (5) or ten (10) years or until the owner or business
has recouped the maximum payment amount to which it is entitled, whichever
comes first; and
WHEREAS, the annual reimbursement payment is capped at fifty percent
(50 %) of the sales and use tax revenue (hereafter "sales tax ") generated by the
business in the preceding four quarter year; and
WHEREAS, at the March 5, 2013 City Council meeting, the Council
authorized Staff to negotiate a Sales and Use Tax Agreement with CJC Fallon
Gateway LLC, a gas station development company, who is constructing a gas
station /car wash facility at the southwest corner of Dublin Blvd. and Fallon
Gateway; and
WHEREAS, CJC Fallon Gateway LLC seeks reimbursement for the
eligible improvement costs associated with construction of masonry columns and
parapets for a convenience store and car wash structure, a tower element
associated with the convenience store, brick planter boxes and a trash enclosure
and wishes to avail itself of the benefits of the Program by entering into an
agreement with the City to receive reimbursement from the City to be based on
sales tax revenue generated; and
WHEREAS, under the City's Program, CJC Fallon Gateway LLC is eligible
to participate in a 5 -year reimbursement period, as taxable sales generated at
the site are estimated to be in excess of $10 million annually; and
WHEREAS, but for the existence of this Agreement, CJC Fallon Gateway
LLC would not be able to develop the gas station / car wash; and
WHEREAS, the City Council finds that it is in the public interest to enter
into this agreement because the City and its residents will benefit from increased
revenue received from both sales tax revenue that it may not otherwise receive,
and from the increase in property taxes resulting from an increase in the value of
the assessable value of the property attributable its development; and
WHEREAS, the City Council finds that it is in the public interest to enter
into this Agreement because the City and its residents will benefit from the
aesthetic improvements of the Dublin Blvd. and Fallon Road area; and
WHEREAS, the City Council further finds that it is in the public interest to
enter into this Agreement because the City and its residents will also benefit from
the creation of new jobs in the City resulting from the development of this gas
station /car wash.
NOW, THEREFORE BE IT RESOLVED that the City Council of the City of
Dublin approves the Sales Tax Reimbursement Agreement, attached hereto as
Exhibit A, and titled "Agreement for Reimbursement of Sales and Use Tax
Revenue between the City of Dublin and CJC Fallon Gateway LLC."
BE IT FURTHER RESOLVED that the City Manager is authorized to
execute the Agreement substantially in the form attached hereto and to
undertake such further action as may be necessary and desirable to carry out the
intent of this Resolution.
PASSED, APPROVED AND ADOPTED this 16th day of July, 2013, by
the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
City Clerk
2105029.1
Mayor
AGREEMENT FOR REIMBURSEMENT OF SALES AND USE TAX REVENUE
BETWEEN THE CITY OF DUBLIN AND CJC FALLON GATEWAY, LLC
THIS AGREEMENT is made and entered into this _ day of July, 2013, by and between the City
of Dublin ( "City "), a municipal corporation, and CJC Fallon Gateway, LLC, a California Limited Liability
Corporation ( "Tenant "), collectively referred to as "the Parties."
RECITALS
WHEREAS, the City Council of the City of Dublin adopted Resolution No. 9 -09 on January 6, 2009,
which Resolution established a Sales Tax Reimbursement Program ( "Program ") whereby eligible
businesses that would generate ten million dollars ($10,000,000) in taxable sales annually, which is
equivalent to one hundred thousand dollars ($100,000) of new sales tax revenue to the City, could enter
into an agreement with the City for reimbursement of a portion of their sales tax revenue over a five (5) year
period for participants in order to cover costs of improvements made to the property at which those
businesses are located; and
WHEREAS, the City Council adopted Resolution No. 149 -09 on October 6, 2009, revising and
restating the Program to permit the option of a ten (10) year reimbursement period for participants that
generate fifty million dollars ($50,000,000) in taxable sales annually, which is equivalent to five hundred
thousand dollars ($500,000) of new sales tax revenue to the City each year; and
WHEREAS, the City Council adopted Resolution No. 135 -12 on July 17, 2012, revising and
restating the Program to include improvement costs made by businesses that are constructing new
structures on undeveloped property sites or that may be tenants in such new structures, and extending the
term of the Program through January 5, 2015; and
WHEREAS, the Program authorizes the City of Dublin to enter into agreements with businesses in
certain circumstances, wherein the City agrees to reimburse the business for the actual costs of certain
pre- approved improvements to business properties; the reimbursement is made in annual payments over
five years or until the tenant or business has recouped its actual expenses for the improvements, whichever
comes first; and the annual payment is capped at fifty percent (50 %) of the sales and use tax revenue
(hereafter "sales tax ") generated by the business in the preceding year; and
WHEREAS, provided certain circumstances are met, the Program allows Tenants to recover, over
time, a portion of the costs of interior, exterior and site improvements made to their property through a
partial reimbursement from the City of sales tax generated from the property; and
WHEREAS, Tenant leases a portion of certain real property located at southwest corner of Dublin
Boulevard and Fallon Road (APNs: 985 - 0079 - 003 -00; 985 - 0079 - 001 -03; 985 - 0079 - 002 -01; and 985 -0079-
005-00) , ( "the Property "), located in the City; and
WHEREAS, the space to be occupied by Tenant is currently unimproved and has a total area of
thirty -three thousand seven hundred thirty five (33,735) square feet or less, and Tenant has furnished the
City with documentation establishing that Tenant is expected to have at least ten million dollars
($10,000,000) in taxable sales annually attributable to operations conducted at the Property, which would
result in at least one hundred thousand dollars ($100,000) of new sales tax revenue to the City each year;
and
WHEREAS, Tenant intends to utilize any reimbursements paid pursuant to this agreement to cover
the costs of constructing the following exterior improvements to the Property: masonry columns and
parapets associated with a convenience store and car wash structure, construction of a tower element
associated with the convenience store, brick planter boxes and a trash enclosure for the business; and
WHEREAS, The cost estimate for these improvements is $399,750, and the tenant will be eligible
for $382,000 of reimbursement pursuant to this Agreement; and
WHEREAS, the Tenant has provided documentation establishing that, but for the existence of the
Program, Tenant would be unable to locate its business within the City of Dublin,
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual advantages to be derived therefrom,
and in consideration of the mutual covenants herein contained, it is agreed by and between the Parties
hereto as follows:
DEFINITIONS
1.1 "Eligible Compensation Amount" means three hundred eighty two thousand dollars
($382,000).
1.2 "Improvements" means all improvements to be made to Property identified in Exhibit A of
this Agreement.
1.3 "Reporting Year" means any twelve month period for which Tenant provides an accounting
of Tenant's sales tax payments, which payments are subject to possible reimbursement.
2. TENANT'S DUTIES UNDER THIS AGREEMENT
2.1 Tenant wishes to perform certain Improvements substantially as described in Exhibit A of
this Agreement.
2.2 Prior to commencement of construction of the Improvements or any portion thereof,
Tenant shall submit to City all plans, specifications and cost estimates for the
Improvements for City review and approval. Nothing in this Agreement shall affect the
need for Tenant to obtain any approvals from the City for the Improvements as required by
any City rules, regulations, ordinances or resolutions.
2.3 Following City approval of the plans, specifications and cost estimates pursuant to Section
3.1, and in the event that Tenant desires to modify the specifications for any of the
Improvements or if change orders are required. Tenant shall submit the modifications,
change orders and any revisions to the originally approved cost estimated to City for
approval. Failure to do so shall relieve the City of any obligation to pay for any
Improvements not constructed as approved.
2.4 Tenant shall provide the City with all bills and evidence of payment for the Improvements,
in a form acceptable to City within thirty (30) days of Tenant's final payment for the
Improvements. A form acceptable to the City could include a summary of the original
estimate and final amount paid to each vendor. This summary would also require copies
of receipts and paid invoices as an attachment to the summary.
2.5 The actual cost of the Improvements paid by Tenant, as indicated by City in the written
Notice of Maximum Amount provided to Tenant by City pursuant to Section 3.2 of this
Agreement shall constitute the Maximum Compensation Amount. In no event shall said
Maximum Compensation Amount exceed the Eligible Compensation Amount of three
hundred eighty two thousand dollars ($382,000).
2.6 A representative of the City shall have the right, at the City's sole discretion, to inspect all
Improvement work performed to ensure that said work was performed substantially as
approved by the City pursuant to Section 3.1 of this Agreement. This right of inspection
shall be in addition to any inspection performed by City staff as required or permitted by
any other City rules, regulations, ordinances or resolutions.
2.7 Tenant shall file with the State Board of Equalization a separate sales tax return
encompassing sales tax data relating to sales made at the Property only, regardless of any
other sales activity conducted at other locations within the City. Beginning with the first full
quarter in which Tenant pays sales taxes on its operations at the Property, and for every
subsequent quarter, Tenant shall provide City with copies of all sales tax returns filed with
the State Board of Equalization for a period of five (5) years. For example, if Tenant
begins operations in February of a given year, the first sales tax return submitted to the
City shall be for the period from April through June of that year. Tenant shall provide City
with quarterly returns within thirty (30) days of submitting each return to the Board of
Equalization.
Said submission of quarterly sales tax returns shall end when City has made its final
payment to Tenant pursuant to this Agreement.
2.8 Tenant shall provide City with a total of twenty (20) consecutive quarterly returns, covering
sales taxes paid over a total of five (5) consecutive twelve month periods. Each such
twelve month period constitute a Reporting Year. Thus, if the first sales tax return
submitted pursuant to Section 2.7 encompasses the period from April through June of a
given year, the first Reporting Year shall run from April of that year through March of the
following year, after which the second Reporting Year shall commence. In the event that
Tenant has been fully reimbursed the Maximum Compensation Amount, Tenant shall not
be obligated to provide additional quarterly returns pursuant to this Section.
2.9 In the event that Tenant learns or is notified that the sales taxes it has paid were
incorrectly allocated between City and any other taxing entity for any quarter for which
Tenant has provided City with sales information pursuant to Section 2.7 of this Agreement,
Tenant shall promptly notify City of the error within thirty (30) days of such notification.
2.10 In the event that City determines, pursuant to Section 3.9 of this Agreement, that it
overpaid Tenant due to a miscalculation or misallocation of sales tax payments, and if City
is not obligated to make any additional payments to Tenant pursuant to this Agreement,
Tenant shall pay to City the amount City overpaid within thirty (30) days of notification by
City of the overpayment.
2.11 Tenant hereby acknowledges and agrees that the City may, as required by law, disclose to
third parties confidential information contained in or derived from the sales tax returns
submitted to City pursuant to Section 2.7 of this Agreement. Such information includes,
but is not limited to, the amount of any payments made to Tenant pursuant to Section 3.3
of this Agreement.
3. CITY'S DUTIES UNDER THIS AGREEMENT
3.1 Upon receipt of the plans, specifications and cost estimates, for the Improvements pursuant to
Section 2.2 of this Agreement, or upon submission of revised specifications for any of the
Improvements, change orders or any revisions to the originally approved cost estimates
pursuant to Section 2.3, City shall review said materials to determine the extent to which they
represent work that is consistent with the intent of the Program. City shall inform Tenant in
writing either that the proposed Improvements have been approved, or that they have been
approved with exceptions, which exceptions shall also be in writing.
3.2 Upon receipt of evidence of payment for the Improvements pursuant to Section 2.4 of this
Agreement, City shall provide Tenant with a written Notice of Maximum Amount that may be
paid to Tenant under this Agreement, which amount shall reflect Tenant's actual costs for the
Improvements, and which shall not exceed the Eligible Compensation Amount of three
hundred eighty two thousand dollars ($382,000).
3.3 City shall verify the accuracy of all sales tax returns submitted to City pursuant to Section 2.7
of this Agreement. Within one hundred twenty (120) days after receipt of the final sales tax
return of each Reporting Year, as that term is defined in Section 2.8 of this Agreement, the City
shall pay Tenant an amount equal to fifty percent (50 %) of the sales tax paid by Tenant in the
preceding Reporting Year, subject to the provisions of Sections 3.4, 3.5, 3.6, 3.7 and 3.8 of this
Agreement. In no event shall the City's payment to Tenant for any one Reporting Year exceed
one hundred seventy -five thousand dollars ($175,000).
3.4 Should Tenant fail to timely submit its sales tax returns to City, City shall be under no
obligation to make any payment to Tenant for that year.
3.5 In no event shall City make any payment to Tenant for any Reporting Year in which the total
sales tax paid by Tenant relating to sales on the Property is less than one hundred thousand
dollars ($100,000).
3.6 At no time shall the cumulative amount of City's payments be more than the Maximum
Compensation Amount that may be paid to Tenant determined pursuant to Section 3.2 of this
Agreement.
3.7 In no event shall City be obligated to pay Tenant based on sales tax generated more than five
(5) years after the first quarter Tenant submits its sales tax return pursuant to Section 2.7 of
this Agreement.
3.8 In the event that Tenant vacates the Property or ceases to conduct business at the Property
before submitting sales tax returns encompassing five (5) consecutive years, City's obligation
to pay Tenant shall be based only on the amount of sales tax generated by Tenant while
occupying the Property.
3.9 If, pursuant to Section 2.9 of this Agreement, Tenant informs City that its sales tax payments
were incorrectly allocated to the City, or if the City otherwise learns that Tenant's sales tax
payments were incorrectly allocated to the City, and if the result of the incorrect allocation is
that City paid Tenant more or less than it would have been required to pay pursuant to Section
3.3 of this Agreement, City shall determine the amount of overpayment or underpayment.
If the City is obligated to make any subsequent annual payment to Tenant pursuant to this
Agreement, City shall adjust the subsequent payment to reflect any overpayment or
underpayment it may have made for the period in question.
If City is not obligated to make any additional payments to Tenant pursuant to this Agreement,
but has determined that it underpaid Tenant, City shall pay Tenant the amount it underpaid,
provided that the sum total of payments to Tenant do not then exceed the Maximum
Compensation Amount. This payment shall be made within thirty (30) of City's discovery of the
amount of the underpayment.
If City is not obligated to make any additional payments to Tenant pursuant to this Agreement,
but has determined that it overpaid Tenant, Tenant shall pay City the amount City overpaid in
compliance with Section 2.10 of this Agreement.
4. INDEMNIFICATION
Tenant shall defend City, its officers, employees and officials, against any claims or actions
(including declaratory or injunctive relief) concerning Tenant's construction of the Improvements
and shall indemnify and hold City harmless from any damages, charges, fees or penalties that may
be awarded or imposed against City and/or Tenant in connection with, or on account of, Tenant's
construction of the Improvements or City's failure to enforce or comply with any applicable laws,
including but not limited to the requirements of the California Labor Code, Section 1771, et seq.
5. AMENDMENTS TO AGREEMENT
No part of this Agreement shall be altered or amended without written agreement of the signatory
Parties.
6. ASSIGNMENT
The rights and obligations of the Parties under this agreement are not assignable and shall not be
delegated without the prior written approval of the other Party.
7. EXHIBITS
The following Exhibit is attached hereto and incorporated as if fully set forth herein:
Exhibit A: Description of Improvements.
IN WITNESS WHEREOF, the Parties execute this agreement hereto on the day and the year first written
above.
APPROVED AS TO FORM AND CONTENT:
in
John D. Bakker, City Attorney, City of Dublin
ADOPTED BY:
CITY OF DUBLIN, a Municipal Corporation
Joni Pattillo, City Manager
Date:
CJC Fallon Gateway, LLC, a California Limited Liability Corporation
By: Date: 7—,? 1-3
Carl A. Cox, Managing Member
EXHIBIT A
Description of Improvements
The Eligible Compensation Amount under this Agreement is $382,000. This amount is less than the
planned improvement costs described in a letter submitted by the tenant, CJC Fallon Gateway, LLC, dated
March 27, 2013, which letter has been reviewed and validated by City Staff. Based on this letter, the
estimated costs of the eligible Improvements are as follows:
Convenience Store:
Masonry columns and parapets — approximately $120,000
Construction of a tower element using scored stucco treatment — approximately $135,000
Brick planter boxes — approximately $4,750
Car Wash Building:
Masonry columns and parapets — approximately $95,000
Trash enclosure — approximately $45,000
2074738.5
or
19 82
/ii � 111
DATE:
TO:
FROM:
SUBJECT
STAFF REPORT
CITY COUNCIL
March 5, 2013
Honorable Mayor and City Councilmembers
Joni Pattillo City Manager""'
CITY CLERK
File #470 -50
Participation Requests for Economic Development Incentive Programs
Prepared by Hazel L. Wetherford, Economic Development Analyst
EXECUTIVE SUMMARY:
The City received a request from Fresh Millions to participate in the City's Sewer Capacity
Assistance Program, and a request from C & J Cox Corporation to participate in the City's Sales
Tax Reimbursement Program. Fresh Millions is in contract to lease a commercial suite located
in the Tralee Village project and would propose to use the assistance to offset the costs for the
improvements in the new restaurant. C & J Cox Corporation is in negotiations to construct a
new gas station /car wash proposed for the Fallon Gateway project and would propose to use
the assistance to offset the costs for the construction of the station.
FINANCIAL IMPACT:
If the City Council provides direction to Staff to proceed, there could be legal fees associated
with the review of the agreement for sewer capacity and sales tax reimbursement.
RECOMMENDATION:
Staff recommends that the City Council provide direction regarding each request for
participation in the City's economic development incentive programs.
Submitted By
Economic Development Director
DESCRIPTION:
Reviewed By
Assistant City Manager
Sewer Capacity Assistance Request
On May 4, 2010, the City Council adopted Resolution 53 -10 approving a Letter Agreement with
the Dublin San Ramon Services District (DSRSD) for the Administration of Unused Sewer
Capacity for the City of Dublin.
Commonly referred to as the Sewer Capacity Assistance Program, the Program allows the City
to market its excess sewer capacity as an economic development incentive program to help
stimulate economic growth in the community. The Program is designed to support large and
Page 1 of 4 ITEM NO. 8.1
small businesses and encourage the recruitment, renovation or re -use of properties in Dublin.
The Program allows the City to provide a credit of up to twenty -five percent (25 %) of the DSRSD
connection fees that would otherwise be paid by the applicant. The Program currently has 44
Dwelling Unit Equivalents (DUE) available.
The City received a request to participate in the program from Fresh Millions (Attachment 1),
who is in contract to lease a commercial suite located in the Tralee Village project. The City
Council is being asked to consider this request seeking sewer capacity assistance for the
construction of a restaurant. DSRSD has estimated a requirement of 3.0 DUE for this tenant.
The program was initiated with 66.2 DUE. Since the program's adoption, the City has made the
following DUE commitments:
Initial City DUE Holdings:
66.2
Allocated:
Stanforth Holdings, LLC (BJ's Restaurant) -6.0
Red Mountain Retail Group -2.0
Pending:
Regency Centers -14.0
Remaining DUE Holdings: 44.2
Through the Program, the City would be able to assist Fresh Millions with the allocation of
approximately 0.75 DUEs (value: approximately $13,052 in DSRSD fees) of the 44.2 DUEs of
excess sewer capacity that the City has unreserved. The 0.75 DUE is 25% of the 3.0 DUE
estimated by DSRSD.
Staff believes that the investment of sewer capacity at this location will further assist in the City's
economic development efforts to bring high quality retail and restaurants to the Dublin
community that will likely result in higher sales tax revenues to the City.
Staff presented this request to the Standing Economic Development Committee on February 11,
2013 and they were supportive of the request. This request falls under the Committee's purview
to provide policy guidance and direction on economic development activities. The Committee is
requesting that the full City Council consider the request.
Staff is seeking City Council direction at this time before investing a significant amount of Staff
time and associated legal fees in drafting the necessary agreement. Prior to entitlement, Staff
will prepare the necessary agreements between the City, DSRSD, and the property
owner /applicant for the City Manager to execute per Resolution 53 -10 (Attachment 2).
Sales Tax Reimbursement Agreement
On January 6, 2009, the City Council adopted Resolution 09 -09 approving the Sales Tax
Reimbursement Program. The Program was later amended on October 6, 2009 by Resolution
149 -09 and then again on July 17, 2012 by Resolution 135 -12 to meet the current economic
development needs for the City. The July 17, 2012 modifications added a new section to
provide Staff with the flexibility to consider extending some form of sales tax reimbursement
relief for improvements related to the construction of new buildings and structures.
Page 2 of 4
In summary, the Sales Tax Reimbursement Program assists developers, property owners
and /or business owners to help offset costs associated with improvements to the property or
improvements relating to construction of new buildings and structures.
For businesses generating $100,000 or more in new sales tax revenue to the City annually, the
Program allows a reimbursement for the improvement costs of up to 50 percent of that annual
revenue. This amount is payable for up to five years but for no more than the amount of the
eligible improvement costs.
For a business generating $500,000 in new sales tax revenue to the City annually, the Program
allows reimbursement for the improvement costs of up to 50 percent of that annual revenue for
a period of 10 years. Table 1 provides an example of the Program's financial structure.
F17 L-='1<i
Tenant A
Expected Annual Sales Tax Generation
$100,000
Eligible Improvement Costs
$250,000
Expected Reimbursements (50% for 5 years - $50,000 /year x 5 years =
$250,000) — not to exceed Eligible Improvement Costs
$250,000
Tenant B
Expected Annual Sales Tax Generation
$500,000
Eligible Improvement Costs
$1,000,000
Expected Reimbursements (50% for 10 years - $250,000 x 5 = $1,250,000) —
not to exceed Eligible Improvement Costs
$1,000,000
The City received a request to participate in the Program from C & J Cox Corporation
(Attachment 3), who is looking to occupy a yet -to -be constructed gas station /car wash at Fallon
Gateway (located on the southwest corner of Dublin Blvd. and Fallon Rd.). The City Council is
being asked to consider this request to provide financial assistance to help offset the
construction costs associated with the new building.
Staff presented this request along with a request to participate in the Sewer Capacity Assistance
Program to the Standing Economic Development Committee on January 15, 2013. The
Committee directed Staff to review other options before making a recommendation. On
February 11, 2013, Staff brought back the request to participate in the Sales Tax
Reimbursement Program to the Standing Economic Development Committee and they are
supportive of the request. This request falls under the Committee's purview to provide policy
and guidance direction on economic development activities. The Committee is requesting that
the full City Council consider the request.
Staff is seeking City Council direction at this time before investing a significant amount of Staff
time and associated legal fees in drafting the necessary agreement. If the City Council desires,
Staff will work with the applicant to draft the necessary agreements, and will bring back the
agreement for City Council action at a future date.
NOTICING REQUIREMENTS /PUBLIC OUTREACH: None.
Page 3 of 4
ATTACHMENTS: 1. Request letter from Fresh Millions
2. Resolution 53 -10
3. Request letter from C & J Cox Corporation
Page 4 of 4
Fresh
^mom�A Ways h) Eat ne�` and xmuhy°
Execupreneu/lALbC
Dba Fresh Millions
469G Chabot Drive, Ste. 200
Pleasanton, CA94S88
February 8, 2013
Ms. Linda Smith
City ofDublin
100 Civic Plaza
Dublin, CA94568
Re: Sewer Capacity Assistance Program
Fresh Millions atTra|ee Village —659y Dublin Blvd., Dublin
Dear Ms. Smith,
Thank you for the opportunity to speak to you by phone about our upcoming project. We are the
franchisor of Fresh MiUionsO restaurant and are very pleased to have a completed lease agreement for a
commercial suite located inT/a|eeVillage.
The Fresh Millions franchise started in the valley three years ago and this new location in Dublin will be
our second location. We are proud to hire locally, use food purveyors from the Bay Area and support our
local community by giving back. Our food is fresh, healthy and made to order. We are successful in
satisfying a full range of diners — vegan/vegetarian, gluten free, health conscious, and anyone looking for
quality food at a good value. We are open every day and feature a variety of Hot BowlsO, hand-tossed
salads, and paninis. Our motto is Millions of Ways to Eat Fresh and Healthy. VVe are eager to open by
late Spring 2OI3 and begin serving the Dublin community.
Please accept this letter as our formal application to he considered for participation in this program.
Included herein is the estimate for our sewer usage as determined by the DSRSD.
If you have any questions or require additional information, please contact me directly.
Thank you for your consideration.
Sincerely,
Lydia Moore
Director, Business Operation
RESOLUTION NO. 53 -10
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
* * * * * * * * * **
APPROVING A LETTER OF AGREEMENT WITH
THE DUBLIN SAN RAMON SERVICES DISTRICT (DSRSD) FOR THE
ADMINISTRATION OF UNUSED CITY OF DUBLIN SEWER CAPACITY
WHEREAS, the City Council of the City of Dublin (the "City ") is desirous of improving the
economic viability of the community through the establishment of certain economic incentive
programs; and
WHEREAS, in an attempt to attract new businesses or retain and /or expand existing
businesses that will provide additional jobs and generate additional tax revenues for the City,
as well as for certain residential projects that will likely result in greater economic activity in
Dublin, Staff is requesting City Council consideration of an agreement with the Dublin San
Ramon Services District (DSRSD) that will allow the City to provide unused City sewer capacity
rights to new and /or existing businesses and /or projects; and
WHEREAS, the proposed program would require the City, DSRSD, property owner and
applicant to enter into a agreement permitting the re- allocation of regional and local sewer
capacity rights, and the agreement will be recorded with the Alameda County Recorder's Office,
and
WHEREAS, the City Council finds it is in the public interest to enter into this agreement
because the City and its residents will benefit from increased revenues received from both sales
tax revenue that it may not otherwise receive, and from the increase in the property taxes as a
result of improvements to the property; and
WHEREAS, the City Council further finds that the City and its residents may also benefit
from the creation of new jobs in the City that will occur when a new business is established or
an existing business is expanded; and
WHEREAS, the City Council further finds that the City and its residents may also benefit
from the creation of construction jobs created from residential projects that are developed.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does
hereby approve the Letter of Agreement with the Dublin San Ramon Services District (DSRSD)
for the Administration of Unused City of Dublin Sewer Capacity (attached as Exhibit A).
BE IT FURTHER RESOLVED that the City Manager is authorized to execute the
agreement substantially in the form attached hereto and to undertake such action as may be
necessary and desirable to carry out the intent of this resolution.
Page 1 of 2
PASSED, APPROVED AND ADOPTED this 4th day of May, 2010, by the following vote:
AYES: Councilmembers Biddle, Hart, Scholz, and Mayor Sbranti
NOES: None
ABSENT: Councilmember Hildenbrand
ABSTAIN: None
ATTES
City Clerk
Reso No. 53 -10, Adopted 5 -4 -10, Item 8.1 Page 2 of 2
Mayor
DUBLIN
SAN RAMON
SERVICES
DISTRICT
Ms. Joni Pattillo
City Manager
City of Dublin.
100 Civic Plaza
Dublin, CA 94568
April 21, 2010
Subject: Letter of Agreement for the Administration of
Unused City of Dublin Sewer Capacity
Dear Joni:
3-a6 21
7051 Dublin Boulevard
Dublin, California 94568
Phone: 925 828 0515
FAX: 925 829 11 so
www.dsrsd.com
As you are aware, at the request of the City of Dublin (City), on March 2, 2010, the Board of
Directors of Dublin San Ramon Services District (District) adopted Resolution No. 9 -10
(Attachment A) authorizing the City to transfer unused sewer capacity allocated to City
properties to commercial properties where the City would like to stimulate economic growth.
The resolution requires a Letter of Agreement between the City and District to define the
administrative procedures for the administration of the program. 'In addition, on April 20, 20I0,
the District Board of Directors adopted Resolution No. 14 -I0 (Attachment B) authorizing the
City to also transfer unused sewer capacity to residential development. Upon the City's approval
and acceptance, evidenced by your signature below, this Ietter will serve as the required Letter of
Agreement.
The procedures for administering the unused capacity transfer program shall be as follows:
• City shall provide to District Engineer, David A. Requa, a letter providing the name of
(and contact information for) the applicant for the new, expanding, or relocating business
(hereinafter, "commercial project ") or residential development project (hereinafter,
"residential project" or collectively "project ") the City is supporting, the name of (and
contact information for) the owner(s) of the property on which the project is located (if
different than the applicant for the project) and the number of dwelling unit equivalents
( "DUEs ") the City desires to allocate to the project.
• The District Engineer shall have the discretion to determine whether the number of DUEs
the City desires to allocate to the project are consistent with the wastewater flow
characteristics, including volume and strength in terms of BOD and SS, for the proposed
use. Such determiriation will be based, in the sole discretion of the District Engineer, on
Dublin San Ramon Services DISDUt is a PuNic Entity EXffiBIT A
Ms. Toni Patilio
Page 2
April 21, 2010
Y y ^?/
• information concerning the wastewater flow characteristics provided by the Applicant,
and/or on a schedule of wastewater flow characteristics for the category or categories of
use classifications determined by the District Engineer to be most applicable to the
proposed use.
The Applicant shall be responsible for complying with the District Code' with respect to
commencing wastewater service, including the acquisition of all additional DUEs
determined to be necessary, the application for a Sewer Permit and compliance with all
conditions thereto, and for paying all fees and charges attributable to the project.
Prior to and as a condition of District issuance of a Sewer Permit authorizing a
commercial project to proceed, City shall sign an agreement with the District, the
applicant, and the Iandowner (if a person different from the applicant) regarding
management of the DUEs allocated for the project, which agreement shall be in the form
attached hereto as Attachment C, which form of agreement shall be revised to conform to
changes made from time to time to pertinent portions of the District Code.
• City shall provide District written notification should the applicant's commercial project
fail and the City desires to transfer the allocated DUES back to the City from the owner of
the property.
• The aggregate total of DUES allocated under this program shall not exceed sixty -six and
two- thirds (66 2/3) DUEs at any time.
• No letter request dated after December 31, 2011 by the City to allocate DUES will be
honored by District unless approved by the District Board of Directors.
If this Letter of Agreement is satisfactory to the City, please sign and return one copy to the
District. The District is pleased to have this opportunity to assist the City -in these challenging
economic times.
Sincerely,
BERT L. MICHALCZYK
General Manager
ACCEPTED for CITY OF DUBLIN
JONI PATTILLO Date
City Manager
1. This is the District Code of the Dublin San Ramon Services District, which contains the pertinent rules and
regulations as adopted by the District's Board of Directors from time to time.
Ms. Joni Patillo
Page 3
April 21, 2010
Attachments:
(A) DSRSD Board Resolution No. 9 -10
(B) DSRSD Board Resolution No. 14 -10
(C) Dublin Sewer Capacity Transfer Agreement
cc: D. Requa
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November 21, 2012
Ms. LindmSmith
Economic Development Director
City ofDublin
1$O Civic Plaza
Dublin, CA945b8
RE: Economic Incentives PrlorJ!KIp Site Decision
Ms. Smith:
C&] Cox Corporation is interested |n|wcatmganew*ervicertadvmlntheCkyef Dublin in the Fallon Gateway
Shopping Center. |n support of that project, we have requested \m participate in the City of Dublin's Sa|esTax
Reimbursement Program. VVe took into consideration our conversations with the Economic Development Staff that
we would be eligible for this benefit when we initially approved this significant investment. This program will help
to Justify the significant capital investment to develop the location that would be difficult for our [ompanywithout
the incentive.
We would like to express the critical importance of this benefit to us in this tough economic climate, particularly
considering the associated traffic impact fees, and development fees.
Thank you for Your kind consideration to our request.
Carl A.Cox
President
cc Jim Tong
4431 Stmnoddgo Ddwm Pleasanton, CA 94588 (925) 4174000 Fax: (925) 417-1001