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HomeMy WebLinkAboutMinutes - City Council - 2005-12-09 - Special Meeting 291 City Council, Special Meeting Council Chambers 777 Cypress Avenue Redding, California December 9, 2005 11:00 a.m. The special meeting was called to order by Mayor Murray with the following Council Members present: Dickerson, Mathena, Pohlmeyer and Stegall. I Also present were City Manager Warren, Assistant City Manager Perry, Assistant City Manager Starman, Deputy City Manager Bachman, City Attorney Duvernay, Electric Utility Director Feider, Development Services Director Hamilton, Personnel Director Johnson, and Assistant City Clerk Sherman. LETTER OF INTENT - State Compensation Insurance Fund (State Fund) re fee credits and other economic development incentives; and AGREEMENT - State Fund (E-050) City Manager Warren advised that State Compensation Insurance Fund (State Fund) is a non- profit, public enterprise that operates like a mutual insura~ce carrier to provide workers' compensation insurance to California employers at a reasonable cost. Currently, State Fund has a district office in Redding employing approximately 180 people. He stated that State Fund proposes to build a new, 75,000 square foot office building at the northeast comer of Shasta View Drive and Highway 44 (approximately 11 acres). Upon completion of this building, State Fund proposes to add an additional 100 full-time employees with an average starting salary of approximately $35,000 per year including a comprehensive benefit package. I In order to facilitate State Fund's desire to expand its operations in Redding, State Fund requests the City's assistance. Mr. Warren reviewed the following key elements ofthe Letter of Intent: 1. State Fund agrees to retain the existing 180 full-time positions with an average salary of $46 ,000 per year and agrees to create a minimum of 100 new jobs in Redding over the next seven years with an average starting salary at $35,000 per year or greater including comprehensive benefits; 2. The City agrees to provide State Fund with a $150,000 development impact fee credit; 3. The City agree to provide a reduced electric rate to State Fund for a term of ten years commencing at the completion of the new facility at an estimated rate of approximately $250,000 over the ten years (25 % in years 1 and 2, 20% in years 3 and 4,15 % in years 5 and 6,10% in years 7 and 8, and 5 % in years 9 and 10). Or, State Fund could elect to add an energy efficient ice storage system with the City to guarantee savings associated with the system over a ten year period that would be equal to the value of the electric rate incentive. 4. The City agree to grant up to $50,000 to State Fund for energy efficient equipment and materials that exceed the minimum requirements contained in the California Building Code. 5. State Fund agrees to reimburse the City on a pro rata basis for incentive provided to State Fund by the City if it fails to retain and/or create the jobs as set forth. 6. The City agree to expedite the entitlement process for the State Fund facility to include a General Plan amendment and rezoning, a parcel map, use permit, and mitigated negative declaration. . 7. If deemed necessary, State Fund agrees to construct a new traffic signal at Old Alturas Road and Shasta View Drive and the City will reimburse State Fund for the cost of the traffic signal not attributable to the State Fund project beginning August 1,2008, in the amount of $100,000 per year. If the City determines that a new northbound left turn lane is adequate mitigation for the new State Fund facility, State Fund may elect to either 1) construct the left turn lane and reconfigure the intersection at its sole expense, or 2) construct the traffic signal and be reimbursed for a portion of the cost as set forth. A traffic study was done and both parties wish to continue discussions. Mr. Warren pointed out that the value ofthe proposed incentives is approximately $450,000 (excluding the traffic signal). He also noted that the Letter of Intent is non-binding and will be an outline for negotiations of an agreement. I 12/9/2005 292 Mr. Warren recommended approval ofthe Letter of Intent with State Fund and that the City Council direct the City Manager and City Attorney to negotiate a contract with State Fund based on same and return it for Council consideration. In response to Mayor Murray, Electric Utility Director Feider advised that the ice thermal system has not been in use privately in the Redding area, however, there are programs statewide. The unit installed at the Redding Municipal Airport cost approximately $150,000 and it must be applied to a chiller system. Mr. Feider advised that the standard electric rate credit is a five-year declining 25 %. Mayor Murray expressed concern that the electric rate reduction benefit is being provided to a state agency subsidized by rate payers. He supported and encouraged the proposed ice thermal system for the State Fund project, but voiced trepidation regarding a guarantee for possible savings equal to the value of the rate incentive. I Mr. Warren explained that retaining valuable employers in the City is a delicate balance, at best, and the standard rate incentive would only be allowed for five years, whereas State Fund would be obligated to create new jobs for seven years. He added that the details ofthe Letter of Intent will be refined through negotiations. Mayor Murray suggested that the Letter of Intent be amended to provide only five years to create the new jobs and restructure the rate benefits to match so that ratepayers are relieved at an earlier date. He advised he was in agreement with the incentives, but would be more comfortable with a five-year term. Council Member Pohlmeyer stated that the State Fund organization was ultimately backed by the State of California and has a more stable structure than other publicly owned enterprises. He did not want to set a precedent for allowing rate incentives beyond five years, but felt that State Fund should be considered as an exception. Assistant City Manager Starman interjected that State Fund is not supported by state tax dollars, but by rates paid by employers and is essentially, a rate-based enterprise. It is a quasi-public entity created by the state and run by a Board of Directors appointed by the Governor. I Council Member Stegall pointed out that the $450,000 proposed benefit incentive is very similar to that provided to Blue Shield a few years ago and is a reasonable package. Denise Buriane, representing State Fund, said that State Fund was in agreement with the concept of the Letter of Intent and concurred that individual points will continue to be negotiated to the mutual benefits of both parties. She pointed out that an ice thermal unit was utilized by State Fund in ~akersfield about 18 years ago and was not as rate redeeming as anticipated. She acknowledged that technology may have provided changes to make it more cost effective and would like an opportunity to review the new technology before making a decision whether it would fit their needs. She advised that State Fund was anticipating staying and growing in Redding for many years to come. MOTION: Made by Council Member Stegall, seconded by Council Member Dickerson, approving the Letter of Intent with State Compensation Insurance Fund (State Fund) for a total value of incentives in the amount $450,000 and directing staff to review the item regarding electric rate incentives; and directing staff to negotiate an agreement with State Fund for same and prepare a report for City Council consideration. I The Vote: Unanimous Ayes At the hour of 12: 15 p.m., Mayor Murray announced that the City Council would adjourn to closed session to discuss the following: Closed session pursuant to California Government Code Section 54957.6: CONFERENCE WITH LABOR NEGOTIATOR Designated Agency Representative: Personnel Director Johnson Employee Organization: All Represented and Unrepresented Employees (P-100-050) 12/9/2005 I I I 293 At the hour on :03 p.m., Mayor Murray reconvened the Special Meeting to open session and advised that there was no reportable action taken. ADJOURNMENT . There being no further business, at the hour of 3:04 p.m., Mayor Murray declared the meeting adjourned. APPROVED ATTEST: ~.~ Assistant City Clerk " 12/9/2005