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HomeMy WebLinkAboutMinutes - City Council - 1999-08-10 192 Y City Council, Special Meeting City Hall Conference Rm. A 760 Parkview Avenue Redding, California 96001 August 10, 1999, 12:00 p.m. The meeting was called to order at 12:10 p.m. by Mayor Anderson with the following Council Members present: Cibula, Kight, McGeorge, Pohlmeyer and Mayor Anderson. Also present were City Manager Warren, Assistant City Manager Perry, Deputy City Manager Starman, City Attorney Wingate, Development Services Director Swanson, Administrative Services Director Bachman, Economic Development Director Mitchell, City Clerk Strohmayer and Executive Secretary Sherman. ECONOMIC DEVELOPMENT INCENTIVES (E-050) City Manager Warren provided an overview of the Report to City Council dated August 9, 1999, regarding economic development incentives for new businesses proposing to locate in Redding. Mr. Warren explained that staff and the Economic Development Corporation of Shasta County (EDC) have been working with three call center companies (ACI Telecentrics, and anonymous companies "A" and "B") which expressed interest in locating their businesses in Redding. Mr. Warren related that the competition between cities to entice new business into their area is intense, with some cities offering incentive packages valued at twice the amount of those being proposed by Redding. Mr. Warren explained that Redding must meet the challenge and offer economic incentives based on what other cities are offering. The following incentive options, if approved by Council, will be offered during contract negotiations with the three companies: Mr. Warren noted that currently only companies engaged in manufacturing, assembly and storage are eligible for the "Job Credits Program." However, staff is recommending expansion of the program to include companies "A" and "B", wherein each company will receive up to $1,500 in fee credits for every full-time job created, the total value of which is approximately $75,000 per company. Mr. Warren related that ACI Telecentrics also requested the "Job Credits Program" incentive, but staff declined to include this program in their incentive package - determining that should all three businesses come to fruition, the incentives could total over $1.2 Million. Mr. Warren continued that if feasible, however, the City has agreed to amend the Enterprise Zone Boundary to include the site selected by ACI near the intersection of Hartnell Avenue and Churn Creek Road. Mr. Warren added that all three companies are eligible to participate in the Electric Utility's Economic Attraction Service wherein each will receive a 25% electric rate reduction over a three- year period. The value associated with this incentive could save each Company approximately $100,000. Mr. Warren related that the City has offered Company"A" a grant in the amount of$275,000 to help defray the cost of installing a high speed communications line to the Lake Boulevard/North Market Street area which will also benefit other businesses in that area. He explained that the source of the cash grant will be Community Development Block Grant(CDBG)Funds currently held in the City's Revolving Loan Fund; however, a policy change will be necessary in order for these funds to be used for non-housing-related projects such as this. Mr. Warren stated that Company "B" has been offered a grant in the amount of $225,000 for furnishings and equipment, with an option to increase the amount to $300,000 should they select a site in a downtown location. He added that if Company"B" selects a site inside the Downtown Mall, the City has promised to designate approximately 150 parking spaces below the former Dicker's Department store as permit parking and provide parking permits to its employees over seven years. This incentive is valued at approximately $189,000, and the benefits to revitalization efforts in the downtown area would be substantial. The source of grant funds to Company"B" will also be CDBG funds and/or Redevelopment funds depending on the location they select. Mr. Warren pointed out that if both businesses"A" and"B" successfully relocate in Redding, the City's Revolving Loan Fund of approximately $500,000 will be depleted. 8/10/99 193 Mr. Warren stressed that in order for the companies to take full advantage of these incentives, each. must create a certain number of full-time jobs and maintain them over a seven-year period: ACI will be required to create a minimum of 175 full-time jobs over 3 years, and Companies "A" and "B" will be required to create a minimum of 250 full-time jobs over 3 years. Failure to create and maintain the required number of jobs, will reduce the value of incentives, and the companies will be required to reimburse the City on a pro rata basis. Mr. Warren explained that the economic impact associated with a hypothetical call center having 250 employees is projected to create $26.7 million in"purchasing power" for local businesses over a five- year period. It is also projected to generate $250,000 in local government revenues over the same period-this means that the City will recover most of its investment over the term of the agreement. It is, therefore, the recommendation of staff that the City Council approve in concept the incentives as outlined above to be included in subsequent agreements with the three telemarketing companies identified in order to provide a clear understanding of what the City is prepared to offer to help the companies locate in Redding. Jim Zauer, Economic Development Corporation, confirmed that the market for attracting new business to communities is very competitive, and has remained so for the last three years. Mr. Zauer explained that the EDC has been focusing its energy toward attracting manufacturing companies and industries which pay higher wages. However, the telemarketing industry is growing at a phenomenal rate, and while the wages are average-to-low, they are above salaries paid by retail stores, and they offer employment with benefits. Mr. Zauer recalled that the City Council established a policy which provides staff the latitude to position the City in the competitive arena. Mr. Zauer concurred with Mr. Warren's proposal, and encouraged Council to authorize staff to move forward with the recommendations. Frank Strazzarino, Chamber of Commerce stated that the Chamber is in favor of staff's recommendations and urged Council to grant Mr. Warren the liberty to be creative in order to close the deals with these businesses. Mr. Strazzarino commended the efforts of City staff and the EDC to bring business and jobs to Redding. Council Member McGeorge acknowledged that Company "A" is currently negotiating a lease for property in close proximity to his restaurant business located in the Lake Boulevard Center, and for that reason, he will abstain from voting on incentives for Company"A." Council Member Kight offered support of the use of economic incentives to bring business to Redding. He opined that these companies provide a great opportunity to those currently receiving social service assistance, such as welfare, to become self-supporting. Mr. Kight emphasized that these companies will create 600 to 700 new jobs, and will greatly enhance revitalization efforts in the downtown area. He urged Council to facilitate the process by authorizing staff to move forward. In response to Council Member Cibula, Mr. Warren confirmed that the Electric Utility's Economic Attraction Service does not translate into a cost to the City. He further explained that ACI would like to install a fiber optics system for their business in order to have two points of telephone line entry into their business; should one line go down, this system will provide a back-up line. The cost for this system is approximately $305,000, of which the City would contribute $275,000 for installation of the fiber optics system. Mr. Warren pointed out that this system will also benefit other businesses in the area. In response to Council Member Cibula, Deputy City Manager Starman clarified that a comprehensive list of eligible expenditures for CDBG funds was compiled, and businesses applying for those funds must comply with all CDBG grant requirements and guidelines. Council Member Cibula questioned the juxtaposition of the work being performed by the consultant regarding the Downtown Mall, and the desire of one of the companies to locate there. Mr. Warren responded that the formulation of plans for the Downtown Mall will not be undertaken in the near future, but he conceded that there may be a conflict between the consultant's recommendations, and locating one of the new businesses in the Mall. Mr. Warren assured Council that any conflict identified by the consultant will be addressed prior to finalization of any agreement. Council Member Pohlmeyer also applauded the work performed by staff and the EDC, and commented on the favorable economic impact of these businesses, not just in Redding, but the entire area. 8/10/99 194 Council Member McGeorge voiced his approval of the incentives as outlined, but warned against providing incentives as a promotional package simply to attract new business. Mr. McGeorge asserted that each business should be evaluated on its merits and the benefits it will bring to the City prior to offering incentive packages. Mr. Warren assured Council that he is not in favor of continuing to provide incentives to companies offering this pay rate, but rather concentrate future efforts on industrial projects and manufacturers who will pay a higher wage. Mr. Warren added that any agreements reached with these companies, will be brought back to Council for review and final approval. Mayor Anderson acknowledged that if the City intends to seriously compete for new business, incentives play an important role in portraying Redding as an economically attractive City in which to conduct business. Mayor Anderson further stressed that additional incentives should be considered on a case-by-case basis, and should not be offered indiscriminately. Council Member Cibula expressed his support of a strong economic development process for the City and pointed out that these incentives will provide a good return on the money. MOTION: Made by Council Member Kight, seconded by Council Member Pohlmeyer, approving the inclusion of economic incentives as outlined above in a subsequent agreement, that Council will review, between the City of Redding and Company "A" to locate its call center business on Lake Boulevard. The Vote: AYES: Council Members: Cibula, Kight, Pohlmeyer and Anderson NOES: Council Members: None ABSTAIN: Council Members: McGeorge ABSENT: Council Members: None MOTION: Made by Council Member Kight, seconded by Council Member Pohlmeyer, approving the inclusion of economic incentives as outlined above in subsequent agreements, that Council will review, between the City of Redding and ACI Telecentrics and Company "B" to locate their call center businesses in Redding. The Vote: AYES: Council Members: Cibula, Kight, McGeorge, Pohlmeyer and Anderson NOES: Council Members: None ABSTAIN: Council Members: None ABSENT: Council Members: None ADJOURNMENT There being no further business, at the hour of 12:46 p.m., Mayor Anderson declared the meeting adjourned. APPROVED: Mayor Anderson ATTEST: . ._ . . City Clerk 8/10/99