Title
RESOLUTION NO. 2017-009 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING THE ECONOMIC DEVELOPMENT DEPARTMENT’S FISCAL YEAR 2016/2017 BUDGET BY APPROPRIATING $200,000 FOR BUSINESS ATTRACTION AND RETENTION INITIATIVES (4/5 VOTE REQUIRED)
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RECOMMENDED ACTION
Recommended Action
Council adopt the resolution.
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SUMMARY
The City of Chula Vista participated with the cities of San Diego and National City in the San Diego Regional Enterprise Zone Program. The City of San Diego was the administrator for the program on behalf of all three cities. On January 1, 2014, the State of California repealed the Enterprise Zone Program. With completion of the administration of the Program, the City of San Diego is remitting a proportional share of the remaining revenues of the program to the partner agencies.
ENVIRONMENTAL REVIEW
Environmental Notice
Environmental Notice
The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
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Environmental Determination
The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. Thus, no environmental review is required.
BOARD/COMMISSION RECOMMENDATION
N/A
DISCUSSION
The California Enterprise Zone program provided state sales and use tax credits, business expense deductions, and employee hiring tax credits to attract private sector investment to the enterprise zone. In November 2006, the California Department of Housing and Community Development awarded designation of the San Diego Regional Enterprise Zone (SDREZ), a multi-jurisdictional, regional enterprise zone comprised of geographical areas within the cities of Chula Vista, San Diego, and National City. The boundary of the Enterprise Zone within Chula Vista included low and moderate income census tracts in western Chula Vista and certain employment centers in eastern parts of the city.
The City of San Diego was the program administrator for the SDREZ Program. Businesses seeking to utilize the employee hiring tax credit submitted a Hiring Credit Voucher Certificate application to the City of San Diego. If a business qualified for the tax credits, a voucher was issued to the business for each employee. The voucher was required for the business to utilize the tax credit. Each business was required to pay an application fee for the voucher which paid for the administration of the program.
Although State law terminated the Enterprise Zone program in 2013, the law also authorized local Enterprise Zone agencies to continue accepting applications for hiring credit voucher certifications during 2014. Due in large part to early termination of the State Enterprise Zone Program, and anticipation by regional businesses and the tax professional community of the approaching December 31, 2014 voucher issuance deadline, the City of San Diego received a very high volume of certification applications to process during the last 18 months of the program. As a result, the City San Diego ended the program with a fund balance of approximately $3,500,000. On January 13, 2016, the San Diego City Council approved disbursement of the funds to former SDREZ partner agencies in an amount equal to the percentage of Hiring Credit Voucher Certificate applications received from qualifying businesses in those jurisdictions. Based upon this formula, the City of San Diego is remitting $486,991.16 to the City of Chula Vista.
These funds are unrestricted revenue to the City however the intended use of the funds was to support the administration of an economic development program and our local businesses. The Economic Development Department recommends utilizing $200,000 to establish a revolving loan account to assist in attracting businesses to Third Avenue and to retain businesses along Main Street. The receipt of these funds represents a unique opportunity to provide resources to assist our small business community by helping them overcome some financial challenges associated with either opening their business or remaining in business. If approved, staff will work with the Third Avenue Village Association and the local business community along Main Street to draft up an appropriate revolving loan program for future City Council consideration. The intention behind the revolving loan program is to be able to provide an on-going funding mechanism that can be deployed strategically to assist our local business community.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific and consequently, the 500-foot rule found in California Code of Regulations Title 2, section 18702.2(a) (11), is not applicable to this decision for purposes of determining a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The funds received will support the Economic Vitality goal as it will implement strategies that build prosperity and quality employment opportunities for new and existing businesses.
CURRENT YEAR FISCAL IMPACT
Approval of the resolution will amend the Other Expenses category budget of the Economic Development Department by $200,000. The funds will be used to establish a revolving loan account to assist in attracting businesses to Third Avenue and to retain businesses along Main Street. This amendment is offset by revenues received from the City of San Diego and the San Diego Regional Enterprise Program resulting in no net fiscal impact to the fiscal year 2016-17 budget.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact as this is a one-time appropriation to the fiscal year 2016-17 budget.
ATTACHMENTS
None
Staff Contact: Craig Ruiz, Senior Economic Development Specialist