Agenda Packet 2000-05-04 SP
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.. CITY COUNCIL ~ty 0/
AGENDA ~ 8J~de
Michael A. Lady Mayor Rick TerBorch Interim City Manager
Tony M. Ferrara Mayor Pro Tem . Timothy J. Carmel City Attomey
Thomas A. Runels Council Member
Steve Tolley Council Member Kelly Wetmore Director, Administrative Services
Jim Dickens Council Member
NOTICE OF SPECIAL MEETING
CITY COUNCIL/REDEVELOPMENT AGENCY
AGENDA SUMMARY
THURSDAY, MAY 4,2000
7:00 P.M.
Arroyo Grande City Council Chambers
215 East Branch Street, Arroyo Grande
1. CALL TO ORDER: 7:00 P.M.
2. ROLL CALL: COUNCIL/AGENCY
3. FLAG SALUTE
4. PUBLIC COMMENT ON WORKSHOP AGENDA ITEM
Members of the public wishing to address the Council/Agency on any item
described in this Notice may do so when recognized by the Presiding
Officer.
5. REDEVELOPMENT AGENCY WORKSHOP
The City Council/Redevelopment Agency will conduct a workshop to
discuss:
1. General redevelopment purposes and practices; and
2. Short-, Mid-, and Long-term redevelopment implementation projects
and programs as contained in the Agency adopted Redevelopment
Plan Implementation Strategy.
6. ADJOURNMENT to Regular City Council Meeting of Tuesday, May 9,
2000 at 7:00 p.m. in the Council Chambers, 215 East Branch Street.
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MEMORANDUM
TO: CITY COUNCIUREDEVELOPMENT AGENCY
FROM: DIANE K. SHEELEY, ECONOMIC DEVELOPMENT DIRECTOR OF--S
SUBJECT: REDEVELOPMENT WORKSHOP .
DATE: MAY 4, 2000
RECOMMENDATION:
It is recommended the City Council/Redevelopment Agency conduct a workshop to
discuss:
1. General redevelopment purposes and practices; and
2. Short-, Mid-, and Long-term redevelopment implementation projects and
programs as contained in the Agency adopted Redevelopment Plan
Implementation Strategy.
DISCUSSION:
Urban Futures, Inc. (UFI), Agency Advisors, have identified the following objectives for
this Workshop:
1. Provide the City Council/Redevelopment Agency with a better
understanding of the California Community Redevelopment Law (CCRL)
as it pertains to general redevelopment purposes, practices, and
procedures;
2. Provide a general overview as to how to finance redevelopment projects
and programs; and
3. Reiterate and clarify the projects and programs identified to be
implemented in the Agency's Redevelopment Plan Implementation
Strategy.
The following topics have been identified for discussion:
1. General redevelopment purposes, practices, and procedures;
2. Public financing mechanisms utilized in the implementation of identified
redevelopment projects and programs;
3. Agency adopted Near-, Mid-, Long-Term Implementation activities; and
4. Additional future projects and programs that the City
Council/Redevelopment Agency may wish to consider for implementation.
Attachment:
Redevelopment Plan Implementation Strategy
rdaworkshop050400.doc
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Table of Contents
EXECUTIVE SUMMARY .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ES - 1
A. Financial Incentive Policy Guidelines . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . .. ES - 1
B. Implementation Operations Plan ........................................... ES - 2
C. Resource Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .' . . . . . .. ES - 4
D. Attachments .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '. ES - 4
E. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ES - 4
IMPLEMENTATION OPERATIONS PLAN............................................ OP-1
I. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. OP - 1
II. BASIC ECONOMIC DEVELOPMENT OPERATING PRINCIPLES ..................... OP - 5
III. NEAR-TERM IMPLEMENTATION PROGRAM.................................... OP-6
A. Leveraged Marketing Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. OP - 7
B. Signature Event ....................'.................................... OP - 7
C. Community Outreach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . ...~ 'OP - 7
D. The Internet .........................................................,. OP - 9
E. Business Visitation Program .. .". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .' . . . . . . . .. OP - 10
F. Internal Economic Development Review Committee . . . . . . . . . . . . . . . . . .. . . . . . . .. OP - 10
G. Development Information Guide .......................................... OP - 10
IV. MID-TERM IMPLEMENTATION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. OP -11
A. Principal Improvement Zones ....................................:....... OP - 11
B. Identification of Principal Improvement Zone Goals and Objectives . . . . . . . . . . . . .. OP - 13
C. Redevelopment Opportunities in the Principal Improvement Zones ............... OP - 13
D. Target Marketing Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. OP - 14
E. Target Marketing Plan .................................................. OP - 14
F. Marketing Tools.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. OP -15
G. Membership in Support Organizations . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. OP - 15
H. Mid-term Business Expansion and Attraction Programs ........................ OP., 15
I. Revitalization and Rehabilitation Programs .................................. OP - 17
J. Assist in Forming a Business Improvement District. . . .. . . . . . . . . . . . . . . . . . :. . . .. OP -19
K. Market NichefTenant Mix Assistance. . . . . . . . . . . . . . .. . . . . . . . . .. . . " .. . .. . ... OP -19
L. Infrastructure Improvements .............................................. OP - 20
M. Community Signage and Landscaping Design Program. . . . .. .. . . . . . . . . . . . . .... OP - 21
N. Technical Assistance and Staffing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. OP - 21
O. Residential Rehabilitation Program ........................................ OP - 21
P. Recommended Mid-Term Programmatic Budget Parameters. . . . . . . . . . . . . . . . . ~ .. OP - 22
V. LONG-TERM IMPLEMENTATION PLAN ........................................ OP - 25
A. Long-Term Programmatic and Planning Activities. . . . . . . . . . . . . . . . . . . . . . . . .. . .. OP - 25
B. Long-Term Business Attraction Programs. . . . . . . . . . .. . . . . . . . . .. . . . . . . . . .. ... OP - 26
C. Site Specific Recjevelopment Opportunities in The Principal Improvement Zones .... OP - 30
VI. CONCLUSIONS ........................................................... OP - 3~
5f7199C:\OO3C1TY01\AG07\lMPLSTRATEGYFNL. WPD i
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RESOURCE GUIDE. . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " RG _ 1
I. HOW TO USE THIS GUIDE ................................................... RG _ 1
II. LAND ACQUISITION ........................................................ RG - 1
A. Purchase Only Subject to Development Agreement ............................ RG _ 1
B. Purchase of Developable Parcels in Phases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RG _ 1
C. Purchase of an Entire Developable Site in One Phase .......................... RG - 2
III. LAND PREPARATION AND DiSPOSITION....................................... RG - 2
A. land Banking .. . . . . . . . . . . . . . '.' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RG - 2
B. land Write-Downs ...................................................... RG - 2
C. Site Remediation ....................................................... RG - 3
D. Ground lease ......................................................... RG - 3
E. Property Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " . . . . . . . . . . . . . . . " RG - 3
IV. ENTITIES TO WHOM THE AGENCY MAY DISPOSE OF LAND ...................... RG - 4
A. Private, For-Profit Developers ............................................. RG - 4
B. Non-Profit Corporations .................................................. RG - 4
C. Joint Development Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..-: RG - 4
D. Housing Developers - For-Profit And Non-Profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RG - 4
E. Owner Participation ..................................................... RG - 6
V. SOURCES OF PUBLIC FINANCING ..........................:.......... '.. . . . ~. RG - 6
A. Tex Increment Financing. . . . . .. ... . . . . . . . . . . . . . . . . '.' . . . . . . . . . . . , . . . . . . . . " RG - 6
B. Certificates of Participation ............................................... RG - 7
C. City Funds ............................................................ RG - 7
D. Developer Advances .................................................... RG - 8
E. Federal Funds ......................................................... RG - 8
F. Special Assessment Districts . '.' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RG - 8
G. State Funds ........................................................... RG - 8
VI. IMPLEMENTATION PROCESSES................................... ... .. ...... RG - 8
A. Phase One - letter of Interest .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RG - 8
B. Phase Two - Detailed Information to Be Supplied . . . . . . . . . . . '.. . . . . . . . . . . . . . . .. RG - 9
C. Phase Three - Preliminary Negotiations ("Exclusive Right to Negotiate") . . . . . . . . . .. RG - 9
D. Phase Four - Final Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RG - 10
VII. CONSTRAINTS ON AGENCY ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RG - 10
VIII. OWNER PARTICIPATION AND DISPOSITION & DEVELOPMENT AGREEMENTS...... RG -10
A. Owner Participation Agreement(OPA) ..................................... RG -10
B. Disposition And Development Agreement (DDA) ............................. RG - 11
. C. OPAlDDA Criteria ...................................................... RG - 11
D. OPAlDDA Review Process .............................................. RG - 12
IX. PARTICIPATION PROCEDURES ............................................. RG -13
A. Certificates of Conformance . . . . . . . . . . . . . . . . . . . . . . . . . . . . '.' . . . . . . . . . . . . . . .. RG - 13
B. Participation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RG - 13
5I7199C:\OO3CJTv01\AG07\JMPlSTRATEGYFNL.WPO ii
X. RELOCATION POLICY AND PROCEDURE ..................................... RG - 14
XI. HOUSING PROGRAMS, COMPLIANCE REQUIREMENTS AND PROCEDURES. . . . . . .. RG - 14
A. Agency Compliance Requirements ........................................ RG - 14
B. Replacement Rule ..................................................... RG - 15
C. Inclusionary Rule .............................:........................ RG - 15
D. Terms of Affordability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .; RG - 16
E. Inclusionary Housing Plan Requirement .................................... RG - 16
F. Agency Implementation of Affordable Housing Programs ....................... RG - 17
G. Housing Analysis ....................................................... RG - 17
H. Ten-Year and Life-of-the-Plan Housing Requirements ......................... RG - 17
XII.' ACCOUNTING REQUIREMENTS .............................................. RG - 30
XIII. FUNDING ACCOUNTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RG - 30
XIV. ACCOUNT GROUP ......................................................... RG - 30
XV. BUDGETS AND BUDGETARY ACCOUNTING ................................... RG - 31
XVI. REPORTING REQUIREMENTS . . . .. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .. . . . .. .. :- RG - 32
ATTACHMENTS
ATTACHMENT 1: Principal Improvement Zone Goals and Objectives
ATTACHMENT 2: Photographic Survey: Key Sites
ATTACHMENT 3: Photographic Survey: Secondary Sites
ATTACHMENT 4: Programs and Projects List
ATTACHMENT 5: Owners, Business and Tenants Participation and Re-Entry Rules
ATTACHMENT 6: Financial Incentive Operating Principles
5f7199C:\OO3CITY01\AG01\lMPlSTRA TEGYFNL.'M'O Hi
Tables
1 Advantages, Opportunities, Constraints .......................................... OP - 5
2 Recommended Near-Term Programs to Initiate. . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . .. OP - 11
3 Recommended Mid-Term Programs to Initiate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. OP - 22
4 Estimated Agency Receipts And Expenditures - General RDA Fund . . . . . . . . . . . . . . . . . :. OP - 23
5 Estimated Agency low/Moderate Income Fund Receipts And Expenditures . . . . . . . . . . . .. OP - 24
6 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '. . . . .. RG - 32
Schedules
1 Total No. Of Units Destroyed or Removed And Inventory of Replacement Dwelling
Units Provided ......................................................... RG - 19
1.1 Estimated Total No. Of Units to Be Destroyed or Removed And Estimated Number of
Replacement Dwelling Units ............................................. RG - 20
2 Total Units Developed And Substantially Rehabilitated Inside Project Area by
Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RG - 21
2.1 Estimate of Total Units to Be Developed And Substantially Rehabilitated Inside Project
Area by Agency ....................................................... RG - 22
3 Total Units Developed And Substantially Rehabilitated Outside Project Area by
Agency. . . . . . . . . . '.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-; .RG - 23
3.1 Estimate of Total Units to Be Developed And Substantially Rehabilitated Outside
Project Area by Agency ................................................. RG - 24
4 All Non-agency Developed And Substantially Rehabilitated Dwelling Units. Within The
Project Area .......................................................... RG - 25 /
4.1 Estimate of All Non-Agency Developed And Substantially Rehabilitated Dwelling
Units . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. RG - 26
5 Total Agency Assisted Units Project Area Adoption Through 200_ . . . . . . . . . . . . . . .. RG - 27
5.1 Estimated Total Agency Assisted Units 199_ Through 200_ . . . . . . . . . . . . . . . . . . . .. RG - 27
6 Estimated Agency lMI Fund Receipts and Expenditures ....................... RG - 29
Figures
1 PROJECT AREA MAP ....................................................... OP - 2
2 EXISTING LAND USES ...................................................... OP - 3
3 GENERAL PLAN LAND USE .................................................. OP - 4
4 PRINCIPAlIMPROVEMENT ZONES.......................................... OP -12
5 KEY SiTES............ ......................................... ........... OP - 31
6 SECONDARY SITES ....................................................... OP - 36
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EXECUTIVE SUMMARY
In July 1996 the City of Arroyo Grande approved a Redevelopment Feasibility Study (the "Study") designed
to provide the Arroyo Grande Planning Commission and the Arroyo Grande City Council with sufficient
information to determine whether or not the special powers of a redevelopment agency would be helpful in
the Gity's quest to: I) solidify its financial base; ii) upgrade the infrastructure and aesthetic characteristics of
the Village and other commercial districts within the City; iii) create additional employment opportunities City-
wide; iv) promote new and retain existing industry and commerce within the community; and v) upgrade
existing and provide new housing opportunities in the City. After review and consideration of that Study and
public comment, the City Council elected to activate the City's redevelopment agency and to begin procedures
to adopt a redevelopment plan to provide the newly activated Arroyo Grande Redevelopment Agency (the
"Agency") with the legal authority and planning basis to implement redevelopment activities within those
portions of the City ultimately included within a redevelopment project area.
Consequently, the City Council activated the Agency by City Ordinance No. 479CS on August 27,1996; in
May of 1997 the Agency adopted the Redevelopment Plan (the "Plan" or the "Redevelopment Plan") for the
Arroyo Grande Redevelopment Project Area (the "Project Area") by City Ordinance No.487CS. The
Redevelopment Plan and supporting documents are filed with the Director of Administrative Services.
The Agency has proceeded to the next step in its redevelopment process which is to determine how it can
identify, and then maximize, the redevelopment opportunities and fiscal resources that will be available to it
over the remaining 29-year effective life of the Plan.
Toward this end the Agency has commissioned Urban Futures, Inc. "(UFI), to develop this Redevelopment
Plan Implementation Strategy (the "Strategy"). The Strategy is divided into three major components: I) an
Implementation Operations Plan (the "Operations Plan"); ii) a Resource Guide (the "Guide"); and Hi)
Attachments (the" Attachments"). The Operations Plan is predicated on the following financial incentive policy
guidelines:
A. FINANCIAL INCENTIVE POLICY GUIDELINES
Agency and City participation in the revitalization and redevelopment of properties within the project area
will more than likely require the infusion of public dollars. As such, the Agency should have general
policy guidelines that pertain to potential financial incentives and participation. It is the intent and
purpose of the Agency's incentive policy to be implemented within the following general policy
guidelines:
1. Financial incentives intended to foster the economic development of the community shall only be
used judiciously and with the appropriate accountability safeguards in place.
2. The Agency shall assess requests for financial assistance on an individual basis yet shall
determine participation predicated on compatibility with the community's overall development
policy, goals and objectives.
3. The basic priority of the Agency's Financial Incentive Policy is the elimination of blight, the creation
of new jobs, the retention and expansion of existing businesses and the attraction of compatible
commercial, professional and industrial uses.
4. It is the intent of the Agency to develop public/private partnerships that ensure a safe and fair
return of the public's investment.
5f1/99C:\OO3CI1Y01\AG07\lMP\.STRATEGYFNL.WPO ES -1
5. Recognizing the necessity to reduce the financial incentive competition fot business between local
jurisdictions, the Agency will make best efforts to collaborate with the surrounding communities
in reducing potential "Bidding Wars" for new and expanding businesses.
B. IMPLEMENTATION OPERATIONS PLAN
The Operations Plan is a "road map" of programs and projects the Agency can institute over the near-,
mid- and long-term in order to effectuate the provisions of the Redevelopment Plan. The Operations
Plan should be updated every two and one-half years, in concert with the Agency's preparation and its
review of its' Implementation Plan prepared pursuant to Section 33490 of the California Community
Development Law (CCRL).
Implementation of the Operations Plan is predicated on the financial capacity of the Agency and is
predicated on the following format:
GENERAL FINANCIAL AND PROGRAMMATIC ASSESSMENT
As part of the Operations Plan of this Strategy a general financial and potential programmatic
assessment was conducted. Primarily due to lagging appreciation in property values, the Agency will
realize only modest flows of tax increment through the initial years of the plan. The Agency will not be
in a Dosition to capitalize the Proiect Area through a tax increment financing until Fiscal Year 2000-2001
with a Droiected issuance occurring in the Fall of 2000. The estimated tax increment flow of $82,661
in Fiscal Year 2000-2001 will allow the Agency to issue tax-exempt, five (5) year notes that will net the .
Agency approximately $1.3 million1. For fiscal year 1999-2000 the Agency must'rely on the annual tax
increment flows of approximately $33,000 which includes an estimated $8,000 in the Agency's low- and
moderate- income housing fund. This leaves the Agency approximately $25,000 for non-housing related
activities. The Agency's longer programmatic and project activities will depend upon the Agency's
financial position commencing say in Fiscal Year 2005-20062. Given these financial constraints, the
Operations Plan of this Strategy is developed around the Agency's ability to fund needed projects and
. programs. Within the Operations Plan, near-, mid- and long-term program activities are highlighted.
NEAR-TERM IMPLEMENTATION PROGRAM
These activities are planning and marketing based, are not capital intensive and can be implemented
during Fiscal Year 1999-00 and the first half of Fiscal Year 2000-01. In many instances, these activities
rely on committees and volunteers for actual implementation and provide the forum for community input,
clarificatio!1 of community goals and objectives and development of needed base studies. These
activities should also be ongoing through the life of the redevelopment plan and are designed to provide
the basis for more capital intensive, economic development programs and projects to be developed over
the mid- and long- term.
MID-TERM IMPLEMENTATION PLAN
1 The tax increment increase in Fiscal Year 2000-2001 is primarily due to the development of the proposed mixed office commercial
project located at northeast comer of Wesley Street and West Branch Streel Without this development the Agency's ability to issue
tax exempt debt may be postponed for an additional one (1) to two (2) fiscal years.
2 At a conservative 2.00 percent annual growth rate in assessed valuation for the Project Area, the Agency should have an annual tax
increment flow of $193,980 in Fiscal Year 2005-2006. This includes an estimated $48,495 for the state mandated low- and moderate-
income housing fund. This amount should provide adequate debt service for the refunding of the proposed tax exempt notes
recommended to be issued in Fiscal Year 2000-2001. The Agency would in essence payoff these short-term notes with the issuance
of long-term tax-exempt bonds in Fiscal Year 2005-2006. This effort would provide additional capital for Agency-sponsored long-term
projects and programs.
5I7/99C:\OO3C1TY01\AG07\JMPLSTRATEGYFNLWPO ES -2
~--- -
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Commencing with the potential issuance of a tax-exempt financing in the Fall of 2000, the Agency will
be able to undertake a modest level of more capital intensive projects pertaining to marketing, business
development, restoration and rehabilitation of existing structures, street beautification, landscaping and
small scale public works improvements. The timing of mid-term activities is predicated on the
expenditure rate of the estimated $1.3 million note proceeds obtained by the Agency in the fall of 2000.
Mid-term activities are also more programmatic than site specific, flexible in design arid may continue
throughout the life of the redevelopment plan. These activities are geared to assist the economic
viability of the entire Project Area and in particular, four Principallmprovement Zones (the "Zones").
LONG-TERM IMPLEMENTATION PLAN
These activities tend to be more site specific and large public works based. They will require a greater
amount of public capitalization. These activities are more complicated, expensive and contingent on
the financial strength of the Agency and private market forces. Through the initial public input process
for the development of this Strategy, the actual "Geographical Targeting" of resources and long-term.
efforts have been developed through the identification of the four Principal Improvement Zones and the
targeting of specific Primary and Sec.ondary "Key" Redevelopment Sites.
Principal Improvement Zones
The Zones are general target areas that have been identified as priorities for the AgencY's efforts.
Primarily mid- and long-term based, the Zones are generally described as: I) the Grand Avenue
commercial district; ii) The Village commercial district; iii) the commercially designated parcels
generally located along the southerly side of EI Camino Real and westerly of Brisco Road; and iv)
the Traffic Way commercial district. The zones were identified after community input and
consideration of Project Area advantages, opportunities and constraints. In addition, the Agency
should consider a future Business Park Improvement Zone and a Residential Improvement
Zone(s) in order to address both a targeted job creation program and the focused restoration of
the community's housing stock. .
Primary and Secondary Key Redevelopment Sites
The Operations Plan also identifies and describes key redevelopment sites (the "Key Sites"), each
located within one of the previously described Zones. It is expected that each of the identified Key
Sites will develop or redevelop as a result of a complicated and complex series of operations
involving private development activity, private financing, tenant- or owner-occupant interest and,
as necessary, Agency involvement. The end product of the long-term redevelopment effort is to
induce actual real estate development within the Zones generally and the Key Sites specifically.
The Key Sites are complicated to develop yet are significant as to their respective ability to: I)
create large revenue-generating facilities; ii) enhance surrounding property values; iii) be a
catalyst for the revitalization of an overall development Zone.
The last component of the Plan identifies secondary sites (the "Secondary Sites") within the
Project Area where the Agency may also wish to focus its resources as opportunity avails itself.
Generally these Secondary Sites are more developable than other parcels in the Project Area
because they are vacant, or underdeveloped, or they demonstrate a greater degree of
deterioration or need than other sites located in the Project Area. These sites may become Key
Sites in the event that they may become marketable faster than the more complicated
recommended Key Sites. As an example. a Secondary Site that is potentially the location for the
City's largest future employment base could move forward depending upon market demand, local
marketing efforts and the cost to develop the property.
sn/99C:\OO3Cm01\AG07\lMF't.STRATEGYFNL.WPD ES-3
C. RESOURCE GUIDE
If the Operations Plan is a road map to a certain destination, then the Guide is intended to be a catalog
of various vehicles the Agency can use to arrive at that destination. The Guide will empower the Agency
to choose the correct vehicle for the correct job. It is intende<;lto provide the Agency with a general
discussion of the redevelopment process and practice and to serve as a practical reference gUide for
Agency staff and Board members. The Guide will be useful to Agency staff and Board members during
all phases of the redevelopment plan implementation plan process.
The Guide consists of subsections providing information about and explanation of implementation
processes and procedures, including: I) land acquisition and disposition; ii) sources of public financing;
Iii) owner participation; iv) disposition and development agreements; and, v) relocation policy and
procedures, housing compliance requirements and procedures (including housing compliance
schedules), and Agency accounting, budgetary and reporting requirements.
Together, the Operations Plan and the Guide will provide the Agency the map and the vehicle to achieve
its immediate and intermediate goals and objectives - its mission. This document commences the
Agency's implementation effort. In order to address future changes in the Project Area, this
implementation strategy must be reviewed and, as need dictates, updated on an annual basis.
_.
D. . ATTACHMENTS
For informational purposes, this section of the Strategy provides: Goals and Objectives statements,
photographic surveys of Key and Secondary Sites, the Agency's previously adopted Programs and
Projects list, and the Owners, Businesses and Tenants Participation and Re-entry Rules.
E. AUTHORITY
At its meeting of _, 1999 the Agency adopted this Strategy and directed staff to
commence implementation procedures on the Redevelopment Plan.
5I7199C:\OO3C/TY01\AG07\JMPlSTRATEGYFNL.WPD ES-4
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IMPLEMENTATION OPERATIONS PLAN
FOR THE
ARROYO GRANDE
REDEVELQPMENTPROJECT
I. BACKGROUND
The Agency adopted its 30-year Redevelopment Plan in May, 1997. The Redevelopment Plan provides
for redevelopment activities in the Project Area shown in Figure 1. The Project Area is approximately
510 acres in size and includes portions of the City and certain contiguous parcels ofland located north
and south of State Highway 101. Existing and General Plan land uses found within the Project Area are'
identified in Figures 2 and 3 respectively. The Redevelopment Plan does not contain its own land use
categories or restrictions, but rather uses those zoning categories and land use restrictions found in the
City's Zoning Ordinance and General Plan. Therefore, it is important that all activitie$ contemplated
under this Operations Plan, as well as the Redevelopment Plan itself, comply with the City's Zoning
Ordinance and its General Plan. -
While the Agency has the right and a responsibility to consider redevelopment initiatives throughout the
Project Area, the Project Area is too large for the Agency to consider immediate physical rehabilitation
and redevelopment of the entire Project Area. Such an implementation strategy would result in too
diffuse an expenditure of limited resources. A far more efficient and fiscally responsrble way for the
Agency to operate is for it to develop general programmatic economic development activities and to
focus initial investment in those parts of the Project Area that fit within certain "Categories of High
Potential" for economic development activity. The Agency should concentrate special emphasis on
those areas where redevelopment opportunities are most likely to occur; namely, within the identified
Principal Improvement Zones (the "Zones"). Subsequent benefit to other parts of the Project Area
should then occur through private investment in direct response to Agency involvement in the previously
redeveloped portion(s} of the Project Area.
In this regard, it must be stressed that the total amount of tax increment funds the Agency will collect
from within the Project Area in the first years of implementation are limited. The Agency must be
especially cautious during these early years to focus its resources on projects and programs that will
enable it to maximize the return on its investment so that it can parlay early returns into implementation
of subsequent, broader scope projects. This will ensure the continuation of the investmenUredevelop-
ment process.
Additionally, the Operations Plan must always be flexible enough so that the Agency can act quickly and
decisively to assist in a project's development when unforeseen opportunity avails itself anywhere within
the Project Area.
The Categories of High Potential referred to above are most simply understood by the terms
"advantage", "opportunity" and "constrainr. What are the advantages of one parcel of land over another
that would induce a private developer to invest his or her funds in that first parcel? Secondly, what is
the opportunity for such a private developer to redevelop that parcel? And, thirdly, are there any
constraints to development of that parcel which the Agency could help the developer overcome?
5I7/99C:\OO3CI1Y01\AG07\JMPLSTRATEGvFNL.WPO OP-1
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Within each Category of High Potential there are various criteria which describe and define that
category. Specifically relating to Arroyo Grande, these "criteria" are identified in Table 1 below.
Advantages
. High Quality of Life Environment
. Strategic Location in the Five Cities Trade Area
. Proximity to Key Transportation Corridors such as:
SR 101, Grand Avenue, Traffic Way, Branch Street, and Halcyon Road
. Highway Commercial Opportunities
. Existing Successful Downtown Corridor ([he Village)
. Existing Automotive Dealerships
. Available Land for Business Park Development
. Centralized Regional Health Care Facilities on Halcyon Road
. Inclusion within the Redevelopment Project Area
. Diverse Labor Force
. Availability of R~gional Economic Development Organizations
Opportunities Constraints
. Expansion of the Village & Other Commercial Districts . Financial Resources
. Participation with Regional Economic . No Clear Cut Economic Development POlicy
Development Efforts . Slow Property Value Appreciation
. Need for Entertainment Facilities . Market Support Ability
. Vacant Land/Location . Incompatible and Inefficient Land Uses
. Potential for Partial/Complete Site Demolition . Lack of Infrastructure
. Potential for Speciality Retail/Shopping & . Community and Market Identity Outside of Region
Hospitality Facilities . Maintenance Issues
. Architectural Amenities . Fear of Change (Growing Too Fast)
. Cultural Orientation/Special Events . Development Review Process
. Community and Market Identity . Lack of Suitable, Non-Residential,
. Business Park Development Standing Building Inventory
II. BASIC ECONOMIC DEVELOPMENT OPERATING PRINCIPLES
This Strategy has been developed within a broad context of operating principles. The following list of
near-,mid- and long-term programs and projects reflects the latest thinking in economic development
theory and practice and adheres to the following operating principles:
. Economic Development and Redevelopment policies and programs are tools in implementing the
City's General Plan
. Economic Development and Redevelopment activities require sensitivity in fostering economic
growth while preserving the character of the community
. Strengthening the existing business community through retention and expansion activities is as
important, if not more important, as attracting new business
. The Agency will generally prefer to leverage its funds with private and other public investment
rather than to pay 100% of the cost of any activity.
5f7I99C:\oo3CITY01\AGQ7\lMPLSTRATEGVFNL.WPO OP"'5
. Until the community has achieved a strong economic base that can fund basic municipal services
and facilities, the Agency will need to invest in revenue-producing development and jOb creation
activities.
. Clear, concise and reasonable development policies and fees are an integral part of the rede-
velopment process.
. The Agency induces, the City regulates - both functions are necessary ingredients in a
successful economic development program. .,
Each of the below-listed programs or projects has been designed in accordance with these principles.
The following programs highlight a series of policies, operating principles, participation guidelines and
specific activities that the City can implement to retain and attract business and deter the effects of
blighting influences. Again, the near-term programs are not capital intensive given the modest financial
position of the Agency in the initial years of operation. As such, these initial activities are more labor.
intensive and may be addressed by existing staff, the Arroyo Grande Chamber of Commerce, and
community volunteers.
11/. NEAR-TERM IMPLEMENTATION PROGRAM
During Fiscal Years 1999-2000 and 2000-2001, the Agency shou.ld focus its strategic efforts on
enhancing the City's economic profile, identity and image.3 This effort is comprehensive and pertains
to the entire redevelopment project area as well as the community as a whole. This. image is internal as
well external. There should be community and business support and understanding of what economic
development program(s) are to be developed and implemented. There should be an organizational
structure that will implement such a program and there needs to be consistency between the
inducement and regulatory functions of the Agency and City. To date, the City of Arroyo Grande enjoys
a positive community image by those who are aware of the City. Yet, even with a strong list of
community and economic assets, Arroyo Grande is not widely recognized outside of the confines of the
Central Coast. In addition, the recent increase in residential development combined with the lagging
of commercial and industrial development, has created an imbalance in the City's ability to fund basic
services to the community. Revenue-generating real estate needs to come. into balance with the
expenditure needs of the existing residential community. If an economic balance is to come into play,
along with job creation and revenue generation through business expansion and attraction, then the
Agency must take steps to literally put Arroyo Grande on the "economic map." This effort starts with a
focused community identity marketing program.
The initial marketing efforts need not be fully financed by the Agency. In fact, the Agency can take part
in regional and state marketing efforts that will allow the Agency conserve scarce resources by sharing
marketing costs with other economic development agencies and local community and business
associations.
Various ways to accomplish this task are through typical private sector marketing and community
involvement techniques. In particular the Agency should encourage:
3 The Agency should solidify its economic development goals by sponsoring the creation of an Economic Development Element to the
City's General Plan. The General Plan is the most important municipal policy document which defines where the oommunityis and
where it plans to go. Given the Agency's lack of financial resources, the development of the Economic Development Element is
recommended for funding in later years or paid through City revenue sources. However. if funds become available earlier. this item
should become a near-term priority.
5I7199C:\OO3CrrY01\AG01\lMPlSTRA TEGvFNl. WPO OP-6
A. LEVERAGED MARKETING PROGRAM
The Agency should participate in the "Team California" approach to marketing. This allows the
Agency to "coat tail" with other agencies and the State of California Department of Trade and
Commerce at trade shows, as well as participating in regional marketing advertisements. Instead
of the Agency footing the entire bill for this form of marketing. this level of group participation
enables local communities to participate in the State of California's marketing programs through
trade show buy-ins, and joint ads in site location publications. Agency staff would be provided
space in collaborative booths at trade shows and would be provided a list of state and national
events. The Agency would then participate in only those trade shows that pertain to the industries
that are suitable for Arroyo Grande. On a more local basis, a similar collaborative marketing
program could be developed with the Economic Vitality Corporation of San Luis Obispo County
(the "EVC"). The point is to leverage limited marketing dollars while raising the visibility and
impact of the Agency's local economic development efforts. The local business community and
the Chamber of Commerce could sponsor a marketing fund raiser to assist in the funding for the
initial years. A near-term budget of $11,000, which includes $6,000 for the printing of a marketing
brochure, could be the basis for a much more comprehensive marketing program that would be
funded and then commence with the Mid-Term Implementation Program. Design and layout of
a marketing brochure can be expensive; therefore, the Agency might solicit local marketing and
printing companies to prepare the initial layouts "pro bono" in exchange for "tree" advertising in
the City's brochure. All in all, the most cost efficient marketing effort will be baseo upon a
partnership with the EVC. The Agency will in effect buy space in an existing marketing brochure
rather than paying for the design and creation of its own document.
B. SIGNATURE EVENT
As part of the process in developing a broader community identity, and thus a higher economic
profile, the Agency/City should continue to work with the Chamber of Commerce and the Village
Improvement Association in expanding the Strawberry and Harvest Festivals. Community identity
is normally characterized through significant events or significant facilities or both. A significant
event brings local, sub-regional, and eventually the potential for regional recognition. The City of
Gilroy has its Garlic Festival, the City of San Luis Obispo has its Thursday night Farmers' Market,
the City of Temecula has its Balloon and Wine Festival while the City of Monterey has the Historic
Automobile Races. These events are unique and synonymous to these respective communities
and have obtained state wide recognition. The Agency, working with community leaders, may be
able to expand the existing events in order to achieve the same level of notoriety.
C. COMMUNITY OUTREACH
An effective and continuing public relations effort is very important to all redevelopment agencies
and especially to a redevelopment agency that is just commencing its program as is the Arroyo
Grande Redevelopment Agency. Any community outreach program should highlight the types
of activities that will need to be conducted by the Agency in order to maximize communication and
the dissemination of information about its programs to the persons and entities outlined above:
Such an outreach program should include the active participation of at least the Chamber of
Commerce, the Village Improvement Association, local service clubs, and any available home-
owner associations.
On an annual basis, or shorter time interval as may be appropriate, the Agency should advertise
that it is seeking the participation of local civic and community organizations to advise the Agency
Sfl/99C:\003CITY01IAG07\IMPl.STRA TEGYFNl.. 'M'O OP-7
on a regular basis about various issues affecting the long-term implementation of the
Redevelopment Plan, and this Operations Plan. Any organizations interested in participating, and
in being included on the Agency's Participating Organizations Notification List, are invited to
contact the Agency Executive Director's office.
Issues discussed with the Participating Organizations should be those that are pertinent to the
business of the Agency at that point in time. For example, if the Agency is developing a facade
improvement or housing assistance program it could request input from Participating
Organizations and modify the proposed program as may be appropriate based upon input
r~ceived.
The Agency should always endeavor to implement the goals and objectives included as a part of .'
the Redevelopment Plan and this Strategy. The Agency may periodically request Participating
Organization input as to the Agency's effectiveness at achieving the stated goals and objectives.
Meetings should be informal. Informal meetings are more conducive to creativity and interaction
amongst participants, resulting in more meaningful input to the Agency. Meetings should be held
on a quarterly basis, or as recommended by Agency staff during periods of intense Agency
activity .
At a minimum, the Agency should ask that participants submit Advisory Statements on a-quarterly
basis, in conjunction with quarterly meetings. The Agency may also seek input on an "as
requested" basis to enable the Agency to consider participant input prior to making major
decisions.
The Agency can work with the business and civic associations to assist .in the planning and
execution of special events and promotions, in addition to the aforementioned Signature Event,
and other parts of the City where special focus is required to promote economic development,
cultural awareness and interaction, education and other civic causes. Special events, promotions
and activities might include:
. Street fairs . Mimes
. Farmers' market . Air shows
. Parades . Strolling minstrels
. Outdoor dining/cafe . Outdoor music
. Wine Tasting
Agency staff should work with representatives of identified business and community associations
to: 1) identify special events, activities and promotions, 2) establish scheduling, funding and
prioritization requirements of those events and promotions, and 3) identify specific ways that the
Agency could assist in the implementation of the same.
This effort is highly labor intensive and will require sufficient staff resources to implement in an
effective and timely manner. Moreover, it is an ongoing effort to be maintained in the mid-term
and long-term programs. It is therefore imperative that the Agency appoint an Economic
Development Director as soon as possible.4
4 This position has been previously authorized by the Agency with the approval of the Enterprise Development Program in February
1998.
5f7'199C:\OO3CITYOtIAG07\lMPLSTRATEGvFNL.WPO OP-B
D. THE INTERNET
The Agency/City should develop an economic development image via the Internet. A localized
web page becomes a source of information to existing citizens and businesses as well as to
potential new industries. By using a web page to provide basic economic and demographic
information, and to describe the development review process, the Agency will be able to provide
cost-effective data to potential and existing businesses and employers. Site location decisions
are no longer lefHo just outside consultants. Many companies gather at least initial information
about a community directly or indirectly from the Internet. In many instimces. these same
companies may follow up with direct requests for information and assistance, but it is increasingly
likely that their initial screening of possible locations will be based on information and impressions
from an Internet search. The Lancaster Redevelopment Agency (www.econdev.larycaster.ca.us)
and the Cities of Moreno Valley (www.moreno-valley.ca.us) and Corona (www.cLcorona.ca.us)
each maintain Internet accessible pages to provide relatively comprehensive community
information presented in a competent, user-friendly way. The City of Vallejo has gone so far as
to copyright the City's web page and has prepared a software package that is being sold to other
California municipalities.
The information on the Agency's web page should provide detailed technical information that
assists companies in making business decisions. For example. the cost of land, the cost to
develop, the City's fee structure and the development review process are all vital in the site
selection process. The web page will also contain market demographics for the City and the
surrounding region. Much of this information has already been provided to the Agency with the
previous procurement of economic development marketing studies commissioned by the Agency.
Questions can be: 'What is the buying power, educational level and number of individuals in the
five-city trade area?" Answers to these questions are basic to the type of information that should
be displayed on the Agency's web page. The focus of developing these demographics needs to
be towards those industries that have been previously identified in the "Economic Opportunities
Analysis" prepared for the Agency by Applied Development Economics. The Agency's effort
should be based upon overall community imaging, but also be designed to attract those industries
best suited for the community. At the same time, the Agency's web page also must provide
resource information to existing businesses. Information pertaining to technical training
assistance, access to low cost capital and loans and general employment opportunities can be
made available through an Agency-sponsored web page. Initially, it would be more cost effective
to participate with a regional organization to develop an Internet presence. In this instance, the
San Luis Obispo County Economic Vitality Corporation (the UEVC"), is best.suited to assist the
Agency in this endeavor. Much of the basic demographic information is regicmal in nature and is
already available through County sources. An initial budget of $7,500 may be proposed with the
EVC to pay for basic data input that is specific to th~ City of MOYO Grande. The cost of
developing the web page is primarily the time to design and the inputting of the data. As an
alternative, the Agency may wish to have volunteers provide the necessary input and maintenance
efforts. Maintenance and upkeep can be accomplished through volunteer assistance, an
administrative intern, or via a cooperative effort with Cal-Poly, San Luis Obispo and/or Cuesta
College student summer intemship programs. This latter approach may not guarantee continuity
of input and maintenance.
S Rigorous maintenance and prompt updating of a web page is essential because it reflects the page sponsor's commitment to ongoing
forward progress and smooth operations. Given the Agency's limited financial and staff resources. a participatory Near- and Mid- Term
commitment with the EVC will be required in order to maintain an Intemet presence.
5f7I99C:\D03CITY01\AG07\JMPLSTRA TEGvFNL. WPO OP-9
-_..~---._---,----- --
'-
E. Bl,JSINESS VISITATION PROGRAM
The City has previously conducted a Business Visitation Program. This is an invaluable business
retention and expansion activity that needs to continue. Businesses like knowing that there is a
sympathetic ear at City Hall. One of the worst events to happen to an Agency's economic
development effort is to read in the newspaper than a prominent business is. leaving the
community. Sometimes. these events can be avoided with communication. The Agency Board.
advisory committees and Agency staff can all playa role in a scheduled outreach program to
existing business. Agency/City personnel in particular must get out into the community and
establish both "one-on-one" and community-wide relationships. The Agency's/City's effectiveness
in prompt permit processing. police and fire service and the fairness of the municipal fee structure
may be discussed during these scheduled visitation. Businesses are normally very proud of their
respective facilities and are appreciative of "City Hall's interest." These visitation programs often
become the genesis of the Agency's business attraction program. Namely. it is the owners of
existing business who communicate to their peers. suppliers and financial partners about how
effective the local Agency efforts are in retaining. expanding and attracting targeted businesses. .
This is local business and industry marketing the City of Arroyo Grande, not just the Agency and
the Chamber of Commerce.
F. INTERNAL ECONOMIC DEVELOPMENT REVIEW COMMITTEE
_.
This committee would consist of representatives from key departments (Planning. Building, Public
Works. Parks and Recreation, Utilities. Fire, Police, etc.) who meet periodically to review proposed
economic development projects prior to the submission of any formal documentation. This
process allows "regulators" to become problem solvers and playa role in the project development
process while providing the client with a snapshot of the strengths and weaknesses of a site
specific development proposal. This process shows the client business that the City/Agency is
willing to work with it should problems later emerge.
G. DEVELOPMENT INFORMATION GUIDE
A Development Information Guide can be used as a marketing tool, while providing nuts and bolts
information about the City's development review process. For developers or companies coming
into a community, such information is invaluable. Special concerns on design, growth and
environmental issues may also be included. Given the availability of staff time, this document may
be developed in-house. The cost to develop is basically staff time and the cost to print the guide.
Initially, this effort should be a compilation of the City's development review process and the
demographics obtained from the EVC. This is not a "High Gloss" effort at this stage. This is
merely an information packet comprised of existing municipal information that can be compiled by
clerical, planning staff and. once recruited, the Economic Development Director.
H. RECOMMENDED NEAR-TERM PROGRAMMATIC BUDGET PARAMETERS
Given its limited resources, the Agency cannot initiate the above programs in the near future;
however, the above list provides a "menu" from which the Agency may select those programs that
best fit its immediate needs, phasing them in as resources allow. In the Near-Term, the City will
need to keep its commitment to the Agency by advancing funds to the Agency as outlined in the
City/Agency Cooperative Agreement.6 This will provide the basic staff support necessary to run
a basic economic development and redevelopment program. If staff costs are to absorbe~ by the
6 As referenced in the staff report, Initiation of Enterprise Development Program. to the City/Agency on February 10, 1998.
5f7199C:\OO3CITY01\AG07\1MPlSTRATEGYFNLWPO OP - 10
----- ~~ --~ -
-----.
----~- -
Agency in the initial years of Agency operations, there will be inadequate financial resources
available to capitalize both Agency sponsored programs. Funding would go to overhead not
projects.
This Operations Plan recommends that the Agency initiate the programs listed in Table 2 below
over the five-year period commencing in Fiscal Year 2000-2001:
:::i:::~~~~~9~:~~~!illl~~I:~~:~:~~~.~~!:~~i+ii~~:i:;:i:
Leveraged Marketing Plan $11,000
Community Outreach Planning 3,000
Web Page (Internet) Development 7,500
Business Visitation Program 2,500
Development Information Guide 1.000
Total $25,000
IV. MID-TERM IMPLEMENTATION PLAN ..
As referenced above, the Near-Term Implementation Plan is on-going. As such, it is also a mid- and
long-term effort. In addition to these activities, the Mid-Term Implementation Plan becomes more project
specific while also being more capital intensive. These program and project activities generally should
be scheduled to commence in the Fall of 2000. They may begin earlier if the Agency's tax increment
receipts grow at a faster pace than presently anticipated. Mid-term activities are programmatic as well
as more capital intensive than the previously outlined near-term programs. Actual restoration,
revitalization and rehabilitation can commence during this period, if the Agency proceeds in the issuance
of tax-exempt, tax increment notes that will net the Agency an estimated $1.3 million. This includes,
through the five-year mid-term implementation plan, approximately $261,200 in the low- and moderate-
income housing fund. With the note proceeds of $1.3 million as the basis, the fol/owing recommended
programs can be employed throughout the Project Area, but are specifically geared towards the
Principal Improvement Zones (the "Zones") outlined below.
A. PRINCIPAL IMPROVEMENT ZONES
Working with input from the community, staff, UFI, and based upon the criteria identified above,
the Agency has identified the four Zones shown in Figure 4. It is in these Zones that the Agency
can best promote and facilitate mid- and long-term economic development, enalJ.ling the Agency
to implement the greatest number of redevelopment projects and programs in the shortest period
of time for the least amount of money. In addition to these improvement zone areas, the Agency
will need to consider a future Business Park Improvement Zone and a Residential Improvement
Zone(s). Neither of the latter two zones has been geographically identified; however, both are
instrumental to the long-term, economic stability of the community. Both zones could be capital
intensive to implement and will take a substantial amount of time, effort and funding. The
Business Park Improvement Zone is included as a priority in that it has the capacity to attract
development that will keep a significant percentage of the existing labor force in the City of Arroyo
Grande instead of commuting to surrounding communities.
5I7/99C:\OO3CITY01\AGOl\fMPLSTRATEGvFNL.WPO OP - 11
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1. Grand Avenue Improvement Zone
Generally that area located on either side of Grand Avenue from the westerly city boundary
toSR101.
~. The Village District Improvement Zone
Generally that area located on either side of West and East Branch Streets extending west
to SR 101 and easterly to the East Branch Street/Crown Hill intersection. This Zone
includes the West Branch Streetrrraffic Way/Bridge Street "triangle", The southerly
boundary of this improvement zone is co-terminus with the Arroyo Grande Creek between
Bridge Street on the west and approximately Garden Street to the east.
3. Traffic Way Improvement Zone
Generally that area located east and west of Traffic Way, extending northwesterly to
approximately the southerly tip of the West BranchfTraffic Way/Bridge Street triangle and
southeasterly to SR 101.
4. EI Camino Real Improvement Zone
_.
The freeway-oriented property generally included in the southwesterly quadrant of EI
Camino Real and Brisco Road. This Zone also includes the triangular-shaped area located
on the southeasterly quadrant of EI Camino Real and South Halcyon Road.
While remaining open to development opportunities elsewhere in the Project Area, it should be
the Agency's objective to focus redevelopment activities in the above four described Zones.
B. IDENTIFICATION OF PRINCIPAL IMPROVEMENT ZONE GOALS AND
OBJECTIVES
The Agency has established the goals and objectives for Operations Plan implementation as
identified in Attachment No. 1 to this Strategy. In keeping with the goals and objectives of the
City's General Plan, it is the Agency's objective to work with property owners, residents, business
owners, tenants, civic and business organizations to meet the needs within each Principal
Improvement Zone. These goals and objectives should be reviewed periodically to determine their
continued relevance.
C. REDEVELOPMENT OPPORTUNITIES IN THE PRINCIPAL IMPROVEMENT ZONES
In each Zone, the Agency must focus on near-, mid- and long-term activities to take advantage
of redevelopment opportunities and to advance the purposes of the Redevelopment Plan. There
are some fundamental differences between near-, mid- and long-term activities.
As stated previously, near-term activities will tend to be economic development- and marketing-
oriented, while mid- and long-term activities will not only continue these initial efforts, but also
5I7/99C:\OO3CITY01\AG07\JMPLSTRATEGYFNL.WPO OP - 13
--
expand into public works, restoration and project orientation? Furthermore, near-term activities
will, by their very nature, not be capital intensive. Consequently, they will tend to be organized as
"programs" which, once established, can be replicated over and over again. On the other hand,
mid- and long-term activities can be more complicated and contingent on private market forces.
Such activities will tend to be more expensive, larger and more substantial, on an individual basis,
than near-term activities. Another difference between the three types of activities is that while
near-term programs tend to encompass whole areas, mid- and longer-term activities tend to be
site-specific.8
A final and very important difference between near- and longer-term activities is that longer-term
activities tend to be "custom" designed from the resources available to a redevelopment agency
on a project-by-project basis. For instance, remediation of an existing commercial building that
is obsolete with respect to modern use requirements will require different resources than will
development of a new retail center at, say the northeast corner of Grand Avenue and Oak Park
Boulevard; both these activities will demand different resources than would the purchase and
rehabilitation of a public park. In short, each longer-term activity will require the Agency to review
the resources available to it (or described in the Guide) and then to pick and choose which
resource best meets the requirements for that particular activity. The resources required for near-
and some of the mid-term programmatic aGtivities, which consequently tend to be more repetitive,
are more easily defined in a document such as this Operations Plan. Therefore, this Qperations
Plan describes specific mid-term activities in sufficient detail to facilitate implementation while
. describing longer-term activities more generally and with greater reliance on the Guide and
creativity of the Agency and its staff.
D. TARGET MARKETING PROGRAM
The marketing efforts outlined above in the near-term implementation program highlight an effort
to establish and expand the community's identity on a local, regional and statewide basis. From
this basis, the Agency should be able to move forward to establish a more focused and targeted
marketing approach to the Agency's specific economic development efforts and programs. A mid-
term opportunity for the Agency is to market the programs it establishes as well as the availability
of other, long-term, inducements to economic development specifically within the Zones and
within the Project Area in general. A successful marketing campaign will include a marketing plan
which emphasizes the positive attributes of the City, provides useful infonnation about the various
programs and projects available, and involves the business community. Based on the idea that
the Agency should concentrate on business retention and expansion, the mid-term marketing
strategy will focus on existing Arroyo Grande businesses; it will look within the existing market
area rather than outside.
E. TARGET MARKETING PLAN
Successfully marketing the Project Area will include developing and then implementing strategies
designed to retain businesses in the community, helping them expand, as well as attracting new
businesses. The actual marketing plan should be developed by a firm that specializes in target
7 Activity duration should n~t be confused with commencement For example. a facade improvement or a business expansion program
can extend over many years and, consequently, appear to be a long-term activity. The operational issue, however, is whether a
program can be established relatively quickly, easily, and with few necessary partners. Such a program, regardless of its Intended
duration, would be classified as a near-term activity.
8 One general exception would be the implementation of residential and/or commercial property rehabilitation programs that go beyond
site specific restoration and are capital intensive.
5f7199C:\OO3CrrY01\AG07\lMPlSTRATEGvFNL.WPO OP - 14
marketing strategies and would 'include an industry and labor analysis of the existing community
and the surrounding regions. A minimal yet effective marketing plan should cost approximately
$25,000 to complete. A general list of activities to attract businesses and jobs has been previously
highlighted for the City/Agency by Applied Development Economics (ADE) in their Marketing
Strategy Report approved by the City Council on January 13, 1998.
F. MARKETING TOOLS
Marketing tools to be developed for mid-term benefit should include, but not be limited to:
. Strengthening 'team' marketing activities with Economic Vitality Corporation
. Agency/Project Area logo/image, or other marketing concept to be incorporated in all
outreach materials
. Redevelopment Agency Brochure
. Press kits
. Design of property/project signs
. Agency newsletter
. DevelopmenVdistribution of an "electronic brochure" (Compact Disc [CD ROM]).
Total start-up costs for the above tools should be about $19,000 and $6,000 per year .thereafter.
In addition to the Economic Vitality Corporation, the Agency WQuld continue the team marketing
activities with the State of California, but would also avail itself of the newty expan.ded marketing
opportunities by highlighting more mid-term implementation.
G. MEMBERSHIP IN SUPPORT ORGANIZATIONS
Numerous agencies exist that could facilitate the Agency's promotional and marketing efforts. The
Agency should seek membership, and/or subscribe to, and/or advertise in publications and other
materials from the following organizations:
. State Trade and Commerce Commission
. California Redevelopment Association
. California Association for Local Economic Development
. National Council for Urban Economic Development
. International Council of Shopping Centers
. California Downtown Association
. American Economic Development Council
Including the near-term marketing efforts, which are ongoing, the five-year projected budget is
estimated to be $170,000.
H. MID-TERM BUSINESS EXPANSION AND ATTRACTION PROGRAMS
1. Pro-Retail and Hospitality Program9
The Agency should undertake a program of its own that promotes both retail and lodging
development. The purpose of the Pro-Retail and Hospitality Program (PRHP) is to
9 Funded through new site specific generated sales tax, this program would serve as an inducement and would operate under the
Agency's Financial Incentive Policy Guidelines and Operating Principles.
5I7f99C:\003CITVO 1\AG07\IMPLSTRA TEGvFNL2.wPD OP - 15
- -- -,-----~.- --'--~.._-----.-- -- -------
encourage the private sector to develop new large-scale retail. office and hospitality facilities
within the Principal Improvement Zones. In this regard, the Agency's primary goal is to
expand and diversify the City's economy. The PRHP would be available to any business
that meets the following program criteria. Under the Program. a qualifying business would
be eligible for reimbursement of all of their City building and development impact fees. For
a minimally eligible. 15.000 square foot retail facility. this could mean a significant savings.
The larger the building, and subsequent employment generated. the greater the benefit. The
PRHP's 15.000 square foot minimum building size requirement is based on typical. major
retailer prototypical occupancies.
The PRHP provides for a very simple reimbursement process. in which the Agency
reimburses each eligible business the full cost of the City fees actually paid during the
development of the participant's new facilities. These reimbursements may be made over
a five-year period. The payment(s) would be equivalent of the lesser of 50 percent of that
portion of the business' eligible sales taxes actually received by the City of Arroyo Grande.
or the City fees actually paid by the business.
In addition. Agency staff would use the following qualifying criteria:
Job Creation: The Business must provide. by the end of the second year of _operation.
at least one full-time equivalent employment opportunity (i.e.. a 40 hours
per week job) for every 1,000 square feet, or portion thereof. of gross
buildable area.
Gross Receipts: A minimum of $750,000 in gross revenue must be generated.
Investment: An investment of at least $50.000 per job created in land, building(s)
and/or equipment.
Businesses that apply would also be reviewed with respect to these additional criteria:
. Financial strength and stability;
. Successful business track record and principal experience;
. Quality of the jobs created and their match to the regional labor
force; and
. Environmental compatibility.
This program is contingent upon the creation of new sales tax funds actually received by the
City. The City would allow no more than 50 percent of new sales tax receipts to be passed
through to the expanding or new business in order to offset both processing and mitigation
fees. The Agency's tax increment, based upon the incremental growtli in property tax.
would not be used for this program. The Agency. not the City. must be the conduit for such
a program.
2. Small Business Assistance Programs
According to the publication Compact: A Guide For Future Plannina. prepared by the
Foundation for Community Design of the County of San Luis Obispo. the number of self- .
employed persons in San Luis Obispo County is currently at an all time high. The
publication states: "The number of self-employed persons represents 27 percent of all
workers in San Luis Obispo County." As has been widely publicized, the success of small
5I7199C:\OO3CITY01\AG07\lMPLSTRATEGYFNL.WPO OP - 16
business is largely due to the individual proprietor possessing basic business skills
combined with obtaining and retaining adequate capital for the initial years of operation. In
many instances, small companies, "start-ups" and self-employed individuals are successful
when they have access to business training programs and the acquisition of low cost capital.
Both of these resources are available to the City of Arroyo Grande and should be facilitated
by the Agency. Technical business skills seminars, one-an-one counseling and low-cost,
longer term loans are currently available to small business. Cuesta College is the sponsor
of a state/federally funded Small Business Development Center (SBDC) which provides
technical business assistance training, while Mission Bank, in the City of San Luis Obispo,
is establishing a U.S. Small Business Administration (SBA)-sanctioned, Certified
Development Corporation (CDC) that can provide low-cost, long-term capital for the
acquisition of equipment and real property. These programs are highly successful in various
parts of the state and can be brought into focus in the City of Arroyo Grande as well.
With 27 percent of all workers acting as self-employed entrepreneurs, it would seem that a
main goal of the Agency's effort would be in the cultivation and expansion of these local
"cottage" industries. The local SBDC can provide technical assistance training in the City
of Arroyo Grande, specifically. One-on-one counseling, group training sessions and
quarterly businesses seminars can be tailored to meet the heeds of local businesses.
Agencies can and do pay SBDC's to coordinate these types of efforts on the co.mmunity's
behalf. Annual participation with the local SBDC should not exceed more than $10,000.'
These efforts would be in addition to the City/Agency effort pertaining to the implementation
of the Home-Based Business Development Plan as recommended by ADE and funded
through the State administered Community Development Block Grant (CDBG) Program.10
I. REVITALIZATION AND REHABILITATION PROGRAMS
Such programs would provide a growing benefit to the above-listed Zones for relatively little cost
in comparison to the cost to construct new facilities. They could include the following types of
programs:
1. Building Improvement Loans
Such a program would be most useful in the Grand Avenue, Village District and Traffic Way
Improvement Zones. It would provide for the Agency to loan funds to improve structures in
targeted areas consistent with specified guidelines (see below for discussion of guidelines).
CCRL Section 33444.5 specifically states that "an agency may establish a program under
which it loans funds to owners or tenants for the purposes of rehabil.it~ting commercial
buildings or structures within the project area." The advantage of such a program is that it
needn't be complicated, nor is the borrower required to establish need;. only an ability to
repay. Since state law does not establish minimum underwriting criteria, the program.may,
and in fact should, employ more generous underwriting criteria and a lower interest rate than
would a commercial bank.
Typical programmatic components would include the following:
. Interest rate to be approximately 3% below current commercial rates, revised annually.
10 As referenced in the staff report to the City Coundl on July 14.1998 (CDBG Economic Development Planning Technical Assistance
Funds).
sn/99C:\OO3CITY01\AG07\lMPLSTRATEGvFNL.WPD OP - 17
---..
. Improvements can include cost of awnings, signage, lighting, repainting, window
enlargement or rehabilitation, minor rehabilitation, un-reinforced masonry retrofit,
foundations retrofit, etc.
. Maximum loan size should allow the Agency to have loans outstanding on up to "1-0
percent of potential lots" during the first two years. of the program with possibility of
revisions to the program thereafter. For example, if there were 100 affected lots in the
program area and the Agency decided to fund the program at $200,000, then . the
maximum loan size should equal $20,000 (allowing for 10 loans, or 10% of the total
need, to be outstanding). In no event should the maximum loan be less than $15,000.
. Repayment should be fully amortized over five years. The Agency might wish to
provide for a one year "grace period" where no payments are due and no interest
accrues. Therefore, the loan period would equal six years.
. Collateral for the loan could be either the real estate itself (in the case of a loan to the
land owner), or a UCC filing and personal guarantee in the case of a loan to the
merchant.
. The application should be no more than two pages and loan approval should occur
with relative ease.
. The Agency should test market this program prior to establishi~g and advertising it to
the full range of appropriate lots.
Ideally, this type of program would be developed in concert with actual design guidelines for
each Zone. Fortunately, the City adopted design guidelines for historic districts on
November 22, 1994 which primarily pertain to the Village and Traffic Way Zones. The
Grand Avenue Improvement Zone should have design criteria of its own. These programs
may become highly labor and capital intensive depending upon the collective business
community's desire to participate and the Agency's ability to market the program.
2. Grand Avenue Revitalization Program
Grand Avenue is in need of a comprehensive planning and implementation effort. The
planning effort alone should include a market and ,use analysis combined with
comprehensive design guidelines pertaining to both public and private improvements. This
planning exercise would be the basis for the development of actual implementation activities
including, but not limited to, building facade restoration, landscaping; street furniture.
installation, undergrounding of utilities and the development of useable parking facilities.
The Agency could expend some amount of its funds for these and similar activities on and
adjacent to public streets. The Agency would need to be very careful to expend its funds
in such a way that the expenditure could be attributed to blight eradication and other legally
permissible activities. Agency legal counsel should be consulted prior to any authorization
of funds. For more on this program, please see the Business Improvement District Program
below. This program should also be expanded into the Traffic Way Improvement Zone.
Typical programmatic components would include the following:
5n199C:\O03CITY01\AG07\lMPLSTRA TEGvFNL.WPO OP - 18
. Assemble a group of Grand Avenue merchants to provide input on specific projects
to be undertaken. Group to consider itself an ad hoc committee without any ongoing
responsibilities.
. Possible projects could include repaving streets; provision of new, and upgrading of
existing parking facilities; historic preservation; constructing entry monuments;
providing stamped concrete sidewalks at intersections; providing Grand Avenue-
specific street furniture, signage, traffic control devices, etc.; planting street trees and
providing for placement of annual and biennial plants and flowers; and providing funds
for engineering and planning analysis and construction documents.
. Provide a four-year budget to be used exclusively for this program. Given the amount
of funds available and the importance of this improvement zone, this budget could be
as high as $400,000. However, the Agency's ability to fund such an effort seems to
be in the long-:-term range of operation and would require the issuance of some form
of long-t~rm debt.
There is a very important caveat to this program which cannot be stressed enough. Simply
planting trees and buying expensive park benches is not sufficient to revitalize a commercial
area which has to compete with other commercial districts in and around the City of Arroyo
Grande. More important is to identify and exploit Grand Avenue's market niche "ersus that
. of the competing commercial areas. It is absolutely vital that this program not be attempted
in a vacuum, but rather that it, and the Building Improvement Program, be an integral part
of other revitalization programs described below.
J. ASSIST IN FORMING A BUSINESS IMPROVEMENT DISTRICT
The concept of a property-based Business Improvement District (a "BID") has been discussed in
the past. A BID is a legal entity that could expend funds more freely on Grand Avenue than could
the Agency; on the other hand, the Agency could legally help subsidize a BID program as long as
the program helps to eliminate blight in the Project Area. Forming a BID is expensive ($60,000
or more); the Agency could subsidize formation activities. Obviously, this program would be useful
in the Grand Avenue Improvement Zone.
An absolutely necessary component of any successful BID is the active involvement of its
participants. It is difficult to generate enthusiasm for an additional tax (which is at the heart of the
BID), unless participants understand the benefits that will accrue from such a tax. The Agency
might want to provide dollars for a program which will both: I) generate sufficient hard information
and envision specific projects to assist potential participants in understanding the benefits and
costs of a BID; and, ii) disseminate this information in the most effective fashion possible. Much
of the effort expended and information gathered in this effort will be useable for the ultimate BID
formation process.
Typical programmatic components would include financing the BID formation process at
approximately $60,000, or simply an information process at $12,000. Programs and projects
organized by the corporation formed to manage the BID would be paid for by member
assessments. Again, this is a mid-term effort.
K. MARKET NICHEffENANT MIX ASSISTANCE
It is axiomatic that effective retail marketing demands a clear understanding of the market and an
5I7199C:\OO3CITY01\AGQ7\JMPLSTRATEGvFNL.WPO OP - 19
-~--
ability to serve, but not over serve, all segments of that market. Single-owner shopping centers
have been successful because the individual owner can survey the market for its entire shopping
center (rather than just one store) and can rent only to those retail uses that will serve, but not
over serve, that market. Multiple ownership, commercial districts are much less successful in this
effort. The Agency could retain a retail marketing consultant to work with Grand Avenue owners
to: I) establish a tenanting plan, and ii) assist owners in seeking those tenants who will be
beneficial to both the individual owner and to the entire downtown marketing effort.11
Typical programmatic components would include the following:
. Working with existing downtown merchants and owners to establish a need for and the
proposed scope of this program. This effort can be a part of the BID formation process.
Since the program anticipates that owners will be asked to conform in some meaningful Y{ay
with the Grand Avenue marketing needs, as opposed to simply maximizing their own
income, this first process will be very important and could consume a long period of time. .
. Establishing an RFOIRFP process (please see the Guide for discussion of this process) to
select a marketing professional. Final selection will be with the concurrence of the BID
Board of Directors, if there is one, or an appropriate merchants/owners committee.
. Working with the selected marketing professional to improve the downtown tenant mix.
Please note that the "end product" of this program is not another report or any other sort of
document stating what the tenant mix should be, but rather an actual change in real tenants. The
concept will be to improve the tenant mix, thereby stimulating consumer commitment to shopping
downtown and ultimately increasing municipal sales tax receipts, private rental rates and property
values.
L. INFRASTRUCTURE IMPROVEMENTS
The City's Capital Improvement Program and the "Projects List," incorporated into the Redevelop-
ment Plan, identify a number of infrastructure projects within the Project Area which include major
street reconstructions, storm drain and sewer improvements, water capacity improvements,
underground utility projects, public parking improvements, improvements to park facilities,
recreation areas, community facilities and other public buildings (except the City Hall). The
Agency could pay for any, or all, of these improvements in conjunction with other projects that.
produce increased sales or property taxes. In this way these "public" works, which traditionally
are not thought of as money makers, can be "leveraged" with tax-generating projects. This
program would be useful in all the Improvement Zones. Priority projects within each Zone should
be established by the City's Engineering Division, and then be implemented in accordance within
established budgetary guidelines. Initial priorities are currently being implemented with: 1) the
authorization of the establishment of the Arroyo Grande Grand Avenue Underground Utility District
No.5, causing the undergrounding of utilities along Grand Avenue between SR-101 and Halcyon
Road; 2) the first phase of the Grand Avenue reconstruction Project from Halcyon Road to Elm
Street; and 3) the development of the Preliminary Studies Report for the proposed interchange
improvements at Brisco Road, Halcyon Road and SR 101. Items 2 and 3 above are funded
11 Such an effort has been ongoing in the City of Pasadena by which the City employs outside consulting services to define and
market individual retail commercial districts throughout the City. These efforts have been in the $25.000 range.
5n199C:\OO3CITY01 \AG07\lMPlSTRATEGvFNl.WPO OP - 20
--~-- -------_._-".->,--~---,_._.._-. .-~~--~--~
through the Urban and Regional Surface Transportation Program (STP) and the Regional State
Highways Account in particular. Agency funded projects will come from the $400,000
recommended Grand Avenue budget referenced below.
M. COMMUNITY SIGNAGE AND LANDSCAPING DESIGN PROGRAM
Community and economic profile building should be a main focus of the Agency's initial efforts.
One way to enhance any community's image is through sign monumentation.and landscaping.
Although this is a long-term, capital intensive program to actually construct and install, the
preliminary design and prioritization of such an effort can commence in the near-term. Entrances
into cities are both the physical and "identity gateways" of communities. Streetscapes that
incorporate landscaping, ",onument and directional signage, as well as hardscape, assist in
setting communities apart. Freeway off-ramps that are designed to incorporate signage and
landscaping would assist in clearly designating the City as distinct and unique to the travelers
along SR-101. A freeway landscaping program will need to be developed in conjunction with the
State of California Department of Transportation (CAL TRANS).
Creating a regional identity could be a potential goal with such a identity program. The initial
designs for hardscape, landscape and signage could be developed through a local competition
developed by an Agency-sponsored community advisory process. Community acknowledgment
and support of the actual design will assist in laying the ground work for future financing
mechanisms and the eventual installation of the improvements. After the' initial design has been
approved by the City, the funding for the working and construction documents may be funded in
the mid- and long-term budgets. Subsequently, the Agency would then be in the position to assist
in the financing construction of facilities at the entrances to the City. The projected mid-term
budget for this program is estimated to be $200,000 over a five-year per~od.
N. TECHNICAL ASSISTANCE AND STAFFING
Agency staff, or other recognized entities or persons, may provide assistance to residents, owners
and businesses within the Project Area. This technical assistance is part of the ongoing Agency
administration of the Project and, as such, eligible for funding with tax increment monies.
Additionally, the Agency Board will need some staff available to it for general Agency
administration. Typically the Agency will pay for some percentage of the salary for the City
Manager (who acts as the Executive Director for the Agency), the Community Development
Director, the Financial Services Director, and an administrative analyst or comparable position12.
O. RESIDENTIAL REHABILITATION PROGRAM
Such a program allows the Agency to use its 20 percent low- and moderate-income housing set-.
aside monies (LMI funds) to assist low-income owner-occupants, or owners of-qualifying multi-
family residences, in making necessary repairs. Under this program no-interest loans or grants
12 It is a good practice not to fund operational expenses, such as staffing costs, out of either .Note. or .Bond. proceeds. Funds
generated through the issuance of debt should be project based. Operational expenses need to be based upon long-term revenue
streams not periodic infusions of money created through the issuance of debt As such, the Agency has available through the Near-
and Mid-Term periods. an estimated $248,700 in accrued tax increment above the required debt service for the issuance of the Five
Year Tax Allocation Notes. In that the Agency only has an estimated $1.3 million in note proceeds available plus the $248,700, the
entire amount has been budgeted for programs and projects. The actual staffing of programs with the associated costs of operations
have been assumed to be absorbed by the City's General Fund. If the City is unable to absorb the cost of staffing and operations, it
is estimated that the five (5) year cost of one full time Development Specialist position will be approximately $325.000. If staffil')g is
to be the responsibility of the Agency, then the above referenced program budget will need to absorb this $325,000 estimate over the
five (5) year period.
5I7/99C:\OO3CITY01IAG07\lMPLSTRATEGvFNL.WPO OP - 21
---- - ----.--..----
--
can be made available to eligible homeowners and apartment owners to perform repairs to their
units, including but not necessarily limited to: heating, roofing, plumbing, sewer connection, and
other repairs. If the Agency were to allow a cap of, for example, $5,000 per unit over the mid-term
period of five (5) years with the projected $350,000 in LMI fund resources, the Agency could assist
70 dwelling units. In order to qualify for such assistance, homeowners (in single-family
residences) and renters (in multi-family residences) would need to show total family incomes that
are either very low, low, or moderate as defined.
P. RECOMMENDED MID-TERM PROGRAMMATIC BUDGET PARAMETERS
Given its limited resources, the Agency cannot initiate all of the above programs immediately;
however, the above list provides a "menu" from which the Agency may select those programs that
best fit its immediate needs, phasing them in as resources allow.
This Operations Plan recommends that the Agency initiate the programs listed in Table 3 below
over the five-year period commencing in Fiscal Year 2000-2001 :
:".:::::::::;l::i:::\:\.;i;:~~aB~:~:~~6~~:.M6"~~~~~8:~'~~~"+a':fM~:i~+~f:ili\.I.il!.i:\.i'i:'!:.:::I'I.:ilii::'....:::i
On-Going Near-Term Program Activities $ 69,100 _.
Marketing and Small Business Development 235,100
Preliminary BID Formation Activities . 60,000
Signage and Landscaping Program 200,000
Grand Avenue Revitalization Program 440,000
Building Improvement Loans 200,000
Residential Rehabilitation Program 350.0002
. Total $1,554,200
1 This Table does not include a budgeted amount for the PrcrRetail and Hospitality Program in that the
funding is predicated on future sales tax collected from future development Sales tax is not a revenue
of the Agency but rather the City.
2 This is funded through the statutory low- and moderate-income housing fund (LM!).
TABULAR SUMMARY OF MID-TERM REDEVELOPMENT ACTIVITY COSTS
Tables 4 and 5 on the following pages summarize the projected costs and revenues of the above
described activities (both General [Table 4] and Housing [Table 5]) over the next five years.
5f7/99C:\OO3CrTY01\AG07\lMPLSTRATEGvFNL.WPD OP - 22
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v. LONG-TERM IMPLEMENTATION PLAN
Long-term activities are both site specific and programmatic. Projected to be able to commence by
Fiscal Year 2005-06, the Agency may consider the following activities. Again, these activities are based
upon the Agency's ability to fi~ance and/or fund a given set of projects and programs. As the Agency
moves nearer to this period of time, it will be more able to decid~ which set of activities to pursue
predicated on not only on funding, but on a needs assessment at the time.
A. LONG-TERM PROGRAMMATIC AND PLANNING ACTIVITIES
Small Business Incubator
M incubator is an environment that provides a group of entrepreneurs knowledge about effective
business practices and access to community resources, including sources of funding
opportunities. This environment is created by providing on-site support services along with flexible
rental space at attractive rates. Incubator tenants also benefit by lowering start-up costs through
shared resources such as computer services, copiers, fax machines, printers, conference rooms,
receptionist, etc.
Incubator tenants are typically selected by an incubator consultant or manager with support from
an advisory committee (see below for committee make-up). Criteria such as viability of the
business and the potential to produce jobs for the City have to be considered as part of the tenant
selection process.
'The CCRL specifically authorizes agencies to "assist public agencies or private nonprofit
corporations to establish and maintain a small business incubator." The Agency could work with,
or help establish, a local not-for-profit organization that can design and develop such an incubator.
This program would be extremely useful to the overall Project Area given the high number of self
employed individuals currently residing within the community. Additionally, small industrial
businesses which are nurtured in the incubator and grow too large would be perfect candidates
for relocation to market rate buildings. Agencies can be creative in the location of small business
incubators; for instance, one community in Southern California has physically located a small
business incubator facility in retired railroad cars situated on a vacated railroad spur.
This program will involve either the purchase or lease of land and a building and improving the
building which, if the latest communication/computer networking infrastructure is involved, may
be relatively expensive. The Agency should budget at least $300,000 for start-up costs and a net
$50,000'3 per year for ongoing activities.
The programmatic elements of a Arroyo Grande Small Business Incubator might include:
. Select an incubator consultant or manager to provide advice and counseL This consultancy
service could be provided by an independent consultant or through Cuesta Community
College.
. Working with the consultant,' assemble a committee of interested and effective individuals
who are knowledgeable, and are willing to volunteer such knowledge, in at least the
following areas: industrial real estate, small business financing (including knowledge of SBA
programs), small business accounting and planning, local and state-wide programs, local
13 This assumes that there will be some amount of income from rentals; however, income will not cover operations and maintenance
cosb. .
5I7199C:\OO3CITY01\AG07\JMPLSTRATEGYFNL.WPD OP - 25
----' -,-
----- -
-_.__._~.-
and state political influence. industrial networking and major industry supply needs. This
committee will remain in operation and provide information in the respective areas of
knowledge as needed. either for free. or at reduced rates.
. Select a property and building which can be easily rehabilitated to provide actual
incubator space. Rehabilitate said building.
. Institute an advertising and outreach campaign.
. Using committee members or, if necessary, paid persons to provide:
. On-site support services
. Business Plan development
. Accounting/financial analysis
. Cash flow management
. Human resource management
. Marketing
. Funding sources
. Expansion strategies
. Loan proposals
. Management assistance
. Provide business growth assistance through the RDA or other appropriate funding
sources in the following forms:
. Line of credit
. Micro loans
. Venture capital
. Provide business outreach assistance as follows::
. Community resource awareness
. Insight and education from successful entrepreneurs
. Business incubator counseling
. Provide network technical assistance as follows:
. Legal assistance
. Accounting
. Promotional services
. Business products
B. LONG-TERM BUSINESS ATTRACTION PROGRAMS
1. Broker Assistance Program
The Broker Assistance Program (the "BAP") is an incentive program designed to attract new
commercial. office and industrial development to existing vacant space in the Principal
Improvement Zones. The program offers consultant fees to real estate brokers who are
successful in filling facilities currently available within the Principallmprovement Zones. The
procured businesses must be permitted uses as defined by the City's General Plan and
Development Code. Procured businesses must meet minimum length of occupancy and
employment generation standards and must occupy a location on a city-approved list of
vacant space. The approved list of vacancies would be developed and updated on a
quarterly basis in concert with the local brokerage community.
5f7199C:\OO3CITY01\AG07\lMPlSTRATEGvFNL.WPD OP - 26
----...
.,-----"_..-. . --,....-
.
The BAP provides performance-based consultant fees to brokers who are successful in
filling vacant commercial, industrial and office space. The basic purpose of the program is
to ensure that building and development opportunities contained within the Principal
Improvement Zones are clearly and regularly communicated to prospective entrepreneurs
considering locating in the City of Arroyo Grande. This program encourages the commercial
real estate community to assist the Agency with its goal of growing and diversifying the
City's economy. Broker assistance is considered essential to the success of this process
in that brokers are typically the first point of contact made by business operators wishing to
lease or acquire a new business location. The BAP recognizes the synergistic relationship
that exists between the Agency's economic development efforts and the real estate
brokerage community and especially the significant time and energy that brokers invest in
the task of commercial leasing and acquisition.
Program Parameters
The BAP would pay brokers, who fill vacant commercial, office and industrial space .
contained within the Zones, a consultant fee of between $1,000 and $5,000. All fees would
be paid in installments over an approximate one-year period. The size of the space leased
or purchased and the number of jobs created by the qualified business used will determine
both the amount paid and the schedule of installments. As an added incentive, with the
intent of emphasizing the establishment of new sales tax generating retailers, the program
would pay a supplemental fee. The supplemental fee would be the lesser of $7,500 or
twenty-five percent (25%) of the sales tax revenue actually received by the City from the
newly established business during its first full year of business operation. Program specifics
include:
a. Consulting fees are only payable on property listed on the Agency's Inventory of
Available Commercial Space. The listing must predate any application for program
participation.
b. New businesses established pursuant to the program must:
(1 ) Provide at least one full-time equivalent employment opportunity (i.e., a 40-
hours-per-week job) for every 1,000 square feet, or portion thereof, of new
space occupied by the new business;
(2) Obtain a City of Arroyo Grande business license prior to occupancy; and
(3) Be a legal use ( Le., be consistent with all City department requirements).
c. The participating business may not be a relocation from elsewhere in the City.
d. The participating business must commit to a significant term ofoc::cupancy. This
means the business must either acquire its property or lease it for not less than two
(2) years.
e. The broker must be licensed in California and be independent from the property
owner. In-house leasing agents, owner/developers and their employees are not
eligible.
f. The consultation fee will normally be paid only to the applicant broker. However,
subject to approval of the parties, the consultation fee may be split between brokers
and/or assigned to third parties.
5f7199C:\OO3CITY01\AG07\lMPlSTRATEGvFNl.W?O OP - 27
'---- ,--.-.-- --"--- ----.-------
-
- - ~--- -~~"
g. Consultation fees are paid incrementally according to the schedule of fees provided
below. Other than the initial installment payment which is paid after occupancy by the
new business, the payment of all subsequent installment payments is subject to the
affected business being in continuous business operation at the site. If the affected
new business ceases continuous business operation at the site, the payment of all
subsequent installments is terminated.
h. To be eligible, the broker's application for program participation must be filed with the
Agency prior to or concurrent with the closing of escrow or the effective date of a real
property lease.
Schedule of Fees
Program consultation fees are as follows:
SIZE OF SPACE TOTAL CONSULTANT FEE INSTALLMENT PAYMENT # OF PAYMENTS
1,000 sq.ft or less $1,000 $ 250 4
1,001 to 2,000 $1,500 $ 375 4
2,001 to 7,000 $2,500 $ 625 -4
7,001 to 10,000 $3,500 $ 700 5
10,001 + sq.ft $5,000 $1,000 5
2. Business Retention and Expansion Program
The Business Retention and Expansion Program is an incentive program designed to attract
new business and industry, and to induce existing businesses to expand. The program
offers to offset all City building and development fees in exchange for binding commitments
to develop new or expanded facilities, provide new jobs and commit to at least five (5) years
of business operation.
As envisioned, the Business Retention and Expansion Program would have the following
qualifying criteria:
Job Creation: A minimum of 15 new jobs must be created within a 2-year period by
a new or expanding business at its Arroyo Grande location.
Types of Jobs: Jobs created must be in manufacturing, distribution, company head-
quarters or back-office operations.
Investment: An investment of at least $50,000 per job created in land, building(s)
and/or equipment is preferred.
Businesses that apply would also be reviewed with respect to these additional criteria:
. Financial strength and stability;
. Successful business track record and principal experience;
. Quality of the jobs created and their match to the regional labor force; and
. Environmental compatibility.
5f7199C:\OO3C/TYO I\AG07\JMPlSTRA TEGyFNL.wPO OP - 28
It is important to note, however, that the qualifying criteria and other factors outlined above
are basic guidelines to be analyzed in determining whether a company qualifies for this
incentive program. The criteria cannot be used as regulations. As such, Agency staff will
also consider other business criteria and factors depending on the quality of the project and
its economic impact on the City. This program is not intended to limit the Agency's ability
to use any of its resources to carry out economic development. This program, in effect, is
what Agency staff will use as a beginning to negotiations.
3. Economic Development Element in the City's General Plan
Contrary to some lines of thinking, economic development does not mean development for
development's sake. Nowhere can this be better pointed out than in the City's General Plan. ..
The elements of a city's general plan go beyond the land use element map. Consistency
between land use, economic development, housing, circulation, open space etc. must be
obtained in order for a community's general plan to be approved by the State of California.
Therefore, the Economic Development Element in the General Plan should clearly depict.
the City/Agency development goals and objectives and highlight how such activities are
balanced with the quality of life issues pertaining to traffic, education and open space.
.
With quality of life as the mainstay of the City of Arroyo Grande, policy makers should clearly
define the level of economic development needed in order to develop a revenue and job
base that maximizes the level of services required by the community. The primary-directive
of the Agency's economic development efforts is to encourage and develop a stable,
continued and growing level of private and public financial capital. It is this financial capital
that will support the public and private services and facilities required by the citizens and
businesses of the community. With this primary directive in mind, it should be noted that the
basic premise of the Agency's economic development efforts is to focus on those programs
and projects that can develop both a short- and long-term return on the Agency's
investment. Local economic development efforts and activities are methodologies of provid-
ing capital to finance the services and facilities required to enhance the health, safety and
welfare of the citizens of the City of Arroyo Grande.
The City/Agency efforts, adopted as policy in an Economic Development Element of the
City's General Plan, can serve as the basis for expanding and attracting new business that
will provide the community with the needed financial and human capital necessary to
implement the community's vision of itself. This activity would normally be conducted in the
very early years of the existence of a redevelopment agency. However, agencies can plan
for the sake of planning and never commence actual implementation.
Given that the goals and objectives of the Agency are incorporated in the actual redevelop-
ment plan and, consequently, in this document, the Agency is not without a vision and
objective of purpose. Yet an Economic Development Element solidifies policy in a citywide,
macro sense and clarifies such issues as balancing, preservation, community character and
economic growth. If the City is currently updating its General Plan, then tlie development
of this element should be included in the Scope of Work and should be a near-term activity.
However, if it cannot be include in the City's budget during the near-term period then the City
should consider funding this basic economic development road map as soon as City funds
become available.
4. Design Guidelines/Standards
Design guidelines and/or standards should be prepared as soon as financially feasible to do
so. The Agency has made a very good start on such guidelines and standards with the work
already completed in the Design Guidelines for Historic Districts. These guide-
5I7/99C:\OO3CITY01\AG07\JMPlSTRATEGvFNl.WPD OP - 29
lines/standards will define a theme or themes and call out building materials and design
detailing. Pedestrian use areas and parking areas could be landscaped to include planting,
hardscape, and shade control devices including trees, trellises and overhead canopies that
will provide an intimate scale in concert with the established design theme. The design
theme might also promote street vendors, musicians, artists and other similar uses that both
promote character and provide income and shopping opportunities for residents and visitors.
. Two mechanisms to establish design guidelines and other planning and development
guidelines and/or restrictions for the other improvement zones merit consideration.
Overlay Zone
First, a zoning device commonly known as a "suffix" or "overlay" zone may be
established for the various Improvement Zones. The overlay outlines design goals
and relevant parameters to be employed in all Improvement Zone developments. It
further establishes a review and hearing process by the Planning Commission to"
determine if the use and design conform to the established guidelines and/or
standards. The overlay zone may be as flexible as necessary to meet the needs of
the community.
Specific Plan _.
An alternative to the overlay zone could be implemen~ed through a Specific Plan,
prepared pursuant to Section 65450 of the California Government Code. A Specific
Plan replaces the zoning designations in the Improvement Zones with the develop-
ment policies and/or standards of the Specific Plan. Specific Plans are required to
include certain elements and may be either policy or regulatory in nature.
A Specific Plan is a complicated and involved document that can cost $60,000 or more
to complete; however, it does present a specific indication of how land subject to its
regulations will develop in the future and as such, allows the community to, in large
part, "control its own destiny". Amending the Zoning Ordinance to provide for an
overlay zone with design goals and development standards would be somewhat less
expensive and, consequently, less detailed. An overlay zone amendment might be
completed for approximately $30,000. This Operations Plan recommends that the
Agency invest in a Specific Plan for the long-term implementation of its vision for the
various Improvement Zones.'
C. SITE SPECIFIC REDEVELOPMENT OPPORTUNITIES IN THE PRINCIPAL IMPROVE-
MENT ZONES
The Agency has identified five Key Redevelopment/Development Sites within the Principal
Improvement Zones ("Key Sites", Figure 5) for its longer-term development opportunities.
Redevelopment of these Key Sites ,will playa pivotal role in "making or breaking" the overall
success of the Agency's long-term redevelopment effort. Photographic descriptions of each of the
Key Sites are included as Attachment 2.
Each Key Site is described below.
1. KEY SITE NO.1: Generally that area located northeast comer of East Branch Street and
Wesley Street.
5I7199C:\OO3CITY01\AG07\lMPLSTRATEGYFNL.WPO OP - 30
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2. KEY SITE NO.2: Generally that area located on the southwest comer of EI Camino Real
and Brisco Road.
3. . KE'( SITE NO.3: Generally that area along both the east and west sides of Traffic Way
north of Fair Oaks Avenue.
4. KEY SITE NO.4: Generally that area located on the southwest comer of Grand Avenue and
Elm Street.
5. KEY SITE NO.5: Generally that area located on the northeast comer of Grand Avenue and
Oak Park Boulevard.
Each Key Site will develop or redevelop as a result of a complicated and complex series of
operations involving private development activity, private financing, tenant or owner-occupant
interest and, as necessary, Agency involvement. Additionally, all the private activities are further
dependent upon a complex series of conditions including, at least, the macro-economic condition
of the state and the nation, the micro-economic condition of the Arroyo Grande market area, the,
real estate knowledge of the private entities involved, the specific site conditions (e.g., soils,
presence of hazardous materials, status of infrastructure), the availability of private financing, and,
interestingly enough, the whim of all parties to any specific transaction. Therefore, it is very
difficult to predict the exact timing and development program for any given Key Site. -
The end product of the long-term redevelopment effort is to induce actual real estate develppment
on the ground, within the Principal Improvement Zones and on the Key Sites. Such development,
by necessity, will be market-driven and, preferably, will be completed by private, profit-driven
developers acting in concert with the Agency when and as nece~sary. The private developer must
believe there is profit to be made in the development, placement, financing and tena.nting of any
given project. Therefore, ultimate site planning (including building location and land use) will be
the responsibility of the private developer who will have the preponderance of money at risk. This
is not to say, however, that the Agency should not begin the process of enunciating its preferred
development concepts for each given Key Site. Such a pro-active posture on the Agency's part
will be useful because by working through the various development potentials for each Key Site,
the Agency wUl acquire an awareness of development parameters. For instance, it is unlikely that
development on Key Site No. 4 will include a department store due to its location and
configuration; and Key Site No.3's awkward configuration will require intensive site planning in
order to maximize land coverage. Arroyo Grande's demographics will ultimately dictate the type
of development for all Key Sites.
While private market forces will heavily influence the type of development possible in Arroyo
Grande, the Agency, with its special financing sources and ability to acquire land, has influence
on what gets built in the City. Therefore, and within the parameters discussed above, the Agency
will have to determine what it does want and how much it is willing to pay to achieve its ends. For
instance, a discount department store (such as Ross Dress for less) may be willing to locate on
Key Site No.4, but only at a land price below market rate and substantially below acquisition costs
to the Agency. If Arroyo Grande residents need such an outlet and the Agency has the funds.to
subsidize its development, then expenditure of those funds would be appropriate. As a corollary
issue, the Agency can adopt a proposed development scheme and seek to secure private entities
to develop that scheme. For instance, the Agency might desire a movie theater complex on Grand
Avenue and would, therefore, seek a developer to develop such a use.
5flI99C:\OO3CrTY01\AG07\1MPLSTRATEGvFNL.WPO OP - 32
-
Key Site NO.1 - Villaae Centre
This mixed office commercial development has received Planning Commission approval and has
obtained a grading permit. Not only does this two-story development eliminate the blighting
conditions currently associated with the site, it provides an infusion of additional commercial space
that will attract additional consumers to the general Village Business District. This proposed
development also increases the Project Area's assessed valuation by an estimated $3.6 million.
With this increase, the Agency will be able to issue a tax-exempt financing in the fall of 2000
which, in turn, finances the Agency's mid-term redevelopment efforts. Without this project, the
Agency may have to postpone its mid-term efforts by at least two (2) additional fiscal years.
Although this Key Site is identified as a long-term project, it is in the Agency's best interest to
move this project forward because it: I) meets the land-use goals of the City's General Plan; ii)
eliminates existing blighting conditions; iii) provides an additional destination point and attraction
for the Village Business District; and iv) assists in the capitalization of the Agency's implementation
efforts.
Kev Site No.2 - The Southwest Corner of EI Camino Real and Brisco Road
This Key Site represents the Agency's major opportunity in the attraction of additional regional
commercial uses. This site affords both retail and hospitality opportunities that would add to the
City of Arroyo Grande's identity along SR 101. However, this site .may also be one of the few
future opportunities for the Agency in the attracti~n of light industrial uses. The properties
contained within the parameters of this Key Site could be assembled in such a fashion that would
allow for the development and construction of a business park. The tenants' of such a
development would be more in line with those uses highlighted in th~ previously prepared
Economic Opportunities Analysis report by ADE. This report specifically identifies instrument
manufacturing as a potential target industry for the City of Arroyo Grande. With a lack of suitable
developable sites, this Key Site may afford the Agency its only chance at creating a manufacturing
job base for the City as a whole. The significance of this activity is to provide the development
opportunity that creates a higher paying employment base for the community. Presently, the City
of Arroyo Grande primarily has lower paying service-related job opportunities.
As an alternative, this Key Site can provide freeway commercial retail and hospitality opportunities
for the City. This is the only location within the Project Area that can provide a competitive site
for regional and sub-regional commercial uses. Given the reliance on sales tax as a means to
finance the majority of municipal services, the City/Agency may decide to work with existing
property owners in the marketing of this site to major .retail operators. The decision to facilitate
either a light industrial- or commercially-based development is primarily a policy issue. In either
event, the Agency should take an active role in the redevelopment of this Key Site. Fortunately,
the City has already taken steps to undertake the preliminary studies required for the interchange
improvements at Brisco Road and SR 101.
Key Site NO.3 - Traffic Way
The commercially designated properties along Traffic Way, north of Fair Oaks up to both the Ford
and Chevrolet dealerships, should be of primary concern to the Agency. Both dealerships are
undersized by today's regional automotive standards, and they are, from time to time, being
pursued to relocate to other, larger locations in and out of the City of Arroyo Grande. Given the
significance of preserving existing businesses, the Agency will need to assist these two existing
businesses in terms of potential expansion at their current locations. Both operations have
expressed interest in expanding and have not taken on the added expense of an actual relocation.
sn/99C:\O03CITY01\AG07\lMPLSTRA TEGvFNL.WPD OP - 33
-.,.- ,---,--.-.--.----,--.,
However, in many instances the actual automotive manufacturer determines the minimal size
needed to meet the ever-changing needs of a given trade area. Both the Agency and the
dealerships should develop a level of flexibility to address the changing requirements of the
individual automotive manufacturers; therefore, the Agency must continue to work with both of the
dealerships to ensure that their respective short. and long-term needs can be met without
relocation. Both land assembly and expanded public works improvements will likely be necessary
over the long-term to retain these two significant businesses within the corporate boundaries of
the City of Arroyo Grande.
Key Site No.4 - Williams Center
This community-based commercial development, located at the southwest comer of Grand and
Elm Avenues, should be redeveloped in order to compete with similar shopping centers in the
Cities of Arroyo Grande and Grover Beach. The project consists of a dated design that has
allowed the overbuilding of "front pads" along Grand Avenue. This overbuilding literally blocks the
view of the main shopping center. Major retailers will normally not occupy space where the actual
facade of their store cannot be seen from the main thoroughfare. In addition, the overbuilding of
the front pads has contributed to an inferior internal circulation system that makes driving through
the center somewhat haphazard. This level of obsolescence prevents this center from attracting
larger and more viable tenants and contributes to a larger than normal vacancy rate Jor similar
centers in the region. Such a center has the potential to facilitate blight and reduce property
values in and around the site itself. Consequently, this Key Site needs to be repositioned in order
to take advantage of the market opportunities in and around the City of Arroyo Grande while
facilitating the restoration of the Grand Avenue Principle Improvement Zone. The Agency should
consider the following activities in the redevelopment of this Key Site: .
. Site specific market analysis
. Community planning process
. Site specific design gUidelines
. Potential acquisition and relocation assistance
. Potential demolition and clean-up assistance
. Landscape. hardscape and street improvements in the public right-of-way
. Undergrounding of utilities
Ironically, the market analysis may determine that "Retail-Commercial" is not the highest and best
use at this location. The competing Lucky's Center and the new Rite Aid development may in fact
provide more than enough community and neighborhood retail space for the Arroyo Grand~ trade
area. As such, this Key Site may be a potential site for the expansion of medical- related office
and laboratory space, or even an altemative site for the development of a business park. Before
the Agency goes too far in the restoration of the existing center, it should assist the existing
property owner in obtaining a comprehensive market analysis that will act as the basis for future
redevelopment efforts. This repositioning effort should also include the surrounding community
in the planning, design and implementation discussions. This planning and study phase will
determine what level of future Agency assistance mayor may not be required in the
redevelopment of this Key Site. Any future design efforts should conform to an overall Grand
Avenue Design Program and or Specific Plan.
Key Site NO.5 - Rite-Aid
This Key Site, located on the northeast corner of Grand Avenue and Oak Park Boulevard, has
been selected as a primary retail location as evidenced by the development of a new Rite Aid Drug
5n199C:\OO30TY01\AG07\JMPlSTRATEGVFNL.WPO OP - 34
Store at this location. Such an anchor can and will provide a significant catalyst for additional retail
space on this property. Given that Rite-Aid is an approved project and the property is currently
vacant, the Agency needs to assist in facilitating the success of the balance of the surrounding
properties. The success of a new commercial development at this location will apply pressure to
existing community shopping centers to stay competitive. With the limited residential growth
currently experienced throughout the City of Arroyo Grande, the demand for new community and
neighborhood-based commercial development will also be limited. Only the .better designed
centers with a tenant mix best suited for the City of Arroyo Grande will succeed. This Key Site
also represents the westerly entrance into the Grand Avenue Improvement Zone and should also,
like Key Site No.4, conform to an overall Grand Avenue Design Program and/or Specific Plan.
The success of this development will reflect on the entire Zone. Again, the success of this retail
opportunity may adversely affect both the Lucky's and Williams Centers. The Agency will need
to take an active role in the planning, marketing and repositioning of both of these aging centers
should they begin to falter due to new competing sites being developed.
Seconda.ry Sites
Figure 6 shows "Secondary Sites" within the Project Area that the Agency may also wish to focus
its resources if or when the opportunities arise. Generally, these sites are more developable than
other sites in the Project Area (or even some of the Key Sites described above) because they are
vacant or underdeveloped, or because they demonstrate a greater degree of deterioration (and,
consequently, are probably less valuable) than other parcels located in the Project Area.
However, their importance to the overall redevelopment ~rogram is not as great as the Key Sites
previously identified.
VI. CONCLUSIONS
This Operations Plan provides the Agency with a destination, a road map and a number of vehicles it
can use along the road to arrive at its destination. That destination is sufficiently broad so that the
current Agency Board, and subsequent Boards as well, can interpret it as the situation warrants.
However, as has been reiterated above, this Operations Plan should not be viewed as the final word on
redevelopment in Arroyo Grande past the Mid-Term Implementation Plan. Redevelopment is, above
all, an exercise of opportunity to eradicate blight, provide affordable housing and generally improve the
quality of life for the residents of the City. As development and other appropriate opportunities "come
through the door" of City Hall, Agency staff should be prepared to respond in a quick and nimble fashion.
It is for this reason that the second component of this Strategy, the Guide, is so very important and has
been made an integral part of the Strategy. To the extent new or additional programs, projects or
development opportunities present themselves during the term of this Operations Plan, Agency staff will
have a resource to turn to in order to structure an Agency response to these new programs, projects
or development opportunities. That resource, the Guide, follows this section of the Strategy.
5I7/99C:\OO3CrrY01\AG07\lMPLSTRATEGvFNL. 'M'O OP , 35
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RESOURCE GUIDE
FOR THE
ARROYO GRANDE
REDEVELOPMENT PROJECT
I. HOW TO USE THIS GUIDE
This Guide is intended to provide a general discussion of the redevelopment process and practice in
order to give Arroyo Grande elected and appointed officials a practical reference guide. It is not
intended to be a substitute for legal advice, nor can it identify every possible situation, and solution, the
Agency might face over the life of the Redevelopment Plan. This Guide can be referred to when and
as necessary as various redevelopment opportunities arise within the Principal Improvement Zones or
on the various Key Sites identified in the Operations Plan.
II. LAND ACQUISITION
The Agency may assist real estate development in a number of ways, the most traditional of which is
through land acquisition. The Agency can decide how and in what manner it elects to purchase land
for ultimate redevelopment. Outlined below are three alternative methods that redevelopment-agencies
in the State have used in the past when purchasing land for eventual redevelopment. There is no "righr
way to assemble developable parcels. Over time, the Agency may use one of the processes identified
below, only to switch to an alterative method later on.
A. PURCHASE ONLY SUBJECT TO DEVELOPMENT AGREEMENT
This alternative proposes the purchase of select parcels only when the Agency has entered into
a disposition and development agreement with a bona fide developer for the sale of said land.
The advantages of this alternative are that the Agency's risk is minimized in that the Agency
purchases property only when it knows it will be able to transfer said land to a developer. Agency
funds "tied up" in real estate are minimized and political disruptions are more easily resolved
since, to the extent they occur at all, they will be directed at specific projects and therefore might
be mitigated.
The major disadvantages of this alternative, however, are the potential for price inflation of un-
purchased parcels and the potential that, for the first developers especially, the un-redeveloped
portion of a site will discourage investment. The Agency can partially resolve this second issue
by purchasing additional land around the proposed development and creating "buffer" zones. The
price inflation can be viewed as the cost to the Agency of its reducing its risk.
B. PURCHASE OF DEVELOPABLE PARCELS IN PHASES
This alternative allows for the phased acquisition of the most developable parcels on a site and
the subsequent demolition of structures and other site preparation activities as may be necessary
to prepare these parcels for redevelopment. The first-purchased parcels would offer the best
location on a site with respect to traffic and circulation, good visibility, affordable acquisition,
relocation and site preparation costs. The premise for this alternative. is based upon limited
market need, interest and rate of absorption, and the Agency's limited ability to actually assist in
offsetting development costs, including land acquisition, infrastructure development and relocation.
5I7I99C:\OO3C1TY01\AG07\JMPlSTRA TEGvFNL.WPO RG -1
-.---_'"0__._-..----. ,_,_,_.
This alternative would limit the amount of land the Agency would carry on its books and would
allow a more sustainable relocation schedule. Furthermore, it would more directly track the
anticipated absorption for redeveloped uses, thereby reducing the Agency's risk. This alternative
would be much less politically disruptive than would be the following alternative. However, the
Agency would still be "land banking" some amount of land awaiting future, unspecified
development - a similar, albeit much less severe, risk as that described below. Moreover, the
Agency would run the risk of inflating the value of those parcels yet to be acquired as it started to
succeed in attracting more up-scale uses.
C. PURCHASE OF AN ENTIRE DEVELOPABLE SITE IN ONE PHASE
This altemative provides for acquisition, demolition and relocation of existing uses on an entire site
in one phase and prior to an executed development agreement. The premise for this alternative
should be grounded on the deteriorated condition of buildings and other structures on site.. and
the Agency's desire to present the development community with as few obstacles to
redevelopment as possible. This alternative is the most proactive and assumes maximum
City/Agency control and participation in the redevelopment effort, yet it can als<? be the most
capital intensive. It would necessitate the relocation of all existing business and residences. On
the other hand, this alternative is the most politically disruptive, expensive and risky alternative,
and may not be a viable option in that the Agency did not choose to retain the power of eminent
domain. Even if the Agency were successful in acquiring property on a voluntary basis,
implementation o.f this alternative would almost certainly require that the Agency employ the "land
banking" of large parcels of land, awaiting their redevelopment. Such a course would tie up
whatever funds the Agency might have available to it in the hope that, ultimately, a developer, or
small number of developers, would find the full site valuable enough to purchase and develop.
The Agency would also have to be concemed about whether or not the Arroyo Grande area could
absorb a substantial relocation burden in a relatively short period of time.
III. LAND PREPARATION AND DISPOSITION
With certain exceptions, the Agency does not engage itself as a developer. The Agency disposes of
property acquired by it to public agencies or private entities for development. The procedures for the
sale or lease of land by the Agency are very flexible, the only requirement being that a public hearing
on the terms of the sale or lease be held. In the case of the Agency's use of tax increment funds, the
City Council, as the legislative body of the City in which the Agency is acting, must also hold a public
hearing for the purpose of considering a report by the Agency on the adequacy of the consideration
bei.ng paid under the purchase contract or lease. Land may be disposed of to public entities with or
without consideration. The Agency cannot purchase or lease land for speculative purposes. The
Agency's ability to prepare and dispose of land is spelled out in more detail below.
A. LAND BANKING
The Agency may acquire land and retain ownership control until it has a specific development
projectfor its use. Such acquisition and holding of property by the Agency allows it to purchase
property early in the program or acquire it in strategic locations so as to guide development and
avoid rising costs. Subject to market acceptance, the Agency may also enter into long-term
options to purchase land and contingent escrows.
B. LAND WRITE-DOWNS
This approach to disposition of Agency land results from the fact that the Agency is acquiring la~d
5I7199C:\OO3CITY01\AG01\IMPlSTRATEGvFNL. WPO RG-2
~--"-'--._-.---------.- -._--_-0.___-
(or has acquired land), and - usually - improvements thereon at "fair market value" in the open
market, and is then reselling or leasing vacant land for "fair consideration" subject to the
requirements of the Redevelopment Plan, for a specific kind of development. Quite often, the
"improvements" are blighted to such a degree that, while they may have some cost, they have no
value to the new development. State law allows an agency to sell land for less than it paid for it,
or to ''write-down" the disposition value from the acquisition cost, so long as the Agency can find
that the ultimate buyer paid fair consideration for the land subject to Agency conditions of sale.
.
Developer payment to the Agency for land may include, in addition to payment of the land price,
lease payments for public facilities, special assessments for public improvements, and Agency
participation in the profits or cash flow from the development. Most sales or Jeases of Agency
property are negotiated with a selected developer and are not put out to competitive bidding;
however, the Agency may solicit proposals for development by formal or informal means. For low-
and moderate-income housing projects, a write-down of land cost by an agency is not unusual.
C. SITE REMEDIATION
The Agency may prepare land that it owns for ultimate disposition. Such preparation may include
demolition of improvements, hazardous waste removal, rough grading, installation of utilities on-
site and off-site, etc. The Agency can create air rights platforms for private development over
public areas. - .
D. GROUND LEASE
This technique allows the Agency to retain considerable control over the proposed project. The
developer usually has the ground lease for at least 35 years, and it is not uncommon for the lease
to have renewal provisions for up to 55 years.
The use of this method of land disposition is especially effective in housing projects so as to
guarantee the Agency specific control over significant matters such as rent or sales price of units
and services to be provided to residents. Rent increases may be subject to Agency review and/or
approval.
The developer may, however, find the conditions of the lease to be a burden on securing financing
and in other matters.
E. PROPERTY DISPOSITION
The process for selling Agency-owned land to developers is as follows:
. Agency has a reuse appraisal prepared by Agency or consultant.
. Developer submits offer of price it is willing to pay Agency for the land. Offer must be
supported by a "pro forma" or other justification of land value, if it is less than the fair market
value.
. Agency staff (with Agency concurrence) and developer negotiate purchase price and
conditions of sale of land. When staff and developer are in agreement and developer has
executed the agreement document, a joint Council/Agency public hearing is advertised for
sale of land pursuant to Section 33433 of the Health and Safety Code.
5I7199C:\OO3CITY01\AG07\lMPLSTRATEGYFNL. WPO RG-3
. Staff prepares the following items for Council/Agency review and action at the joint public
hearing:
. Cover memo for public hearing, including required Summary of Agreement, with
attachments and resolution for Council and Agency adoption. Resolutions must contain
certain findings pursuant to State law, if sale price is below appraisal value.
. Resolutions pertaining to environmental findings pursuant to State law for adoption by
Council! Agency.
If possible, development plans should be processed to be considered by Agency, following
Planning Commission review, at the same meeting as the joint public hearing and the Agreement.
IV. ENTITIES TO WHOM THE AGENCY MAY DISPOSE OF LAND
A. PRIVATE, FOR-PROFIT DEVELOPERS
The Agency may dispose of land to any appropriate private, for-profit developer; however, the
Agency should complete extensive "due diligence" investigation of the proposed development
entity and its sources of financing (both equity and debt) prior to such disposition. Typically the
Agency will require that the entity to whom it has disposed of the land also be the developer of
improvements on that land.
B. NON-PROFIT CORPORATIONS
An Agency may also dispose of land to non-profit development entities. This form of entity is most
often used in the development of affordable housing. Once formed, a non-profit corporation may
issue bonds for construction of a facility (so-called "501 (c)(3) Bonds"). The focus of a non-profit
corporation may also include public facilities (e.g., parking).
C. JOINT DEVELOPMENT PROJECTS
The Agency may enter into a joint development agreement with a selected developer. Such an
agreement would usually involve the construction of both public and private improvements. A
retail shopping center integrated in design and construction with public parking facilities is an
example. Where the public and private facilities are so integrated that separate construction is
not reasonable, the public facilities may be constructed by the developer and contractor under a
negotiated contract without competitive bidding. Usually, construction, operation and reciprocal
easement agreements are entered into to govern the use, operations and maintenance of the
jointly developed facilities.
D. HOUSING DEVELOPERS - FOR-PROFIT AND NON-PROFIT
The Agency is broadly authorized to develop sites for and participate in the financing, construction
and rehabilitation of low- and moderate-income housing. For low- and mod~rate-income housing
purposes, the Agency may operate outside the Project Area anywhere in the City, upon a finding
that such activity is of benefit to the project being undertaken by the Agency. Such findings were
made by the Agency at the time of the Plan's adoption by the City Council. State law provides the
Agency broader pow~rs with reference to affordable housing development and preservation than
for other types of development. In general, for affordable housing development, .an Agency may:
5I7J99C:\OO3CITY01\AG07\lMPlSTRATEGvFNL.WPO RG-4
. Acquire land or building sites
. Improve land or building sites with on-site or off-site improvements
. Donate land to private or public persons or entities
. Construct buildings or structures
. Acquire. buildings or structures
. Rehabilitate buildings or structures
. Provide subsidies to, or for the benefit of, very low-income households,
lower-income households, or persons and families of low- or moderate-
income.
. Develop plans, pay the principal and interest on bonds, loans, advances,
or other indebtedness, or pay financing or carrying charges
Developer Selection
- .
The methods for selecting a developer for proposed projects are as follows:
. Proposed developer owns 100 percent of the property which is of such a. size as to be
developed according to the Redevelopment Plan.
. Proposed developer owns or has agreements for majority of property, but requires
Agency assistance in acquiring additional parcels.
. Proposed project site contains multiple ownerships and an owner of a minority portion
of the site wishes to be the developer. Agency solicits proposals. from developers,
including the minority property owner.
. Proposed project contains single or multiple ownerships, but there is no owner interest
in developing combined parcels. Agency solicits proposals from developers.
The Agency will first work with the major property owner( s) to develop projects but, lacking
a majority property owner or owner interest to participate, the Agency may desire to select
a qualified developer, financially capable of accomplishing the type of development
proposed, by one of the following methods:
. Request for Proposals - The Agency solicits formal proposals, including a site plan,
project pro forma and developer resume.
. Request for Qualification - The Agency solicits Statements of Qualifications, listing the
developer's references and experience.
. Single Source - The Agency negotiates the specific project participation with a single
developer.
5I7199C:'.D03CtTY01\AG07\lMPlSTRATEGYFNl.WPO RG- 5
. Bid - The Agency prepares plans and specifications for a particular project, then
solicits bids for the property acquisition and construction costs as a package.
E. OWNER PARTICIPATION
The Agency has previously adopted obligations to provide owners of property to be acquired with
an opportunity to participate in the redevelopment of the Project Area (See Attachment 3). It
should be clear that these obligations are limited and need not be exercised on the specific parcel
being acquired. Once the Agency has offered an owner such an opportunity, it need not provide
the owner with any additional special consideration and should qualify a proposal for development
from an owner using the same criteria as it would any other developer. It is important, however,
that the Agency provide all owners with the opportunity to participate.
v. SOURCES OF PUBLIC FINANCING
Much of the advantage of a redevelopment agency i~ its access to tax increment financing-a form of .
financing unique to redevelopment agencies in the State of California. However, creative redevelopment
agencies leverage their tax increment funds with other sources of financing. Both tax increment and
other forms of financing are described below.
TAX INCREMENT FINANCING -
A.
The basic method of financing the' Agency is by means of "tax increment" ~nancing. Authorized
by both the State Constitution and statutes, this method of financing uses revenue generated by
growth in assessed valuation from within the Project Area to pay the costs of programs, projects,
administration, studies, capital items, and low/moderate income housing initiated by the Agency.
Expenditures (debt) of the Agency focus on means to use tax increment in numerous ways in
order to upgrade the Project Area. To receive tax increments, the Agency must have incurred
debt. Tax increment financing may be used to fund these activities, projects and programs
described below; however, this listing should not be considered all-inclusive. Unique methods of .
using tax increment funds, legal interpretations, case law, and changing legislation all playa role
in defining the use of tax increment financing.
. Credit enhancement for lease revenue bonds
. Property acquisition
. Site preparation and clearance
. Relocation
. Land write-down
. Off-site and on-site improvements
. Parking, parks, and public facilities and buildings construction
. Feasibility studies
. Market studies
. Soils reports
. Surveys
. Appraisals
. Architectural and engineering costs
. Infrastructure
. In specific cases, pay for security, parking operation and maintenance, as well as
common area operation and maintenance of Agency-owned land
. Land assembly
5I7199C:1D03C1TY01\AG07\lMPlSTRATEGYFNL. WPO RG-6
. Site grading
. Create air-rights platforms
. Street, sewers, water and drainage, and utilities
. Recreation areas, community facilities and public buildings
. Acquire land or building sites for low/moderate income housing
. Construct housing for low/moderate income persons and families
. Provide direct subsidies to persons and families for low/moderate income housing
. Rehabilitate buildings and structures for low/moderate income persons and families
. Tax allocation bonds and notes
. Minimum 20% housing set-aside for increasinglimproving low- and moderate-income
housing
. Assisting non-profit developers in providing community low- and moderate- income
housing .
. Facade and landscape easements
. Loans to low- and moderate-income housing developers and owners
. Construction financing for short-term loans for low- and moderate-income housing
. Agency financial guarantees to lenders for low- and moderate-income housing projects
. Agency administration (e.g., staff, rental, telephone, postage, etc.)
. Agency can pay for City and District permits for public and private developmen~
projects
. Agency can pay for its equipments, such as desks, chairs, computers and
automobiles
The Agency generally uses its tax increment funds to issue "Tax Allocatfon Bonds" which are
secured solely by the pledge of tax increment received from the Project Area. Tax Allocation
Bonds, or other obligations of the Agency, are not a debt of the City or the general taxpayer. Only
binding commitments for new and improved development and completed projects will assure bond
buyers that the tax increment to pay the debts of the Agency will, in fact, occur.
Tax Allocation Bonds may qualify for tax exempt treatment, either as governmental bonds or
private activity bonds, or may not qualify for tax exempt treatment at all, depending on the nature
of the facilities being financed, and manner of repayment.
B. CERTIFICATES OF PARTICIPATION
This is a long-term financing tool for significant projects such as public safety facilities, parking
garages and major recreational facilities. It could also be used to fund the acquisition of motorized
equipment, communications systems, computer, and other major items of equipment having a life
of three to ten years.
C. CITY FUNDS
An appropriation of funds by grant or loan from the City is usually required to create working
capital for the Agency and to pay the cost of studies and plans which lead to establishing a project.
These advances are repaid by the Agency as it generates its own funds. These advances to the
Agency by the City may also take the character of public works (construction) with repayment
occurring from the Agency as it receives project income.
snI99C:\OO3CrrY01\AG07\lMPlSTRATEGYFNL. WPD RG-7
.- D. DEVELOPER ADVANCES
As the Agency implements its priority projects, it may request or require developers to advance
financial resources to supplement or replace Agency funds so it may assist private parties in
accomplishing development which otherwise may be delayed or abandoned.
E. FEDERAL FUNDS
The Agency may supplement its financial resources by participating in what has become a steadily
declining number of federal programs such as Community Development Block Grants, which have
been decreasing in recent years; Economic Development Administration (EDA) programs; the
Section 108(A} Loan Guarantee Program, which permits HUD advances on Block Grant funds;
and the Small Business Administration (SBA).
F. SPECIAL ASSESSMENT DISTRICTS
This means of funding public improvements that benefit private development places the burden
of repayment on. the benefitted property. Benefits include the actual cost of the public
improvement as well as, usually, those costs of maintenance for the public facilities.
G. STATE FUNDS -
The California Department. of Commerce has developed the Small Business Revitalization
Program (SBR) to package loan assistance from SBRto HUD. This State Department can also
assist small developers and businesses in securing loans for their activities.
VI. IMPLEMENTATION PROCESSES
The principal purpose of this Section is to set forth a series of procedures and infonnational items which
will be used in the processing and evaluation of requests for Agency assistance that will be made from
time to time by developers, property owners and tenants.
In general, the project evaluation process will consist of four phases which are listed below. Only
projects that are consistent with the Agency's stated purposes, goals and objectives, as identified in
Redevelopment Plan Section 101 and the Agency's goals and objectives contained in Attachment 1 of
this Manual will be considered for Agency Assistance.
Interested developers, property owners, and tenants who desire Agency assistance and who have
projects to be evaluated will, in general, follow the programs and supply the infonnation as requested
below:
A. PHASE ONE - LETTER OF INTEREST
The Letter of Interest should contain a statement of interest to develop a site in the Project Area and
provide the following information:
. Description of proposed development, including the location and size, type and scope
of proposal, sufficient to illustrate the design concept.
snI99C:\OO3CrrvO1 \AG07\lMPlSTRATEGYFNLWPO RG-B
--------,
. A brief economic estimate of the governmental benefits to be generated from the
pr~posed project, and a market feasibility statement which supports the proposed
use{s).
. Materials describing' the developer's background. major projects and principals
involved. This can be an attachment or enclosure with the proposals.
. A statement of willingness to provide a good faith deposit, if required.
. A description of how the proposed project meets one or more of the Agency's
development objectives.
The Agency will review the Letter of Interest and advise the developer as to whether or not it is
acceptable or if additional information is needed.
B. PHASE TWO - DETAILED INFORMATION TO BE SUPPLIED
If the developer owns the property or holds purchase options, and if the proposal meets the
Agency's purposes, goals and objectives, the Agency will ask the applicant to prepare the
following:
-
. A detailed market analysis which reviews the strength of the marketplace over the next
five-year time frame in conjunction with the proposed use(s).
. A plot plan, including space allocation by use. parking provisions, ingress and egress,
setbacks, and features such as traffic circulation, needed off-site improvements, and
conceptual elevations or renderings sufficient to illustrate the design concept.
. A refined analysis of projected governmental benefits, such as increased sales tax,
property values, employment opportunities. etc.
. A list of names of potential tenants/owners expressing a desire to participate in the
project. and letters of intent from tenants/owners.
. A complete economic pro forma.
c. PHASE THREE - PRELIMINARY NEGOTIATIONS ("EXCLUSIVE RIGHT TO NEGOTIATE")
If Agency participation is warranted to make the project feasible, negotiations between the Agency
and developer will follow. If the developer needs to acquire property rights and if the proposal
meets the Agency's development objectives, the Agency may issue an Exclusive Right to
Negotiate (ERN). In order to consider such an agreement, the Agency will ask the applicant to
prepare and submit all of the data listed above in addition to the following:
. A letter requesting an agreement to negotiate exclusively.
. A "good faith," non-refundable deposit in an amount to be proportionate to the
size and type of the proposed development, and generally not less than $5,000.
(In cases where there is a signed agreement to negotiate exclusively, and where
the Agency decides that the proposed development becomes no longer
5I7I99C:\OO3CITY01\AG07\JMPlSTRATEGYFNL.W?O RG-9
advantageous, the deposit is refunded to developer, excluding fees for
appraisals, land use and financial analysis, and staff time.)
Staff will review the economic pro forma supplied by the developer and undertake a
preliminary survey to gather information regarding those properties to be affected by the
proposed development.
The project would be evaluated by the Agency, subject to the following terms:
. Amount and scope of requested Agency financial participation
. Site layout and design concept
. General off-site requirements
. Satisfactory assurances concerning major tenants and/or purchasers
. Identification of private financing institutions/requirements pertaining to the
Disposition and Development Agreement (DDA)/Owner Participation Agree-
ment/OPA
. General Plan and Zoning issues
If the project is found acceptable, it will be scheduled for Agency consideration. If the Agency
grants concept approval, it will usually recommend entering into an ERN for the purposes of
developing a draft Disposition and Development Agreement or Owner Participation Agreement,
as appropriate. As an alternative, the Agency may directly authorize the negotiation and .
preparation of a DDA or OPA.
D. PHASE FOUR....,. FINAL AGREEMENT
Agency advisors and Agency counsel will prepare the DDAlOPA finalizing the terms of land sale
and/or development. This phase will allow time for the developer to refine the lease or purchase
agreements so the parties can be assured the project will go forward. During this time period, the
environmental review activities can be processed, along with any necessary zoning change(s) and
General Plan amendment(s).
VII. CONSTRAINTS ON AGENCY ACTIVITIES
Municipal involvement in the redevelopment of the Key Sites will generally be implemented through the
Agency, subject to the provisions of the CCRL and the Arroyo Grande Redevelopment Plan, both of
which provide substantial advantages to the municipal entity in its efforts to participate in redevelopment.
These advantages have been described throughout this Strategy. Along with these advantages,
however, come certain constr.aints such as: I) the obligation to provide owners of land to be acquired
the opportunity to participate in the implementation of the Redevelopment Plan; 'ii) the need to provide
relocation assistance to owners and tenants of real property to be acquired; Iii) the obligation to
purchase real property at fair market value; and iv) the obligation to provide assistance in as efficient
a method as possible.
VIII. OWNER PARTICIPATION AND DISPOSITION & DEVELOPMENT AGREEMENTS
A. OWNER PARTICIPATION AGREEMENT (OPA)
Through an Owner Participation Agreement between the Agency and existing owners, projects
may be rehabilitated, developed or expanded.
5n/99C:\OO3CITY01\AG07\lMPlSTRATEGYFNl. WPD RG - 10
'. Although OPAs vary in complexity, their purpose is to define the role of the owner and the Agency
in the redevelopment of the project. An OPA may provide for rehabilitation of a property (with or
without Agency assistance). The principal distinction between an OPA and DDA would be that
the private sector participant in one case is an existing project/property owner, while in a DDA, the
private sector participant is an "outside" developer.
B. DISPOSITION AND DEVELOPMENT AGREEMENT (DDA)
When the Agency agrees to sell property to a developer and the developer agrees to construct
improvements on property in accord with the Agency's requirements, the document used is the
DDA. The distinguishing feature of a DDA, as opposed to a private market real estate sale, is that
the DDA not only contains the terms and conditions for the sale of the property, but also the terms
and conditions for its development and use.
C. OPAlDDA Criteria
The Ag~ncy should adopt criteria similar to the following as a basis for considering financial
assistance to private projects in Project Area, subject to documented need:
. Write-down - A review of project pro forma to determine if write-down is necessary for
. project feasibility. -
. Facade Easement - Applied to projects, except architecturally or historically significant
structures. The Agency will use the front footage of building' facing a public
road/street/ boulevardlway/court or avenue to determine the level of assistance.
. Landscapina/Walkways - The square foot area in a public right-of-way or easement
area in relation to the total site area will be used to determine the Agency participation
for these off-site improvements.
. Development Permits - This will be considered on a case-by case basis and will be
given priority over other forms of Agency assistance.
. Public Improvements - Streets, lighting, fire hydrants, and other improvements on
public property/easement areas may receive Agency financial assistance.
. OPA or DDA Participation - A developer in most cases can enter into an OPA of DDA
with the Agency only once every fiscal year.
. APDlicationlProiect Information - Consideration for Agency assistance will be given
only to those proposals which have a completed Applicant/Project Information
Summary on file with the Agency.
. Return to City/AQency - A private project is , in usual cases, expected to r~turn to the
City/Agency an amount of sales tax and tax increment within seven years maximum,
which will equal the amount of Agency financial assistance provided. This period of
"return" may be longer if it is found that the Agency will be benefitted to an extent,
including non-financial benefits, which requires such time extension. A return within
four years is preferred.
5nI99C:\OO3CITY01\AG07\JMPlSTRATEGvFNl.WPD RG - 11
. UnacceDtable Proiects - No assistance will be considered or given for any project
which is in violation of any City/Agency ordinances, codes of plans.
. New Employee Bonus - Consideration may be given to additional Agency financial
support for: new employees added to an expanding, existing or new project ("Dollars
for Jobs").
. Financial Assistance Distribution - Where possible, money will be distributed to the
Applicant in stages over three to ten years. If the amount of financial assistance is
less than $15,000, it may be paid upon issuance of a Certificate of Completion.
. Preferential Consideration - Projects that promote the Agency's Design standards (if
and when adopted), as well as those residential projects which promote low and
moderate income housing opportunities, will be given consideration for special
assistance.
. Other Off-Site imDrovements - Other off-site improvements and utility extensions
required as part of a project may be funded by the Agency, at the discretion of the
Agency, to provide economic viability to the project.
-
D. OPAlDDA REVIEW PROCESS
While keeping in mind the information and contents of the Private Development Guidelines
previously presented, the following steps and documents form the essential process of Agency
review and action regarding potential OPA's/DDA's in the Project Area.
. Applicant submits a written request to the Executive Director of the Agency for
assistance. Present or existing owners in the Project Area will receive consideration.
. The staff/advisor of the Agency provides the applicant with direction for the preparation
of a written proposal.
. Once the Agency determines the proposal is acceptable for consideration, the
applicant will continue to prepare information required in Phase Two ( see Phase Two
for content requirements).
. Once Phase Two has been completed, the project will be evaluated by the Agency
staff and, if found acceptable, it will be scheduled for Agency consideration.
. Proposed project is placed on Agency's agenda for full evaluation, consideration and
action by the Agency.
. If the Agency gives the proposed project favorable consideration, it will instruct Agency
staff the prepare either a draft OPA or DDA will provide comprehensive comments to
Agency staff.
. All parties reviewing the draft OPA of DDA will provide comprehensive comments to
Agency staff.
5I7199C:\OO3CITYO1 \AG07\lMPlSTRATEGYFNL.WPD RG - 12
. A final OPAlDDA will then be prepared and sent to all parties; the applicant will be
asked to sign the OPAlDDA prior to its being placed on the Agency's agenda for
consideration.
. If the Agency authorizes the approval of the OPA of DDA, the Agency's staff will
handle technical details of implementation.
. The Agency's staff will record and distribute necessary documents to all parties and
entities in order to implement the approved OPAlDDA.
IX. PARTICIPATION PROCEDURES
The Agency has adopted Owners, Business and Tenants Participation and Re-Entry Rules (the "Rules"),
incorporating them into the Plan as required by the CCRL. A copy of the Rules may be found in
Attachment 3 hereto. Please reference the Rules for direction on participation issues and procedures,
and for Agency/participant responsibilities. The following list is a partial summery of related processes
and procedures contained in the rules:
A. CERTIFICATES OF CONFORMANCE
The Project Area contains many parcels of real property. As a result, there is a need 10 simplify
the availability of participation opportunities. Therefore, as an alternative to requiring a
participation agreement for each property not to be purchased, the Agency is authorized to make
determinations of those properties which conform to the Redevelopment Plan. As may be deemed
appropriate and necessary, the Agency shall in good faith review the property contained in the
Project Area and issue Certificates of Conformance to the qualifying properties as soon as
possible, consistent with the restoration and redevelopment permitted by the Plan and specific
designs for development adopted by the Agency pursuant to the Plan.
B. PARTICIPATION AGREEMENTS
The Agency is authorized to enter into participation agreements regarding properties not
purchased of not to be purchased by the Agency and not included in as Agency Certificate of
Conformance. Each agreement will contain provisions necessary to insure that the participation
proposal will be carried out, and that the subject property will be developed or used in accordance
with the conditions, restrictions, rules and regulations of the Redevelopment Plan and the
agreement. Each agreement will require the participant to join in the recordation of such
documents as the Agency may require to insure such development and use.
Participation agreements will be effective only if approved by the Agency.
. Statement of Interest to Participants
Before making offers to purchase property in the Project Area, the Agency shall
notify the owners of any such properties by certified mail. return receipt
requested, that the Agency is considering the acquisition of such property. The
Agency shall include a form entitled Statement of Interest in Participation, along
with the notification.
5I7I99C:1OO3ClTY01\AG07\lMPLSTRATEGYFNL, WPO RG - 13
. Enforcement
In the event a property is not developed or used in conformance with the
Redevelopment Plan, or with a Certificate of Conformance. or a Participation
Agreement, then the Agency is authorized to:
. Purchase the property
. Purchase any interest in the property sufficient to obtain conformance
. Take any other appropriate action sufficient or obtain such conformance
X. RELOCATION POLICY AND PROCEDURE
The Agency has adopted the California Relocation Assistance Guidelines (the "Guidelines) - Califomia
Administrative Code, Title 25, Chapter 6, and incorporated them in the Plan. Please reference the
Guidelines for direction on relocation issues and Agency responsibilities.
Owners and tenants of properties to be acquired by the Agency have certain relocation benefits as set
forth in stat~ and federal law. In general, the Agency has no obligation to actually relocate any
occupant, but only to offer occupants appropriate site(s) to which they may relocate if they so choose.
While the availability of such relocation sites is closely monitored with reference to reside!}tial uses,
there is no obligation for a municipality to provide appropriate relocation sites in the community for
commercial uses if none exist. However, of course, if an occupant elects not to relocate to a property
identified by the Agency, the Agency will be obligated to pay that entity certain amounts of money as
set forth in state and federal law.
Because the relocation obligation tends to be complicated and expensive, UFI recommends that
relocation consultants be commissioned to prepare an analysis of the cost of relocation for site specific
projects. In the early planning stages it is recommended that a general cost of relocation be estimated.
Initial estimates will not include interviews with potentially displaced residential and business occupants
or property owners. Estimated relocation costs will typically not include the loss of goodwill and the
"bonus value" of existing leases. These costs cannot be ascertained without on-site inspection and
examination of occupants' books and records. However, it is possible to provide estimates of the value
of furniture, fixtures and equipment ("FF&E") where appropriate in the early stages of planning.
The Agency will need to provide a Replacement Housing Plan for any property purchased by either the
Agency or a private entity subject to a disposition and development agreement if that property contains
dwellings where the residents are to be relocated. Additionally, the Agency has an obligation under
state law to "develop housing [within four years] to replace those dwelling units that were destroyed or
converted as a result of its efforts".
XI. HOUSING PROGRAMS, COMPLIANCE REQUIREMENTS AND PROCEDURES
PRODUCTION, IMPROVEMENT AND PRESERVATION OF AFFORDABLE HOUSING
A. AGENCY COMPLIANCE REQUIREMENTS
One of the fundamental goals of redevelopment in California is the production, improvement and
preservation of a participating community's supply of housing affordable to very low-, lower';', and
low- and moderate-income households. This goal is accomplished, in part, through the execution
of four different, but interrelated requirements imposed on redevelopment agencies by the CCRL.
The requirements are:
5f7/99C:\OO3CITY01\AG07\JMPlSTRATEGYFNL.WPD RG - 14
u_
. An agency must use at least 20 percent of tax increment revenue to increase, improve and
preserve the supply of very low-, lower-, low- and moderate-income housing in the
community (CCRL 33334.2);
. An agency must replace, in equal or greater number, very low-, lower-, and low- and
moderate-income housing units (which have an equal or greater number Qf bedrooms) and
bedrooms which are destroyed or removed as a result of a. redevelopment project (the
"replacement rule", CCRL Section 33413[a]);
. An agency must ensure that a fixed percentage of all new or substantially rehabilitated
dwelling units developed by an agency are affordable to very low-, low- and moderate-
income persons and families (the "inclusionary rule", CCRL 33413[b][1]);
. An agency must ensure that a fixed percentage of all new and substantially rehabilitated
dwelling housing units developed' within the project area by public or private el1tities or.
persons other than the Agency are affordable to very low-, low- and moderate-income
persons (the "inclusionary rule", CCRL 33413[b][2]).
Section 33413(b)(4) requires that as part of the Agency's Implementation Plan (CCRL Section
33490), the Agency adopt a plan to comply with the requirements of the inclusio!1ary rule.
Sections 33413.5 and 33334.5 require adoption by resolution of replacement housing plans in
connection with projects destroying or removing units housing low- and moderate-income
households for compliance with .the replacement rule.
B. REPLACEMENT RULE
Section 33413(a) of the Health and Safety Code requires that whenever dwelling units housing
persons and families of low- or moderate-income are destroyed or removed from the low- and
moderate-income housing market as part of a redevelopment project subject to a written
agreement with the agency or having been provided financial assistance by an agency, the
agency shall, within four (4) years of the removal of the dwelling units, cause to be rehabilitated,
developed, or constructed an equal number of replacement dwelling units which have an equal
or greater number of bedrooms as those destroyed or removed units at affordable housing costs
within the territorial jurisdiction of the agency. Notwithstanding the foregoing Section 33413(1) of
the CCRL permits agencies to replace destroyed or removed units with a fewer number of units
so long as the total number of bedrooms equal or exceed the number of bedrooms in the
destroyed or removed units and the replacement units are affordable. to the same income level of
households as the destroyed or removed units.
For units removed after September 1, 1989, the CCRL requires that 75 percent of the replacement
units must be available at affordable housing cost'4 to the same income groups, inclusive of very
low-income levels, that occupied the units removed or destroyed.
C. INCLUSIONARY RULE
Section 33413(b)(1) of the CCRL requires that at least 30 percent of all new and substantially
rehabilitated dwelling units developed by a redevelopment agency shall be available at affordable
housing cost to persons and families of low- or moderate-income, and not less than 50 percent
of the units shall be available at affordable housing cost to very low-income households.
14 As defined in Health and Safely Code Sections 50052.5 and 50053.
5f7I99C:\OO3C1TY01\AG07\lMPLSTRATEGvFNl.WPO RG - 15
Section 33413(b)(2) requires that at least 15 percent of all new and substantially rehabilitated
dweHing units developed within a project area by public or private entities or persons other than
the redevelopment agency shall be available at affordable housing cost to persons and families
of low- or moderate-income, and not less than 40 percent of the affordable units shall be available
at affordable housing cost to very low- income households. To illustrate the inclusionary rule in
terms of numbers, of every 100 dwelling units developed or substantially rehat?iHtated by entities
other than the agency. 15 shall be affordable to persons of low- or moderate-income, with not less
than six of those units affordable to persons of very low-income.
To satisfy this requirement an agency may cause, by agreement or regulation, to be available, at
affordable housing costs to persons and families of low- or moderate-income, or to very low-
income households, two units outside a project area for each unit that otherwise would have to
be available inside a project area.
CCRL Section 33334.4 states that over the duration of the plan, LMI monies shall be expended.
to assist housing for persons .of low- and very low-income in at least the same proportion as the
total number of housing units needed for those income groups which are not being provided by
other governmental programs, and bears to the total number of units needed for persons of
moderate-, low- and very low-income within the community.
D. TERMS OF AFFORDABILlTY -
Section 33413(c) of the CCRL requires that replacement and inclusionary units shall remain
available at affordable housing cost to the income levels indicated for the longest feasible time,
but for not less than the period of the land use controls established in the applicable
redevelopment plan. CCRL Section 33334.3(f) states that when new or' substantially rehabilitated
housing units are developed or assisted with money from an agency's 20 percent affordable
housing set-aside fund, the agency shall require that those housing units remain affordable for the
longest feasible time, but for not less than 15 years for rental units or 10 years for owner-occupied
units. The "longest feasible time" includes but is not limited to, unlimited duration.
E. INCLUSIONARY HOUSING PLAN REQUIREMENT
Section 33413(b)( 4) of the CCRL requires each redevelopment agency to adopt a compliance plan
to be included as part of the Implementation Plan indicating how the agency will comply with the
requirements of the inclusionary rule. The compliance plan must be consistent with the Housing
Element of the City's General Plan. The compliance plan shall be reviewed and amended at least
every five years, in conjunction with the Housing Element cycle or the plan implementation cycle.
The compliance plan must ensure that the requirements of 33413(b) are met every ten (10) years.
Section 33490(a)(2)(B) requires that for each project area to which subdivision (b) of Section
33413 applies15, the Section addressing the agency-developed and project area housing shall
contain:
. Estimates of the number of new, substantially rehabilitated or price-restricted
residential units to be developed or purchased within one or more project areas, both
over the life of the plan and during the next 10 years.
15 The Indusionary Rule applies only to redevelopment projects for which a final redevelopment plan was adopted on or after January 1, 1976, and to areas which
are added to a project area by amendment on or after that date.
5I7199C:\OO3Cm01\AG07\lMPLSTRATEGvFNL. WPO RG - 16
. Estimates of the number of units of very low, low, and moderate income households
required to be developed within one or more project areas in order to meet the
requirements of paragraph (2) of subdivision (b) of Section 33413, both over the life
of the plan and during the next 10 years.
. The number of units of very low, low, and moderate income households which have
been developed within one or more project areas which meet the requirements of
paragraph (2) of subdivision (b) of Section 33413.
. Estimates of the number of agency developed residential units which will be
developed during the next five years, if any, which will be governed by
paragraph (1) of subdivision (b) of Section 33413.
. Estimates of the number of agency developed units for very low, low, and
moderate income households which will be developed by the agency during the
next five years to meet the requirements of paragraph (1) of subdivision (b) of
Section 33413.
F. AGENCY IMPLEMENTATION OF AFFORDABLE HOUSING PROGRAMS
Presented below is a description of several housing programs which the Agency could develop
and implement as a way of complying with CCRL housing requirements.
. Multi-Family Residential Rehabilitation Programs
. Single Family Residential Rehabilitation Programs
. Housing Assistance Loan/Grant Programs
. New Residential Construction Programs
G. HOUSING ANALYSIS
Presented on the following pages is a series of schedules that should be used by the Agency as
a means to continually monitor its long-term compliance of CCRL housing requirements.
Implementation of this compliance system will help the Agency to ensure compliance with CCRL
Sections 33490, 33413, 33334.2, 33334.3, .33334.4 and 33334.6. The schedules provide the
required nexus to afford ability I replacement and inclusionary requirements established in the
CCRL and previously discussed in this section of the Guide.
H. TEN-YEAR AND LlFE-OF-THE-PLAN HOUSING REQUIREMENTS
Section 33490(a)(2)(8) of the CCRL requires that:
(B) For each project area to which subdivision (b) of Section 33413
applies, the section addressing the agency developed and project
area housing shall contain:
(I) Estimates of the number of new,- substantially
rehabilitated or price-restricted residential units to be
developed or purchased within one or more project
areas, both over the life of the plan and during the next
10 years.
(ii) Estimates of the number of units of very low, low, and
5I7199C:\D03CITY01\AG07\JMPLSTRA TEGyFNL WPD RG - 17
moderate income households required to be developed
within one or more project areas in order to meet the
requirements of paragtaph (2) of subdivision (b) of
Section 33413, both over the life of the plan and during
the next 10 years.
Agency and City staff should use the housing compliance and monitoring system included in this
section of this Guide to prepare ten-year estimates that will satisfy CCRL Section 33490
requirements.
-
.
snI99C:\oo3CITY01IAG07\lMPLSTRATEGvFNL.WPO RG - 18
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Year Price Restricted Price Restricted Price Restricted Rehabed' .
(new const) (sub rehab) (existing)
_2
'ComplIance with CCRL Sections 333342(a). 33490(a)(2)(A). Includes Agency assisted units Inside/outside Project Area; see footnote No.4.
'Project Area adoption.
'Does not include units that are defined as substantially rehabilitated. pursuant to CCRL SectIons 33413(b)(2)(A)(iii) and flY).
.~ nut have made findings pursuant to CCRL Section 333342(8).
'Units included in QOIurMS 1. 2 and 3 count forlnclusionary credits, pursuant to CCRl Section 33413(b)(1) and (2). See 9 and 10 series tables. Units included in column 4 do not quarlfy for
indusIonary credll
1 2 3
Price Restricted Price Restricted Price Restricted Rehabed2
(new const) (sub rehab) (existing) 'Compliance with Sections 333342(a). 33490(a)(2)(A). Includes Agency assisted units ln$ide/outsIde the Project Area: see footnote No.3.
'Does not Include units that are defined as substantiaDy rehabilitated, pursuant to CCRl Sections 33413(b)(2)(A)(iIi) and flY). Effective January 1. 1997. 'substantially rehabilitated. Is no longer
defined.
'Agency must have made findings pursuant to CCRl Section 333342(8).
'Units indueled In columns 1, 2 and 3 count forindusionary credits, pursuant to CCRl Section 33413(b)(1) and (2). See 9 and 10 series tables. Units included in column 4 do not qualify for
Indusionary credil
~- --
H. LOW AND MODERATE INCOME HOUSING FUND
Section 33490{a){2){A){I) of the CCRL requires that each agency show the amount of money
available in the Low- and Moderate-income Housing Fund (LMl Fund) and the estimated amounts
which will be deposfted in the LMI Fund as part of its Implementation Plan compliance procedures.
Section 33490{a){2){A){ii) of the CCRL requires that an agency provide, in addition to the estimate
of the number of new, rehabilitated, or price restricted units to be assisted, an estimate of the
expendftures of monies from the LMI Fund during each of the five years. Schedule 6, shown on
the following page, should be used for the purpose of providing the required analysis.
-
snI99C:\OO3OTY01\AG07\lMPLSTRATEGYFNL.WPD RG - 28
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XII. ACCOUNTING REQUIREMENTS
The Agency has accepte~ loans from the City which are recorded on the books of both entities. The
following guidelines will assist Agency and City finance staff in dealing with the accounting for these and
other Agency loans.
If a loan is short-term in nature (i.e., payable from resources available to the capital project fund within
the current year), the loan proceeds and loan payable should be recorded as a cash debit, and a credit
due to the City in the capital Projects Fund. When the loan is repaid, the entry would be reversed.
If a loan is long-term in nature (i.e., the Agency has no current resources designated for repayment of
the loan and the loan is not "due" by year-end), the loan proceeds should be recorded as another
financing source of the Agency as a cash debit, and a credit to long-term debt in the Capital Projects
Fund. The liability should be recorded in the General Long Term Debt account group as a debit to
provision for long-term debt, and a credit to Advance Payable to City. When the loan is repaid, entries'
in the Debt Service Fund would be a debit to Expenditures - Debt Service and a credit to Cash. The
liability entries would be reversed. In general, the same budgeting, accounting and financial reporting
procedures as are used by the City should also be used by the Agency, though the records of the two
entities should be kept separately.
-
XIII. FUNDING ACCOUNTING
The accounts of the Agency are organized on the basis of funds and an account group, each of which
is considered a separate accounting entity, with a self-balancing set of accounts. The types of funds
and the account group used are as follows:
GOVERNMENTAL FUNDS
,
Special Revenue Fund: The Special Revenue Fund is used to account for the proceeds of specific
revenue sources that are legally restricted to expenditures for specified purposes. This fund is used to
account for the Low and Moderate Income Housing activities.
Debt Service Fund: The Debt Service Fund is used to account for tax increment revenues, bond
proceeds required to be set aside for future debt service, and related interest income. The funds are
used to pay principal and interest on indebtedness of the Agency.
Capital Proiect Fund: The Capital Projects Fund is used to account for bond proceeds available for
project improvements, proceeds from the sale of land, interest income on invested funds, and certain
other income. The funds are expended primarily for redevelopment project costs and administrative
expenses.
General Agency Fund: The General Agency Fund may be utilized to depict general overhead and
administrative expenses. This fund mayor may not be the Capital Project Fund.
XIV. ACCOUNT GROUP
GENERAL LONG-TERM DEBT
This account group is used to accountJor all long-term debt of the Agency. The proceeds of the
indebtedness are recorded in the Capital Projects Funds and serve as a financing for redevelopment
expenditures.
5I7199C:\OO3CfTY01\AG07\JMPLSTRATEGYFNL.WPD RG - 30
BASIS OF ACCOUNTING
The modified accrual basis of accounting is utilized by all funds of the Agency. Revenues are
recognized when they become measurable and available to finance expenditures of the current period.
Expenditures are recorded when a current liability is incurred except that unmatured principal and
interest on general long-term debt are recorded when due.
CASH AND INVESTMENTS
The Agency uses the City's cash and investment pool to obtain the benefit of increased interest income
through pooled investment activities. The Agency is permitted the same types of investments as the
City. This pool contains deposits, repurchase agreements, and other investments with an average
maturity of less than two years. Investments are stated at cost which approximate market.
LAND AND IMPROVEMENTS HELD FOR RESALE
Land and improvements held for resale are stated at cost which is less than market. The Agency
purchases land and improvements in designated areas for rehabilitation and resale.
Land purchased for resale by the Agency should be accounted for in the Capital Projects Fund as an
"investment" debit, and a credit to Cash. The "cost" of the "investment" should include all cosfsincurred
which are directly associated with the land ( i.e., acqutsition costs, demolition costs, soil preparation
costs, etc.) should not be added to the investment but should be recorded as period expenditures. If
the "cost" of the investment exceeds net realizable value, the "value" of the investment should be
adjusted to bet realizable value through the use of an allowance for the decline in value.
The investment should continue to be carried at "cost" or net realizable value until such time as there
is a disposition agreement with a developer or any other event which would indicate an agreed-to sales
. price.
The loss (expenditures), if any, on the disposition of the land should be recognized in the accounting
period in which the sales price is determined. A gain (revenue), if any, should be recognized if the
period in which an actual sale is effected.
XV. BUDGETS AND BUDGETARY ACCOUNTING
BUDGET PROCEDURES
Fiscal year budgets are prepared in accordance with the statutory requirements of the CCRL. The
following procedures should be followed in preparing the budget:
1. Preliminary budgets are prepared by the Agency staff and submitted to the
Redevelopment Agency Board for Approval.
2. A public meeting is conducted by the Agency Board. .
3. The approved budget is recorded in the minutes.
4. The final budget is compiled and entered into the accounting records.
5I7/99C:\OO3CITY01\AG07\lMPlSTRATEGvFNL.WPO RG - 31
5. The annual budget may be amended as determined by the Agency at a public
meeting. Adjustments are then entered into the accounting records. Control is
maintained at the object level.
ENCUMBRANCES
Purchase orders, contracts and other commitments are recorded in the accounting records as
encumbered appropriations are carried forward as reserves of fund balance.
XVI. REPORTING REQUIREMENTS
The Redevelopment Agency is required to report on operations and activities to the State, the
government body of the City. bondholders, and other interested parties. These reports are intended to
communicate information about existing resources, the types of financing methods used to carry out the
agency's activities, and data about how these resources were used, and include the following:
. Annual Report to the City Council
. Annual Report to the State controller
. HUD Compliance Reports
. Bond Indenture Compliance Report - .
The reporting requirements for these reports are outlined in Table 6:
Type of Report Frequency Required By
Annually - within 6 months Government Code. Section 1246.3 and
Report to legislative Body CCRl, Section 33080.5(a). (b), (c) and
after end of fiscal year Section 33080.1
Report to the State Controller Annually - within 6 months Same as above.
after end of fiscal year
Audited Financial Report on Annually. Bond Indenture
Mortgage Revenue Bond Funds
Asset Coverage - Mortgage
Revenue Bond Reserve Every 6 months Some Bond Indentures
Requirements
Audited Financial Report on Every 2 years. U.S. Department of Housing and Urban
HUD leveraged loan Funds Development
Compliance Audit Report on . Every 2 years. U.S. Dept of Housing & Urban
HUD leverage loan Funds Development
ANNUAL REPORT TO THE CITY COUNCIL
This annual report of the previous fiscal year's activities is prepared in the fonnat prescribed by the State
controller and includes the following:
5I7/99C:\OO3C1TY01\AG07\lMPlSTRATEGYFNL.WI"O RG - 32
1. Independent audit reports (financial and compliance) on the financial statements of the
Agency which present the results of the operations and financial position of the Agency, and
an opinion of the Agency's compliance with the laws. regulations and administrative
requirements governing the Agency's activities.
The State Controller's Office has issued Guidelines for Compliance Audits of California
Redevelopment Agencies. The Guidelines are used to evaluate the Agency's adherence
to certain requirements. Some of the major requirements are:
a. An independent financial and compliance audit report.
b. Biennial public hearing on plan.
c. Twenty percent set-aside of Incremental Property Tax Revenues.
d. Relocation and Land Acquisition expenditures.
2. A fiscal statement for the previous fiscal year, which contains the following information:
a. The amount of outstanding indebtedness of the Agency and each project area.
b. The amount of tax increment property tax revenues generated in the Agency and in
each project area. -
c. The amount of tax increment revenues paid to a taxing agency pursuant to pass-
through agreements. --
d. The financial transactions report required by the Government Code.
e. Any other fiscal information which the Agency believes useful to describe the program.
3. A description of the Agency's housing and displacement activities as part of a
redevelopment project, as follows:
a. The total number of households, including households for persons and families of low
or moderate income that were displaced during the previous fiscal year.
b. The total number of households, including households for persons and families of low
of moderate income, that the Agency estimates will be displaced or will move during
the present fiscal year.
c. The total number of dwelling units housing persons and families of I~w and moderate
income which have been destroyed or removed from the housing market during the
previous fiscal year.
d. The total number of Agency-assisted affordable dwelling units which were constructed,
rehabilitated, acquired, or subsidized during the previous fiscal year. .
e. The status and use of the Low and Moderate Income Housing Fund, including
information on the use of this fund for very low income households, lower income
households, and households for persons and families of low or moderate income.
5I7I99C:\OO3CITY01\AG07\lMPLSTRATEGvFNL.WI'O RG - 33
f. Any other information which the Agency believes useful to explain its housing
programs, including, but not limited to, housing for persons and families of other than
low and moderate income.
4. Any information which the Agency believes useful to explain its programs, including, but not
limited to, the number of jobs created as a result of its activities.
ANNUAL REPORT TO THE STATE CONTROLLER
Every redevelopment agency must file with the State Controller (within six months after the end of the
agency's fiscal year) a copy of the above-described annual report to the legislative body.
OTHER COMPLIANCE REPORTS
Several other types of compliance reports may be required for compliance with HUD grant regulations
and provisions of bond indentures:
ComDliance with HUD Regulations
Should the Agency receive HUD grant funds for use in Leveraged Loan Programs related to the
rehabilitation of personal residences and commercial structures, the Agency negotiated an
agreement with a bank whereby. the bank actually makes rehabilitation loans to individuals. The
Agency collateralize the bank's loan by placing HUD grant funds on deposit with the bank. The
Agency' may collateralize anywhere from fifty to one hundred percent of each loan. This is where
the leveraging benefit arises.
The HUD compliance audit requirements deal with the Agency's adherence to the terms and
conditions of the "Grant Agreement" signed in order to get the funds. Typically, the following areas
will be reviewed to determine if the Agency has complied in a "reasonable" 'manner.
a. Eligibility of loan recipients.
b. Handling of grant funds, i.e., deposited in the proper fund, accounted for properly, and
disbursement properly recorded.
c. Eligibility of expenditures - for reimbursement under the terms of the grant and federal
regulations.
d. Loan accounting, i.e., properly accounted for, principal collections restored to use, and
collateral reserve requirements met.
Other requirements, such as the adequacy of the general system of internal control, drawdowns
of federal funds, and program income, are set forth in the HUD audit guide.
Compliance with Bond Indentures
When the' Agency sells tax allocation promissory notes, incremental tax allocation bonds, or
residential mortgage'revenue bonds, the related bond indentures (Official statements of Sale) and
underlying resolutions frequently contain provisions requiring separate aUcfits of the bond fund
financial statements throughout the life of the issue.
5I7I99C:\OO3CITY01\AG07\JMPlSTRATEGvFNL.WPO RG - 34
--,--~~---.-. _.--
.
In some cases, the indentures require that the Agency's ability to maintain required debt reserves
at amounts specified in the bond indentures be reported upon every six months. The different
objectives of bond fund examin.ations consist of the following:
a. The individual bond funds should be maintained as required by the resolution, such
as:
. bond principal amount
. bond interest account
. mortgage reserve fund
. debt service reserve fund
. asset accumulation fund
. revenue fund
. operating fund
b. The actual flow of funds should follow the requirements of the indentures, such as:
. Investment earnings from each fund to be transferred monthly into the
revenue fund?
The revenue fund to be maintained at a zero balance? -
.
. The bond principal and interest accounts to be funded monthly?
. The reserve funds to be funded monthly?
. The operation fund to be reimbursed as required?
. Excess funds to be placed in the asset accumulation fund?
c. The reserve funds should be maintained at the required amount, such as:
. The mortgage reserve fund to be maintained at the required level or
reduced as outstanding loan principal is collected?
. The debt service reserve fund to be maintained at the required level or
reduced as bonds are retired?
d. Excess funds should be disposed of properly. In some cases, excess' funds (amounts
in . excess of outstanding principal, interest due and a safety margin) may be
transferred free and clear to the Agency for use for any lawful purpose.
Other requirements, such as insurance coverage, special calls and redemptions, annual audit reports,
and investment policies, should be clearly spelled out in the authorizing resolution.
5I7/99C:\OO3CITY01\AG07\lMPLSTRATEGvFNL.WPO RG - 35
~.____.~,_~..b"
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6rlJ99C:~f\L5S\BI>.CIWP\W?\'I'IP).eK1
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FINANCIAL INCENTIVE OPERATING PRINCIPLES
The National Development Council has stated that the goal of economic development
financing is:
'To stimulate private sector investment into long-lived physical plant and.
equipment, to increase productivity and to create new, permanent, private sector
jobs. II
With this as the basic objective of the Arroyo Grande Redevelopment Agency's financial
participation policy, the determination of owner/developer eligibility shall be bas~d upon
anyone or a combination of the following principles:
. The utilization of performance-based systems for awarding incentives that
provide for recovery and/or adjustment of the subsidies according to an agreed
upon scheduled performance by the owner/developer.
. The same incentives shall be offered to existing owner/developers in the
community that are offered to outside owner/developers that are considering
relocation or expansion.
. Incentives shall only be offered to owner/developers that: (1) make long-term
commitments in capital investment; and (2) plan to create jobs that pay family-
supporting wages or at least wages that are higher than the average in the
community.
. Incentives shall only be considered when a proposed development can justify
their utilization by positive cost/benefit, fiscal impact and return-an-investment
analyses.
. Incentives shall only be considered to fill financing, costs or assistance gaps that
the owner/developer cannot fill from conventional sources.
. Incentives shall be utilized to attract and assist only those owner/developers that
otherwise would not locate or expand in the community.