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RESOLUTION NO. CDC 1999-48
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RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO APPROVING THE
PRELIMINARY REPORT FOR THE PROPOSED 40TH STREET
REDEVELOPMENT PROJECT AND DIRECTING THE TRANSMITTAL
OF THE PRELIMINARY REPORT TO THE AFFECTED TAXING
AGENCIES
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WHEREAS, pursuant to Section 33328 of the California Community Redevelopmen
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Law ("CRL"), the Community Development Commission ("Commission") of the City of S
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Bernardino shall consult with each taxing entity which levees taxes, or for which taxes ar
levied, on property in the 40th Street Redevelopment Project Area with respect to
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Redevelopment Plan and the allocation of taxes pursuant to Section 33670 of the CRL; and
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WHEREAS, pursuant to Section 33344.5 of the CRL, the Commission has prepared th
Preliminary Report on the proposed Redevelopment Plan for the 40th Street Redevelopmen
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Project ("Preliminary Report") for transmittal to the affected taxing agencies for consultatio
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purposes.
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NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF TH
CITY OF SAN BERNARDINO, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:
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Section 1.
The Preliminary Report for the proposed 40th Street Redevelopmen
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Project, a copy of which is attached hereto as Attachment A, is ordered, received, approved an
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filed.
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Section 2.
The Executive Director is authorized and directed to transmit the dra
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Preliminary Report to the affected taxing agencies in accordance with the provisions of the CRL.
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Section 3.
The Executive Director and Commission staff are authorized and directe
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to continue consultations with the affected taxing agencies with respect to the
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Redevelopment Plan and the allocation of taxes pursuant to Section 33670 of the CRL.
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CDC 1999-48
1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO APPROVING THE PRELIMINARY
2 REPORT FOR THE PROPOSED 40TH STREET REDEVELOPMENT
PROJECT AND DIRECTING THE TRANSMITTAL OF THE
3 PRELIMINARY REPORT TO THE AFFECTED TAXING AGENCIES
4 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
5 Development Commission of the City of San Bernardino at a joint reaular
meetin
6 thereof, held on the 20th day of December
7 COMMISSION MEMBERS: AYES
8 ESTRADA X
9 LIEN X
10 McGINNIS X
11 SCHNETZ X
12 SUAREZ X
13 ANDERSON X
14 MILLER
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, 1999, by the following vote, to wit
NAYS
ABSTAIN ABSENT
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By:
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The foregoing Resolution is hereby approved thi~ay of December
,1999.
)7 ~_..~ -- /)J [{z,,-,,-,
Norine Miller
Vice Chairman
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CDC 1999-48
PRELIMINARY REPORT
FOR THE REDEVELOPMENT PLAN
FOR THE
40TH STREET PROJECT AREA
NOVEMBER, 1999
PREPARED FOR:
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO
201 NORTH E STREET, SUITE 301
SAN BERNARDINO, CA 92401.1507
(909) 384.5081
PREPARED BY:
ROSENOW SPEV ACEK GROUP, INC.
540 NORTH GOLDEN CIRCLE, SUITE 305
SANTA ANA, CALIFORNIA 92705
(714) 541.4585
CDC 1999-48
TABLE OF CONTENTS
INTRODUCTION..........................................................................................................................1
SECTION A............................................................................................................................... A-I
SECTION B ................................................................................................................................B-l
BLIGHTING CONDITIONS ..........................................................................................B-l
PHYSICAL BLIGHT..................................................................................................... .B-l
ECONOMIC BLIGHT.....................................................................................................B-2
PROPERTIES INCLUDED FOR REDEVELOPMENT PURPOSES ...........................B-3
STUDY APPROACH AND METHODOLOGY ............................................................B-3
PROJECT AREA BOUNDARIES ..................................................................................B-5
CHARACTERISTICS OF THE PROJECT AREA ........................................................B-5
PHYSICAL BLIGHT ......................................................................................................B-5
Physical Conditions that Cause Blight.................................................................B-5
Buildings in Which it is Unsafe or Unhealthy for Persons to Live .........B-7
Deterioration and Dilapidation ....................................................B-7
Lots/Buildings Suffering from Defective Design or Defective
Physical Construction................................................................. .B-9
Faulty or Inadequate Utilities.....................................................B-ll
Serious Code Violations ............................................................B-12
Factors that Prevent or Substantially Hinder the Economically
Viable Use or Compatibility of Buildings or Lots.................................B-13
Substandard Design ...................................................................B-13
Lack of Parking......................................................................... .B-15
Incompatible Adjacent Uses ..................................................................B-16
Subdivided Lots ofIrregular Form and Shape and Inadequate Size for
Proper Usefulness and Development that are in Multiple Ownership...B-17
ECONOMIC CONDITIONS THAT CAUSE BLIGHT ...............................................B-18
Depreciated or Stagnant Property Values or Impaired Investments ......B-18
Depreciated or Stagnant Property Values ........................................B-18
Impaired Investments .......................................................................B-19
Abnormally Low Lease Rates................................................................B-20
High Business Vacancies .......................................................................B-21
A High Crime Rate That Constitutes A Serious Threat To The Public
Safety and Welfare................................................................................ .B-23
Gangs and Graffiti........................................................................... .B-24
CDC 1999-48
SUMMARY ...................................................................................................................B-25
SECTION C................................................................................................................................C-I
SECTION D............................................................................................................................... D-I
GENERAL FINANCING METHODS AVAILABLE TO THE AGENCy.................. D-I
Financial Assistance from the City, State, and/or Federal Government............. D-l
Property Tax Increment Revenue ....................................................................... D-2
Bonded Debt....................................................................................................... D-2
Lease or Sale of Agency-Owned Property.......................................................... D-3
Participation in Development ............................................................................. D-3
Other Available Sources ..................................................................................... D-3
PROPOSED REDEVELOPMENT ACTIVITIES AND PROJECT RELATED
COSTS............................................................................................................................ D- 3
ESTIMATED TAX INCREMENT REVENUE AND BONDING CAPACITy........... D-4
ASSESSMENT OF THE ECONOMIC FEASIBILITY OF THE PROJECT................ D-7
REASONS FOR THE PROVISION OF INCREMENT REVENUE ............................ D-9
SECTION E ................................................................................................................................ E-I
ECONOMIC DEVELOPMENT PROGRAMS............................................................... E-I
PUBLIC INFRASTRUCTURE IMPROVEMENTS ......................................................E-2
LOW AND MODERATE INCOME HOUSING PROGRAM .......................................E-2
ECONOMIC DEVELOPMENT PROJECTS.................................................................. E-4
PUBLIC IMPROVEMENTS PROGRAM ......................................................................E-5
LOW AND MODERATE HOUSING PROGRAMS......................................................E-7
APPENDIX A Information Sources
APPENDIX B Project Area Photographs
CDC 1999-48
INTRODUCTION
The City of San Bernardino ("City") and the San Bernardino Community Development
Commission ("Commission") are considering expanding their redevelopment efforts by
incorporating certain commercial and residential areas into a project area. The firm of Rosenow
Spevacek Group, Inc. ("RSG") has been retained by the Economic Development Agency of the
City of San Bernardino ("Agency") to conduct the necessary analyses needed to adopt a
redevelopment plan for the proposed area. RSG recently completed a Feasibility Study to
identify areas in the City which meet the requirements of a redevelopment project area, as
specified in the California Redevelopment Law, Health and Safety Code Section 33000, et seq.,
("CRL").
The areas identified by RSG for inclusion in a potential redevelopment project area are shown in
Exhibit 1. Based on the conditions of physical and economic blight documented in the
Feasibility Study, RSG determined that there is sufficient evidence to move forward with the
adoption of a redevelopment project area (Exhibit 1).
The area under consideration, the 40th Street Project Area ("Project Area"), includes
approximately 83 acres (excluding public rights of way) encompassing two non-contiguous
regions (Subarea 1 and 2). The larger area (Subarea 1) is generally bordered by 44th Street to the
north, Sepulveda and Waterman Avenues to the east, Ralston Avenue and Sonora Drive to the
south, and Electric and Mountain View Avenues to the west. The other area (Subarea 2) is
multi-unit residential and vacant land, just to the east of Sierra Way on 49th Street. Commercial
areas of the Project Area are located on 40th Street, as well as along certain portions of Sierra
Way. Commercial uses in this portion of the Project Area consist of a mix of marginal retail and
other commercial uses serving the local neighborhood. The residential areas are primarily north
of 40th Street, east of Sierra Way, and south of 40th Street, west of Sierra Way.
The Commission's goal is to improve the physical condition of the Project Area, enhance the
economic base and allow the City to create and retain jobs within the area. Establishing these
areas as a redevelopment project will enable the Commission to utilize redevelopment tools to
remove blighting conditions, revitalize the local economy, correct infrastructure deficiencies,
enhance employment opportunities, and provide a safe environment.
In order to adopt the proposed 40th Street Project Area Redevelopment Plan ("Redevelopment
Plan"), the Commission must comply with the procedures for adoption of a redevelopment plan
as set forth in the CRL. Proceedings for the proposed adoption of the Redevelopment Plan for
the Project Area were initiated with the adoption of Resolution No. _ on September 7,1999,
by the Planning Commission of the City of San Bernardino, approving and adopting the
Preliminary Plan for the Redevelopment Project Area ("Preliminary Plan"). The objectives of
the Redevelopment Plan are to:
. Include approximately 83 acres of territory in the 40th Street Project Area;
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CDC 1999-48
. Provide for the use of redevelopment tools to assist in the revitalization of the 40th
Street Shopping Center;
. Alleviate blighting conditions which constitute physical and economic liabilities, and
require redevelopment in the interest of the health, safety, and general welfare of the
people of the community; and
. Promote economic development within the Project Area.
The CRL provides the Commission with the authority to undertake revitalization efforts in
blighted areas within the City. As defined by CRL, redevelopment includes the rehabilitation,
reconstruction, and improvement of existing structures; the provision of public improvements;
and the replanning or redesign of blighted properties within a project area. Sections 33450-
33458 of the Redevelopment Law permit the Commission to recommend adoption of the
Redevelopment Plan subject to: 1) the preparation of documents by the Commission to
substantiate the need for the Plan; 2) the convening of a joint public hearing of the City Council
and the Commission on the proposed Plan; and, 3) consideration and approval of an adopting
ordinance by the City Council.
This Preliminary Report, prepared pursuant to Section 33344.5 of the CRL, provides information
to assist affected taxing agencies in assessing the potential impacts of the project. The "affected
taxing agencies" are governmental taxing agencies which levied a property tax on all or any
portion of the property located within the boundaries of the project within the last fiscal year.
With the approval of this Preliminary Report, along with a Draft Environmental Impact Report
and draft Redevelopment Plan, the Commission will invite consultations with the affected taxing
entities and the community as to the scope and nature of the proposed Redevelopment Plan.
Following these consultations, the Commission will incorporate comments into the Report to
Council. The Report to Council, Final Environmental Impact Report, and Final Plan will be
considered by the Commission and City Council at a joint public hearing tentatively scheduled
for May, 2000. The Method of Relocation and Rules Governing Participation and Reentry
Preferences for Property Owners, Operators of Businesses and Business Tenants are both
scheduled to be approved prior to the joint public hearing.
This Preliminary Report has been divided into the following sections:
SECTION A
The Reasons for the Selection of the Project Area
SECTION B
A Description of the Physical and Economic Conditions Existing in the
Project Area
SECTION C
A Determination as to whether the Project Area IS Predominantly
Urbanized
SECTION D
A Preliminary Assessment of the Proposed Method of Financing the
Redevelopment of the Project Area and the Reasons for the Provision of
Tax Increment
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SECTION E
A Description of How the Amendment and Proposed Projects to be
Pursued by the Commission, Will Improve or Alleviate Physical and
Economic Conditions in the Project Area
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SECTION A
Reasons for Selection of the Project Area
The Proposed Project Area as depicted in Exhibit 1 is comprised of two noncontiguous areas
located in the northeastern quadrant of the City. Generally, the area includes: 1) the commercial
corridors in the vicinity of the intersection of 40th Street and Sierra Way, and 2) high density
apartments and a small vacant area located on 49th Street east of Sierra Way. The majority of the
land uses are residential and commercial. The neighborhood commercial areas generally along
40th Street and Sierra Way can be characterized as retail, marginal retail, and food service. The
buildings in these commercial areas exhibit signs of obsolescence, their small size no longer
meets current market trends, they have limited egress/ingress, entrances and parking areas are
inconveniently located, architectural design and signage is outdated, and access for loading is
deficient.
The 40th Street Shopping Center ("Center") is one of the major developments in the area. The
Shopping Center serves the local residents as well as vacationers on their way to the mountain
resorts just north of the City. The City of San Bernardino has made numerous attempts to
alleviate the blighting conditions at this Shopping Center. The Center is run down, has design
and access problems, and currently has numerous vacancies. It is not serving the surrounding
residents nor maximizing its potential to attract business from passing tourists. The Center
access is difficult because of narrow driveways and its street presence from the east is severely
compromised because of a two-story office complex and a gas station that front Waterman
Avenue. These structures make it difficult for passers-by to see that a retail center is located to
the rear of these structures.
While the Center will be a focal point of the redevelopment effort, the surrounding area has also
experienced significant business attrition during the past decade. Several large employers are no
longer operating in the greater San Bernardino area, including Santa Fe Railroad, Kaiser Steel,
and Norton Air Force Base. This has resulted in the loss of thousands of jobs. The loss of these
employers, combined with the already generally deteriorating conditions in the proposed Project
Area, has further compromised the City's ability to attract new businesses to the Area.
Efforts to revitalize the area will entail assisting businesses to upgrade their facilities, as many of
the smaller businesses along 40th Street and Sierra Way appear to be obsolete. Many of these
businesses are comprised of stand-alone buildings, frequently built in the 1950's and 60's, that
have outlived their economic usefulness. These buildings are too small, deteriorated, or
dilapidated and lack adequate ingress/egress to compete in the current retail market. They are
predominately occupied by low-end discount stores, auto repair facilities, bars or independent
fast-food restaurants, leaving these prime commercial areas underutilized. Upgrading these areas
will allow for additional retail stores and services, and provide expanded employment
opportunities for area residents.
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8. Implement design and use standards to assure high aesthetic and
environmental quality, and provide unity and integrity to developments
within the Project Area.
9. Address parcels of property that are of irregular form and shape, are
inadequately sized for proper usefulness and development, and/or are held in
multiple ownership.
10. Remove impediments to land disposition and development through the
assembly of property into reasonably sized and shaped parcels served by
improved infrastructure.
II. Recycle and/or develop underutilized parcels to accommodate higher and
better economic uses while enhancing the City's financial resources.
12. Promote the rehabilitation of existing housing stock.
13. Increase, improve, and preserve the supply of housing affordable to very
low, low and moderate income households.
In the following sections, the objectives of the Plan are discussed in greater detail. Section B
provides a description of the physical and economic blighting conditions existing in the Project
Area. A determination that the Project Area is predominantly urbanized is presented in Section
C. The economic feasibility of the project adoption is analyzed in Section D. Section E of this
Preliminary Report delineates the proposed projects to be undertaken through the
Redevelopment Plan, and identifies how the projects will mitigate blight in the Project Area.
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SECTION B
A Description of the Physical and Economic
Conditions Existing in the Project Area
Section B of this report details the nature of the Project Area by providing a description of the
physical and economic blighting conditions found within its boundaries.
BLIGHTING CONDITIONS
The CRL sets forth specific parameters that define blight. According to Section 33030 of the
CRL, a blighted area contains both of the following:
1. An area that is predominantly urbanized and is an area in which the combination
of physical and economic blighting conditions is so prevalent and so substantial
that it causes "a reduction of, or lack of, proper utilization of the area to such an
extent that it constitutes a serious physical and economic burden on the
community, which cannot reasonably be expected to be reversed or alleviated by
private enterprise or governmental action, or both, without redevelopment" (CRL,
Section 33030(b)(1)).
2. An area that is characterized by either, physical blight and economic blight or the
"existence of subdivided lots of irregular form and shape and inadequate size for
proper usefulness and development that are in multiple ownership" (CRL Sections
33030(b)(2) and 3303 1 (a)(4)).
PHYSICAL BLIGHT
Section 3303 1 (a) of the CRL describes physical conditions that cause blight as follows:
1. Lots/buildings in which it is unsafe or unhealthy for persons to live or work;
examples of such conditions include:
a. Dilapidated and deteriorated buildings
b. Lots/buildings suffering from defective design or physical construction
c. Lots/buildings suffering from faulty or inadequate utilities
d. Serious Building Code violations
2. Factors that prevent or substantially hinder the economically viable use or
capacity of buildings or lots; examples of these conditions include:
a. Lots/buildings suffering from substandard design
b. Lots/buildings of inadequate size given present standards and market
conditions
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CDC 1999-48
c. Lack of available parking
3. Adjacent or nearby uses that are incompatible with each other and which prevent
the economic development of those parcels or other portions of redevelopment
project areas.
4. The existence of subdivided lots of irregular form and shape, inadequate size for
proper usefulness and development, and that are in multiple ownership.
ECONOMIC BLIGHT
Section 33031 (b) of the CRL describes the following economic conditions that cause blight:
1. Depreciated or stagnant property values or impaired investments. This condition
includes the presence of hazardous waste.
2. Stagnant or declining market conditions; examples of this include:
a. An abnormally high number of business vacancies
b. Abnormally low lease rates
c. High turnover rates
d. Abandoned buildings
e. Excessive vacant lots within an area developed for urban uses and served by
utilities
3. A lack of necessary commercial facilities such as those normally found in
neighborhoods including grocery stores, drug stores, and banks and other lending
institutions.
4. Residential overcrowding or an excess of bars, liquor stores, or other businesses
that cater exclusively to adults have led to problems of public safety and welfare.
5. A high crime rate that constitutes a serious threat to the public safety and welfare.
Provided that other conditions of physical and economic blight are present, a blighted area may
also be one that is characterized by the existence of inadequate public improvements, parking
facilities, and utilities.
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The characteristics of both physical and economic blight, as defined above, are present
throughout the Project Area. The characteristics of physical blight include deteriorated and
dilapidated structures; lotslbuildings suffering from defective design, substandard design, lots of
inadequate size and under multiple ownership, and incompatible uses. The characteristics of
economic blight in the Project Area include and abnormally high number business vacancies,
low lease rates, depreciated property values, impaired investments, including declining retail
sales tax revenues and crime, all of which are indicative of declining market conditions. These
blighting characteristics are detrimental to surrounding uses and the community.
PROPERTIES INCLUDED FOR REDEVELOPMENT PURPOSES
Conditions of blight predominate throughout and injuriously affect the entire Project Area. If
and to the extent that properties are not blighted, their inclusion in the Project Area is necessary
and appropriate for one or more of the following reasons and redevelopment purposes: (1) in
order to effectively plan and carry out the Project; (2) because such properties are impacted by
the conditions existing on adjacent properties, and correction of such conditions may require the
imposition of design, development or use requirements on the standard properties in the event
they are rehabilitated or redeveloped by their owners; (3) to impose uniform requirements over a
geographically defined and identified area of the City; (4) for the provision of low and moderate
income housing; and (5) because such properties are part of a blighted area.
STUDY APPROACH AND METHODOLOGY
Several data sources were utilized to quantify existing conditions in the Project Area. An
important data source for evaluating the existence and prevalence of conditions that characterize
blight in the Project Area was the field survey conducted by Rosenow Spevacek Group, Inc.
("RSG"), consultants to the Commission, in May 1999 and a follow-up survey in September
1999. The survey documented the existing physical and economic conditions of each parcel in
the Project Area, as observed from the public right-of-way. Both physical and economic
indicators were observed during the field survey, including deterioration and dilapidation,
inadequate utilities, defective design, substandard design and incompatible uses. The results of
the field survey, as well as other data collected, are presented below within the same categories
as defined in the CRL. Also, an explanation of the method used for assessing these conditions is
provided by category.
The survey and supplementary research included analyzing each parcel to determine conditions
of blight present. The criteria established for determining the presence of the majority of the
blighting conditions in the Project Area are as follows:
Dilapidation and Deterioration: A structure was determined to be dilapidated or
deteriorated if structures were observed to be suffering from deteriorated roofs or eaves;
peeling paint; damaged exterior building material; exposed wiring or plumbing; and/or if
the buildings were constructed with substandard building materials. In addition, these
structures were deemed deteriorated and/or dilapidated if the condition or the lack of
maintenance of a building resulted in the building being unfit or unsafe for occupancy.
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Defective Design or Defective Physical Construction: A parcel and/or building suffers
from defective design when setbacks do not comply with current requirements; there is a
lack of parking; ingress and egress are difficult for vehicular traffic; structures lack
sufficient loading area; buildings are being used for purposes for which they were not
originally constructed or intended; or when a building or site has been poorly laid out. A
parcel suffers from defective physical construction when structures appear to be built
from materials that are outdated or substandard, such as corrugated metal, and would not
be permitted if the structure were built today; have cracked foundations; are leaning; lack
windows; or have a variety of other physical inadequacies.
Substandard Design: A building suffers from substandard design when building sizes,
setbacks, and design themes are inconsistent with surrounding buildings. A parcel
exhibits conditions of substandard design when it is not consistent in size with
surrounding parcels or is inadequate for its existing use.
Lack of Parking: Parcels lacking off-street parking and/or instances in which vehicles are
either parked on sidewalks or are double parked on parcels.
Incompatible Adjacent or Nearby Uses: Properties with incompatible adjacent or nearby
uses result from predominate land uses which negatively impact other land uses in the
area. For example, the presence of residential units in a primarily industrial area which
lack adequate buffers typically results in incompatible adjacent or nearby uses.
Irregularly Formed, Shaped, Inadequately Sized Parcels or Lots in Multiple Ownership:
Parcels were determined to be irregularly formed, shaped, or inadequately sized based on
a review of Los Angeles County assessor parcel maps and the City's current zoning code.
In addition, the ownership of these parcels was analyzed to determine multiple
ownership.
The survey noted situations in which at least one building on a parcel exhibited a blighting
condition. Since many of the parcels in the Project Area have more than one building on the site,
the survey illustrates conditions of at least one building on the parcel. Since some buildings may
be in somewhat better condition, it does not suggest that all buildings on any single parcel
exhibit all of the same blighting characteristics or are in the same condition. In addition, there
are certain types of blighting conditions that cannot be directly linked to a parcel. This occurs
when blighted parcels are interspersed among non-blighted properties. Due to their geographical
location, the non-blighted parcels are by necessity included in the Project Area. Inclusion of
these parcels, which are not detrimental to the public health, safety, or welfare, is necessary for
the effective redevelopment of the Project Area; they are not being specifically included for the
purpose of obtaining the allocation of tax increment revenues.
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PROJECT AREA BOUNDARIES
The Project Area is located in the northeast section of the 60 square mile City of San Bernardino.
It is generally bounded by 44th Street to the north, Ralston Avenue, and Sonora Drive to the
south, Electric and Mountain View Avenues to the west, and Sepulveda and Waterman Avenues
to the east. In addition, a section of high-density apartments and some vacant parcels north of
this area are included in the Project Area. This additional section is generally bounded by
Waterman Avenue to the east, Sierra Way to the west and northwest, and parcels fronting 49th
Street on the south as depicted in Exhibit 1.
CHARACTERISTICS OF THE PROJECT AREA
The Project Area is comprised of approximately 83 acres. The majority of the land uses are
residential and commercial. The commercial areas generally along 40th Street and Sierra Way
can be characterized as retail, marginal retail, and food service. The buildings in these
commercial areas exhibit signs of obsolescence, their small size no longer meets current market
trends, they have limited egress/ingress, entrances and parking areas are inconveniently located,
architectural design and signage is outdated, and access for loading is deficient.
The residential parcels exhibit varying degrees of maintenance with some of the units in need of
extensive repairs. The units have peeling paint, damaged exterior building materials,
deteriorated roofs and eaves, exposed utilities, and in some instances faulty additions. The
residential areas suffer from excessive lot coverage, inadequate parking and access, outdoor
storage, and deteriorated fencing, landscaping, and driveways.
PHYSICAL BLIGHT
A. PHYSICAL CONDITIONS THAT CAUSE BLIGHT
The CRL describes physical conditions that cause blight in Section 33031(a), as shown
above. These physical conditions are assessed in terms of the health and safety of
persons and the economic viability and development of the area. The physical blighting
conditions found in the Project Area include deterioration and dilapidation of all types of
buildings, buildings defective in design, buildings which do not meet code requirements,
buildings with faulty or inadequate utilities, buildings of substandard design, properties
with parking and access problems, and parcels of irregular form and shape, and
inadequate size which are under multiple ownership. Conditions of deterioration and
dilapidation, inadequate parcel size and shape for development, as well as the conditions
listed above, discourage private sector investment, and further contribute to the blighting
conditions of the Project Area. Seventy-three percent of all parcels within the Project
Area suffer from one or more conditions of physical blight (Table B-1).
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TABLE B-1
Adoption of the 40th Street Redevelopment Project Area
Summary of Blighting Conditions
Defective Design/Physical Construction
Faulty or Inadequate Utilities
No. of No. of % of Parcels with
Parcels/Properties with Parcels/Properties Blighting Conditions
Blighting Conditions in Project Area in Project Area
18 234 7.69%
109 234 46.58%
24 234 10.26%
11 234 4.70%
144 234 61.54%
58 234 24.79%
48 234 20.51%
Physical Blighting
Conditions
Buildings Unsafe/Unhealthy to Live or Work
Serious Building Code Violations
Dilapidation and Deterioration
Deferred Maintenance
Moderate Rehabilitation
Extensive Rehabilitation
Subtotal
Factors that Prevent or Hinder the Economically
Viable Use or Capacity of Bldgs. or Lots
Substandard Design (1)
Lack of Parking
76
30
234
234
32.48%
12.82%
Incompatible Adjacent Uses
10
234
4.27%
Lots ofIrregular Shape and Inadequate Size
..~~..!?:..~:.I..?"-'.!.l~_~~..~~..~~.I.~ip'~.:..~~:~~.iP..................._.........-..-...........................~~.....................................................~~.~...............-..........................-..!..~:~~:.?...........
Total Physical Blighting Conditions (2) 171 234 73.08%
Economic Blighting Conditions
Declining Property Valuesllmpaired Investments (3) 32 234 13.68%
Business Vacancies (4) 16 69 23.19%
..~?~~.?~.:..~_~.~~!~!.~~~.................................................................................................................._............................................................................._..!...~........................................................................?.~.:'................................................................~.~~2.~...__......................
Total Economic Blighting Conditions (2)
50
234
21.37%
(1) Includes Outdoor Storage or Production.
(2) This number represents the number of parcels with at least one condition of physical or economic blight.
(3) Comparison of Property Values from 1995-96 to 1998..99.
(4) Totals inclnde Parcels Designated for Use by Business Establisbments with at least one vacant unit
Source: Blight Survey Conducted September 1999
Within the Project Area, the commercial centers along 40th Street and Sierra Way
provide important commercial uses and services to the surrounding residents. The poor
physical conditions create a burden on the immediate community by causing a lack of
necessary retail stores and services needed or desired by area residents. The poor
physical and economic conditions of the commercial properties also impact surrounding
neighborhoods, as residents have no incentive in some cases to upgrade and/or maintain
their properties. The magnitude of these building and site problems has seriously
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November, 1999
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CDC 1999-48
impacted the ability of the City to remediate poor conditions and facilitate private
reinvestment in the area. In many cases, the high costs involved in upgrading and
rehabilitating existing structures and infrastructure have caused buildings to deteriorate to
a state of disrepair that causes health and safety issues for occupants, and have caused
buildings to remain vacant for two years or more. Removing blighting conditions will
require a concerted effort by both the community and the private sector. Neither entity
acting alone possesses the ability or the resources to remediate the deficiencies of the
Project Area.
The following discussion provides a description of physical blighting conditions found to
be pervasive within the Project Area. The photographs contained in Appendix 1 provide
examples of conditions within the Project Area described below.
1. Buildings in which it is Unsafe or Unhealthy for Persons to Live or Work
(a) Deterioration and Dilapidation
Deterioration and dilapidation is one indicator of buildings which are
unsafe or unhealthy for persons to live or work in, as identified under
Section 33031(a)(1) of the CRL. Buildings, which are in poor or
substandard condition, jeopardize the health and safety of the occupants
and the community as a whole. The presence and persistence of
deteriorated and dilapidated building conditions reflects a lack of
investment necessary to assure the safety of persons who live or work in
the area.
In order to assess the level of building deterioration occurring in the
Project Area, a parcel-by-parcel survey of blighting conditions was
conducted in the Project Area. Buildings in the Project Area were viewed
and generally categorized based on the condition of the structures in one
of the following categories:
=> Sound: There are no noticeable deficiencies in the structural
-
condition of the roof, walls, or foundation. The structure appears
to have adequate plumbing and electrical service and is subject to a
regular program of maintenance. The exterior walls and other
surfaces are well painted and clean, and the windows and doors are
intact.
=> Deferred Maintenance: The structure has been maintained
adequately enough to eliminate any major structural defects. The
exterior of the building shows signs of deferred maintenance such
as peeling paint, dirty exterior walls and other surfaces, weathered
and worn wood facades, and/or cracked stucco or foundations.
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Community Development Commission
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Draft Preliminary Report
CDC 1999-48
=> Moderate to Extensive Rehabilitation: There are obvious
indications that proper maintenance to the structure is very
infrequent. The building shows signs of structural deterioration,
such as rotten or cracked building materials, a sagging roof or
walls, or a crumbling foundation. Patchwork repairs may be
apparent, and paint may be largely peeled or faded. The exterior
walls and other surfaces are very dirty and show signs of neglect.
=> Dilapidated: The building appears structurally unsound, and
maintenance is nonexistent. Its fitness for human habitation is
highly questionable, and its state of deterioration and neglect is
such that it is a candidate for demolition.
Deteriorated and dilapidated structures were observed throughout the
Project Area. The windshield survey identified a total of 144 parcels
(about 62% of properties surveyed) with signs of deterioration or
dilapidation. Approximately 109 parcels had one or more signs of
deferred maintenance, 24 parcels were in need of moderate rehabilitation,
and 11 parcels require extensive rehabilitation.
Building conditions observed during the field survey included broken
windows, boarded up abandoned buildings, rotting wood eaves or trim,
occasional sagging roofs, damaged and deteriorated roofing material,
damaged exterior building material, cracked or crumbling foundations,
and substandard exterior electrical wiring and plumbing. The
deterioration in the commercial area includes damaged exterior building
and roofing materials, exposed wiring and plumbing, peeling paint,
occasional broken windows, deteriorated parking lots and obsolete
signage. These conditions are most prevalent in what appears to be the
older commercial area along the northern portion of Sierra Way. Physical
blighting conditions are also concentrated along the businesses west of
Sierra Way on the south side of 40th Street, with many of the buildings
exhibiting conditions similar to those cited above. One of the most
dramatic examples of the deteriorated conditions among commercial areas
is the 40th Street Shopping Center, where the western side is not in use and
has been partially covered with exposed building materials, has boarded
up or broken windows, drainage problems, trash and debris strewn about
the deteriorated parking lot, un-kept landscaping, and outdated signage.
Further, the rear of these buildings show exposed plumbing and electrical
wiring, cracked foundations, peeling paint, and deteriorated building
materials.
On Sierra Way south of 40th Street there is a mixed-use parcel that houses
several rental units and two small businesses. The business structures are
very deteriorated and exhibit signs of obsolescence. The very small
structures have peeling paint, antique signage, and deteriorated exterior
Rosenow Spevacek Group, Inc.
November, 1999
B-8
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
building materials. One of the structures appears to have an unpermitted
addition abutted to the rear. They share a dirt parking lot with the adjacent
residential units that does not allow for adequate ingress/egress. The
residential units are more dilapidated. The multi-residential units suffer
from deterioration including peeling paint, voids in the stucco, and severe
dry rot in the eaves as well as other exposed wood.
The majority of all structures within the Project Area are residential. The
overall condition of the building stock in the Project Area is reflective of
the older age of the housing. According to the 1990 Census,
approximately 46% of the total housing units in the City were constructed
prior to 1960. Given the age of many of the residential units, routine
minor and major maintenance and repair are required to insure the
structural integrity and safety of residential buildings.
Residential units in the area generally bounded by 40th Street to the north,
Electric Avenue to the west, and Mountain View Avenue to the east,
exhibit one of the highest incidences of deterioration in the Project Area.
These "California bungalow" type houses are quite deteriorated, primarily
due to age and lack of maintenance. For example, they have peeling paint,
dry rot, deteriorated roofing, broken windows, voids in the exterior
building materials, and substandard exterior plumbing and electric wiring.
Further, these residential properties have significant outdoor storage, trash,
and other debris accumulating around the properties.
The noncontiguous residential area along 49th Street contains about 8
parcels primarily consisting of abandoned, boarded up buildings, as well
as a large number of units in need of moderate to extensive rehabilitation.
These high density apartments have deteriorated exterior building
materials, peeling paint, broken windows, inoperable vehicles in the
limited parking areas, un-maintained or non-existent landscaping, and
deteriorated fencing and driveways.
Given the age of many of the residential units, routine minor and major
maintenance and repair are required to insure the structural integrity and
safety of residential buildings. In the absence of such repair, deterioration
and dilapidation like that observed in the Project Area can have an
damaging effect on the physical and economic viability of the specific
property, as well as the surrounding area.
(b) LotslBuildings Suffering from Defective Design or Defective Physical
Construction
Buildings, structures, or their additions that are constructed with materials
that do not meet current design or construction standards may be
considered defective in design. Such buildings can present safety hazards,
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November, 1999
B-9
Community Development Commission
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Draft Preliminary Report
CDe 1999-48
be functionally inefficient, or facilitate their own deterioration. Defects
may exist from the moment a given building is completed; or, they may
evolve as uses within the building or within the surrounding buildings
change over time. Conditions of defective design or physical construction
can be manifested in a number of ways. One example is where existing
conditions do not meet modem construction standards established to
ensure the health and safety of building occupants. Such defects may not
technically be code violations (although, most older buildings suffer from
many of these also) but rather deficiencies resulting from evolutionary
improvements in building code standards that have occurred since the
building's construction.
The results of the windshield survey indicate that 25% of the parcels in the
Project Area were observed to have one or more conditions of defective
design or defective physical construction. These include inadequate
vehicular access and loading areas, outdoor storage, and substandard
building materials.
Examples of defective design can be seen in some of the auto repair shops
in the Project Area. These businesses seem to have inadequate storage
area for the number of vehicles currently in the repair facility. In addition,
it appears that parts, storage, and repair often take place in the open
parking areas. Thus, these businesses do not appear to have adequate
building or parking lot space for their current business volume.
Inadequate loading capabilities plague many of the commercial retailers
along 40th Street. One example of this occurred during RSG's land use
survey, when a large semi-truck delivering supplies to a pizza restaurant,
parked in front of a bus stop on 40th Street during delivery. This lack of,
or inadequate loading areas, results in trucks loading and unloading in
parking lots, or the public right-of-way, impeding access to businesses and
restricting traffic flow.
The 40th Street Shopping Center also suffers from inadequate loading
areas. The majority of the complex does not have an adequate loading
area to accommodate a large truck or to allow two vehicles to pass in order
to access other businesses via the narrow access alley.
Towards the north end of the Project Area on the eastside of Sierra Way,
there is a group of businesses that can only be accessed by the alley east of
the street. This provides very poor access, traffic flow and visibility for
these commercial properties, some of which are service oriented.
Furthermore, there are few designated parking spaces for these
establishments.
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November, 1999
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Community Development Commission
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Draft Preliminary Report
CDC 1999-48
There were two residential units without any side yard set-backs. One of
these units is on Mountain View and the other is on 4151 Street. Both of
these units appeared to have unpermitted construction, which did not
provide proper ventilation or light for the structure
There were several residential units, primarily along Mountain View
Avenue, with either no driveway or an unpaved driveway and parking
area. Those units without driveways have no off street parking and thus
would not meet current development standards.
The high-density apartments located on Sonora Drive and Ralston
Avenue, south of 40th Street suffer from excessive lot coverage, which
has caused inadequate parking, poor vehicle access to parking, and little or
no open space. These conditions make these developments less attractive
to tenants and would appear to affect the rental income potential for the
units. The units on Ralston A venue have parking access only from a rear
alley that may increase the potential for crime in the parking areas. These
units, as well as other high-density developments, seem to have only one
off-street parking space per unit, which may be inadequate for most
families and does not meet current City standards.
(c) Faulty or Inadequate Utilities
Faulty or inadequate utilities, is a condition identified under Section
3303 1 (a)(1) of the CRL, which characterizes buildings that are unsafe or
unhealthy for persons to live or work. Buildings served by electrical or
other utilities that are old, constructed inadequately, modified without
proper permits, or otherwise substandard, are considered faulty or
inadequate. These conditions, which include exposed electrical wiring or
excessive concentration of utilities, were documented during the
windshield survey of blighting conditions within the Project Area. Faulty
or inadequate utilities systems often serve as an indicator of health and
safety issues facing building occupants and the area in general.
The results of the windshield survey indicate that 48 properties, (21 % of
parcels in the Project Area), or one out of every five properties, exhibit
faulty or inadequate utilities, or have current violations concerning utility
systems. This condition was present on residential properties located
along Mountain View A venue, south of 40th Street, and on some of the
high-density apartment buildings on Sepulveda Avenue between 44th
Street and 42nd Street. The worst example of this condition is single-
family homes where extension cords go through windows to provide
adequate electrical power.
Rosenow Spevacek Group, Inc.
November, 1999
B-ll
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
Several of the commercial buildings and the office building on the eastern
portion of the 40th Street Shopping Center suffer from exposed wiring.
These buildings have been upgraded by stringing wiring along the exterior
of the buildings. The Center also has examples of exterior plumbing
upgrades where extensive piping systems are exposed at the rear of the
building.
Exposed wiring often occurs when structures as originally designed did
not provide adequate electrical capacity or outlets. In an effort to upgrade
these utility systems, electrical wiring and plumbing are sometimes strung
along the exterior of a building where they are subject to damage due to
adverse weather conditions, accidental dislocation, and vandalism.
Exterior wiring is also a potential safety hazard because of the age of the
work, location, and possible lack of compliance with modem code
standards. Substandard wiring is also an indicator of obsolescence (i.e.,
that the building is approaching the end of its useful economic life).
(d) Serious Code Violations
Violations of local or state building codes are a condition identified under
Section 33031(a) of the CRL, which characterizes buildings that are
unsafe or unhealthy for persons to live or work. Buildings and structures
that do not meet current uniform building requirements, or other local
codes mandated to ensure human health and safety, pose a threat to the
workers, patrons, visitors, and residents of an area.
The City of San Bernardino covers 60 square miles and has a population
of 185,000 (January 1999, State Department of Finance). Because of the
size of the City, code enforcement efforts are, for the most part, limited to
complaint generated enforcement. The majority of the complaints come
from property owners or tenants who observe potential violations in their
neighborhoods. However, due to the fact that code violations are
primarily investigated only if a complaint is filed or observed by staff,
many properties go unnoticed and the true number of total building and
other code violations are likely to be much greater than those reported.
Code enforcement complaints are currently maintained in a computerized
log, which provides updated information on the monitoring of residential
and other structures with code enforcement problems. This information
included years 1997 and 1998, as well as the first six months of 1999.
Code enforcement log data for the Project Area indicates that code
violations have increased by 8% between 1997 and 1998. A total of 32
properties, (or 13.6% of all Project Area properties), were cited with code
violations in 1998. Serious Code Violations have also increased by 8%
between 1997 and 1998. A total of 18 properties, (or 7.6% of all Project
Area properties), were cited with serious code violations in 1998. Serious
code violations involve potential threats to public safety such as illegal
Rosenow Spevacek Group, Inc.
November, 1999
B-12
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
construction, outdoor storageltrash & debris, illegal home occupancy,
building maintenance violations, and violations which are health code and
fire code violations.
According to a City of San Bernardino Senior Code Compliance Officer
familiar with the Project Area, the most significant problem, although not
the most prevalent, is illegal construction. During the windshield survey,
RSG also identified several instances where additions appeared to be
faulty or illegal. The most frequent complaint in the residential areas is
landscape maintenance. Recent concerns for the Code Compliance
Division has been the neglect, and eventual abandonment, of several of the
apartment buildings on 49th Street, east of Sierra Way. This has created a
situation of blight, adversely impacting the neighborhood and project area.
2. Factors that Prevent or Substantially Hinder the Economically Viable
Use or Compatibility of Buildings or Lots
Buildings in the Project Area were noted as having physical factors inhibiting the
economic viability of properties. Indicators of this condition that were frequently
noted are substandard design, lack of parking, and lots and buildings of
inadequate size.
(a) Substandard Design
Substandard design is identified as a factor that prevents or substantially
hinders the economically viable use or capacity of buildings or lots under
Section 33031(a)(2) of the CRL. Substandard design includes
architecture, site layout problems, and other deficiencies involving the
building or parcel that do not meet the contemporary requirements of users
or residents. The results of the field survey indicate that 32% (nearly one-
third of all properties) exhibit conditions of substandard design.
The most obvious characteristic of substandard design in commercial
properties within the Project Area is obsolescence. Although not
technically defined as a blighting characteristic, it is most often a result of
a combination of factors, including the age of a structure, lack of
maintenance and lack of desirable amenities such as parking and tenant
improvements that occurs as contemporary market standards evolve over
time. This condition often occurs as competing newer, more efficiently
designed buildings or developments emerge. The appeal of obsolete
buildings diminishes, as market conditions and consumer preferences
change, or as factors important to the function for which the buildings
were designed change, making the buildings no longer useful in terms of
their original function or purpose.
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November, 1999
B-13
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
As stated above, important factors in determining obsolescence are the
size and design of commercial properties. Along the north side of 40th
Street, several small stand-alone retail stores show signs of deferred
maintenance to extensive rehabilitation. Current market standards make
these small stores less desirable. Further, many of the stores have block
walls or other barriers that inhibit customers from going from store to
store without pulling out on to the busy 40th Street thoroughfare.
The 40th Street Shopping Center is one of the two major retail centers in
the Project Area. The Shopping Center, located on 40th Street between
Waterman Avenue and Lugo Avenue, is 14 acres in size and comprises
19% of the Project Area. Construction began in 1959 and the Center was
completed in 1969 with the addition of the Stater Bros. grocery store. The
original anchor grocery store was destroyed in a fire in the early 1990's.
The building was subsequently demolished and never replaced. Shortly
thereafter, the Center's other anchor tenant, Thrifty Drug, left the Center.
Currently, the Center is 35% vacant. The occupied tenant spaces house
marginal, incidental, small tenants and a low-end discount store (Cheapo
Depot). Given its generally poor condition, the Center will likely continue
to suffer from tenant attrition. The lack of maintenance and investment in
the Center, as well as other factors, have caused its deterioration: poor
access from 40th Street, lack of presence on Waterman, poor internal
traffic circulation, and the presence of trash and other debris. In addition,
the many differing facades result in a lack of Center identification, and the
signage is in poor condition and outdated. Multiple ownership of this
property (the Center is owned by eight different owners) has caused
rehabilitation efforts to be nearly impossible. A recently completed
appraisal of one of the properties in the Center states that the multiple
ownership has prevented anyone owner from obtaining financing for
rehabilitation.
There are two businesses along Sierra Way that appear to be converted
homes now being used as retail or production establishments. Both use
metal storage units as an integral part of their business for either storage
and/or production. The metal containers appear to have more floor area
than the buildings that the businesses are occupying. These businesses
exhibit severe signs of obsolescence. They are too small for current
market standards for retail and the service industry. One of these
commercial properties is in need of substantial rehabilitation, with signs of
severe deterioration, such as deteriorated exterior building and roofing
materials, peeling paint, substandard electrical wiring, dry rot, deteriorated
fencing and an adjacent building that is need of demolition. One business
does not have off-street parking and the other offers only a dirt lot.
Rosenow Spevacek Group, Inc.
November, 1999
B-14
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
At the very northern portion of the Project Area are several businesses that
offer parking only behind their buildings, with no access "between the
individual businesses. The physical layout of this block of businesses is
very outdated for current trends. The individual business spaces are too
small, have limited access to parking, and are either vacant or house
incidental uses. In an area with a perception of high crime and inadequate
public safety services, these buildings have little chance of being used to
their full potential. Further, the facades of these structures are very often
deteriorated and in all cases outdated.
Another indicator of obsolescence was the prevalence of outdoor storage,
which was noted on many commercial properties particularly along Sierra
Way. The storage of construction materials and equipment, or the
presence of other debris around buildings, not only poses health and safety
hazards, but also has the effect of reducing the economic value of
properties and diminishing the potential for a favorable economic return
on the properties. The presence of outdoor storage is also an indicator that
the existing building stock provides inadequate building space for modem
business activity. When outdoor storage areas are unscreened, as in the
Project Area, it contributes to the declining appearance of an area.
The economic value of commercial land in the general area encompassing
the Project Area has gradually declined over the years as the needs of
modem commercial users have intensified, thereby requiring larger lot
sizes and diverse building amenities. Many of the commercial properties
on the west side of Sierra Way, north of 42nd Street, and intermittent
parcels on the north side of 40th Street, exhibit signs of obsolescence.
These properties lack suitable access and convenient parking. Many are
constructed in a manner that prevents adequate provision for truck
delivery, storage, manufacturing, and production space. As a consequence,
this section within the Project Area has a high proportion of vacant tenant
spaces.
(b) Lack of Parking
Other factors, similar to substandard design, can also provide or
substantially hinder the economic viability of uses or capacity of buildings
or lots as identified in Section 33031 (a)(2) of the CRL. Another factor
specific to the Project Area is inadequate parking. Properties that do not
have adequate parking for patrons, employees, or residents, and/or do not
provide satisfactory access for vehicles and pedestrians, experience
diminishing economic value. The field survey results indicate that 30
parcels, or 13% of the properties in the Project Area, do not have the
parking needed to effectively conduct business. It should be noted,
however, that this figure is based upon a field survey in which only gross
deficiencies in parking, such as inadequate on-site and off-site parking
Rosenow Spevacek Group, Inc.
November, 1999
B-15
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
adjacent to a business, were identified. For example, there are two
developments along the western side of Sierra Way, south of 40th Street
that do not appear to have adequate parking. The lots are narrow and
contain several businesses, providing insufficient space for turning around
should all of the spaces be full. These developments do not have alley
access, so all loading must be done in the small narrow parking lots.
Additionally, the strip commercial center to the north of these properties
provides no off-street parking for patrons. Another example of lack of
parking involves a dirt lot that services both a small multi-unit housing
complex and two small businesses. The unpaved lot acts as a dusty front
yard to the housing units while it offers the only parking for these
businesses. In rainy weather this lot may be inaccessible for all vehicles.
Many of the high-density multi-unit developments in the area offer very
limited parking. There is generally not any off street parking for visitors
and only one space per unit for tenants. One space per unit does not meet
current development standards and contributes to the difficulty in renting
the units in these high-density developments. Often this parking it at the
rear of the building, allowing no observation from the units and resulting
in additional opportunities for crime or vandalism to automobiles.
3. Incompatible Adjacent Uses
Section 33031(a)(3) of the CRL states that adjacent or nearby uses that are
incompatible with each other and which prevent the economic development of
those parcels or other portions of the project area are conditions of blight. These
incompatible uses hinder the economic development of the area by causing a
reduction in the proper utilization of the parcel. Incompatible adjacent uses,
where residential properties are directly adjacent to commercial properties, was
noted on ten of the properties, or four percent of parcels within the Project Area.
One example is the area south of 40th Street, between Sierra Way and Genevieve
Street. The alley stretching north and south is the only buffer between the
commercial uses on the east and the housing on the west. Residents are likely
impacted by truck deliveries being made through this alley. In addition, the
residential neighborhood along Ralston Avenue and Sonora Drive is directly
adjacent to the 40th Street Shopping Center. Since the majority of the loading for
the Center occurs on these streets, the residents are impacted by noise and
congestion. Graffiti and loitering were also observed in this area during the field
survey.
The alley is the only buffer between the houses on the south side of 41 st Street and
the retail uses on the north side of 40th Street. Many of these establishments are
fast food restaurants that likely generate significant traffic throughout the evening
hours. Many of them have drive-thru windows that would cause loud residual
noise from the speakers and fumes from the idling traffic.
Rosenow Spevacek Group, Inc.
November, 1999
B-16
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
Also, on Sepulveda Avenue a housing unit exists next to the zero lot line of the
adjacent large commercial development that fronts 40th Street. This commercial
development provides no buffer for the adjacent residential neighborhood.
4. Subdivided Lots of Irregular Form and Shape and Inadequate Size for
Proper Usefulness and Development That Are In Multiple Ownership
Economic dislocation, deterioration, or disuse can result from the prevalence of
lots of irregular form or shape and of inadequate size for proper usefulness and
development. Parcels must be large enough to accommodate the primary
structure, setback areas, parking, and circulation space. Irregularly shaped parcels
frequently occur as a result of a change in the street system or subdivision pattern.
As with the Project Area, such a change can be a result of the construction of
roads that cut across existing subdivisions, causing irregularly shaped remnant
parcels. This is what has occurred between Electric and Mountain View Avenues,
south of 40th Street. A number of residential properties are of inadequate size in
this area. Of the 113 residential parcels in the Project Area, 9 parcels (8%) are
inadequate in size and under multiple ownership.
In order to determine appropriate minimum lot sizes for properties within the
Project Area, the adopted ordinance for commercially zoned properties was
reviewed and analyzed. The results of this review indicate that of approximately
69 commercial parcels in the Project Area, 16 (23%), or nearly one out of every 5
parcels, are inadequate in size and under multiple ownership. These parcels are a
barrier to development because they are frequently difficult or impossible to use
without combining with other parcels. Multiple ownership exacerbates this
problem by complicating land purchases or shared use agreements that would
make these parcels more useful. One of the most severe examples of multiple
ownership is in the 40th Street Shopping Center, which has 8 different property
owners. This has made upgrading and rehabilitating the Shopping Center nearly
impossible. It is extremely difficult to coordinate between property owners to
make necessary improvements to the Center such as improvements to vehicle
access and pedestrian access. In addition, it is impractical for a single individual
owner to finance such a project that would benefit all tenants in the Center.
Due to small lot sizes, coupled with the diversity of ownership, it is unlikely that
the reuse or private redevelopment of deteriorated and obsolete properties would
ever be possible without a land assembly effort. The prevalence of economic
blighting conditions in the Project Area further discourages any prospect of
attracting private sector investment. Even in the unlikely event that two or three
parcels were successfully assembled, these combined parcels would only result in
a site of little more than one acre. Such properties are a barrier to development
because, as stated previously, they are frequently difficult or impossible to use
without combining with other parcels.
Rosenow Spevacek Group, Inc.
November, 1999
B-17
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
A major tool of redevelopment is the power to assemble properties and remedy
ownership problems. Properties can be assembled for recycling to newly
developed properties. Viable uses that need to expand can also be assisted with
an agency's power of assembly.
B. ECONOMIC CONDITIONS THAT CAUSE BLIGHT
The CRL requires that for an area to qualify for inclusion in a redevelopment project area
it must not only exhibit conditions of physical blight, but also must contain and suffer
from economic blight.
To accurately represent existing economic conditions, the Project Area has been analyzed
and information has been gathered from City, County, and private sources to document
the deteriorating economic conditions of the Project Area. The following describes the
economic blighting conditions that are present and contribute to the lack of proper
utilization of the properties within the Project Area.
1. Depreciated or Stagnant Property Values or Impaired Investments
(a) Depreciated or Stagnant Property Values
When assessed values are increasing at a comparable rate to surrounding
areas, such as the City, it is often an indicator of a healthy local economy.
Conversely, if assessed values are declining, especially at a rate greater
than the remainder of the City, or the City as a whole; the area's economy
is likely to be in a state of decline.
In order to examine the health of the real estate market in the Project Area,
trends in secured assessed property values, which include land values and
building improvements for fiscal years 1994-95 through 1999-00, were
analyzed for the Project Area and compared to those for the City and the
County.
Data obtained from the San Bernardino County Auditor-Controller's
office indicates that the total secured assessed valuation in the Project
Area has declined by over 11 % during a six year period, from $42,204,583
in fiscal year 1994-95 to $37,605,723 in 1999-00, compared to a 4.4%
increase City-wide and a 8.5% increase County-wide over the same time
period. This significant decrease in assessed property values in the Project
Area compared to the increases in both the City and the County is an
indicator that the area's economic condition is weak and investment in the
area is impaired. Table 2 below presents the secured valuation for the
Project Area, the City, and the County for fiscal years 1994-95 through
1999-00.
Rosenow Spevacek Group, Inc.
November, 1999
B-18
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
TABLE B-2
ECONOMIC DEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
Comparative Secured Assessed Values, 1994-95 through 1999-00
CHANGES IN ASSESSED VALUATION
Change from
1994.!l5 1995.96 1!l96.!I1 19!IUl8 1998-99 J.99!l.IlO Jtv IOOtt O~
Proposed Project Area $42,204,583 $38,156,984 $38,399,054 $37,708,886 $37,371,781 $37,605,723 -/0.90%
City of San Bernardino $3,353,924,718 $3,374,643,679 $3,396,989,862 $3,424,621,285 $3,467,788,731 $3,501,454,880 4.40%
County of San Bernardino $52,616,134,087 $52,964,717,925 $53,531,875,400 $54,410,823,045 $55,263,360,728 $57,085,428,394 8.49%
Source: TRW Redi-Data MetroScan and San Bernardino County Auditor Controller's Office, 1999.
Note: TRW Redi-Data MetroScan data, not San Bernardino County Auditor Controller's Office data, was utilized in the analysis of
Proposed Project Area secured assessed values.
When property values decline or remain constant over an extended period
of time, such as during the period reported above, property owners have
little incentive to reinvest in their property due to an uncertain return on
their investment. Over an extended period of time, lack of investment,
including maintenance, contributes to the decline of an area and eventual
revenue loss to the City, particularly in commercial areas.
(b) Impaired Investments
Retail Sales Tax Revenues
Stagnation or decline in sales tax revenues is an important indicator of
impaired investments. The majority of the commercial businesses north of
the 30 Freeway are located within the boundaries of the Project Area,
Although Waterman Avenue, rather than Sierra Way, is used as the
primary thoroughfare to the mountain areas, the primary commercial
corridors of the Project Area (Sierra Way and 40th Street) continue to
sustain sufficient traffic levels, and businesses along these corridors
should be successful. Many of the businesses located on these streets have
been unsuccessful in capturing business from a constant traffic flow as
evidenced by the taxable retail sales information reported by the California
State Board of Equalization and data provided by MBIA MuniServices
Company.
RSG compared the taxable retail sales information provided by MBIA for
the Project Area and the same information for the City and County of San
Bernardino between 1993 and 1997, F or this period, the taxable retail
sales in the City and County increased by 9% and 26%, respectively,
Other surrounding cities, including Rialto, Colton, and Redlands have
experienced increases up to 44%. However, the Project Area has suffered
a significant 10% decrease in taxable retail sales for the five-year period.
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Community Development Commission
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Draft Preliminary Report
CDC 1999-48
TABLE B-3
SAN BERNARDINO COMMUNITY DEVELOPMENT COMMISSION
Taxable Sales Trends, 1993 through 1998
1993 1994 1995
Taxable Sales % change Taxable Sales % change Taxable Sales % change
40 Street Project Area 357,981 N/A 337,980 -5.59% 329,678 -2.46%
City of San Bernadino 1,677,978 N/A 1,727,800 2.97% 1,747,319 1.13%
County of San Bernadino 11,131,798 N/A 11,843,466 6.39% 12,482,309 5.39%
City of Colton 391,231 N/A 397,593 1.63% 415,493 4.50%
City of Redlands 434,990 N/A 452,449 4.01% 459,561 1.57%
City of Rialto 325,543 N/A 331,805 1.92% 351,715 6.00%
1993-1997 %
1996 1997 1998 CHANGE
Taxable Sales % change Taxable Sales % change Taxable Sales % change
40 Street Project Area 336,824 2.17% 321,685 -4.49% N/A N/A -10.14%
City of San Bernadino 1,792,467 2.58% 1,827,233 1.94% 1,960,752 7.31% 16.85%
County of San Bernadino 13,126,523 5.16% 14,005,016 6.69% 15,013,657 7.20% 34.87%
City of Colton 410,918 -1.10% 394,069 -4.10% 424,576 7.74% 8.52%
City of Redlands 477,436 3.89% 521,703 9.27% 553,607 6.12% 27.27%
City of Rialto 391,953 11.44% 468,630 19.56% 505,735 7.92% 55.35%
. Taxable Sales percent change from 1993 to 1997.
Source: California State Board of Equalization and MBIA MuniServices Company
The results of the analysis of the State Board of Equalization and MBIA data
presented above indicates that many of the existing retail businesses in the Project
Area are performing below standard with regard to sales. Additionally, the
analysis indicates that significant retail sales tax leakage is occurring as residents
and other business patrons are traveling outside of the Project Area to purchase
goods and services.
2. Abnormally Low Lease Rates
A ~hone survey was performed of local realtors leasing commercial space in the
40t Street Project Area. In general, the realtors stated that the lease rates in the
area were lower than in surrounding communities. One realtor stated that the
average lease rate was $.95 to $1.00 in the area. However, his company currently
offered three 500-square foot offices for $250 per month, or $.50 per square foot.
Another newer building on Sierra Way was leasing commercial space for $.50 to
$.75 per square foot.
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Community Development Commission
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Draft Preliminary Report
CDC 1999-48
One realtor handling the several vacancies in the Lucky's Shopping Center on
Sierra Way stated that a number of spaces available in the Center (ranging from
1,000 to almost 5,000-square feet in size) had been vacant for at least the past
three years. Recently he has tentatively leased some of these spaces because he
has been "aggressively" advertising a lower per square foot lease rate, offered
graduated lease payments and other incentives. Local realtors have indicated that
the Lucky's Center is the "premiere" Center in the area even though there are
extreme difficulties leasing its space.
Many of the higher density apartment buildings in the area are offering "Move-In"
specials. These offers advertise very low first month rent in order to entice
tenants into their complex. The offers were from $0 for the first month's rent up
to a $299 move-in cost. This would seem to demonstrate that these complexes are
in dire need of tenants and need to compete with each other by offering units at or
below cost in order to alleviate vacancies in their apartments. These complexes
all appear to be high-density buildings with few amenities. They vary
significantly in their condition, from a newly rehabilitated complex with a pool to
very deteriorated units and grounds with poor access, little or no open space and
minimal off street parking.
3. High Business Vacancies
High vacancy rates or high turnover rates in businesses provide an indication of
the presence of economic blight. A vacancy survey was conducted in June 1999
as part of the field survey to determine the vacant parcels, buildings, and tenant
spaces within the Project Area. In addition to identifying vacancies during the
field survey, the names and phone numbers of real estate brokers representing the
vacant buildings and/or tenant spaces were noted. These brokers were
interviewed regarding the size of the vacant buildings or tenant spaces, as well as
how long the property had been vacant. The results of the field survey, and
interviews with local real estate agents, indicates that of the 69 commercial
parcels in the Project Area, a total of 16 properties, or 23%, are partially or
completely vacant. Real estate broker interviews and recently completed
appraisals of commercial properties cited the poor condition of the structures,
small tenant spaces, and the perception of criminal activity as primary factors
affecting vacancy in the Project Area.
The majority of the units that were vacant during our June 1999 survey remained
so in late August 1999. This is further evidence of a lack of investment in the
Project Area.
There are several parcels that appear to have been vacant for long periods of time
or are abandoned. On the southeast comer of Sierra Way there are several vacant
or abandoned buildings. One of these buildings has apparently been vacant so
long that there is no longer any evidence of its original use. Another building that
remained vacant during our second survey was previously a restaurant that has
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November, 1999
B-21
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
relocated across the street to a larger site. The last building on the parcel was a
liquor store that seems to have been abandoned, since there is no "For Lease" sign
evident. It has suffered further damage in the intervening months since our initial
survey. The building may be so obsolete and in such bad condition that
demolition is its only option.
What appears to be a prime commercial lot on the northwest comer of Waterman
Avenue and 40th Street does not exhibit a "For Development" sign. This may be
further evidence of the high vacancy rate in the area in that the owner would
rather "hold" this property than try to develop it.
In order to illustrate the magnitude of the commercial/retail vacancy problem, the
field survey data was aggregated to show the vacancy rate of each shopping
center and strip mall in the Project Area (Table 4). As shown in Table 4, all but
one shopping center has vacancies. The centers located at 4276 North Sierra Way
and 4236 North Sierra Way have critical vacancy rates of 89% and 40%,
respectively.
TABLE B-4
ECONOMIC DEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
Shopping Centers and Strip Malls in Survey Area
Tenant
Shonninl! Center Snaces
4276 N. Sierra - Commercial Strip 9
4236 N. Sierra - Commercial Strip 5
40th Street Shopping Center 65
Lucky's Shopping Center 17
171 W. 40th Street - Commercial Strip 8
3990 N. Sierra - Commercial Strip 5
3970 N. Sierra - Commercial Strip 4
Vacant Tenant
Snaces
0/0
Vacant
8
88.89%
2
40.00%
23
35.38%
6
35.29%
2
25.00%
20.00%
o
0.00%
Due to the fact that there are a number of well-developed retail centers within a
fifteen-minute drive of the area, the Project Area has encountered great difficulty
in attracting larger retail businesses. The composition and quality of the existing
retail stock further exacerbates this problem, as very few of the retail centers in
the Project Area contain large enough structures to house a "large" retailer or a
value oriented discount retailer. Because of this, developments in other parts of
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November, 1999
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Community Development Commission
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Draft Preliminary Report
CDC 1999-48
the City not only draw residents out of the Project Area to purchase goods and
services, but also inhibit other national retailers from adding locations in the area.
4. A High Crime Rate That Constitutes A Serious Threat To The Public Safety
and Welfare
According to CRL, "a high crime rate that constitutes a serious threat to the public
safety and welfare" is a condition of economic blight. In order to assess the
impact of crime within the Project Area, information regarding the incidence of
violent and other serious crime reported by the San Bernardino Police Department
for the Project Area was analyzed. As shown in Table 5, the number of serious
crimes reported in the police districts that encompass the Project Area has
increased between 1996 and 1997. Complete data for 1998 was not available.
TABLE 5
ECONOMIC DEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
Crime Statistics for 40th Street Redevelopment Project Area *
YEAR MURDER RAPE ROBBERY A. ASSAULT BURGLARY LARCENY G.T.A TOTAL
1996 0 4 45 43 143 220 93 548
1997 1 4 28 43 108 240 134 558
1998 2 2 26 36 76 179 99 420
1999** 0 1 13 28 50 139 43 274
· - Reporting Districts roughly encompass the following geographic boundaries:
North - 48th Street, South - Parkdale Street, East - Waterman Avenue, West - H Street
.. - Crime Statistics by specific geographic regions for 1999 was only available for the time span of
January 1,1999 to August 31,1999.
These types of crimes can be potential safety threats, negatively impacting
existing businesses in the Project Area, and may discourage business investment
and patronage in the area. This has been confirmed by information gathered from
local real estate brokers. Additionally, appraisals conducted for commercial
properties in the area indicate that crime, and/or the perception of criminal
activity, has negatively impacted the Project Area. Crime represents an additional
cost in conducting businesses, as well as a deterrent to attracting new businesses
to the Project Area. Crimes such as rape, burglary, and assault not only affect
business owners and tenants, but also discourage patronage. Businesses located
in areas perceived to have a crime problem suffer from increased insurance and
other costs as a result of stolen merchandise, fraud, vandalism, or other crimes.
Increases in crime rates may also negatively influence property values in an area
by diminishing the area's desirability. Given the location options within the
competitive market area and the potential threat to personal safety and property,
crime presents a threat to the economic viability of the Project Area.
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Draft Preliminary Report
CDC 1999-48
In the Project Area, according to a Police Department representative residents
have also expressed a concern about aggressive "pan handling" by the homeless
population that resides in the Park just adjacent to the Project Area. During
RSG's land use survey, several persons who appeared to be homeless were
loitering at or around the 40th Street Shopping Center.
When interviewed, a Police Department representative further stated that "this
area used to be one of the nicer areas in the City, although over the past 20 years
the area has declined." He said, "that residents have a perception deteriorating
with higher crime, and decreased public safety."
(a) Gangs and Graffiti
Also detrimental to property values is the presence of graffiti. Graffiti
affects the condition of a property and adds an extra cost and concern to
doing business in communities where it is prevalent. Aside from the cost
and effort of removal, graffiti can also be a detriment to investment and
reinvestment, since it is often a sign of gang activity - a hazard businesses
and residents avoid whenever possible.
During RSG's parcel by parcel survey it was apparent that graffiti was a
chronic problem in the Project Area. There was evidence of painted over
graffiti throughout the area as well as patches of existing graffiti. In a
discussion with a Police Department representative, he acknowledged the
graffiti problem and expressed the City's goal of consistently removing
graffiti as soon as possible. He stated that the problem in the 40th Street
area comes in waves, as does most graffiti, and is predominately done by
taggers who come to an area to "bomb" it (cover it with graffiti). One
tagger crew will follow another and try to "raid the area" by "bombing" it
more severely, by covering the other group's graffiti with their own.
Gangs also use graffiti to claim territory or send other messages. This type
of graffiti is less prevalent in the Project Area. Because of the graffiti
problem, the City's task force of five police officers has recently been
assigned to address the situation. This group of officers targets trouble
spots throughout the City and try to alleviate the graffiti problem. This is
done through education, enforcement, and punishment.
The predominate gang in the area is a white supremacist group that, unlike
most gangs, is not territorial. This gang specializes in burglaries, credit
card fraud, and other crimes detrimental to local merchants. However,
gang enforcement in the western portion of the City has pushed some
Hispanic gangs into the Project Area. While these gangs are more
territorial and therefore visible on the street, their presence in the area is not
strongly established.
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B-24
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
SUMMARY
Due to the age of the buildings in the area and a lack of private investment to maintain or
redevelop property, the Project Area is characterized by both physical and economic blighting
conditions. Properties in the Project Area suffer from deterioration and dilapidation, are of
inadequate size given present market requirements, and are often under multiple ownership. The
Area contains incompatible adjacent or nearby land uses, a prevalence of stagnant property
values, a declining sales, and overall economic maladjustment. These conditions are exacerbated
by the existence, and/or, perception of crime and decreased police services, which not only
threatens the public safety and well-being of residences and businesses, but discourages potential
business patrons from shopping in the area.
The presence of these physical and economic blighting conditions cause a reduction in utilization
of the Project Area to such an extent that it constitutes a serious physical and economic burden
on the community. These conditions have not been, and cannot reasonably be expected to be,
reversed or alleviated by private enterprise, governmental action, or both, without
redevelopment. It is essential that redevelopment tools and powers be available to address these
problems or they will continue to worsen.
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November, 1999
B-25
Community Development Commission
of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
SECTION C
A Determination as to Whether the Project Area is
Predominantly Urbanized
Section 33344.5(c) of the CRL requires a description of the Project Area which is sufficiently
detailed for a determination as to whether the Project Area is predominantly urbanized. CRL
Section 33320.1 (b) defines "predominantly urbanized" as not less than 80% of the land in the
project area: (1) has been or is developed for urban uses; or (2) is characterized by the existence
of subdivided lots of irregular form and shape and inadequate size for proper usefulness and
development that are in multiple ownership; or (3) is an integral part of one or more areas
developed for urban uses which are surrounded or substantially surrounded by parcels which
have been or are developed for urban uses.
Section 33344.5 requires that this Preliminary Report include a description of the following
conditions with respect to the Project Area, which is sufficiently detailed for a determination on
whether the Project Area is predominantly urbanized:
(1) The total number of acres within the Project Area.
(2) The total number of acres that is characterized by the conditions of blight described
in paragraph (4) of Section 33031 of the CRL (the existence of subdivided lots of
irregular form and shape and inadequate size for proper usefulness and development
that are in multiple ownership).
(3) The total number of acres that is an integral part of an area developed for urban uses.
(4) The percent of property within the Project Area that is predominantly urbanized.
(5) A map of the Project Area that identifies the property described in items (2) and (3)
and the property not developed for an urban use.
The Project Area contains a total of approximately 83 acres. All of the 83 acres in the Project
Area are developed for urban uses. Although there are approximately 6.26 scattered acres, or
7.5%, of vacant land, these parcels are an integral part of the Project Area. They are an integral
part of the Project Area because they are surrounded by parcels which are developed. The
Urbanization Maps (Sheets 1 of 5) of the Project Area identify 25 parcels in the Project Area that
are characterized by conditions of blight, as described in paragraph (4) of Section 33031 of the
CRL, which defines lots of irregular shape and inadequate size and development in multiple
ownership. The Project Area meets all requirements of the CRL necessary to be included in a
redevelopment project area.
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Community Development Commission
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Draft Preliminary Report
CDC 1999-48
TABLE C-l
SAN BERNARDINO COMMUNITY DEVELOPMENT COMMISSION
40TH STREET REDEVELOPMENT PROJECT
PERCENT OF 40TH STREET REDEVELOPMENT PROJECT
PROPERTY PREDOMINANTLY URBANIZED
Total No. of Acres in Economic Revitalization Project:
Acres
83
Percent
100%
Total No. of Acres of Inadequately Sized Lots in
Multiple Ownership (Redevelopment
Law Section 33031 (a) (4): (1)
Total No. of Acres of Vacant Land That is an Integral
Part of an Area that is Predominantly Urbanized:
5.15 6.2%
0 0.0%
76.74 92.5%
6.26 7.5%
83 100%
83 100%
Total No. of Acres for Agricultural Uses:
Total No. of Acres that is Developed for Urban Uses:
Total No. of Acres that is an Integral Part of an
Area that is Predominantly Urbanized: (2)
Property that is Predominantly Urbanized:
(I) Includes all properties which are under the minimum lot size requirement and the minimum lot size exception.
(2) All properties, including vacant properties, are considered urbanized since they are within, or are an integral
part of an urban area.
Source: San Bernardino County 1998-99 Assessment Roll and Maps.
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",,,__,,,,'."_"'00
CITY OF SAN BERNARDINO
Proposed 40th street Redevelopment Area
CDC 1999-48
SECTION D
A Preliminary Assessment of the Proposed
Method of Financing the Redevelopment of the
Project Area, including an Assessment of the
Economic Feasibility of the Project and the
Reasons for the Provision of Tax Increment
The Redevelopment Plan authorizes the Commission to finance redevelopment activities with
financial assistance from the City, State of California, Federal government, tax increment funds,
interest income, Commission bonds, donations, loans from private financial institutions, the lease
or sale of Agency-owned property, or any other available source, public or private.
GENERAL FINANCING METHODS AVAILABLE TO THE AGENCY
Redevelopment of the Project Area is proposed to be financed with a combination of a variety of
resources including:
. Financial assistance from the City, State of California, and/or Federal Government;
. Tax increment revenue;
. Commission bonds or other obligations;
. Proceeds from the lease or sale of Commission - owned property;
. Participation in development;
. Any other legally available source; and
. Loans from private financial institutions.
Financial Assistance from the City, State, and/or Federal Government
These funds shall include loans and advances for planning, construction and operating capital for
implementation of the Plan. As available, other funds, such as gas tax funds and Community
Development Block Grants (CDBG), may also be used to pay the costs of project
implementation. The Agency and the City will work together to pursue available grants and
loans to assist with project implementation. The City or other public agencies may also issue
bonds on behalf of the Agency and provide in-kind assistance.
To provide the necessary financial tools to initiate revitalization within the proposed Project
Area, the City has obtained and committed the use of an Economic Development Initiative (EDI)
grant in the amount of $344,000 and has qualified for a $2,295,000 Section 108 Loan from HUD
for the 40th Street Shopping Center. These funding sources will allow the Commission to jump
start revitalization activities prior to receipt of adequate amounts of tax increment revenue begin
to flow to the Project Area.
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Community Development Commission
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Draft Preliminary Report
CDC 1999-48
Property Tax Increment Revenue
The Commission will use property tax increment revenue as provided for in Section 33670 of the
CRL as the primary long term financing mechanism to implement the Plan. Tax increment
revenue may only be used to pay indebtedness incurred by the Commission. Generally,
indebtedness includes principal of and interest on loans, moneys advanced, or indebtedness
(whether funded, refunded, assumed, or otherwise) incurred by the Commission to finance or
refinance, in whole or in part, redevelopment activities.
Tax increment revenues from the Project Area are generally distributed in three ways: (1) to the
housing fund; (2) to affected taxing entities through statutory payments; and (3) to the
redevelopment fund. As required by Section 33334.2 and 33334.3 of the CRL, unless certain
findings are made, twenty percent (20%) of Project Area tax increment revenue is deposited into
the Commission's Low and Moderate Income Housing Fund ("Housing Fund") for the purposes
of improving, expanding, and preserving the supply of affordable housing. Housing Funds may
be used by the Commission, among other things, to defray infrastructure costs directly benefiting
low and moderate income single and multifamily housing, to purchase and write-down the cost
of land, to rehabilitate residential units, to provide assistance for home ownership opportunities
for qualified persons and families, and to subsidize mortgage and rental payments. Section
33607.5 of the CRL requires the Agency to make certain payments to taxing entities that receive
a portion of the property taxes derived from the Project Area. Over the projected 45-year period
in which the Agency is eligible to collect tax increment, approximately 31 percent of the total tax
increment received by the Agency would be paid to affected taxing agencies. After the required
allocation of tax increment to the affected taxing entities and the Housing Fund, the remaining
tax increment revenues will be deposited into the "Redevelopment Fund," and be used to pay for
housing or non-housing programs, including related bond debt service costs. Redevelopment
Fund revenue can also be used to finance the proposed infrastructure and land acquisition efforts
within the Project Area.
Bonded Debt
Under the Plan, the Commission would have the capacity to issue additional bonds and/or notes
or other obligations for any of its corporate purposes, on which the principal and interest are
payable in whole or in part from tax increment revenue. Historically, bonded debt has been an
integral component of any redevelopment agency's financing program to eliminate blight in
redevelopment project areas. In order to advance the redevelopment of the Project Area, the
Commission must be permitted the ability of issuing notes or bonded indebtedness. Financial
analysis of the Project Area's Redevelopment Fund and Housing Fund revenue projections
indicate a capacity to support bonded indebtedness of at least $11 million. In order to
accommodate potential project cost inflation, a total bond limit of $20 million, adjusted annually
in accordance with the Los Angeles-Anaheim-Riverside Consumer Price Index (CPI) for all
urban consumers (where 1982-84 equals 100), published by the Bureau of Labor Statistics of the
U.S. Department of Labor, has been provided for in the Plan. In the event the CPI ceases to be
published, an acceptable replacement index shall be applied. Setting such a bond limit will allow
implementation activities to be maximized even in a high cost inflationary economy.
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Draft Preliminary Report
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Lease or Sale of Agency-Owned Property
If the Commission acquires property within or outside of the Project Area, the revenue generated
by selling or leasing such properties may be used to pay the costs of Redevelopment Plan
implementation.
Participation in Development
The Commission, through the adoption of Owner Participation Rules, will encourage and give
preference to existing owners and businesses to participate in implementing the Plan. Such
participation will typically involve negotiation of an Owner Participation Agreement between the
Agency and owner/business. If the agreements with property owners, tenants and/or other
developers provide for revenues to be paid or repaid to the Agency, such revenues may be used
to pay project costs.
Other Available Sources
Any other loans, grants or financial assistance from the United States, or any other public or
private source will be utilized, as available and appropriate. The Agency will also consider use
of the powers provided by Chapter 8 (Redevelopment Construction Loans) of the CRL to
provide construction funds for appropriate projects. Where feasible, the Agency may use other
types of financing to pay for the costs of public infrastructure, facilities and operations.
PROPOSED REDEVELOPMENT ACTIVITIES AND PROJECT RELATED COSTS
Proposed Redevelopment project costs consist of $16 million for public projects and
improvements, and $10 million for economic development, commercial rehabilitation program,
business expansion and retention program are needed to redevelop the Project Area (Table D-3).
Funds for administration must also be provided and have been estimated at 10% of project costs.
Because projects will commence construction over the next thirty (30) years, significant cost
inflation may occur so some inflation should be anticipated.
As previously stated, CRL requires that twenty percent (20%) of all tax increment revenue be
set-aside for low and moderate income housing programs unless certain findings are made.
Thus, twenty percent (20%) of the total tax increment will be set aside for project costs so this
obligation can be met.
Section 33607.5 of the CRL requires that the Commission remit statutory payments to affected
taxing entities.
Rosenow Spevacek Group, Inc.
November, 1999
D-3
Community Development Commission
Of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
ESTIMATED TAX INCREMENT REVENUE AND BONDING CAPACITY
Table D-l presents a preliminary estimate of the tax increment revenue, which will be generated
from the Project Area over the life of the Plan. In addition to growth anticipated from new
development, the projections assume growth factors for the Project Area ranging from two
percent (2%) to five percent (5%) annually for secured property and one-quarter of one percent
(0.25%) for unsecured property. These factors include provision for rehabilitation,
redevelopment, property sales, and the maximum two percent (2%) growth allowed by
Proposition 13. Although these rates may be exceeded in some years, these are likely to be the
average rates over the next forty-five (45) years.
Table D-l presents the Project Area's projected total tax increment revenue, low/moderate
housing revenue, pass-through payments to affected taxing entities and the remaining revenue
available to fund implementation projects.
Tables D-2 and D-3 provide a bonding capacity analysis of the "remaining revenue" or
Redevelopment Fund available to fund implementation projects. The bond analysis assumes the
following:
a. Bonds are issued in various years as depicted on the tables.
b. Bond terms of:
. 5.00% interest
. Two 30-year fully amortized, and one with 25-year amortization
. 110% coverage factor
The analysis concludes a bonding capacity of approximately $11 million.
Rosenow Spevacek Group, Inc.
November, 1999
D-4
Community Development Commission
Of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
TAB..E [)'1
<<IiI 9relt Rqect PEa fstimml Tax: Irmnet IeIerue Rqeclioos
p - 1- Ga;s fhSrg Ga;s Td;j t<t ClmJl/Ml Td;j
I Rroj ""'" i'lnJej I.IunJ1<I .... Irmrratj T1I< &t t-lrtruirg smtay t-lrtruirg t<t fhSrg &
a YEm "" vaee vaee Itm vaee Irmrnrt P&e ~ REs llru ~ t-lrtruirg t-lrtruirg
"
@I.m IIIBrufu1 1% Al% FIynns -...
y
i- 1999-mJ 43,ll27~
1 2llJ{)1 ~" 1l,118,951 5,4111,lIIIl 7fJJ,7lI 7,fJJ1 PglrqllillnltlllCli\elaxil'OllTBt.nilldla.li'llfiscal)V
2 :m1.(lJ ~. <<l,ffil,7m ~~818 7,7ffi,ZQ 10,147,440 101,474 2l,U 81,100 Z\U ffl,1l!i ffl,1l!i 81,100
3 2Il!OO ~" 5),410.819 ~51~575 ~422,!Hl 18522,!li4 1ff\2Il 37,016 148184 37,016 111,133 172,a22 148184
4 2Xll(J4 ~" ffi, 107,047 ~511,J37 87ffi,E ZJ,'JIJ,477 ZJ51lli 00,1ll 2l\ffil ffi,1ll 177,417 349,4ll 2l\ffil
5 Zl)Iffi 4l\ 7ll,581,OO7 ~544,lffi !ll1,ffIl :n12l,!l'lJ 331,U ffi,2lJ ~tm ffi,2lJ l00,m 548217 aD,tm
6m 9% 74,ffil,321 ~5ffi,lEl l\714,m; J37,141 73,4Jl 2l\712 73,4Jl m,Jl4 7ffi,501 2l\712
7 'JJJ3iJl "" 7873l,4lll ~571,~ <<1,477,116 <<J4,771 OO,!li4 ;m817 OO,!li4 24ZlEl 1,011,l>l ;m817
8 2lO7.(JJ "" al.1lB,112 ~ffi5878 44,427,67ll 444,277 ffi,ffii :l'6,421 ffi,ffii ~ffil 1,277,'JIJ lD,421
9 amm "" ffi,~568 ~tlll,843 48575UlJ 4ff\751 97,lffi :E8501 97,1ffi ZJ1,451 1,'JIJ,E :E8501
10 :mJ-10 "" 91,1421'93 ~613,842 !>!,illl,218 5ZJ,ZJ2 lai,568 423,434 1ai,568 317,575 1,!ll3,% 423,434
11 2)1()'11 ~" !li,568,!ll1 ~f3ll,fJT/ 57,ffiQlIl 575004 11~001 460Cll3 172,!Hl 3Jl,311 ZZM,278 452324
12 2)11-12 ~" 1[J),484,1ll2 ~641,%' (>1,2ll,449 522,934 1:!1,a::e 400,1l3 1<<1,341 :HIm; Z5ffl,:ID 4ffl,651
13 2)12-13 "" 1ai,ffiJ,lEl ~ffi\001 f51,3Jl,7!li 673,378 134,878 5:E)(l2 1581B2 3l9,821 Zffi2,153 514,400
14 2)13-14 '''' 100,m,4Jl ~67Q,1!l2 71,5/Z211 71~7Zl 143,145 5/Z578 174,4ffi 118113 3,Jl1dl7 541,2lJ
15 2)14-15 4l\ 114,1181m ~581,J37 ~975fffJ lffi,757 151,!li1 ffJ1,fffJ 19O,1lB 417,133 3,m/ill 568,007
16 2)1&16 ~" 118ffil,347 ~EIl\578 OO,651,fffJ ~546 161,100 644,437 2l7,5AI 41\917 4,214,:t!l tlll,aal
17 2)16-17 ~" 123,4Jl,681 ~71ZIk5 ff\31~lffi 1:63162 170tm 6ffl,5ZJ Z!\1l12 457,487 4,f511,fJJ1 628119
18 2)17-18 4l\ 1:!l,J37,OCB ~ 7lI, 107 9O,dl7,1lli fJJ2,f517 100,536 772,142 ;!13,J34 478878 5,15),581 1lB,413
19 2)18-19 4l\ 1:n~1lM 5,741,4:!I 9S,41~m !li4,1f51 190,833 763,334 a>2,212 501,121 ~ffi1,fffJ 681,%
20 2)19-2l 4l\ 13884Zm ~7ffi,m Ixrd il&e 1[J),771,187 1,007,712 2)1,542 ~100 ZJ1,917 !>!I,2i3 ~17\3,1Hl lEJ,7!li
21 :mJ-21 ~" 144,1l8 4ll 5,7701f51 1m 1a;,311,283 1,cm,ll3 21Zf519 ffll,714 31?,407 548117 ~rn,335 700,005
22 2)21-22 ~. 1ffi,172,U ~ 784,Sll 11Z 1ZJ,568 1,121,U ZM,2lJ ffJI,rm ;m716 673,321 7,'E!,6ffi 797,!l'lJ
Zl :!l12-23 4l\ 1ffi,179,1oo 5,)gj,ai4 1181ffi,W2 1,181,!ffi 2l3,Jl1 9015,217 345,874 tlll,:ID 7,ffJI,019 B'E,OE
24 W:!I ~" lffl,ffi!,651 ~813,ffi2 172,ffll,i'ffi 1,728,1m :!15,)(l2 002,006 E,17ll 619,637 851~ffi5 !lli,3:E
25 :ll!4-25 J\I> 1ffi,OOO,501 ~&B,1Hl 121,681,283 1,~913 255,E 1,021,511 3ID,lE3 640,547 9,157,2l3 !ll3,'JIJ
26 ;m).25 J\I> 17ll,681,216 ~84Zffi5 1:>',575ffi2 1,:m,1ffi aD,E 1,(1)1,412 1ll,311 6t>1,C84 9,819,283 92/,437
zr :Jll3-21 ~" 1~781,001 ~ffi7,2il 137,810,% 1,37\3,110 275,f5l2 1,1a>,4lll 418Zll 581,aD 10,!ll\551 fRJ,007
2B W-::B ~/o 181,ai4,484 ~871,906 143,009,000 1,43O,9l1 ;H\100 1,144,7ffi 437,!Rl 707,100 11,21O,ffil ffi\1I7
2J :ml-ZJ ~" 183,4ffi,118 ~!ll3,!ffi 148~:E4 1,4ff\454 'E!,0l1 1,Iffi,E 457,725 730,637 11,911,'E! 1,W,725
II dL!:l3J J\I> 1!l2,(B),)(l2 ~901,Jl1 154,154,581 1,541,547 Jl\3ll 1,;m237 478338 754,1lB 1Z~1f51 1,cm,179
31 :!:ID31 J\I> 197,843,123 ~91~m; 100,931,568 1,a::e,319 319,ffi! 1,219,4ffi 5ll\009 773,JiJ 13,400,523 l,cmm
32 2l31-J2 J\I> 2ll,77\3,416 5,93),845 1ffi,lll1,912 1,1'ffl,819 331,764 1,32l,m; 5l4,1lB 7!l2,1l7 14,J)1,919 1,1:!1,1ffl
33 :m13l ~" 2)9,9l1,YOO 5,915,673 17Z010,121 1,m,101 344,ffil 1,3713,031 651,074 81ZOO7 15,073,925 1,156W
34 2l33-34 ~" 21~Iffi,5l2 ~96Q,517 178321,739 1,783,217 :moo 1,425574 004,370 !rn,2J4 15,~13J 1,100.847
1) ZJ34.J) '" 22Zf514,178 ~~4:E 184,522,ZJ6 1,848Zll llJ,845 1,478578 ~573 1:63am 16,lffi,133 1,22ZfffJ
36m ~" 229,l>l,403 5,fffJ,377 191,517,400 1,91~175 Jl3,tm 1,~140 ffil,7fJJ 874,430 17,833,!ffi 1,257,4ffi
Jl lffiJ7 J\I> 2l\213,tm 6,Offi,E 1ll\413,1Hl 1,004,131 118825 1,58l,lE OOO,Bll ~400 18511,~ 1,2l\3l2
3B 2l37-38 J\I> ;!I3,372,1Hl 6,ffil,JiJ ~51~ 132 Zrn;,151 411,cm 1,644,121 rn,fm 919,Zll 19,449,283 1,330,2i3
II 2l38-ll J\I> 23),621,749 6,tm,417 21Z8ZJ,846 ZI:!l,2I1 425,fffJ 1,7a>,611 7OO,0J) 9I2,611 2l,391,915 1,:E8ZJO
() 2l39<<J '" 2l\ 1<<1,401 ~(ll),fiE 22O:m58l Z2ll,6li 440,7lI 1,762909 ~171 9ffi,739 21,338,ffi2 1,407,4ffi
41 2m41 J\I> ~ffi!,613 ~065,tm 728,172,925 ZZJ1,229 4ffi,246 1,l@,lE3 833,416 9l1,ffil 72,:Hl,m 1,447,814
'i2 2J41-42 '" 2l3,ffi1,152 ~(BJ,i'ffi 2l3,114,f3ll Z331,I46 472,229 1,1H\917 871,776 1,017,141 23,3f51,331 1,400,370
43 2J42.43 ~. :llI,07\3,OO5 ~(Ri,mJ :!I4,~ffi! Z443,457 400001 1,!li4,765 911,283 1,()13,430 :!I,410,842 1,~172
44 2J43-44 J\I> ZJQ,519,ZJ6 ~111,2l8 2;Zll23,213 Z5Jl,212 fiE,846 Zlll2,ffil GJ1,977 1,0lQ1DJ 2>,481,4ffl 1,57ll,255
45 2J4445 J\I> 2ll,255,475 ~125,516 251,651,67ll Z615,547 tml00 Z(RJ,437 fll3,008 1,1Il\549 25,!l'lJ,o:D 1,621,1lB
Td;js 23,~065 ffi,183,ffil 11,1lI\1l12 44,140,17ll 17,550,170 25,5IJ)o:D 37,615,1l12
- ------------- -~
t<t Aesa1 vaee (I:mD rn a 6%o:Iun) 11,57ll,1lB Z45l121 9,81Z4ll3 3,4lli,177 6,347,:rn 81DO,4Jl
Rosenow Spevacek Group, Inc.
November, 1999
D-5
Community Development Commission
Of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
BONDING CAPACITY ANAL YSIS INCLUDING HOUSING FUNDS
San Bernardino Economic Development Agency TABLE 0-2
Proposed 40th Street Project Area
Plan Fiscal I Net Debt Issuance Reserve Net Bond Total Bond Coverage Interest 5 I Surplus
Year Year I Tax Issued Costs Funds Proceeds Debt Service Debt Ratio on Reserves! Resources
Increment Service
5% 1.5% 10% 1.10 5% !
BY 1999-200
1 2000-01 0
, 2002-03 81,180 0 81,180
3 2002-03 148,184 0' 148,184
4 2003-04 236,556 01 236,556
5 2004-05 265,036 0, 265,036
6 2005-06 293,712 01 293,712
7 2006-07 323,817 4,525,327 67,880 452,533 4,004,915 294,379 294,379 1.10 22,627 52,065
8 2007-08 355,421 294,379 1.21 22,627 83,669
9 2006-09 388,601 294,379 1.32 22,627 116,848
10 2009-10 423,434 i 294,379 1.44 22,627 151,681
11 2010-11 452,324 I 294,379 1.54 I 22,627 180,571
12 2011-12 482,654 - 294,379 1.64 i 22,627 210,901
13 2012-13 514,496 ; - 294,379 1.75 22,627 242,744
14 2013-14 541,258 , 294,379 1.84 22,627 269,506
15 2014-15 569,087 294,379 1.93 22,627 297,335
16 2015-16 598,026 3,626,366 54,395 362,637 3,209,334 235,900 530,279 1.13 40,758 108,505
17 2016-17 628,119 530,279 1.18 40,758 138,599
18 2017-18 659,413 530,279 1.24 40,758 I 169,892
19 2018-19 691,955 530,279 1.30 40,758 I 202,434
,"'"
I.~
..,,, 2019-20 725,795 2,500,000 37,500 250,000 2,212,500 177,381 707,660 1.03 53,258 71,393
21 2020-21 760,985 707,660 108 53,258 106,583
" 2021-22 797,580 i 707,660 1.13 53,258 143,178
23 2022-23 835,635 ! 707,660 1.18 53,258 181,233
" 2023-24 865,338 i 707,660 122 53,258 210,936
25 2024-25 , 895,930 707,660 1.27 53,258 241,528
,. 2025-26 927,437 - - 707,660 1.31 53,258 273,035
27 2026-27 ! 959,887 - 707,660 1.36 53,258 305,485
" 2027-28 993,307 - - , 707,660 1.40 53,258 338,905
" 2028-29 1,027,728 - - , 707,660 1.45 53,258 373,326
3Il 2029-30 1,063,179 ! 707,660 1.50 53,258 408,777
31 <UOU-01 I 1,U"o,au ! 707,660 1.54 03;258- -438,818
32 2031-32 i 1,124,160 TOTAL BONDING 707,660 1.59 53,258 469,758
33 2032-33 ' 1,156,027 CAPACITY 707,660 1.63 53,258 501,625
34 2033-34 1,188,847 $10,651,693 , 707,660 1.68 53,258 534,445
35 2034-35 1,222,650 FUNDS REMAINING , 707,660 1.73 53,258 568,248
36 2035-36 , 1,257,465 $16,196,736 707,660', 1.78 53,258 , 603,063
!
37 3036-37 , 1,293,322 (includes funds available after 707,660 1.83 53,258 638,920
38 2037-38 1,330,253 debt service and interest on 707,660 188 53,258 675,851
39 2038-39 1,368,290 reserve funds) ; 707,660 193 53,258 713,888
40 2039-40 1,407,465 , 707,660 1.99 53,258 753,063
41 2040-41 1,447,814 i i 707,660 2.05 53,258 793,412
" 2041-42 1,489,370 707,660 2.10 I 53,258 834,968
43 2042-43 1,532,172 707,660 2.17 53,25831 877,770
" 2043-44 1,576,255 707,66~1 2.23 53,258 921,853
45 2044-45 1,621,659 707,660 2.29 53,258 967,257
Totals 37,615,042 10,651,693 159,775 1,065,169 9,426,748 707,660 23,169,700 1,751,394 16,196,736
Rosenow Spevacek Group, Inc.
November, 1999
D-6
Community Development Commission
Of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
BONDING CAPACITY ANAL YSIS OF PROJECTED NET TAX INCREMENT REVENUE (NET OF HOUSING)
San Bernardino Economic Development Agency TABLE D-3
Proposed 40th Street Project Area
Plan Fiscal I Net Debt Issuance Reserve 1 Net Bond Total Bond Coverage Interest Surplus
Year Year Tax Issued Costs Funds ! Proceeds Debt Service Debt Ratio on Reserves Resources
Increment Service
, (net of housing) 5% 1.5% 10% 1.10 5%
BY 1999-2000 I -
1 2000-01 I - O! I I
2 2002-03 60,885 O! 60,885
3 2002-03 111,138 01 I 111,138
. 2003-04 177,417 0 i 177,417
, 2004-05 198,777 I 0 198,777
6 2005-06 220,284 0 220,284
7 2006-07 242,863 3,393,995 50,910 339,400 3,003,686 220,784 ' 220,784 1.10 16,970 39,048
8 2007-08 266,566 220,784 1.21 16,970 62,752
9 2008-09 291,451 220,784 1.32 16,970 87,636
10 200!l-10 317,575 220,784 1.44 16,970 113,761
11 2010-11 337,323 220,784, 1.53 16,970 133,508
12 2011-12 358,055 220,7841 1.62 16,970 154,240
13 2012-13 I 379,820 220,784' 1.72 16,970 176,006
14 2013-14 398,113 220,784 180 : 16,970 194,299
15 2014-15 417,136 220,784 1.89 I 16,970 213,322
16 2015-16 436,917 2,557,627 38,364 255,763 2,263,~00 I 166,377 387,162 1.13, 29,758 79,513
17 2016-17 457,487 I 387,162 1.18 ! 29,758 100,084
18 2017-18 478,878 - 387,162 1.24 29,758 121,474
19 2018-19 501,121 - 387,162 1.29 29,758 143,718
I I
(DobIlulIl 200,~0 1
Umitl;ll 201!l-20 524,253 2,000,000 30,000 1,770,000 141,905 529,067 0.99 39,758 34,944
21 2020-21 548,307 529,067 1.04 39,758 58,998
22 2021-22 573,321 529,067: 108 39,758 84,012
23 2022-23 599,333 529,067 1.13 39,758 110,025
24 2023-24 619,637 ! 529,067 1.171 39,758 130,328
25 2024-25 640,547 I - - 529,067 1.21 39,758 151,239
26 2025-26 662,084 I - - 529,067 1.25 39,758 172,775
27 2026-27 684,265 ' I 529,067 1.29 39,758 194,956
28 2027-28 707,109 I - : 529,067 1.34 39,758 217,801
,
29 2028-29 730,637 529,067 1.38 39,758 241,329
30 202!l-30 754,869 529,067 1.43 39,758 265,561
31 2030-31 , 773,356 529,067 1.46 39,758 284,048
32 2031-32 792,397 529,067 150 39,758 303,088
33 2032-33 812,007 529,067 153 39,758 322,698
" 2033-34 832,204 , I 529,067 1.57 39,758 342,895
" 2034-35 853,006 ' 1 529,067 1.61 39,758 363,697
, TOTAL BONDING
36 2035-36 874,430 CAPACllY 529,067 1.65 39,758 385,122
37 3036-37 896,496 $7,951,623 308,282 2.91 39,758 627,972
38 2037-38 919,223 FUNDS REMAINING 308,282 2.98 39,758 : 650,699
39 2038-39 942,630 $12,581,097 308,282 3.06 39,758 I 674,106
40 2039-40 966,738 (includes funds available 308,282 3.14, 39,758 698,214
41 2040-41 991,568 after debt service and 308,282 3.22 I 39,758 723,044
42 2041-42 1,017,141 I Interest on reserve funds) 308,282 3.30 39,758 748,617
43 2042-43 1,043,4~ I I 308,282 3.38 39,758 774,956
.. 2043-44 1,070,609 I i 308,282 3.47 39,758 802,084
" 2044-45 , 1,098,549 308,282 3.56 39,758 830,025
Totals 26,580,000 7,951,623 119,274 795,162 7,037,186 529,067 15,304,376 1,305,473 12,581,097
ASSESSMENT OF THE ECONOMIC FEASIBILITY OF THE PROJECT
A list of the currently identified proposed redevelopment projects is presented in Table E-1 of
this Preliminary Report. The total proposed project costs to be paid by the Commission are
estimated to be approximately $28.9 million, including administrative costs. In order to
adequately assess the economic feasibility of the Project, the total proposed program/project
costs have been compared with the tax increment calculations shown on Table D-1. The project
feasibility analysis presented on Table D-4 indicates that approximately $55.2 million of tax
increment will be generated by the Project. Of this amount, approximately $17.6 million is
Rosenow Spevacek Group, Inc.
November, 1999
D-7
Community Development Commission
Of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
required to be set aside for low and moderate income housing and $1 1 million must be allocated
to the statutory pass-through payments to affected taxing agency pursuant to Section 33607.5 of
the CRL. The remaining $26.6 million will be available to pay for Agency projects. As show on
Table D-4 there appears to be a short fall in need project funding of approximately $2.3 million.
However, as stated previously, the City has obtained and committed the use of an Economic
Development Initiative (EDI) grant in the amount of $344,000 and has qualified for a $2,295,000
Section 108 Loan from HUD for the 40th Street Shopping Center. These funding sources will
allow the Commission to jump start revitalization activities prior to receipt of adequate amounts
of tax increment revenue begin to flow to the Project Area and make up for the estimated
shortfall in Project revenue.
As stated above, Table D-l indicates that the Housing Fund is projected to receive approximately
$11 million over the life of the Plan. The Agency intends to use these funds citywide to improve
and expand low and moderate income housing opportunities
THE TAX INCREMENT PROJECTIONS USED IN TABLES D-l ARE SOLELY TO
DEMONSTRATE TAX INCREMENT POTENTIAL AND SHOULD NOT BE USED TO
SIZE BONDS OR PROJECT ACTUAL FUTURE INCREMENT.
Table D-4 below presents a summary of the project costs, tax increment revenues projected to be
available, and a finance plan. The finance plan shows that there is estimated to be sufficient
revenue to cover costs and, therefore, the project is economically feasible.
TABLE D-4
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO
40TH STREET REDEVELOPMENT PROJECT AREA
PROJECT ECONOMIC FEASIBILITY
TAX INCREMENT REVENUE A V AILABLE TO SUPPORT
NON-HOUSING PROJECTS
Total Tax Inrement Revenue
Less Low/Moderate Housing Fund Set Aside
Less Mandatory Pass Through Payments
Total Net Tax Increment to Fund Non Housing Projects
NON-HOUSING PROJECT/PROGRAMS
In 1999 Dollars
$55,183,020
$11,035,042
$17,560,170
$26,587,807
Economic Development Projects
Public InprovementslFacilities Projects
Subtotal
Administrative Costs @ 10%
Total Non-Housing Project/Program Costs
Net RemainingTax Increment Revenue for Non-Housing Projects
$10,000,000
$16,300,000
$26,300,000
$2,630,000
$28,930,000
($2,342,193)
Rosenow Spevacek Group, Inc.
November, 1999
D-8
Community Development Commission
Of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
REASONS FOR THE PROVISION OF INCREMENT REVENUE
The provision of tax increment revenue must be included in the Redevelopment Plan because
other sources are not available or are insufficient to finance the costs of redevelopment of the
Project Area. Utilization of tax increment financing for this Project will provide the resources to
develop a consistent and directed approach to activities and programs needed to eliminate blight,
provide for the improvement of infrastructure, and aid in the expansion of the Project Area's
economic base. It is commonly agreed that when adverse conditions are not addressed, the
resulting physical and financial impacts imposed by these conditions will exacerbate the existing
blighting conditions. It will cause serious economic hardships and undue disruption of the lives
and activities of people working in the Project Area and the City.
Since both federal and state governments are under extreme budgetary shortfalls, it is extremely
clear that federal and state assistance in providing funding for necessary public infrastructure
improvements and facilities cannot be reasonably expected. The City does not currently have or
expect to have the available financial resources to fund the magnitude of improvements
necessary to reverse the adverse conditions present in the Project Area. In fact the City has
identify federal grant monies that will be dedicated to initiating this Project. Other financing
programs available to the City, such as assessment districts, may not be workable for the type
and amount of improvements required. Assessment districts could impose such detrimental
financial burdens that area businesses and potential developers would be unable to bear such
costs. As indicated by the blighting conditions, which can be found throughout the Project Area,
property owners do not have the resources to maintain their properties, much less rehabilitate
them. In instances where re-parcelization needs to occur, the Commission's powers and
financing will be necessary. Therefore, it cannot be reasonably expected that private enterprise
acting alone would have the means to accomplish redevelopment of the Project Area. Without
the provision of tax increment revenue financing, sufficient revenue would not be available to
fund the needed programs and improvements.
Rosenow Spevacek Group, Inc.
November, 1999
D-9
Community Development Commission
Of the City of San Bernardino
Draft Preliminary Report
CDC 1999-48
SECTION E
A Description of How the Proposed Projects to be
Pursued by the Commission Will Improve or Alleviate
Physical and Economic Conditions in the Project Area
The Commission will encourage the following proposed projects in order to alleviate and prevent
the reoccurrence of blighting conditions throughout the Project Area. The Commission proposes
to implement redevelopment activities envisioned in the Plan through commercial and residential
revitalization activities. These projects include: I) economic development, 2) public
infrastructure improvement, and 3) low and moderate income housing. The Commission's list of
projects and their respective costs are summarized in Table E-I. The blighting conditions, which
will be alleviated, are discussed below.
ECONOMIC DEVELOPMENT PROGRAMS
Economic development programs are needed to improve the Project Area's economic base.
Commission staff will pursue reuse, redevelopment, and revitalization of nonconforming, vacant
or underutilized properties through marketing of the area and encouragement of private sector
investments. The initial focus may be on the revitalization of the neighborhood commercial
centers on 40th Street and Sierra Way. Proposed projects may include attracting a "Big Box"
retailer, remodeling the shopping centers and enlarging existing retail stores.
Another component may be the implementation of a commercial rehabilitation program, in the
form of grants and/or low interest loans to businesses. This program would involve upgrading
outdated facades and enlarging commercial space to better meet today's market trends. This
program would also assist property owners and businesses in replacing deteriorated signs, and/or
signs, which do not meet current City codes.
In order to support the economic development and commercial rehabilitation programs, the
Commission proposes a proactive Business Expansion and Retention Program that would
encourage new businesses to locate within the boundaries of the Project Area and assist in the
retention of existing businesses. This program would market the area to prospective businesses,
while also assisting existing businesses to remain in the Area or to expand by offering technical
assistance as well as commercial rehab. By marketing an array of redevelopment tools, which
could include land assembly, acquisition and site preparation activities, and commercial
rehabilitation, this program would provide incentives for businesses to relocate to the area.
The economic development program is aimed at eliminating blighting conditions, including
deterioration, defective design, substandard design, lack of parking, high vacancies, and small lot
sizes. In addition, rehabilitation and modernizing of the building stock in this area would reverse
economic blighting conditions, including declining property values and sales tax revenues, in
order to enhance the economic viability of commercial properties. The Business Expansion and
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Retention component would market the area, inviting prospective businesses to locate in the area
and assist existing businesses in remaining in this revitalized area.
PUBLIC INFRASTRUCTURE IMPROVEMENT PROGRAM
The Commission has identified a number of public improvement projects, which would eliminate
deficiencies in the existing infrastructure system. Through public investment in infrastructure
the Commission hopes to stimulate private sector activity in the Project Area. They generally
include street and alley reconstruction, as well as streetscape, signalization, drainage and flood
control improvements.
One proposed program would improve traffic circulation by widening the two major
thoroughfares, 40th Street and Sierra Way, and provide maintenance at regular intervals for the
majority of streets in the Project Area. Streetscape improvements would provide upgrades in the
lighting system, add disabled access ramps at intersections, and install landscaping in the right-
of-way. The Signalization Improvement program would interconnect traffic signals along 40th
Street for better traffic flow, and install new traffic signals at major intersections in the Project
Area.
Storm drain improvements along Sepulveda and Mountain Avenues would address storm drain
inadequacies that may pose a potential flooding problem. Other projects may be needed to
efficiently accommodate storm water flow throughout the Project Area. Existing sewers in the
Project Area are in need of replacement, rehabilitation, and upsizing of lines to efficiently
accommodate flow. For example, sewer system improvements are also needed along Sierra
Way.
The public improvements projects would upgrade the traffic circulation, allowing better access
for emergency vehicles, improved traffic flow for shoppers and residents in the Project Area.
Street lighting and other streetscape improvements would improve the overall appeal of the area
while also increasing the public's perception of safety as they shop in well-lit areas. Streetscape
improvements would improve the overall quality of the physical environment and encourage
private sector investment. Finally, drainage improvements would provide increased capacity and
increased service to the properties in the Project Area.
LOW AND MODERATE INCOME HOUSING PROGRAM
The Commission is required to set aside not less than 20 percent of the tax increment revenue
generated by the Project into a special Low and Moderate Income Housing Fund. These funds
are to be used to increase, improve and preserve the supply of low and moderate income housing
in the community.
The Commission's housing program may include one or more of the following components: 1) a
residential rehabilitation loan program; 2) a residential rehabilitation grant program; 3) a
residential acquisition and rehabilitation program; 4) property acquisition assistance for qualified
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homebuyers; 5) residential loan assistance; 6) assistance in the construction of new residential
dwelling units; and 7) development of senior housing.
The Housing program will assist very low, low and moderate income persons in rehabilitating
their property and alleviating physical blighting conditions such as deterioration. In addition, the
Commission may provide affordable housing opportunities to prospective qualified homebuyers.
By implementing these and other projects to abate the blighting conditions affecting the Project
Area, the public sector will signal its confidence in the area and provide a catalyst for private
investment and reinvestment.
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TABLE E-l
SAN BERNARDINO 40TH STREET REDEVELOPMENT PROJECT
PROPOSED PROJECTS AND
PUBLIC INFRASTRUCTURE IMPROVEMENTS
ECONOMIC DEVELOPMENT PROJECTS
Cost in 1999 Dollars
Economic development programs are needed to improve the Project Area's economic base, and
these programs would facilitate the revitalization of blighted properties by using redevelopment
tools. Costs are in 1999 dollars. The Commission staff will pursue reuse, redevelopment, and
revitalization of nonconforming, vacant or underutilized properties through marketing of the
area, and encouragement of private sector investments. Potential projects include but are not
limited to:
1. Lucky Shopping Center Project: Expansion of the Lucky's located on Sierra Way.
This Project would include removal of several retail structures, as well as enlargement
and integration of the structures to the north into the existing market.
2. 40th Street Shopping Center Project: Envisions the western portion of the Center
redeveloped with a high-volume retail use and rehabilitation of the existing market.
Another aspect of the Economic Development Program is the implementation of a commercial
rehabilitation program. This program would provide assistance, in the forms of grants and/or
low interest loans, to businesses in the Project Area to encourage and assist in restoring,
modernizing, and improving commercial structures. The reinvestment in the business
community would include far;ade improvements, rehabilitation of deteriorated buildings, and
signage upgrades.
To support the commercial and economic program, the Commission proposes a proactive
Business Expansion and Retention Program that would encourage new businesses to locate
within the boundaries of the Project Area, and assist in the retention of existing businesses. This
investment in the business community may include expanded marketing of the area, advertising
the area to potential customers and clients, improvements to business facilities to meet the needs
of today, and other actions to stop sales tax leakage.
$10,000,000
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PUBLIC IMPROVEMENTS PROGRAM
The Commission has identified a number of public improvement projects, which would eliminate
deficiencies in the existing infrastructure system. Through public investment in infrastructure
system improvements, the Commission hopes to stimulate private sector investment in the
Project Area. They generally include improvements to: 1) traffic circulation (to improve traffic
flow, provide greater accessibility for emergency vehicles and eliminate safety hazards); 2)
streetscape; 3) signalization 4) storm drain and flood control and 5) sewers.
Traffic Circulation:
1. Widen 40th Street from Acre Lane to Electric Avenue in order to provide a curb-
to-curb distance of 72' and a right-of-way width of 100'. Includes right-of-way
acquisition.
$2,000,000
2. Widen 40th Street from Mountain View Avenue to Waterman Avenue to provide
a curb-to-curb distance of 72' and a right-of-way width of 100'. Includes right-of-
way acquisition.
$2,500,000
3. Slurry seal Mountain View Avenue, Genevieve Street, Lugo Avenue, Sepulveda
Avenue, Leroy Street, 41st Street, 42nd Street, 49th Street and unnamed alleys at
10 year intervals.
$250,000
4. Rehabilitate pavement on Sierra Way at 20-year intervals.
$300,000
5. Rehabilitate pavement on 40th Street at 20-year intervals.
$300,000
6. Rehabilitate pavement on Waterman Avenue at 20-year intervals.
$150,000
7. Rehabilitate pavement on Electric Avenue at 20-year intervals.
$100,000
8. Rehabilitate pavement on Mountain View Avenue, Genevieve Street, Lugo
Avenue, Sepulveda Avenue, Leroy Street, 41st Street, 42nd Street, 49th Street and
unnamed Alleys at 20-year intervals.
$500,000
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Streetscape Improvements:
1. Install landscaping in Electric Avenue right-of-way of from 34th Street to 50th
Street.
$510,000
2. Upgrade street lighting system.
$200,000
3. Install new disabled access ramps and upgrade existing non-conforming ones at
intersections.
$50,000
Si2nalization Improvements:
1. Upgrade traffic signal at intersection of Electric Avenue and 40th Street.
$100,000
2. Install new traffic signal at Waterman Avenue and 48th Street.
$150,000
3. Interconnect traffic signals along 40th Street between Kendall Drive and
Waterman Avenue.
$200,000
Storm Drain and Flood Control Improvements:
1. Comprehensive Storm Drain Plan No. 7-B23 in Sepulveda Street and Sierra Way.
$2,290,000
2. Comprehensive Storm Drain Plan No. 7-B22 in Mountain View Avenue.
$1,300,000
3. Comprehensive Storm Drain Plan No. 7-DI in Mountain View Avenue and "H"
Street.
$2,300,000
4. Comprehensive Storm Drain Plan No. 7-B25 in Waterman Avenue.
$1,600,000
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Sewer System Improvements:
1. Upgrade sewers in Sierra Way, 34th Street, "1" Street and "H" Street to remove
deficiencies identified in the 1982 Sewer Master Plan study by Currie
Engineering.
$1,500,000
Total $16,300,000
LOW AND MODERATE HOUSING PROGRAMS
The Commission is required to set aside not less than 20 percent of the tax increment revenue
generated by the Project into a special Low and Moderate Income Housing Fund. These funds
are to be used to increase, improve and preserve the supply of low and moderate income housing
in the community.
$11,000,000
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APPENDICES
CDC 1999-48
APPENDIX A
INFORMATION SOURCES
This analysis, and the assessment of the blighting conditions found within the Project Area, is
based upon the following:
1. A windshield survey of the properties within the Project Area conducted during May and
a follow-up survey during September of 1999 by RSG, redevelopment consultants to the
City.
2. Information and data contained in the report from National Decision Systems, a division
of the VNU Precision Marketing Group, Inc.
3. Information and data contained in the Inland Empire Consultants, Inc., land lease analysis
of a site in the 40th Street Shopping Center, December 1997.
4. Information contained in the 108 Loan Application to the U.S. Department of Housing
and Urban Development for the 40th Street Shopping Center in November 1994.
5. Information contained in the appraisal report of a portion of the 40th Street Shopping
Center by Gottfried, Gamble & Associates, Inc., April 1996.
6. Retail sales data obtained from the State Board of Equalization, 1994 through 1997.
7. Retail sales data from MBIA MuniServices Company, 1993 through 1998.
8. Parcel ownership, sales, and secured assessed valuation data from MetroScan Information
Service, derived from the most recent assessment roll of the County of San Bernardino
Assessor's Office.
9. Crime statistics from State of California Department of Justice - Bureau of Criminal
Information and Analysis, Criminal Justice Statistics Center.
10. Information provided by the City of San Bernardino.
While RSG believes all information sources to be reliable, it is not responsible for the accuracy
of data provided by such sources.
CDC 1999-48
APPENDIX B
PROJECT AREA PHOTOGRAPHS
CDC 1999-48
SUMMARY OF PHOTOGRAPHS
I.
2,3.
4,5,6.
7.
8.
9.
10.
II.
12.
13.
14.
15.
16.
17.
18.
19,20.
2I.
22.
23.
24.
25.
26,27.
28.
29.
30.
3I.
32.
33.
34.
35.
36.
37.
38.
39.
40.
4I.
42.
43.
Limited ingress/egress
Poor vehicle circulation
Vacant/boarded up buildings
Trash and debris
Graffiti
Trash container without closure
Outdoor storage, deteriorated fencing
Deteriorated eaves and roofing materials
Exposed wiring (birds nest in switch box)
Condemned residential unit
Faulty addition, deteriorated exterior building materials
Shopping Center with uneven grade creating parking deficiencies and traffic safety
Issues.
Boarded up commercial building
Graffiti, deteriorated parking surface, no trash enclosure
Deteriorated roofing and substandard exterior building materials, exposed wiring,
debris
Outdoor storage
Missing foundation, outdoor storage
Vacant residential unit, debris
Substandard exterior building materials, no trash enclosure
No off street parking or adequate unloading facilities
Deteriorated exterior building materials and roofing
Deteriorated exterior building materials
Vacant commercial unit, broken windows, exposed wiring, deteriorated exterior
building materials
Outdoor production, substandard signage
Boarded up, vacant commercial building
Vacant commercial center
Inadequate loading
Deteriorated exterior building materials, obsolescence
Inadequate access
Exposed wiring, deteriorated roofing and building materials, outdoor storage and
production
Exposed wiring
Buckled foundation
Deteriorated exterior building materials, outdoor storage
Trash and debris
Vacant boarded up commercial building, exposed wiring
Vacant commercial unit, broken window
Vacant commercial units, inadequate drainage
Voids in exterior building materials, substandard exterior plumbing
(a)
CDC 1999-48
44. Trash and debris, no trash enclosure
45. Inadequate loading/access
46. Exposed utilities
47. Deteriorated exterior building materials, exposed wiring
48. Deteriorated foundation
49. Exposed wiring
50. Faulty addition
F: \rsg\sanber\40thSt\pictures\summaryofphotos
(b)
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Photograph 1: APN: 0154-452-38
Photograph 2: APN: 0154-452-46
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Photograph 3: APN: 0154-452-45
Photograph 4: APN: 0154-462-13
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Photograph 5: APN: 0154-126-24
Photograph 6: APN: 0154-126-26
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Photograph 7: APN: 0154-126-10
Photograph 8: APN: 0154-126-29
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Photograph 9: APN: 0154-126-27
Photograph 10: APN: 0154-221-32
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Photograph 11: APN: 0154-222-18
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Photograph 12: APN: 0154-222-23
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Photograph 13: APN: 0154-222-30
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Photograph 14: APN: 0154-252-09
Photograph 15: APN: 0154-462-02
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Photograph 16: APN: 0154-462-02
Photograph 17: APN: 0154-462-02
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Photograph 18: APN: 0154-261-04
Photograph 19: APN: 0271-061-01
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Photograph 20: APN: 0271-062-13
Photograph 21: APN: 0271-062-13
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Photograph 22: APN: 0154-253-15
Photograph 23: APN: 0154-242-38
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Photograph 24: APN: 0154-262-12
Photograph 25: APN: 0154-263-12
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Photograph 26: APN: 0154-252-09
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Photograph 27: APN: 0154-252-09
Photograph 28: APN: 0154-263-12
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Photograph 29: APN: 0154-221-32
Photograph 30: APN: 0154-221-14
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Photograph 31: APN: 0154-221-31
Photograph 32: APN: 0154-262-15
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Photograph 33: APN: 0154-262-20
Photograph 34: APN: 0154-452-49
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Photograph 35: APN: 0154-222-01
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Photograph 36: APN: 0154-222-23
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Photograph 37: APN: 0271-062-12
Photograph 38: APN: 0271-062-17
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Photograph 39: APN: 0271-062-28
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Photograph 40: APN: 0154-462-02Z
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Photograph 41: APN: 0154-462-13
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Photograph 42: APN: 0154-462-13
Photograph 43: APN: 0154-452-46
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Photograph 44: APN: 0154-452-44
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Photograph 45: APN: 0154-452-44
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Photograph 46: APN: 0154-452-43
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Photograph 47: APN: 0154-462-13
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Photograph 48: APN: 0154-462-13
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Photograph 49: APN: 0154-461-08
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Photograph 50: APN: 0154-261-20