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Home My WebLink AboutR03-Economic Development Agency ,- "'- - "- .- \.... "...., -. D B~B LOP II B II T DB PAR T ""'11 T OF TIIB CITY OF SAIl BBRlWmIBO RBOOBST FOR COMMISSIOIl/CODllCIL ACTIOIl From: Ul'll'lJSIH J. HENDERSON Executive Director Subject: DOWl'ITOWl'I BUSIl'IBSS RBCRUI1'MBB'l/RBTBl'ITIOIl Date: June 26, 1992 ------------------------------------------------------------------------------- SvnoDsis of Previous Commission/Council/Committee Action(s): The Community Development Commission on May 18, 1992 discussed this matter and referred same to the Downtown Urban Task Force. ------------------------------------------------------------------------------- Recommended Motion(s): (Colllll1mitv Develollllent C....ission) IIOTIOIl That the Community Development Commission receive and file the attached staff report regarding the recruitment and retention of downtown businesses. A~trator 1!~~BKSON Executive Director ---------------------------- --------------------------------------------- Contact Person(s): Kenneth J. Henderson/Maria Echeveste Phone: 5081 Project Area(s): Central City Ward(s): One (1) Supporting Data Attached: Staff ReDort FUNDING REQUIREMENTS: Amount: S B/A N/A Source: Budget Authority: N/A ------------------------------------------------------------------------------- Commission/Council lIotes: ------------------------------------------------------------------------------- KJH:MTE:mkc:2465J COIllISSIOIl IlEETIlIG AGBl'IDA lIeetina Date: 7/6/1992 Aaenda Itea lfUIIIber: ~ .~ ~-" DB~BLOPMBWT DBPARTM,rWT OF TUB CITY OF SAlI BBRlWmIWO - l.... STAn' IlBPORT DOWIIrOWW BUSI"SS IlBCRUItMBWT/laITKl'ITIOW BACICGROmm On May 18, 1992, during its regular meeting, Commission Member Ralph Hernandez urged discussion of the needs of downtown businesses and building owners, both ss they exist today and as they relate to the assistance the Redevelopment Agency hss provided over the years. Specific concerns raised during the ensuing dialogue at the Commission meeting included the following: 1. recruitment of existing downtown tenants by Hospitality Lane area building owners who have received Agency assistance; 2. different levels of assistance to downtown as compared to the Tri-City and the Southeast Industrial Park project areas; and 3. the possible lack of effective rehabilitation assistance programs for downtown tenanta and building owners. The Commission referred the matter to the Downtown Task Force for discussion with the staff to report back to the Commission. Due to the lack of meeting time, this item was not considered by the Downtown Task Force at its last regular meeting. Staff, however, has researched this issue and is providing clarifying information. The following material focuses primarily on the downtown business area and the Hospitality/Tri-City Corporate Center area because these areas were identified in the comments. In addition, however, many of the same concepts, perceptions and concerns may relate to Agency activities in the State College Business Park and nearby retail areas, the Highland Avenue and "B" Street retail areas, the Mount Vernon Specific Plan and FBDCO areas, and the new Wests ide Plaza as well as other business areas in redevelopment project areas. Further, concerns about the viability of downtown businesses is not unique to San Bernardino inasmuch as it is a challenge that is evident throughout the inner core areas of cities in California and the nation. PAST AGDCY ASSISTAIlCB Prior Agency sponsorship of the downtown area and businesses has been both substantial and consistent. This is evidenced by financial commitment, advocacy, patronage and current marketing efforts. ------------------------------------------- KJH:MTE:mkc:2465J COtllISSIOW IIDTIIIG AGBWDA Meetina Date: 7/6/1992 Aaends Itea WlDber: J "'''''-''0. c \.." j DEVELOPMBM' DBPAJtoom1olr~TAFF REPORT DOWlmlWW BUSIRBSS RBCRUIDIDT/RBrEl'IrIOIf J1D1e 26, 1992 Page RuIIIber -3- - the area. As the negotiations proceeded, it became apparent that such restrictions would not prevent prospective tenants themselves from making the initial contact and that the only effective tool would be prohibiting downtown businesses from leasing space in the building. This would place an unfair burden on businesses, keeping them from renting competitive space in new buildings and could possibly be considered a "restraint of trade" action by the agency. Consequently, we have opted to avoid such harsh and draconian clauses that invariably prove unworkable. Downtown buildina owners have historically benefited from receivina more assistance than those in other areas and are conseauentlv able. due to a lower cost basis. to offer lower rental rates. As the work on the Downtown Plan has shown, the economics of lower lease rates, without more, is insufficient in retaining and attracting businesses downtown. Businesses may and do often leave because they or their clients perceive the area as undesirable. A lack of investment results from building owners being unable to recover the cost of renovations and improvements from increased rent. Logically, effective strategies to address the problem should include realistic programs for the rehabilitation and improvement of existing structures, and efforts to increase the investment confidence of downtown building owners. .~ \.... IlEIIABILIrATIOIf LOAIf PROGKAMS The Agency has three prinCipal programs that currently involve rehabilitation assistance. Main Street uses Agency funds for programs in the downtown area. The Agency Administers a Small Business Loan Fund Program for businesses city-wide. There is also a newly created, CDBG financed program for interim construction loans in any redevelopment project area which can be used by building owners or tenants for rehabilitation projects. As a part of its initial mandate, Main Street has been operating facade and sign improvement programs using funding from the Agency. Main Street also advertises that rehabilitation assistance is available for informing business owners about its own programs and those operated directly by the Agency. .... The Agency's Small Business Loan Program has operated city-wide for a number of years using fees collected from the issuance of Industrial Development Bonds. The program has not be in great demand, apparently due to the restriction that businesses must be established to qualify. Most requests are for businesses that are just starting out and have no history or track record. Changing some of the loan criteria could make it more widely used and could also result in greater fund losses. Recently, staff has been exploring opportunities with the federal Small Business Administration program and banks adhering to Community Reinvestment Act requirements in an effort to help "start-up" businesses obtain low interest risk loans. " ------------------------------------------------------------------------------- KJH:MTE:mkc:2465J COIlUSSIOIf IIEE'lIIfG AGEBDA Meeting Date: 7/6/1992 3 Aaenda Itea lJumber: "......... '" \ DEVELOPMDr DBPAa.ll'mllX"'1TAFF UPORT DOWlmlWK BUSII!lBSS UCRUInIDT/RBTElITIOI' June 26, 1992 Page I'Ulllber -4- -- .. The Agency's newest programs have just received approval in the recent CDBG funding cycle. One is a $250,000 fund (which can be added to in subsequent years) to provide interim revolving loans at low interest rates for interim construction financing in redevelopment project areas. Eligible businesses must be located within a redevelopment project area and must demonstrate either creation or retention of permanent jobs primarily to low and moderate income residents, or rehabilitation efforts to cure code violations or eliminate slum or blight. The second is a program to grant up to two-thirds of the cost of engineering studies to evaluate earthquake safety needs for identified buildings in redevelopment projects. A large number of these buildings are in the downtown. Marketing of the program will begin upon approval, which is perfunctory in nature, by the federal government. In developing new rehabilitation programs, a number of factors must be taken into account. A partial listing of program elements would include: SURRested Discussion ARenda .. Program size (both in cost and area served) Ages of buildings to be included Available infrastructure (parking, public space, etc) Long-term deferred maintenance to be corrected Current/expected appraised values Existing and expected tenants Existing mortgages and liens Building code deficiencies and safety hazards (including earthquake) Market demand Financial capacity of the building owner or tenant Zoning, sign and use conformity '" UCOMMInmATTOK These and other factors would have to be carefully discussed and considered in the creation of new programs or modifications of existing areas. Items referenced in the immediate "Suggested Discussion Agenda" can be used as a guide to provide focus for any resulting concerns and discussions. Staff recommends adoption of the form motion. ~nsOI" Executive Director Developaent Departaent - ----------- \",. KJH:MTE:mkc:246SJ COIMISSIOI' ImBTIlIG AGDDA Meeting Date: 7/6/1992 Agenda It_ lItIDber: '1