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ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
FROM:
Fred A. Wilson
City Administrator
SUBJECT:
A RESOLUTION OF THE MAYOR AND
COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO APPROVING
CERTAIN FEE DEFERRALS IN
CONNECTION WITH THE KOHL'S
DEVELOPMENT PROJECT TO BE
LOCATED ON THE FORMER NORTON
AIR FORCE BASE
DATE:
September 17, 2001
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Svnonsis oCPrevious Commission/Council/Committee Action(s):
Discussions have been conducted among the Inland Valley Development Agency, City of San Bernardino and
the Redevelopment Agency of the City of San Bemardino regarding certain redevelopment assistance to be
provided in connection with the Kohl's Development Project.
Recommended Motion(s):
(Mavor and Common Council)
That the Mayor and Common Council adopt above described Resolution.
That the Mayor and Common Council approve the summary of a pass-through agreement
between the City and the Economic Development Agency in connection with certain
redevelopment assistance for the Kohl's Development Project and authorize preparation of the
pass-through agreement.
MOTION C: That the Community Development Commission approve the deal-point summary with respect
to redevelopment assistance for the Kohl's Development Project and authorize preparation of
a property tax increment incentive agreement between the Redevelopment Agency of the City
________ of ~~~~~~~~~~~~!-~~_~s Corporation. __________________________________
MOTION A:
MOTION B:
Contact Person(s): Fred A. Wilson
Redevelopment Project Area of the
Project Area(s) Inland Valley Development Agency
Phone:
384-5122
Ward(s):
Supporting Data Attached: X Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 LetterlMemo
FUNDING REQUIREMENTS Amount: $
Source:
Budget Authority:
A;"
Administrator
City of San Bernardino
~@~_;:;~_~:,3~_________________________________mm____________m_____________m______m_________________________________
GYO:XXX:lag:RFCA EDA Kohl's agenda item 9-13-01.doc COMMISSION MEETING AGENDA
Meeting Date: 09/1712001
SIGNATURE:
Agenda Item Number: ~
0(
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Staff Report
Subject:
A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO APPROVING CERTAIN FEE
DEFERRALS IN CONNECTION WITH THE KOHL'S DEVELOPMENT
PROJECT TO BE LOCATED ON THE FORMER NORTON AIR FORCE
BASE
Background:
The Inland Valley Development Agency (the "IVDA") has entered into a
Disposition and Development Agreement with Hillwood/San Bemardino,
LLC, providing for the purchase by Kohl's Corporation (the "Owner")of
certain property presently owned by the IVDA and situated at the former
Norton Air Force Base (the "Property") and for the redevelopment of the
Property by the Owner as a manufacturing, assembly, commercial and/or
warehouse building consisting of not less than 500,000 square feet of gross
building area (the "Project").
It is anticipated that the Project will generate a substantial number of new
jobs, presently estimat<;d to initially be 700 jobs and increasing to 1,100 upon
full build-out. Please'see the attached Exhibit A for a summary of the
proposed development. The Redevelopment Agency of the City of San
Bernardino (the "Agency") will enter into an agreement with the Owner (the
"Agency/Owner Agreement") pursuant to which the Owner will covenant
that a certain percentage ofthe new jobs will be reserved for residents ofthe
City.
As a result ofthe Project being constructed within the redevelopment project
area of the IVDA, the City of San Bernardino (the "City") will receive from
the County of San Bernardino Auditor-Controller increased property taxes.
In order to facilitate the development of the Project, it is proposed that the
City defer collection of certain development fees (the "Fees"), which are set
forth in the above-described Resolution.
It is also proposed that the Owner receive, as a development incentive, a
portion of the increased property taxes. In order to provide this development
incentive, the City will enter into an agreement with the Agency (the
"Cityl Agency Agreement") pursuant to which the City will annually pay to
the Agency, for a period of ten years, an amount equal to the amount of
property taxes received by the City with respect to the Property during the
immediately preceding fiscal year (a "Property Tax Payment"). Pursuant to
the AgencylOwner Agreement, the Agency will each year, for a period often
years, pass the Property Tax Payment through to the Owner. The formula for
SB2001 :27062.1
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payment of this development incentive and a summary of other deal points
to be included in the Cityl Agency Agreement are set forth in the attached
Exhibit B. A spread sheet regarding the Property Tax Payments is attached
as Exhibit C.
In connection with the deferral of Fees described above, it is anticipated that
the City will, at a future date, be made whole with respect to said Fees out of
the increased property taxes on the Property. The Resolution provides that
the City defer commencement of collection ofthe Fees until such time as (i)
the City is, in any fiscal year, not required to make a Property Tax Payment
to the Agency or (ii) the City is no longer obligated to make the Property Tax
Payments to the Agency pursuant to the CitylAgency Agreement.
Financial Impact: As described in the Resolution, certain of the Fees, payment of which is
being deferred, are fees payable to the General Fund. Certain other Fees are
payable to a Special Fund of the City. The General Fund Fees and the
Special Fund Fees total $328,330.94. As noted above, it is anticipated that the
City will, at a future date, be made whole with respect to the Fees out of
increased property taxes on the Property.
Recommendation: Adopt Resolution.
SB200 \ ,27062.\
Attachment A
Summarv of ProDOsed Kohl's Develovment Proiect
. Location: San Bernardino International Trade Center, located on the north side of Mill
Street, east of Lena Road. The distribution center is proposed within the "900" Series of
the San Bernardino Trade Center Specific Plan.
. Type of Facility: Distribution center to support retail stores.
. Proposed Use: The proposed use involves the trucking and warehousing of housewares and
apparel for distribution purposes as part of a major department store's operation (Kohl's) in
the Southern California, Nevada, and Arizona areas.
. Site Area: Approximately 61 acres.
. Phase I: 651,880 square foot building (initial phase).
. Phase II: This phase would include Kohl's option to purchase an approximately 20 acre
site west of the Phase I boundary and east of Lena Road for future expansion of the
warehouse facility and trail parking.
",
. Anticipated Commencement of Construction: Prior to 2002.
. Job Creation: Initial employment of 700 persons. Ultimate employment of 1,100 persons.
. Maximum Number of Employees at Any One Time on Site: 550 persons.
. Current Property Owners of Site: Inland V alley Development Agency.
. Building Height: Approximately 42 feet.
. Number of Floors: One floor with a mezzanine,
. Landscaping: Perimeter and employee parking area landscaping per City Standards,
including over 200 new trees and 11 - 36" box oak trees.
. Anticipated Assessed Valuation of the Completed Project: Approaching $50 million.
. Standard & Poors: Kohl's Corporation is an S & P Fortune 500 company with common
stock traded on the New York Stock Exchange under the symbol KSS.
Formu~a for payment of tax increment from EDA and IVDA to Koh~'s
The EDA shall pay to Kohl's on or before August 31 of each year
with respect to calculations performed for the immediately
preceding fiscal year, those amounts received by the EDA from the
City of San Bernardino which are received by the City from the
County of San Bernardino Auditor-Controller representing
increased proceeds of taxes actually received by the City
attributable to the 1% general property tax rate levied on the
increased assessed valuation of the Kohl's Project on the secured
property tax roll as paid by Kohl's in a timely manner on or
before each property tax installment delinquency date of December
10 and April 10 of each fiscal year or otherwise as set forth in
any supplemental property tax bill. The EDA shall have no
obligation to remit any payments to Kohl's with respect to any
property tax payments that are not remitted by Kohl's to the
County of San Bernardino Tax Collector and received thereby on or
before the date that any such property taxes become delinquent.
The EDA shall have no obligation to remit payments to Kohl's for
any payments not received by the EDA from the City.
The amount to be remitted by the EDA to Kohl's annually pursuant
to this Agreement shall be in\the manner as set forth below:
1. a threshold assessed valuation of $44,240,000 (the
"Threshold Value") shall be established as the minimum
assessed valuation of the Kohl's Project for purposes of
determining the amount of each annual payment to be made
by the EDA to Kohl's;
2. subject to the conditions set forth below, the payments
to be remitted by the EDA to Kohl's shall be equal to the
one-half of the City general property tax rate applicable
to the tax rate area code (currently estimated to be
approximately 9% of the 1% general property tax rate)
wherein the Kohl's project is located calculated upon the
1% general property taxes generated by the increased
assessed valuations of the Kohl's project (the total of
all property taxes received by the City as proceeds of
taxes upon the 1% general property tax payments for
secured property taxes shall be referred to as the "City
Tax Portion");
3. a separate calculation shall be made of the total 1%
general property taxes generated by the Kohl's Project
which are in excess of the property taxes generated by
the 1% general property tax rate calculated against the
Threshold Value (the "Incremental Tax Amount");
4. the payments to Kohl's shall be equal to the City Tax
Portion but not to exceed the Incremental Tax Amount;
5. at such time as the Incremental Tax Amount exceeds the
City Tax Portion, the Inland Valley Development Agency
("IVDAn) shall pay the difference between the City Tax
Portion when subtracted from the Incremental Tax Amount
until such time as the Incremental Tax Amount equals
$57,600 in any fiscal year; provided that the City shall
never be obligated to pay more than $57,600 in any fiscal
year;
6. at such time as the City Tax Portion equals or exceeds
the figure of $57,600 per fiscal year, the EDA shall
continue to remit the amount equal to the City Tax
Portion and no further payments shall be made by the IVDA
thereafter unless the City Tax Portion in any subsequent
year of this the term of this Agreement is less than
$57,600 per fiscal year.
Other dea1 point items:
10 year agreement from date of transfer of title from IVDA to
Kohl's;
IVDA obligated only to remit its portion of the tax increment
reimbursements and does not guaranty performance by the City of
San Bernardino and the EDA;
\
In the event the City of San Bernardino or the EDA default in
their obligation to remit payments, IVDA will be only responsible
for its portion of the annual payment provided that Kohl's has
complied with all other provisions of the Agreement;
IVDA payments will be subject to distributions for Low and
Moderate Income Housing Fund and all pass-through agreement
payments and will be subordinate to the existing principal amount
of the 1997 Tax Allocation Bonds and all debt service payments to
be made on the Bonds;
Hillwood to relinquish all rights and claims to any portion of
the tax increment revenues to be generated by the Kohl's project
whether or not there is a final Master DDA;
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RESOLUTION NO.
A RESOLUTION OF THE MA YORAND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING CERTAIN FEE DEFERRALS IN
CONNECTION WITH THE KOHL'S DEVELOPMENT PROJECT TO BE
LOCATED ON THE FORMER NORTON AIR FORCE BASE
WHEREAS, the Inland Valley Development Agency, ajoint powers authority fonned pursuant
to Government Code Section 6500 et seQ.(the "IVDA"), has entered into a certain Disposition and
Development Agreement with Hillwood/San Bernardino, LLC, providing for the purchase by Kohl's
Corporation (the "Owner") ofthat certain property presently owned by the IVDA and generally situated
within a portion of the former Norton Air Force Base referred to by the United States Air Force as
"Parcel 1-3" (the "Property") in the City of San Bernardino, California (the "City") and for the
redevelopment of the Property by the Owner as a manufacturing, assembly, commercial and/or
warehouse building, consisting of not less than 500,000 square feet of gross building area and
appropriate on-site vehicle circulation, parking, loading, landscaping and utility facilities (the "Project");
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and
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WHEREAS, it is estimated that the Project, when completed, will generate a substantial number
of new jobs presently estimated to initially be 700 jobs and increasing to 1, I 00 upon full build-out; and
WHEREAS, the Owner and the Redevelopment Agency of the City of San Bernardino (the
"Agency") propose to enter into an agreement (the "Agency/Owner Agreement") pursuant to which,
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among other things, the Owner will covenant that a certain percentage of the new jobs will be reserved
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for residents of the City; and
WHEREAS, it is anticipated that, as a result of the Project being constructed within the
redevelopment project area of the IVDA, the City will receive from the County of San Bernardino
Auditor-Controller increased proceeds of taxes attributable to the one percent (I %) general property tax
rate levied on the assessed valuation of the Property (the "Property Taxes"); and
WHEREAS, the City and the Agency propose to enter into an agreement (the "City/Agency
Agreement") pursuant to which, among other things, the City will annually pay to the Agency, for a
28 SB2001:26805.2
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I period often years, an amount equal to the Property Taxes received by the City during the immediately
2 preceding fiscal year (each, a "Property Taxes Payment"); and
3 WHEREAS, it is contemplated that pursuant to the AgencylOwner Agreement, the Agency will
4 pay to the Owner, each year for a ten-year period commencing on the date of the close of escrow with
5 respect to the Property, the Property Taxes Payment; and
6 WHEREAS, the following permitting and impact fees of the City (the "Fees"), each in the
7 anticipated dollar amount as set forth below, are applicable to the Project:
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Planning
Engineering Plan Check
Building Plan Check
$ 3,683,00
$ 28,306.00
$ 26,384.16
$ 33,489.00
$ 2,500.00
$ 21,861.80
$ 73,382.74
$ 53,682.32
$ 2,254.65
$ 54,489.10
$101.680.91
$401,713.68; and
Engineering Construction Permits
Fire Department Plan Check
Building Permit
Traffic Impact Fee
Cultural Development Fee
.<\\
Earthquake Fee
Sewer Connection Fee
Storm Drain Fee
TOTAL
20 WHEREAS, certain IVDA Vehicle Trip Credits will be applied by the Owner which shall
21 constitute payment in whole of the Traffic Impact Fee; and
22 WHEREAS, the Planning, Engineering Plan Check, Building Plan Check, Engineering
23 Construction Permits, Fire Department Plan Check, Building Permit, Cultural Development Fee and
24 Earthquake Fee components ofthe Fees are payable to the General Fund ofthe City (the "General Fund
25 Fees") and the Sewer Connection Fee and Storm Drain Fee components of the Fees are payable to a
26 Special Fund of the City (the "Special Fund Fees"); and
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I WHEREAS, the General Fund Fees and the Special Fund Fees, together, are in the amount of
2 $328,330.94; and
3 WHEREAS, to facilitate the development of the Project, it is desirable that the City defer
4 commencement of collection of the General Fund Fees and the Special Fund Fees until such time as (i)
5 the City, in any fiscal year, is not required to make a Property Taxes Payment to the Agency or (ii) the
6 City is no longer obligated to make the Property Taxes Payments to the Agency pursuant to the
7 CitylAgency Agreement.
8 NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY THE
9 MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS FOLLOWS:
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Section I.
The Recitals set forth above are true and correct.
Section 2.
The Mayor and Common Council hereby find and determine that development
12 of the Project is in the best interests of the City.
Section 3. The Mayor and Coinmon Council hereby approve the deferral of commencement
of collection ofthe General Fund Fees and the Special Fund Fees until such time as (i) the City, in any
fiscal year, is not required to make a Property Taxes Payment to the Agency or (ii) the City is no longer
obligated to make the Property Taxes Payments to the Agency pursuant to the Cityl Agency Agreement.
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SB200 1:26805.2 3
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I A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO APPROVING CERTAIN FEE DEFERRALS IN CONNECTION WITH THE
2 KOHL'S DEVELOPMENT PROJECT TO BE LOCATED ON THE FORMER NORTON AIR
FORCE BASE
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Section 4.
This Resolution shall take effect upon the date of its adoption.
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
Common Council of the City of San Bernardino at a
meeting thereof, held on the
day of
,2001, by the following vote, to wit;
_.
Council:
12 ESTRADA
LIEN
13 MCGINNIS
SCHNETZ
14 SUAREZ
ANDERSON
15 McCAMMACK
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AYES
NAYS
ABSTAIN ABSENT
"
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- City Clerk
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The foregoing resolution is hereby approved this _ day of
,2001.
Judith Valles, Mayor
City of San Bernardino
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By:
23 ,tl.jll('r.. City Attorney
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SB200U6805.2 4
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I STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO)
2 CITY OF SAN BERNARDINO )
3
ss
I, City Clerk of the City of San Bernardino, DO HEREBY
CERTIFY that the foregoing and attached copy of Mayor and Common Council of the City of
San Bernardino Resolution No. is a full, true and correct copy of that now on file in this
office.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of
the Mayor and Common Council of the City of San Bernardino this day of ,2001.
City Clerk
City of San Bernardino
':~,
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** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
Meeting Date (Date Adopted): ~ Item # R- ~z... Resolution #
Vote: Ayes 7,-"',.."i' - Co Nays.G-- Abstain G-
.
L('{') \ - "?-, <::l ()
Absent \ '-1, 0
Change to motion to amend original documents:
Reso. # On Attachments: / Contract term: -
Note on Resolution of Attachment stored separately: -==-
Direct City Clerk to (circle I): PUBLISH, POST, RECORD W/COUNTY
NullNoid After: -
By: -
Date Sent to Mayor: ~o 1
Date of Mayor's Signature: q 01
Date ofClerk/CDC Signature: ~
Reso. Log Updated: /
Seal Impressed: ./
Date Memo/Letter Sent for Ig
60 Day Reminder Letter Sent on 30th day:
90 Day Reminder Letter Sent on 45th day:
See Attached:
See Attached:
See
Date Returned: -
Request for Council Action & Staff Report Attached:
Updated Prior Resolutions (Other Than Below):
Updated CITY Personnel Folders (6413, 6429, 6433, 10584, 10585, 12634):
Updated CDC Personnel Folders (5557):
Updated Traffic Folders (3985, 8234,655,92-389):
ed:
Yes / No By
Yes No ,/ By
Yes N01 By
Yes NO-f By
Yes No By
Copies Distribnted to:
City Attorney / Code Compliance
Dev. Services
EDA /
Finance
MIS
Parks & Rec.
Police
Public Services
Water
Others:
Notes:
BEFORE FILING, REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE
YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE rContract Term. etc.)
Ready to File: ~ Date: ~
Revised 01/12/01