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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From: Judith
Mayor
Valles
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Subject: RESOLUTION OF THE MAYOR AND
COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO, CALIFORNIA, APPROVING
CERTAIN ANNUAL TAX INCREMENT PROPERTY
TAX REVENUE DISTRIBUTIONS TO THE INLAND
V ALLEY DEVELOPMENT AGENCY FOR THE
KOHL'S DEVELOPMENT PROJECT ON THE
FORMER NORTON AIR FORCE BASE
Date: November 19, 2001
Synopsis of Previous Council Action:
On September 17, 2001, the Mayor and Common Council and the Community Development Commission
(the "Commission") took action on three items. The Mayor and Common Council approved Resolution
No. 2001-300, which authorized the deferral of certain fees in connection with the development by Kohl's
Corporation ("Kohl's") of certain properly located on the former Norton Air Force Base within the
Redevelopment Project Area of the Inland Valley Development Agency ("'VDA") as a manufacturing,
assembly, commercial and/or warehouse building (the "Projecf') and authorized the payment to the EDA
of that portion of the new properly taxes to be received by the City from the Project. The third action of
the Commission was to approve an agreement between the EDA and Kohl's for the payment of tax
increment revenues based upon a formula that was coordinated with the prior obligation of the IVDA to
remit certain tax increment payments to Kohl's. Pursuant to continued discussion between the IVDA and
Kohl's, the payment of tax increment revenues to Kohl's has been restructured.
Recommended motion:
(Mavor and Common Council}
MOTION A: That the Mayor and Common Council adopt above described Resolution.
MOTION B: That the Mayor and Common Council rescind the motion as approved on September
17,2001, approving the earlier structure of the tax increment properly tax revenue
distributions.
MOTION C: That the Community Development Commission rescind the motion as approved on
September 17, 2001, approving the earlier structure of the tax increment properly tax
revenue distributions. It:!J \
_ u".-I
ayor .
Tim Saba City of San Bernardino
Contact person: Phone: 909 387-1130
Project Area(s):
Redevelopment Project Area of the
Inland Valley Development Agency
Ward:
FUNDING REQUIREMENTS:
Amount:
Source: (Ace!. No.l
(Acct. Description)
Finance:
Council Notes:
'"E~~ 2Cm-~d.
Agenda Item No. /7
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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Subject:
Backgrouod:
SB200U474I.l
Staff Report
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING CERTAIN
ANNUAL TAX INCREMENT PROPERTY TAX REVENUE
DISTRIBUTIONS TO THE INLAND V ALLEY DEVELOPMENT
AGENCY FOR THE KOHL'S DEVELOPMENT PROJECT ON THE
FORMER NORTON AIR FORCE BASE
On September 17, 2001, the Mayor and Common Council and the
Community Development Commission (the "Commission") took action on
three items. The Mayor and Common Council approved Resolution No.
200 I -300, which authorized the deferral of certain fees in connection with the
development by Kohl's Corporation ("Kohl's") of certain property located
on the former Norton Air Force Base within the Redevelopment Project Area
of the Inland V alley Development Agency ("IVDA") as a manufacturing,
assembly, commercial and/or warehouse building (the "Project") and
authorized the payment to the EDA of that portion of the new property taxes
to be received by the City from the Project. The third action of the
Commission was to approve an agreement between the EDA and Kohl's for
the payment of tax increment revenues based upon a formula that was
coordinated with the prior obligation of the IVDA to remit certain tax
increment payments to Kohl's.
As of September 17, 2001, the Kohl's project had been represented to be in
excess of $50M in value and an annual payment of $57,600 was to be paid
primarily from the City for the contribution of approximately $45,000 and
approximately $12,600 from the IVDA, After the Agreement was submitted
to Kohl's, conversations were held between Kohl's and representatives of the
IVDA and Kohl's reconsidered the value of the project and insisted that the
original representations as previously made to Kohl's in April and May of
this year be made part of the tax increment reimbursement agreement rather
than the arrangement as approved on September 17,2001.
It is now intended that the Kohl's project, without any decrease in building
size or parcel lot size will be valued between $25 and $27M dollars. Based
upon the original representations of the IVDA to Kohl's the IVDA would
have reimbursed to Kohl's approximately $57,600 based upon this amount
of assessed valuation. Mayor Valles has suggested that the City continue to
provide the City share of the increased property taxes on the Kohl's project
which as the result of the lessor assessed valuation will now be reduced from
the previously estimated $45,000 a year to approximately $22,000 a year.
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The IVDA will commit to pay to Kohl's 22% of all taxes paid by Kohl's
when received by the IVDA as tax increment revenues subject to the
reimbursement by the City as provided above. On November 14, 2001, the
NDA approved a Tax Increment Reimbursement Agreement with Kohl's,
subject to receiving the commitment from the City as provided in the above-
referenced Resolution.
The other actions that need to be taken by the Mayor and Common Council
and the Commission are to rescind the motions as approved on September 17,
2001, approving the earlier structure of the tax increment property tax
revenue distributions.
Financial Impact: Pursuant to the actions proposed to be taken, the City will provide to the
IVDA the City share of the increased property taxes on the Kohl's project,
estimated to be approximately $22,000 a year.
Recommendation: Adopt the attached Resolution and approve the suggested motion to rescind
certain prior action taken by the Mayor and Common Council and the
Commission on this matter.
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RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL
OF THE CITY OF SAN BERNARDINO, CALIFORNIA,
APPROVING CERTAIN ANNUAL TAX INCREMENT
PROPERTY TAX REVENUE DISTRIBUTIONS TO THE
INLAND V ALLEY DEVELOPMENT AGENCY FOR THE
KOHL'S DEVELOPMENT PROJECT ON THE FORMER
NORTON AIR FORCE BASE
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WHEREAS, the Inland Valley Development Agency, a joint powers authority
formed pursuant to Govemment Code Section 6500 et seQ. (the "IVDA"), has entered into a
certain Disposition and Development Agreement with HilIwood/San Bernardino, LLC,
providing for the purchase by Kohl's Corporation ("Kohl's") from the IVDA of approximately
sixty (60) acres of land located in the City of San Bernardino on the former Norton Air Force
Base within the Redevelopment Project Area of the IVDA (the "Project Area") and for the
redevelopment by Kohl's of said property as a manufacturing, assembly, commercial and/or
warehouse building, consisting of not less than 500,000 square feet of gross building area and
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13 appropriate on-site vehicle circulation, parking, loading, landscaping and uti.lity facilities (the
14 "Project"); 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
1,100 upon full build-out; and
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WHEREAS, the City of San Bernardino (the "City") is a member of the IVDA
and has contributed a substantial portion of City territory located within the Project Area; and
Whereas, pursuant to the Redevelopment Plan for the Project Area, the City
receives one-half of the amount of general property taxes that are generated by new
development within the Project Area; and
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Whereas, the City has previously taken action pursuant to Resolution No. 2001-
300 adopted on September 17, 2001, to defer the timely payment of certain fees that otherwise
would have been paid with regard to the Project; and
Whereas, the IVDA on November 14, 2001, took official action to approve the
form of and authorize the execution of a certain tax increment reimbursement agreement by and
between the IVDA and Kohl's (the "Tax Increment Reimbursement Agreement") as presented
to the IVDA at the Regular meeting held on said date; and
Whereas, as a further incentive to Kohl's locating the intended project within the
City, the City desires to make reimbursement payments to the IVDA for that portion of the
increased property taxes that will be received by the City; and
Whereas, the City shall remit the required payments to the IVDA in the manner,
at the times, and subject to the limitations as further provided in this Resolution.
NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO DO HEREBY RESOLVE, DETERMINE AND ORDER AS
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Section 1. The Recitals set forth above are true and correct.
Section 2. The Mayor and Common Council hereby find and determine that
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development of the Project is in the best interests of the City.
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Section 3. The Mayor and Common Council hereby approve the annual
payment to the IVDA of that amount of the real property taxes actually received by the City as
the proceeds of taxes pursuant to the provisions of the Redevelopment Plan to the extent that the
IVDA was required to and has made a payment to Kohl's in accordance with the Tax Increment
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Reimbursement Agreement. The City shall remit such payment amounts as a reimbursement to
the NDA within fifteen (15) days after receipt of an invoice from the IVDA together with
copies of all worksheets, assessed value information and property tax receipt verification as
required by the City to determine the amount of the City reimbursement payment to the NDA.
The obligations incurred by the City pursuant to this Resolution are intended to
reimburse the IVDA for the obligations incurred by the IVDA under the Tax Increment
Reimbursement Agreement and no amendment of said agreement shall in any manner increase
the financial responsibility of the City or accelerate any payments by the City unless specifically
9 approved by the City at its sole discretion.
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SB2001 :34978.1
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO, CALIFORNIA APPROVING CERTAIN ANNUAL TAX INCREMENT
PROPERTY TAX REVENUE DISTRIBUTIONS TO THE INLAND VALLEY
DEVELOPMENT AGENCY FOR THE KOHL'S DEVELOPMENT PROJECT ON THE
FORMER NORTON AIR FORCE BASE
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Section 4.
This Resolution shall take effect upon the date of its adoption.
5 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
6 Common Council of the City of San Bernardino at a
meeting thereof, held on the
7
day of
, 2001, by the following vote, to wit:
8
Common Council
9 ESTRADA
LIEN
10 MCGINNIS
SCHNETZ
SUAREZ
11 ANDERSON
McCAMMACK
AYES
NAYS
ABSTAIN ABSENT
City Clerk
. The foregoing Resolution is hereby approved this _ day of
Judith Valles, Mayor
17 of the City of San Bernardino
18 ApJroved as to form
an legal content:
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1 STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO) ss
2 CITY OF SAN BERNARDINO )
I, City Clerk of the City of San Bernardino, DO
HEREBY CERTIFY that the foregomg 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 me. in this office.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official
seal of the City of San Bernardino this day of , 2001.
City Clerk
of the City of San Bernardino
SB2001 :34678.1
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OFFICE OF THE MAYOR
JUDITH V ALLFS
Kohl's Corporation
N56 W1700 Ridgewood Drive
Menomonee Falls, WI 53051
Attn: Ken Bonning, John Fojut
300 North "0" Street. San Bernardino. CA 92418-0001
909.384.5133. Fax: 909.384.5067
www.Ci.san-bernardino.ca.~ I
1/t9Lq/
September 7, 2001 /}'YVJ J ~
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Gentlemen:
This letter will confirm the precise City of San Bernardino
permitting and impact fee deferrals that I am prepared to submit
to the Common Council for their official action to approve the
recommendations as contained ~erein. We are presently in a
position to respond to you with some level of detail regarding
the nature of the permitting and impact fees for your San
Bernardino project and the anticipated value of the subject fees
now that your engineers have made a preliminary site plan
submittal to the City Planning Department.
Kohl's would not be responsible for the payment of any of the
deferred fees as outlined in this letter. Although the City of
San Bernardino must characterize the non-payment of the
following set forth fees as a "deferral", under no circumstances
will Kohl's nor the project be obligated for the payment of such
fees.
The permitting fees and impact fee deferrals that I will propose
to the Common Council for their approval and the anticipated
value of each such fee amount are as set forth below. These
permitting and impact fees and the anticipated dollar amounts
are based upon a Phase I 61 acre development consisting of
28,000 square feet of office, a mezzanine of 126,964 square feet
and a warehouse building of 496,896 square feet. The fee
deferral will apply to each of the following fee categories
regardless of the final calculated dollar amount.
Type of Fee
Anticipated
Dollar Value
. CULTURAL AND'INTERNATIONAL AFFAIRS. EQUAL EMPLOYMENT OPPORTUNll'Y OrnCE
. MARKETING AND PUBLIC AFFAIRS. COMMUNITY LIAISON
Planning
Engineering Plan Check
Building Plan Check
Engineering Construction Permits
Fire Department Plan Check
Building Permit
Traffic Impact Fee (use of IVDA
available Vehicle Trip Credits)
Cultural Development Fee
Earthquake Fee
Sewer Connection Fee
Storm Drain Fee
TOTAL fee deferral
Sewer Capacity Fee (IVDA capacity
contribution)
TOTAL of fee benefits to Kohl's
$ 3,683.00
$ 28,306,00
$ 26,384,16
$ 33,489.00
$ 2,500.00
$ 21,861. 80
$
$
$
$ 54,489.10
$101,680,91
$401,713,68
73,382.74
53,682,32
2,254.65
$175,769.10
$577,482.78
As noted above, there will be no Sewer Capacity Fee to be paid
by Kohl's which amounts to an additional cost savings of
$175,769.10 for the Kohl's project. The Inland Valley
Development Agency ("IVDA") h~s committed to provide a portion
of the total available gallons per day sewer capacity previously
assigned to the IVDA for the benefit of your San Bernardino
project,
I am also prepared to recommend to the City of San Bernardino
Board of Water Commissioners that the City Water Department
provide water service to your San Bernardino project. The
proximity of your project to existing City of San Bernardino
water lines will allow for a much lower capital investment cost
to Kohl's than if water service were to be provided through the
IVDA water system. Kohl's would be a direct customer of the
City of San Bernardino Water Department for all water service
and billing matters.
Additionally, I will recommend to the Common Council that the
City and/or the City of San Bernardino Economic Development
Agency ("EDA") approve a Tax Increment Revenue Reimbursement
Agreement whereby the portion of the County property taxes which
are then remitted by the County of San Bernardino to the City of
San Bernardino and attributable to the increased valuation of
your San Bernardino project on your parcel be reimbursed to
Kohl's annually for a ten (10) year period; such ten (10) period
will commence as of the close of escrow for the acquisition of
the parcel by Kohl's. Such Agreement and the payments to Kohl's
would be subject to all State law requirements under the
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structure that I have proposed through our EOA, The Agreement
will contain mutually satisfactory descriptions and
characterizations of the nature of those payments to be
reimbursed to Kohl's for compliance with all aspects of State
law, Obviously, we would expect Kohl's to be a good corporate
citizen in our community and to pay all real property taxes to
the County of San Bernardino on a timely basis and to maximize
the assessed valuations of the San Bernardino project for the
benefit of all local governmental agencies in addition to .City
of San Bernardino. Based upon a San Bernardino project on the
subject site having an assessed valuation of at least
$50,000,000, we believe that the estimated value to Kohl's of
this City Tax Increment Revenue Reimbursement Agreement could be
equal to approximately $45,000 to $50,000 per year. As the
value of your San Bernardino project increases, all parties will
be benefitted.
If the above meets with your approval, please confirm in writing
by Wednesday, September 12, 2001 to Fred Wilson, City
Administrator, and I will place an appropriate item on the
agenda for the next available Common Council meeting to be held
on Monday, September 17, 200hc At that time I will seek their
consideration and approval of the necessary actions to implement
my recommendations.
I trust that our efforts to provide the financial incentives as
we have previously discussed continue to meet your expectations.
We look forward to welcoming Kohl's to the City of San
Bernardino as a valued business partner in our community.
KDHI:S
September 12, 2oo1
ALAN J. SALLE
(262) 703-1476
FAX: (262) 703-7274
alan.salle@kohls.com
BY TELECOPY
Mr. Frederick C. Wilson
City Administrator
City of San Bernardino
300 North "D" Street
San Bernardino, California 92418
Re: Kohl's DistributiOD Ceuter .
900 Series - NOrtoD AFB Site
SaD Bernardiuo, California
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Dear Mr. Wilson:
This letter is to acknowledge that we are in receipt of Mayor Valles' letter of September 7, 2001 to
Ken Banning and John F ojut concerning the deferral of certain pennitting fees and impact fees in connection
with the development of the contemplated distnbution center facility. At this time, we would like to confirm
that the proposal set forth in Mayor Valles' letter is consistent with Kohl's understanding and we are
requesting that an appropriate item be placed on the agenda for the meeting of the Connnon Council to be
held on September I 7, 2001.
Similarly, we are requesting thai an appropriate item be placed on the agenda for the meeting of the
Common Council to implement the proposed reimbursement of property taxes. In connection with the
reimbursement of property taxes, we would like to clarify that although Kohl's intends to be a good corporate
citizen, Kohl's will not be required to construct improvements in addition to those currently contemplated
and Kohl's will not be precluded from contesting the tax assessment for the project in the event that the
assessment is placed at a higher level than that otherwise pennitted under California law.
We appreciate the efforts being made by the .City of San Bernardino.to make it possible for Kohl's
to locate its distribution center faCilitY in San Bernardino and we look forward to becoming a valued business
partner in your community.
Very Truly Yours,
AJS/
W-~
Alan J. Salle
Assistant General Counsel
'roT IE I!: rg I VI IE ~
lfll SEP 2 0 2001 l!1J
cc: Mr. Ken Banning
Mr. John Fojut
Mr. Tom Taugher
Mr. Patrick E. Peery
01 0912ltr. wpd
City of San Bernardino
Administrative Office j
CORPORATE OFFICES. N56 W17000 RIDGEWOOD DRIVE' MENOMONEE FALLS. WISCONSIN 53051 . (262) 703-7000
.
** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
Meeting Date (Date Adopted): ~ Item #
Vote: Ayes I..) 51 "'\ Nays 3
1
Change to motion to amend original documents: """-
n
Resolution #
Abstain _Lf
200 h3.S..'2.
Absent l..c
Reso. # On Attachments: - Contract tenn: -
Note on Resolution of Attachment stored separately: -=-
Direct City Clerk to (circle I): PUBLISH, POST, RECORD W/COUNTY
Date Sent to Mayor: ~
Date of Mayor's Signature: ~
Date ofClerklCDC Signature: 1\12\) b\
Date Me
i nature:
See Attached:
Attached:
See Attached:
60 Day Reminder Letter Sent on 30th day:
90 Day Reminder Letter Sent on 45th day:
Request for Council Action & StatT 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):
Copies Distributed to:
City Attorney t/ Code Compliance
Dev. Services
Parks & Rec.
Police
Public Services
Water
Notes:
NullNoid After: -
By: -
Reso. Log Updated: /'
Seallrnpressed: .-/
Date Returned: -
Yes ,/ No By_
Yes No -L By
Yes No V By
Yes NO+ By
Yes No_ By
EDA V
Finance
MIS
Others:
BEFORE FILING. REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE
YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term, etc,)
Ready to File: -'hI:. Date: ~\
Revised 01112/01