Loading...
HomeMy WebLinkAboutR34 EDAECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REQUEST FOR COMMISSION /COUNCIL ACTION FROM: RONALD E. WINKLER SUBJECT: 40TH STREET REDEVELOPMENT Director SURVEY AREA ORIU DATE: August 5, 1999 "INA L ------------------------------------------------------------------------------------------------------------------------------------------- Synopsis of Previous Comm ission/Councit/Com mittee Action(s): On 10/27/94, the Council authorized submission of a Section 108 Loan Application for 40`h Street Shopping Center to the U.S. Department of Housing & Urban Development. On 1/27/97, the Council authorized execution of a purchase option agreement with Sophia Salpatas. On 1/28/99, the RDA Committee continued an item to consider redevelopment plan adoption in the area around the 40`h Street Shopping Center. Recommended Motion(s): (Synopsis continued to next page...) (Community Development Commission) Motion A: That the Community Development Commission receive and file the Feasibility Study prepared by Rosenow Spevacek Group, Inc. (RSG) for the proposed 40`h Street Redevelopment Project. (Mayor and Common Council) Motion B: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO DESIGNATING A REDEVELOPMENT SURVEY AREA FOR PROJECT STUDY PURPOSES (40TH STREET). Contact Person(s): Gary Van Osdel /Ronald E. Winkler Phone: 5081 Project Area(s): N/A Ward(s): Four (4) Supporting Data Attached: 10 Staff Report ❑x Resolution(s) ❑ Agreement(s) /Contract(s) ❑x Map(s) ❑x Report FUNDING REQUIREMENT • -Amount: $ N/A Source: N/A Bud et Authority: N/A SIGNATURE: Gary an Osdel, Executive irector onald E. inkler, Director E omic Development gency Develop ent Department Commission /Council Notes: REW:SMM:public \development \susan \40th Street Survey Area COMMISSION MEETING AGENDA MEETING DATE: 08/16/1999 Agenda Item Number: Request for Commission /Council Action 40' Street July 21, 1999 Page Number -2- Synopsis of Previous Commission /Council/Committee Action(s): On February 4, 1999, the Redevelopment Committee discussed redevelopment plan adoption and forwarded a recommendation to proceed to the Commission. On March 15, 1999, the Council conducted a public hearing and approved an amendment to the City's 1998 -99 Annual Consolidated Action Plan reallocating $150,0000 to fund a redevelopment feasibility analysis and related costs for the proposed 40th Street and Waterman Avenue Redevelopment Project Area. On March 15, 1999, the Commission adopted Resolution #1999 -8A approving the execution of a professional services agreement with Rosenow, Spevacek Group, Inc. (RSG) for purposes of carrying out the redevelopment feasibility analysis for the proposed 40th Street and Waterman Avenue Redevelopment Study Area. REW:SMM:public \development \susan \40th Street Survey Area COMMISSION MEETING AGENDA MEETING DATE: 08/16/1999 Agenda Item Number: ECONOMIC DEVELOPMENT AGENCY STAFF REPORT 40th Street Redevelopment Survey Area Background Over the past few years, there have been several attempts by the City and Agency to revitalize the 40' Street area with little success. These efforts have included a commitment from HUD for a $2.295 million Section 108 loan, together with a $344,000 Economic Development Incentive Grant for the renovation of the 40" Street Shopping Center. In addition, the City has worked closely with existing property owners on rehabilitation concepts and designs for new retail developments. However, poor economic conditions in the area have discouraged existing owners to incur additional debt for renovation costs. In 1997, the Agency acquired an option to purchase a parcel of property owned by Sophia Salpatas. The option was allowed to expire due to the inability to assemble sufficient land area for new development through voluntary acquisition. Continued physical and economic decline in the area has made it apparent that revitalization may not be possible without redevelopment powers. As a result, major property owners such as Forecast Properties have encouraged the City to consider adoption of a redevelopment plan. Consequently, in March 1999, the Council /Commission authorized the Agency to retain the professional services of Rosenow Spevacek Group, Inc. (RSG) for the purpose of completing a redevelopment feasibility analysis for the 40" Street and Waterman Avenue Redevelopment Study Area. Feasibility Analysis RSG's preliminary findings of the physical and economic blighting conditions that exist within the study area indicate that a large portion of the residential and commercial properties qualify for inclusion in a potential redevelopment project. A parcel -by- parcel field survey conducted by RSG, combined with information obtained from other sources indicate that 74% of all parcels within the study area suffer from one or more physical blighting and/or economic blighting conditions, or both. The study area is comprised of deteriorated and dilapidated structures, with areas that do not meet current codes, have poor access and other design problems. The majority of the commercial properties in the study area contain deteriorated and underutilized structures with inconsistent architectural or design themes. Inadequate access and inadequate parking further exacerbate the poor condition and appearances of these properties. Within the last 5 years, property values in the study area have declined by over 9 %, compared to a 3% increase City -wide and a 4% increase County- wide. Taxable retail sales in the City and County between 1993 and 1997 have increased by 9% and 26% respectively. However, the study area has suffered a significant decrease of 10% for the same time period. REW:SMM:public \development \susan \40th Street Survey Area COMMISSION MEETING AGENDA MEETING DATE: 08/16/1999 Agenda Item Number: Economic Development Agency Staff Report 40`h Street Shopping Center July 21, 1999 Page Number -2- The feasibility analysis details the physical and economic conditions of the commercial and residential areas of the Study Area. It is concluded in the report that without governmental assistance utilizing the tools of redevelopment, Study Area properties will continue to decline. The powers of redevelopment are needed to assemble properties and provide financial assistance for improvements. Power of land assemblage is only one tool that may be used to benefit the area. Development will still be dependent upon private financing as well as the city's ability to provide the Section 108 Loan and the Economic Development Initiative Grant for the 40"' Street Shopping Center. In addition, the City's annual CDBG, HOME and ESG funds can be used to assist with land acquisition, demolition, infrastructure improvements, construction or rehabilitation projects. These funds, as well as 20% housing set -aside and potential tax increment monies may also be used for correcting the residential problems and promote development of senior housing in the area. Project Area Committee (PAC) It is recommended that a Project Area Committee (PAC) be formed due to the number of residential units within the Study Area that are likely to be occupied by low and moderate income people. A PAC is an elected body comprised of residential owner occupants, residential tenants, business owners (including non - residential property owners) and existing community organizations within a project area. In accordance with Redevelopment Law, each group must be adequately represented. The PAC will review the proposed redevelopment plan and may choose to prepare a report and/or recommendation about the redevelopment to the City Council. If a PAC opposes the adoption of a redevelopment plan, the City Council must adopt the plan by a two - thirds vote rather than a simple majority. In the event we move forward with the plan adoption, PAC procedures will be developed and presented to the Mayor and Council. Current Issues The first step in the Redevelopment Plan adoption process pursuant to California Community Redevelopment Law is the designation of a Survey Area for study purposes. From within the Survey Area, the Community Development Commission, in cooperation with the Planning Commission, will select the proposed boundaries of a project area that may be comprised of all or part of the Survey Area. Particular care should be taken in establishing the Survey Area to ensure that all areas that may benefit from a redevelopment program are included. Once the Survey Area is adopted, the boundaries of the proposed project area must be contained within the Survey Area. If the Planning Commission or Community Development Commission wishes to expand the proposed boundaries REW:SMM:public \development \susan \40th Street Survey Area COMMISSION MEETING AGENDA MEETING DATE: 08/16/1999 Agenda Item Number: Economic Development Agency Staff Report 40" Street Shopping Center July 21, 1999 Page Number -3- when they consider selection of the proposed Project Area, they would be prevented from such an expansion until the City Council expanded the Survey Area boundaries. In the pursuit of redevelopment of the 40" Street Area, a redevelopment program must be financially viable, the redevelopment project area must be predominately urbanized, and the project area must exhibit conditions of physical and economic blight that the private sector, governmental action, or both, cannot remedy. The next step in the adoption of a redevelopment plan is the adoption by the Planning Commission of a Preliminary Plan that designates more specific Project Area boundaries. The Preliminary Plan will then be brought before the Commission for approval. Boundaries The proposed Survey Area consists of 73.17 acres of commercial and residential uses in the northeastern portion of the City. The area is made up of two (2) non - contiguous portions (See map marked Exhibit A). The larger area is generally bounded by 44" Street to the north, Waterman Avenue to the east, Ralston Avenue and Sonora Drive to the south, and Electric and Mt. View to the west. The smaller portion is multi -unit residential, just to the east of Sierra Way on 49th Street. Fiscal Impact None Recommendation Staff recommends the Mayor and Common Council and the Community Development Commission adopt the form motions which (1) receive and file the feasibility study prepared for the proposed 40" Street Redevelopment project and (2) adopt the attached Resolution designating a Redevelopment Survey Area for that area commonly referred to as the 401" Street Study Area Ronald E. inkler, Director Development Department REW:SMM:public \development \susan \40th Street Survey Area COMMISSION MEETING AGENDA MEETING DATE: 08/16/1999 Agenda Item Number: COFT RESOLUTION NO. 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO DESIGNATING A REDEVELOPMENT 3 SURVEY AREA FOR PROJECT STUDY PURPOSES (40TH STREET) 4 5 6 7 THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO HEREBY FINDS, DETERMINES, RESOLVES, AND ORDERS AS FOLLOWS: SECTION 1. The Mayor and Common Council hereby acknowledge receipt of a report entitled "Feasibility Study Proposed 40`x' Street Redevelopment Project" dated July 1999. The 8 Mayor and Common Council of the City of San Bernardino desire to designate a certain area to 9 to be studied as a redevelopment survey area (the "Survey Area ") and authorize the San Bernardino Community Development Commission (the "Commission ") to proceed with further studies to 11 determine the feasibility of potential redevelopment activities within the Survey Area. 12 SECTION 2. The California Community Redevelopment Law ( "CRL ") provides that if f j directed by the Mayor and Common Council, the Planning Commission shall select a project 14 comprised of all or part of a redevelopment Survey Area. It is hereby determined that 15 consideration of a redevelopment project within said redevelopment Survey Area is in the best 16 interests of the City. 17 SECTION 3. The Mayor and Common Council hereby finds and determines that the 18 area requires study to investigate the feasibility of the formation of a redevelopment project to 19 abate and eliminate the condition of blight as described in the July, 1999 survey area study 20 report, and the Mayor and Common Council hereby designate the Survey Area (as depicted on 21 Exhibit "A ") as a redevelopment survey area within the meaning of Section 33310 of the CRL. 22 SECTION 4. The Mayor and Common Council hereby direct the Planning Commission 23 of the City of San Bernardino to select the boundaries for one or more redevelopment project 24 `5 areas within the Survey Area and to submit a preliminary plan for the redevelopment of such proposed project areas, pursuant to CRL Sections 33322 and 33325. 2 3 4 5 6 7 8 9 10 11 12 3 14 15 16 1 17 18 19 20 21 22 23 24 ?5 SECTION 5. The designation of any territory as part of a redevelopment survey area accomplished by action of the Mayor and Common Council prior to approval of this Resolution shall remain in full force and effect. //// //// //// -2- 2 3 4 5 6 7 s 9 10 11 12 3 14 15 16 17 18 19 20 21 22 23 24 1 ?5 1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO DESIGNATING A REDEVELOPMENT SURVEY AREA FOR PROJECT STUDY PURPOSES (40TH STREET) 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 , 1999, by the following vote to wit: Commission/Council Members: Ayes Nays Abstain p ESTRADA LIEN MCGINNIS SCHNETZ VACANT ANDERSON MILLER The foregoing resolution is hereby approved this Approved as to form and Legal Content: James F. Penman City Attorney By: -3- City Clerk day of Judith Valles, Mayor City of San Bernardino 1999. 48th St m m � c m m d c > m ; U Qm > X19 d L m 7 a o i I.-- Jn i �.� Ralstont- ■■�■•�Avenue�•■�■■ I m 7 39th St c m a ' o d m J in a Ps 3 > t C, yt8 \ 40th Street as m �i 4 c m it i City of San Bernardino NORTH ECONOMIC DEVELOPMENT AGENCY Aalstor i I NOT TO SCALE Proposed 40th Street Redevelopment Area 38th St FEASIBILITY STUDY PROPOSED 40TH STREET REDEVELOPMENT PROJECT Prepared For: The Economic Development Agency and The City of San Bernardino 201 North E Street, Suite 301 San Bernardino, California 92401 -1507 Prepared By: Rosenow Spevacek Group, Inc. 540 N. Golden Circle, Suite 305 Santa Ana, California 92705 Phone 714.541.4585 Fax 714.836.1748 E -Mail Address: RSGINCCA @aol.com July, 1999 3 TABLE OF CONTENTS SECTION PAGE # EXECUTIVESUMMARY ............................................................................... ..............................1 I. INTRODUCTION ................................................................................... ..............................4 11. LEGISLATIVE REQUIREMENTS ....................................................... ..............................6 III. DESCRIPTION OF PHYSICAL AND ECONOMIC CONDITIONS EXISTING IN THE STUDY AREA .......................................................................... ..............................9 IV. PRELIMINARY FINANCIAL FEASIBILITY ANALYSIS ................ .............................24 TABLES AND MAPS TABLES Table1 ............................................................................................................... ..............................9 Table2 .............................................................................................................. .............................19 Table3 .............................................................................................................. .............................20 Table4 .............................................................................................................. .............................21 Table5 .............................................................................................................. .............................22 Table6 .............................................................................................................. .............................28 Table7 .............................................................................................................. .............................29 Table8 .............................................................................................................. .............................30 Table9 .............................................................................................................. .............................31 MAPS Map1 .................................................................................................. ..................FollowingPage 5 APPENDICES Appendix 1 — Photographs of the Study Area EXECUTIVE SUMMARY The Rosenow Spevacek Group, Inc. ( "RSG ") was retained by the Economic Development Agency and the City Council of the City of San Bernardino to conduct a Feasibility Study to determine whether conditions pursuant to the California Community Redevelopment Law are substantial enough to proceed with the adoption of a redevelopment project area for the 40th Street Study Area ( "Study Area "). The information and recommendations of this study are based upon a parcel -by- parcel field study conducted by RSG, information gathered from secondary data sources, and a review of historical documents. The 40th Street Study Area consists of approximately 73.28 acres (excluding public rights of way) of commercial and residential uses in the northeastern portion of the City of San Bernardino. The area is made up of 2 non - contiguous portions. The larger area is generally bordered by 44th Street to the north, Waterman Avenue to the east, Ralston Avenue and Sonora Drive to the south, and Electric and Mountain View Avenues to the west. The other area is multi -unit residential, just to the east of Sierra Way on 49th Street. The existing commercial areas in the Study Area are located on 40th Street, as well as along certain portions of Sierra Way. These uses 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 results of the field survey indicate that 74% of all parcels in the Study Area suffer from one or more physical blighting conditions, one or more economic conditions, or both. The Study Area is comprised of deteriorated and dilapidated structures, with areas that do not meet current codes, have poor access and other design problems. The majority of the commercial properties in the Study Area contain deteriorated and underutilized structures with inconsistent architectural or design theme. Inadequate access and inadequate parking exacerbate the poor condition and obsolete appearance of these properties, and have contributed to the lack of business patronage and the overall decline in the economic viability of the commercial uses in the Study Area. Economic conditions in the Study Area are also strained. Property values in the Study Area have declined by over 9% over a five -year period, while values in both the City and County have increased. Despite substantial population growth and increasing retail sales in the City and County of San Bernardino, the Study Area has experienced a decline of 10.1% in its taxable sales in the last 4 years. As the economic viability of the commercial areas in the Study Area has diminished, necessary maintenance of buildings has been deferred. Property owners with little or no cash flow appear unable to fund improvements due to the relatively prohibitive cost of routine maintenance. A central focus in the Study Area is the 40th Street Shopping Center ( "Shopping Center ") and its environs. The physical and economic blighting conditions present in the Shopping Center include deterioration and dilapidation, defective design, substandard design, and a vacancy rate of nearly 40 %. The Shopping Center also suffers from varying grade levels, as the portion directly adjacent to 40th Street is of a higher grade than the southerly portion of the Center. The Shopping Center has suffered a loss of 2 anchor tenants in the last decade, which has made [ leasing vacant space problematic. The substandard condition of the Center, as well as the Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 1 City of San Bernardino development of a larger, newer, and more attractive adjacent shopping center fronting Sierra Way have further exacerbated this problem. The use of Waterman Avenue as the primary thoroughfare to the mountain areas, rather than Sierra Way, has also diverted a significant amount of traffic away from the commercial properties in the Study Area. Residential properties with the highest incidence of physical and economic blighting conditions in the Study Area are primarily located in the following areas: in the northern portion along 49th Street, near the corner of 44th Street and Mountain View Avenue, the area bounded by Electric Avenue, Mountain View Avenue and 49th Street, and adjacent to the 40th Street Shopping Center along Sonora Avenue. The properties along 49th Street exhibit the most severe conditions of deterioration and dilapidation in the Study Area. High proportions of residential units are boarded up and appear abandoned. Two large apartment complexes located near 44th Street and Mountain View Avenue are land - locked with inadequate access points, some of which require traveling through narrow alleys. The complexes also have bars on windows and doors, which indicates crime issues in the neighborhood. Additionally, these structures suffer from deferred maintenance and lack adequate tenant and visitor parking. Conditions documented in the southerly portion of the Study Area, along Mountain View and Electric Avenue include deterioration and dilapidation, inadequate parking access, outdoor storage, and incompatible uses. Finally, the residential area located to the south of the Shopping Center exhibited signs of varying grade levels, deferred maintenance, incompatible uses, and graffiti. Further, there are a number of multifamily properties that are vacant and/or have been taken back by HUD or the mortgage lenders. The 1990 Census reports that over 46% of the housing units in the City were constructed prior to 1960. The poor condition of the housing stock in portions of the Study Area is reflective of the older age structures and the lack of routine maintenance. The conditions noted above, and detailed in the following report, have resulted in the overall physical and economic decline of the commercial and residential areas of the Study Area. It is our opinion that without governmental assistance utilizing the tools of redevelopment, the Study Area properties will continue to decline, increasing the existing physical burden on the community and further diminishing the economic viability of the area. Multiple ownerships and small commercial lot sizes have acted as an impediment to rehabilitation and development. The powers of redevelopment are needed to assemble properties and provide financial assistance for improvements. In residential areas, many of which have been negatively impacted by the poor condition of the commercial properties, public intervention and assistance is needed for rehabilitation, reuse of abandoned buildings, and improved access and parking. The City of San Bernardino has a long history of initiating proposed projects to alleviate the blighting conditions at the 40`h Street Shopping Center with little success, including, previous attempts to include the area in a redevelopment project area. To provide necessary financial tools to initiate projects in the area, the City has obtained 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 40`h Street Shopping Center. In addition, the City annually receives Community Development Block Grant (CDBG) funding in the amount of $3,884,000, HOME funding in the amount of $1,773,000, and ESG funding in the amount of $138,000. It is anticipated that these funding sources can be used in combination with the financial tools available through Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 2 City of San Bernardino r redevelopment to alleviate blighting conditions in the Study Area. The principal financing mechanism of redevelopment is the tax increment financing. Preliminary projections indicated, that over the proposed 45 -year period to collect tax increment allowed under Community Redevelopment Law, the Study Area may generated approximately $50 million dollars of gross revenue. Of this amount, $34.2 million dollars of net tax increment revenue (after mandatory payments to the Area's taxing agencies) allocate to the Agency for redevelopment and housing purposes. These funds in conjunction with the other funding sources described above will provide the necessary dollars need to address and remedy the blighting conditions now prevalent within the Study Area. STUDY AREA BOUNDARIES The Study Area is generally bounded by 44th Street to the north, Ralston Avenue, and Sonora Drive to the south. Electric Avenue and Mountain View Avenue to the west, and Sepulveda Avenue and Waterman Ax,enue to the east. In addition, a section of high- density apartments north of this area is included in the Study 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. Major land uses in the Study Area consist of retail, commercial and residential uses located directly adjacent to or near commercial and office properties. A map of the Study Area is attached as Map 1 of this Study. RECOMMENDATIONS Based on the conditions of physical and economic blight documented in this Study, it is RSG's preliminary determination that there is sufficient evidence to move forward with the adoption of a redevelopment project. Additionally, because of the number of residential units within the Study Area, it is also recommended that a Project Area Committee be formed pursuant to California Community Redevelopment Law. Rosenow Spevaeek Group, Inc. Feasibility Study for the July, 1999 3 City of San Bernardino I. INTRODUCTION The Rosenow Spevacek Group, Inc. ( "RSG ") has been retained by the Economic Development Agency of the City of San Bernardino ( "Agency ") and the San Bernardino City Council ( "Council ") to analyze the feasibility of establishing a redevelopment project area. More specifically, the City requested that RSG review previously prepared studies and materials to assess historical trends in the Study Area and assist in preliminary analysis to identify appropriate redevelopment project area boundaries. To this end, RSG has prepared a Feasibility Study ( "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"). With the assistance of studies to provide historical perspective on portions of the Study Area, and other data provided by the City and other sources, the analysis presented in this report focuses primarily on those areas which have been identified by RSG for inclusion in a potential redevelopment project area, as shown in on Map 1 ( "Study Area "). RSG's preliminary findings of the physical and economic blighting conditions present within the Study Area to date indicate that a large portion of the residential and commercial areas in the Study Area qualify for inclusion in a potential redevelopment project. The properties contained within the Study Area appear to exhibit conditions of physical and economic blight, which cannot be alleviated by private enterprise and /or government action, without redevelopment. However, certain issues such as some parcel level analyses, lease rates, building code violations, and crime statistics require further review and analysis by RSG staff. It is important to note that this Study is limited in nature and therefore in scope. For example, this Study does not recommend a specific redevelopment program of activities, or examine the potential costs associated with such a redevelopment program, and therefore does not make any formal determination of the economic feasibility of redevelopment. Section 33352(e) of the CRL requires that when a project is adopted, the Agency must provide a detailed explanation of the proposed method of financing so that the City Council may make a finding, in the ordinance adopting the redevelopment plan, that the plan is economically sound and feasible. While we are confident that feasibility can be adequately demonstrated to fulfill the CRL requirements, sources of revenues other than tax increment revenue will need to be identified and incorporated into a full financial analysis if a redevelopment plan adoption is undertaken. The Agency is not bound by the assumptions used to demonstrate financial feasibility during the adoption process, but will be required to adopt an implementation plan, covering the first five years of redevelopment activity, concurrent with the plan adoption. In addition to the above limitation, this Study is limited in its assessment of blight. While blight assessment performed for this Study was based primarily on a parcel -by- parcel survey, it contains a review of secondary data sources and does not contain the full scope of the comprehensive review and research of secondary data sources that would be required for an actual redevelopment plan adoption. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 4 City of San Bernardino r re-7 Another factor to consider in connection with the use of redevelopment is the formation of a Project Area Committee. Section 33385 of the California Community Redevelopment Law requires that a Project Area Committee ( "PAC ") must be formed in either of the following situations: (1) A substantial number of low and/or moderate income people reside within a project area, and the redevelopment plan contains the authority for the agency to acquire, by eminent domain, property on which any persons reside; or (2) The redevelopment plan contains one or more public projects that will displace a substantial number of low and/or moderate income persons. Based upon the number of residential units within the Study Area that are likely to be occupied by low and /or moderate income people, RSG recommends that a PAC is formed. A PAC is an elected body comprised of residential owner occupants, residential tenants, business owners (including non - resident property owners), and existing community organization within a redevelopment project area. Each group must be adequately represented. A PAC reviews the proposed redevelopment plan and may choose to prepare a report and/or recommendation about the redevelopment to the City Council. If a PAC opposes the adoption of a redevelopment plan, the City Council must adopt the plan by a two - thirds vote, rather than a simple majority. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 5 City of San Bernardino L---j u 49th Street 48th Street 47th Street \ 46th Street /) N T � o � a m J m Q 45th Street m e m Q. A (n 3 ■■�� ■ ■� ■ ■� 44th Street I -- 43rd Street I42nd Street ■ IIII I I 41st Street i 40th Street armei to 7 c m > 3 6/ Glentair c ` ■� Ralston �u�■■�Avenue■�■■�■y — I 39th St — a — I o rn � J N W ate `I d e > a m w us NORTH Sonora IRalston City of San Bernardino \/ ECONOMIC DEVELOPMENT AGENCY NOT TO SCALE --, 38th St Proposed 40th Street Redevelopment Area _ T � I A w ` ■� Ralston �u�■■�Avenue■�■■�■y — I 39th St — a — I o rn � J N W ate `I d e > a m w us NORTH Sonora IRalston City of San Bernardino \/ ECONOMIC DEVELOPMENT AGENCY NOT TO SCALE --, 38th St Proposed 40th Street Redevelopment Area II. LEGISLATIVE REQUIREMENTS Section 33030 of the CRL states that "there exists in many communities blighted areas which constitute physical and economic liabilities, requiring redevelopment in the interest of the health, safety, and general welfare of the people of these communities and of the state." This Report describes the existing physical and economic conditions present within the Study Area that create blight, the factors which cause a reduction of or a lack of proper utilization of the Study Area, why these blighting conditions create a burden on the community, and why private enterprise acting alone is unable to reverse or alleviate the blighting conditions found within the Study Area. Section 33030 of the CRL states a blighted area is one that contains both of the following: 1. "An area that is predominantly urbanized, as that term is defined in Section 33320.1, and is an area in which the combination of conditions set forth in Section 33031 are 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 or 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." 2. "An area that is characterized by either of the following: a. One or more conditions set forth in any paragraph of subdivision (a) of Section 33031 and one or more conditions set forth in any paragraph of subdivision (b) of Section 33031; b. The condition described in paragraph (4) of subdivision (a) of Section 33031." Section 33031 of the CRL describes both physical and economic conditions that cause blight. The "physical" conditions that cause blight, as detailed in subdivision (a) of Section 33031, are as follows: 1. "Buildings in which it is unsafe or unhealthy for persons to live or work. These conditions can be caused by serious building code violations, dilapidation and deterioration, defective design or physical construction, faulty or inadequate utilities, or other similar factors. 2. Factors that prevent or substantially hinder the economically viable use or capacity of buildings or lots. This condition can be caused by a substandard design, inadequate size given present standards and market conditions, lack of parking, or other similar factors. 3. Adjacent or nearby uses that are incompatible with each other and which prevent the economic development of those parcels or other portions of the area. 4. The existence of subdivided lots of irregular form and shape and inadequate size for proper usefulness and development that are in multiple ownership." Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 6 City of San Bernardino The "economic" conditions that cause blight, as stated in subdivision (b) of Section 33031, are as follows: 1. "Depreciated or stagnant property values or impaired investments, including, but not necessarily limited to, those properties containing hazardous wastes that require the use of an agency's authority as specified in Article 12.5 (commencing with Section 33459). 2. Abnormally high business vacancies, abnormally low lease rates, high turnover rates, abandoned buildings, or excessive vacant lots within an area developed for urban use and served by utilities. 3. A lack of necessary commercial facilities that are 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, that has led to problems of public safety and welfare. 5. A high crime rate that constitutes a serious threat to the public safety and welfare." This analysis, and the assessment of the blighting conditions found within the Study Area, is based upon the following: 1. A windshield survey of the properties within the Study Area conducted during May 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. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 7 City of San Bernardino 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. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 8 City of San Bernardino III. DESCRIPTION OF PHYSICAL AND ECONOMIC CONDITIONS EXISTING IN THE STUDY AREA The following discussion presents a general analysis of physical and economic blighting conditions within the Study Area. As mentioned in the Executive Summary, for the purposes of the description of physical conditions presented in this analysis, the Study Area is the area shown on Map 1. However, the analysis of the economic conditions presented may in some instances (e.g., crime statistics) include additional areas beyond the Study Area because the City provided data for a district that encompasses additional land. Table 1 presents blight findings pursuant to the field study. TABLE 1 Adoption of the 40th Street Redevelopment Project Area Summary of Blighting Conditions (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) Totals include Parcels Designated for Use by Business Establishments with at least one vacant unit. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 9 City of San Bernardino No. of No. of %of Parcels with Physical Blighting Parcels /Properties with Parcels/Properties Blighting Conditions Conditions Blighting Conditions in Project Area in Project Area Buildings Unsafe /Unhealthy to Live or work Serious Building Code Violations 18 234 7.69% Dilapidation and Deterioration Deferred Maintenance 109 234 46.58% Moderate Rehabilitation 24 234 10.26% Extensive Rehabilitation 11 234 4.70% Subtotal 144 234 61.54% Defective Design/Physical Construction 57 234 24.36% Faulty or Inadequate Utilities 46 234 19.66% Factors that Prevent or Hinder the Economically Viable Use or Capacity of Bldgs. or Lots Substandard Design (1) 75 234 32.05% Lack of Parking 29 234 12.39% Incompatible Adjacent Uses 10 234 4.27% Lots of Irregular Shape and Inadequate Size and Development in Multiple Ownership 25 234 10.68% Total Physical Blighting Conditions (2) 171 234 73.08% Economic Blighting Conditions Declining Property Values /Impaired Investments 19 234 8.12% Business Vacancies (3) 16 69 23.19% Abandoned Buildings 9 234 3.85% Total Economic Blighting Conditions (2) 39 234 16.67% Nt� with one,or more Physicai Blighting Con�tliions � �� � � � �'otai Gonditaous,or both � .� =�` 174 :': 234 � oiron+�.or tu►ore EeonomicBlhting (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) Totals include Parcels Designated for Use by Business Establishments with at least one vacant unit. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 9 City of San Bernardino 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. Seventy-two percent of all parcels within the Study Area suffer from one or more conditions of physical blight. The physical blighting conditions found in the Study 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 Study Area. The area analyzed primarily comprises the commercial centers along 40th Street and Sierra Way, which are important resources for neighborhood serving commercial uses in the Study Area, and the surrounding residential uses. Poor physical conditions place a burden on the immediate community by causing a lack of necessary commercial uses needed or desired by area residents. The poor physical and economic conditions of the commercial property also impact surrounding neighborhoods, as residents have no incentives in some cases to upgrade and/or maintain their properties. The magnitude of these building and site problems has seriously 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 Study Area. The following discussion provides a preliminary summary of physical blighting conditions found to be pervasive within the Study Area. The photographs contained in Appendix 1 provide examples of conditions within the Study 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. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 10 City of San Bernardino In order to assess the level of building deterioration occurring in the Study Area, a parcel -by- parcel survey of blighting conditions was conducted in part to assess the overall conditions of buildings in the Study Area. Buildings in the Study 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 plaster or foundations. 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 Study Area. The windshield survey identified a total of 144 parcels (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 include broken windows, boarded up abandoned buildings, rotting wood eaves or trim, 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, 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 Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 11 City of San Bernardino similar to those cited above. One of the most dramatic examples of the deterioration conditions in some commercial areas is the Shopping Center, where the western side is not in use and has been partially covered with exposed building materials, or has boarded up windows. Further, the rear of these buildings show exposed plumbing and electrical wiring, cracked foundations, peeling paint, and deteriorated building materials. The majority of all structures within the Study Area are residential. The overall condition of the building stock in the Study Area is reflective of the older age of the housing. Residential units in the area are 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 Study Area. These "bungalow" type houses are quite deteriorated, primarily due to age and lack of maintenance. Further, these residential properties contain trash and other debris accumulating around properties. In addition, the residential area along 49th Street contains at least six abandoned; boarded up buildings, as well as a large number of units in need of moderate to extensive rehabilitation. 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. In the absence of such repair, deterioration and dilapidation like that observed in the Study Area can have an injurious effect on the physical and economic viability of the specific property, as well as the surrounding area. (b) Code Violations Violations of local or state building codes is a condition identified under Section 33031(a) of the CRL, which characterize 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. According to a City of San Bernardino Senior Code Compliance Officer familiar with the Study 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. Another recent concern 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. Also, large apartment complexes on both Ralston and Sepulveda Avenues have been notified by code enforcement staff regarding serious code violations such as plumbing, heating, and electrical deficiencies. The City of San Bernardino covers 59.83 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 Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 12 City of San Bernardino violations in their neighborhoods. However, due to the fact that code violations are investigated if a complaint is filed or as 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, 1998 and the first six months of 1999. Code enforcement log data for the Study Area indicates that code violations have increased by 8% between 1997 and 1998. A total of 32 properties (or 13.6% of all Study Area properties) was 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 Study Area properties) was cited with serious code violations in 1998. Serious code violations are violations, which are potential threats to public safety such as illegal construction, outdoor storage /trash & debris, illegal home occupancy, building maintenance violations, and violations, which are health code violations and fire code violations. Violations, which are referred to outside agencies such as health, air quality, and fire code violations, require further research to accurately determine the full range of code violations with the Study Area. (c) Faulty or Inadequate Utilities Faulty or inadequate utilities, is a condition identified under Section 33031(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 Study 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 46 properties, (20% of parcels in the Study 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 Avenue, south of 40th Street, and on some of the high - density apartment buildings between 44th Street, Sepulveda Avenue, and 42nd Street. The majority of the properties suffer from exposed or damaged wiring. 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 modern code standards. Substandard wiring is also an indicator of obsolescence (i.e., that the building is approaching the end of its useful economic life). Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 13 City of San Bernardino (d) Lots /Buildings 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, 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 modern 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 too) 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 24% of the parcels in the Study 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 Study 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 retail uses along 40th Street. This lack of or inadequate loading areas results in trucks loading and unloading in parking lots, impeding access to businesses and restricting traffic flow. Towards the north end of the Study 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 and visibility for these commercial properties. Furthermore. there are few designated parking spaces for these establishments. 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 Avenue 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. Rosenow Spevacek Group, Inc. FeasibilityStudy for the July, 1999 14 City of San Bernardino 2. Factors that Prevent or Substantially Hinder the Economically Viable Use or Compatibility of Buildings or Lots Buildings in the Study 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. Seventy -five (32.05 %) of the parcels surveyed had substandard design. (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 Study 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 and 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. 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 40th Street to do so. The 40th Street Shopping Center is one of the two major retail centers in the Study Area. The Shopping Center, located on 40th Street between Waterman Avenue and Sierra Way, is 14 acres in size, which comprises 19% of the Study 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 (i.e., 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 Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 15 City of San Bernardino internal traffic circulation, the presence of trash and other debris. In addition, the many differing facades result in a lack of Center identification, and signage is poor. 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 have prevented any one owner to obtain financing for rehabilitation. Another indicator of obsolescence was the prevalence of outdoor storage, which was noted on many commercial properties particularly along Sierra Avenue. 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 modern business activity. When outdoor storage areas are unscreened, as in the Study Area. it contributes to the declining appearance of an area. It appears that the economic value of commercial land in the general area encompassing the Study Area has gradually declined over the years as the needs of modern 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 Study Area has a high proportion of vacant tenant spaces. Sixteen of the 69 commercial parcels, or 239,0, have at least one vacant unit. (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 3303l(a)(2) of the CRL. Another factor specific to the Study Area is inadequate parking, which inhibits the economic viability of properties in the Study Area. Properties that do not have adequate available 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 29 parcels, or 12% of the properties in the Study 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 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 cover several businesses, providing insufficient space for turning around should all of the spaces be full. Further, these developments do not have alley access, so all loading must be done in the small parking lots. Additionally, the strip commercial center to the north of this property provides no off - street parking for patrons. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 16 City of San Bernardino 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. This condition was noted on ten of the properties, or four percent of parcels within the Study Area, where residential properties are directly adjacent to commercial properties. 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. 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, and 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 Study 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 Study Area 9 parcels (8 %) are inadequate in size and under multiple ownership. In order to determine appropriate minimum lot sizes for properties within the Study 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 Study 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 and 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. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 17 City of San Bernardino 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 Study Area further discourages any prospect of attracting private sector investment. Even in the unlikely event that two or three parcels were owned by the same property owner and 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. 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 Study Area has been analyzed and information and data have been gathered from City, County, and private sources to document the deteriorating economic conditions of the Study Area. The following describes the economic blighting conditions that are present and contribute to the lack of proper utilization of the properties within the Study 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 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 Study Area, trends in secured assessed property values, which include land values and building improvements for fiscal years 1993 -94 through 1998 -99, were analyzed for the Study Area and compared to those for the City and the County as a whole. Data obtained from the San Bernardino County Auditor - Controller's office indicates that the total secured assessed valuation in the Study Area has declined by over 9% over a five year period, from $41,118,009 in fiscal year 1993 -94 to $37,371,172 in 1998 -99, compared to a 3% increase City -wide and a 4% increase County -wide over the same time period. This significant decrease in assessed property values in the Study Area compared to the increases in both the City and the County is an indicator that the area's economic condition is weak and Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 18 City of San Bernardino investment in the area is impaired. Table 2 below presents the secured valuation for the Study Area, the City, and the County for fiscal years 1993 -94 through 1998 -99. TABLE 2 ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO Comparative Secured Assessed Values, 1993 -94 through 1998 -99 CHANGES IN ASSESSED VALUATION Changefrom 1993-94 1994-95 9I 95-96 91 96-97 1997-99 1998-99 FY 1993-9 Proposed Project Area $41,118,009 $41.195.872 $37,560,746 $38,035.643 City of San Bernardino $3,382,524,711 $3,353,924,718 $3,374,643.679 $3,396,989.862 County of San Bernardin $53,270,888,724 $52,616,134,087 $52,964,717,925 $53,531,875,400 Source. TRW Redi -Data MetroScan, HdL Companies and San Bernardino County Auditor Controller's Office, 1999. Note. TRW Redi -Data MetroScan data, not San Bernardino County Auditor Controller's Off-Ice data, was utilized in the analy! Proposed Project Area secured assessed values. $37,468,172 $37.371,781 - 9.1/9. $3,424,621,285 S3,467,788,731 1.52% $54.410,823,045 $55,263,360,728 3.74% is of The significant drop in property values in the Study Area between fiscal years 1993 -94 and 1998 -99, compared to increases in the City and County, indicates that property values in the Study Area are weak. 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 (i) 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 Study Area. Although Waterman Avenue is used as the primary thoroughfare to the mountain areas rather than Sierra Way, the primary commercial corridors of the Study 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 Study Area and the same information for the City and County of San Bernardino between 1993 and 1997. For 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 Study Area has suffered a significant decrease of 10% for the five -year period. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 19 City of San Bernardino TABLE 3 ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO Taxable Sales Trends, 1993 through 1997 Source: California State Board of Equalization and MBIA MuniServices Company The results of the analysis of State Board of Equalization and MBIA data presented above indicates that many of the existing retail businesses in the Study 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 Study Area to purchase goods and services. 2. Abnormally Low Lease Rates Preliminary research of lease rates within the Study Area and the City suggests that lease rates are substantially lower in the Study Area as compared to those in surrounding cities. However, further research, including a survey of local real estate brokers and firms, will be necessary to determine actual lease rates throughout the area and the Inland Empire. 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 Study 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 Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 20 City of San Bernardino 1993 1994 1995 Taxable Sales %change Taxable Sales %change Taxable Sales %change Study 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 CHANGE IN 1996 1997 TAXABLE SALES Taxable Sales %change Taxable Sales %change Study Area 336,824 2.17% 321,685 4.49% - 10.14% City of San Bernadino 1,792.467 2.58% 1,827.233 1.94% 8.89% County of San Bernadino 13,126,523 5.16% 14,005,016 6.69% 25.81% City of Colton 410.918 -1.10% 394,069 -4.10% 0.73% City of Redlands 477.436 3.89% 521,703 9.27% 19.93% City of Rialto 391,953 11.44% 468,630 19.56% 43.95% Source: California State Board of Equalization and MBIA MuniServices Company The results of the analysis of State Board of Equalization and MBIA data presented above indicates that many of the existing retail businesses in the Study 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 Study Area to purchase goods and services. 2. Abnormally Low Lease Rates Preliminary research of lease rates within the Study Area and the City suggests that lease rates are substantially lower in the Study Area as compared to those in surrounding cities. However, further research, including a survey of local real estate brokers and firms, will be necessary to determine actual lease rates throughout the area and the Inland Empire. 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 Study 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 Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 20 City of San Bernardino the property had been vacant. The results of the field survey, 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 brokers 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 Study Area. 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 Study Area (Table 4). As shown in Table 4, all but one shopping center has vacancies. Of this amount, the centers located at 4276 North Sierra Way and 4236 North Sierra Way have critical vacancy rates of 89% and 40 %, respectively. TABLE 4 ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO Shopping Centers and Stip Malls in Survey Area Shopping Center Tenant Spaces Vacant Tenant Spaces % Vacant 4276 N. Sierra - Commercial Strip 9 8 88.89% 4236 N. Sierra - Commercial Strip 5 2 40.00% 40th Street Shopping Center 65 23 35.38% Lucky's Shopping Center 17 6 35.29% 171 W. 40th Street - Commercial Strip 8 2 25.00% 3990 N. Sierra - Commercial Strip 5 1 20.00% 3970 N. Sierra - Commercial Strip 4 0 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 Study 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 Study Area contain large enough structures to house a "large" retailer or a value oriented discount retailer. Because of this, developments in other parts of the City not only draw residents out of the Study Area to purchase goods and services, but also inhibit other national retailers from adding locations in the area. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 21 City of San Bernardino 4. A High Crime Rate That Constitutes A Serious Threat To The Public Safety and Welfare According to the Community Redevelopment Law, "a high crime rate that constitutes a serious threat to the public safety and welfare" constitutes 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 Study Area was analyzed. As shown on Table 5, information obtained from the Police Department indicates that the total number of the most serious reported crimes in the police districts that encompass the Study Area have 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 0 1 13 22 53 102 48 239 * - 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 1998 was only available for the time span of January 1, 1998 to July 31, 1998 due to computer conversions for compliance with Year 2000 issues. 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 Study Area. Crime represents an additional cost in conducting businesses, as well as attracting new businesses to the Study 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. Increases in crime rates may also negatively influence property values in an area by diminishing the area's desirability. Give 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 Study Area. 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. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 22 City of San Bernardino Further analysis of crime in the Study Area will be presented in the documents prepared during the redevelopment plan adoption process. CONDITIONS THAT CAN BE ALLEVIATED BY REDEVELOPMENT This Report provides a description of the physical and economic blighting conditions prevalent within the Study Area. The combination of these conditions has caused a physical and financial burden on the City which cannot reasonably be expected to be reversed or alleviated by private enterprise, or governmental action, or both, without redevelopment. This is primarily due to the lack of incentive for the private sector to invest in this area. Redevelopment offers planning and financial tools to the City to remediate the negative conditions in the Study Area through implemented projects and programs. For example, a commercial rehabilitation program would be established to provide assistance. in the forms of low interest loans and grants, to businesses in the Study Area to encourage and assist in restoring, modernizing, and improving commercial structures. Property acquisition could be used in some cases of multiple ownership as a means for restoring and /or recycling buildings suffering from a variety of physical and economic blighting conditions. A program of this type could enhance the appearance, visibility and economic viability of the existing shopping areas. More specifically, projects for first- generation retail centers in the Study Area could include commercial rehabilitation, architectural fagade enhancement and the acquisition and redevelopment of vacant properties and structures, parking facilities, and street improvements. This type of program could substantially improve the physical appearance, structural integrity and economic viability of buildings, which will have the effect of alleviating or eliminating physical blighting conditions such as deterioration, code violations, defective design and substandard design. In addition, the rehabilitation and modernization of the building stock will also have the effect of reversing economic blighting conditions including impaired investments, declining property values and business vacancies. Overall, the primary focus of this program could be to transform the obsolete commercial corridors into economically viable shopping districts. With regard to the residential portions of the Study Area, redevelopment would provide financial assistance through the requirement to set aside not less than 20% of the tax increment revenue generated by a redevelopment project into a low and moderate income housing fund. These funds would be used to increase, improve, and preserve the supply of low and moderate income housing in the Study Area. Specifically, the Agency could implement one or more of the following programs: 1) residential rehabilitation loan program; 2) residential rehabilitation grant program; 3) residential acquisition and rehabilitation program; 4) property acquisition assistance for qualified home buyers, such as a first -time home buyers program; 5) residential loan assistance; and 6) assistance in the construction of new dwelling units. This program could assist very low, low and moderate income persons to not only rehabilitate and maintain existing properties in order to alleviate physical conditions such as deterioration and dilapidation, but may also provide relocation assistance for residential properties in the Study Area affected by incompatible uses. Feasibility Study for the Rosenow Spevacek Group, Inc. 23 City of San Bernardino July, 1999 IV. PRELIMINARY FINANCIAL FEASIBILITY ANALYSIS The successful implementation of a redevelopment program in the Study Area will require both capital and the tools and powers available to the Agency with the adoption of a redevelopment plan. Redevelopment is traditionally funded through tax increment financing and is often supplemented with State and/or Federal funds. Redevelopment agencies do not have the authority to raise taxes or impose new assessments. Instead, tax increment financing allows for a redistribution of future property tax revenue to a redevelopment agency. Tax increment revenue is property tax revenue generated by increases in assessed values over an established base year value. When a redevelopment project area is established, the county auditor - controller sums up the existing value of all properties within the project area; this value is called the base year value. As subsequent year assessed values within the project area increase due to the reassessments provided for by Proposition I) (property improvements and /or sales, and an up to 2% inflation adjustment), the resulting property tax revenue generated from this incremental increase in assessed value over the base year value is allocated to a redevelopment agency to fund redevelopment activities. The chart below graphically depicts how tax increment is generated. The underlying philosophy of tax increment financing is that without redevelopment, property tax revenues within a redevelopment project area would remain generally flat or even decline. However, when redevelopment powers are utilized in a proactive mode, such actions should result in an increase in property values. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 24 City of San Bernardino TAX INCREMENT Ak FINANCING W Red evelopm ent JRedevelopment Project Period Q Project Area Created Completed > Tax Base Value Set O ■ Increase In Assessed W N New Private ■ Valuation Accrues to N Investment Other Agencies w t� rn Increase Assessed ' ' Valuation for Redevelopment a ■ I I Start Project 10 I _j I I 20 30 40 s0 YEARS The underlying philosophy of tax increment financing is that without redevelopment, property tax revenues within a redevelopment project area would remain generally flat or even decline. However, when redevelopment powers are utilized in a proactive mode, such actions should result in an increase in property values. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 24 City of San Bernardino When a redevelopment program and project area are established, all of the property tax revenues generated from any future increase in the assessed value of properties is allocated to the agency. Upon receipt, an agency is statutorily required to: 1) deposit 20% of the tax increment revenue into a low and moderate income housing fund in order to improve and expand the community's supply of affordable housing, and 2) remit statutory payments to each of the taxing agencies who collect property taxes from the project area. With respect to the latter, a legally prescribed formula is established that calls for payments equal to 25% of the remaining 80% nonhousing tax increment revenue during the first ten years of a redevelopment project. Beginning in the 11th year and again in the 31st year of a redevelopment project, these amounts increase pursuant to a statutory formula. In general, over the 45 -year time period that a redevelopment agency may collect tax increment revenue, $0.31 of every $1.00 of tax increment revenue is allocated to the area's taxing agencies; the redevelopment agency retains $0.20 for affordable housing programs and $0.49 for nonhousing programs. The chart below depicts the disposition of the three primary ways tax increment revenue is distributed. Disposition of Tax Increment Revenues Statutory Payments (to Affected Taxing Agency Agencies) Nonhousing 31 % Fund Revenue 7Agency Housing Fund Revenue 20% AB 1290, adopted in 1993, changed the CRL by imposing upon redevelopment project areas new limits and financing provisions, as well as requiring mandatory pass throughs of tax increment to affected taxing agencies. In general, these new provisions have had a somewhat negative impact on the financial feasibility of new redevelopment project areas. Two provisions that have the greatest financial impact on new project area formations are: (1) the 20 year time limit on incurring (nonhousing fund) debt, and (2) the provision for mandatory tax increment pass throughs. The mandatory pass through provision allocates approximately 31% of all tax increment generated from a project area over the 45 -year term for collecting tax increment to its taxing agencies. These funds are passed through to the affected taxing agencies (excluding the City) on a formula basis specified in the CRL that increases the percentage allocated to the taxing agencies over time. The second provision limiting the amount of time an agency has to incur debt severely limits the dollars available to invest in the redevelopment of a project area, particularly as it relates to bonding capacity. These limits can be extended through the Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 25 City of San Bernardino amendment of a redevelopment plan. However, an amendment of this type would require the resubstantiation of blight. POTENTIAL 40TH STREET PROJECT AREA TAX INCREMENT REVENUE Tax increment revenue projections were constructed to examine the preliminary financial feasibility of the Study Area. All projections assumed that the established base year would be 1999 -2000 (see Table 6). The estimated base year value utilized in the projections was obtained by totaling the fiscal year 1998 -99 secured assessed valuation of all properties within the complete Study Area, as shown on Map 1, and inflating this amount by 1.8 %. The projections in Table 6 show the total estimated fiscal year 1999 -2000 base year value of $47,485,520; $38,044,473 in secured value and $9,366,303 in unsecured and utility value. In total, the redevelopment project may generate $34.2 million in net tax increment for both housing and non - housing projects. Table 6 utilizes an annual growth rate for secured assessed valuation of between 2% and 5 %. Unsecured assessed values were estimated to increase at a rate of 0.25% annually over the term of the projections shown in Table 6. For the purposes of reviewing the proposed project's financial potential a New Development scenario has been created. Table 7 summarizes 7 separate new development projects that could be developed. New development values are net of current assessed values for land and improvements. While some of these potential projects could occur without redevelopment, the majority of the 7 would require at least the Agency's power to assemble properties, if not some financial support. • Project I assume the expansion of the Lucky's located on Sierra Way. This project would require the removal of a number of retail structures that front the center and the acquisition and inclusion into the market of the two adjoining structures to the north of the market. • Project II envisions construction of a Big Box retail use on the 40th Street and Lugo Avenue shopping center. This project of approximately 10 acres would require the assembly of 11 parcels including the apartment properties located on the north side of Sonora Drive. • Project III assumes the rehabilitation of the Stater Brothers store located at 40th Street and Waterman Avenue. • Project IV envisions the development of 60 units of Senior Housing on vacant residential property within the proposed Study Area. • Project V assumes the rehabilitation of a number of the multifamily properties located on 49th Street. • Project VI assumes the development of 6 single - family houses on the vacant properties on the north side of 49th Street. Rosenow Spevacek Group, Inc. Feasibility Study for lire July, 1999 26 City of San Bernardino • Project VII envisions the development of a second Senior Housing project of 100 units within the vacant and underutilized residential area of the Study Area. OTHER FUNDING SOURCES Redevelopment will provide additional tools in assisting this declining area. The Study Area already benefits from several other funding sources that would be available to assist redevelopment efforts. The City has qualified for a $2,295,000 Section 108 Loan for the 40th Street Shopping Center, as well as a $344,000 Economic Development Initiative Grant. The City annually receives $3,884,000 from Community Development Block Grant (CDBG) funding, $1,773,000 from HOME Funds, and $138,000 from ESG funding. These funds can be used for a wide array of eligible activities including land acquisition, demolition, infrastructure improvements, construction or rehabilitation, and related development costs within targeted acres of the City. These funds, combined with tax increment revenues expected to be generated by one proposed Project Area will significantly increase the financial feasibility of revitalizing the Study Area. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 27 City of San Bernardino C� TABLE 6 sT11nY ARFA.HYFnTHFTICAL ESTIMATED TAX INCREMENT REVENUE Notes. BY = Base Year Growth Rates over 2% reflect the statutory 2% assessed value increase limit per Pmpos4lon 13, plus assessed valuation increases due to new wnstructan and reassessment from property sales. Housing set aside per Section 33334.2, Community Redevelopment Law (Health 6 Safety Code) Statutory payments per Section 33607.5 (b), (c), and (d), Community Redevelopment Law (Health 8 Safety Code) Tax Increment not collected in Year 1 due to assumed adoption date after January 1, 1999 Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 28 City of San Bernardino Assumed Unsewmd Increased Gross Housing Gross Total Net Cumulative Total P I Fiscal Growth Secured &Utility value Incremental Tax Set Nonhousing Statutory Nonhousing Net Housing Years Rate Value Value @.25 %inc. from Value Increment Aside Revenue Pass Thru Revenue Nonhousing Nonhousing n (estimated @ 25% of Payments Revenue sec)* construction 1% 20% Y 998 -99 1999.2000 1.8% 37,371,781 38,044,473 9,342,945 9,366,303 - BY 2000 -01 2% 38.805.363 9.389,718 1,480.355 14,804 Agency will not receive tax increment until following fiscal year 2 2002 -03 3% 39,969,523 9,413,193 7,788,232 10.456,222 104,562 20,912 83,650 20,912 62,737 62,737 83.650 3 2002 -03 3% 49,190,488 9,436.726 6,422,880 18,335,367 183,354 36,671 146.683 36,671 110,012 172,750 146.683 4 2003-04 3% 57,281,769 9,460,317 8.759,383 28,786,743 287,867 57,573 230,294 57,573 172,720 345.470 230.294 5 2004-05 4% 68,682,798 9,483,968 831,600 32,283,640 322,836 64,567 258.269 64,567 193,702 539,172 258,269 6 2005-06 4% 72,294,974 9,507,678 35,087,926 350,879 70,176 280,703 70,176 210,528 749.699 280,703 7 2006 -07 4% 75.186.773 9,531,447 38,003,494 380,035 76,007 304,028 76.007 228.021 977,720 304.028 e 2007 -08 4% 78,194,244 9,555,276 41.034,794 410,348 82,070 328,278 82,070 246,209 1,223,929 328,278 9 2008 -09 4% 81,322,014 9.579.164 44,186.452 441.865 88,373 353,492 88,373 265,119 1,489,048 353,492 10 2009 -10 5% 85,388.114 9,603.112 48.276,500 482,765 96,553 386,212 96.553 289,659 1,778,707 386.212 11 2010 -11 5% 89,657.520 9,627,120 52,569.914 525,699 105,140 420.559 112,353 308,207 2,086.913 413.346 12 2011 -12 5% 94,140,396 9,651,188 57,076,858 570.769 114,154 456.615 128,938 327,677 2.414,590 441,830 13 2012 -13 5% 98,847.416 9.675,316 61,808.005 618,080 123,616 494.464 146,349 348,115 2.762,705 471,731 14 2013 -14 4% 102,801.313 9,699,504 65,786.090 657,861 131,572 526,289 160,988 365,300 3,128,005 496.873 15 2014 -15 4% 106.913.365 9,723,753 69.922,392 699.224 139.845 559,379 176,210 383,169 3,511,175 523.014 16 2015 -16 4% 111,189,900 9,748.062 74,223,236 742,232 148,446 593,786 192,037 401,749 3.912,924 550.195 17 2016 -17 4% 115,637,496 9,772.432 78.695.202 786,952 157,390 629,562 208,494 421,068 4,333,991 578.458 to 2017 -18 4% 120,262.996 9,796.863 83.345.133 833,451 166,690 666,761 225,606 441,155 4,775,147 607,846 19 2018 -19 3.5% 124,472.200 9.821,355 87,578,830 875,788 175.158 700,631 241,186 459.445 5,234,592 634.603 20 2019 -20 3.5% 128,828,727 9,845,909 bond issue 91,959.910 919,599 183,920 735,679 257,308 478,371 5,712,963 662.291 21 2020 -21 3.5% 133,337.733 9.870.524 limit 96,493.530 964,935 192,987 771,948 273,992 497,957 6,210,920 690.944 22 2021 -22 3.5% 138.004.554 9.895,200 101,185,027 1.011,850 202.370 809.480 291,256 518,224 6,729,144 720.594 23 2022 -23 3.5% 142,834,713 9.919,938 106.039.925 1,060,399 212.080 848.319 309.122 539,197 7,268.341 751.277 24 2023 -24 3% 147,119.754 9.944,738 110.349,766 1,103,498 220.700 882.798 324,983 557,816 7,826,156 778,515 25 2024 -25 3% 151,533.347 9,969.600 114,788,220 1,147,882 229.576 918,306 341,316 576,990 8.403,146 806.566 26 2025 -26 3% 156,079,347 9,994,524 119.359,145 1,193,591 238,718 954.873 358,137 596,736 8.999.882 835,454 27 2026 -27 3% 160,761.728 10,019,510 124,066,511 1,240.665 248.133 992.532 375,460 617.072 9.616.954 865.205 28 2027 -28 3% 165,584,580 10,044.559 128.914,412 1,289,144 257.829 1.031.315 393.301 638,015 10.254,968 895,844 29 2028 -29 3% 170,552,117 10.069,670 133.907.061 1,339,071 267.814 1.071 256 411,673 659.583 10.914,552 927.397 30 2029 -30 3% 175,668,680 10.094.844 139.048,798 1,390.488 278.098 1112.390 430,595 681,795 11.596.347 959.893 31 2030 -31 3% 180,938,741 10,120,081 144,344,096 1.443.441 288.688 1 154 753 456,012 698,740 12.295.087 987.428 32 2031 -32 3% 186.366,903 10.145.382 149,797,558 1,497,976 299.595 1198.380 482,189 716,191 13,011,278 1,015.786 33 2032 -33 3% 191.957,910 10.170,745 155,413,929 1,554,139 310.828 1243311 509,148 734,164 13,745.442 1,044,992 34 2033 -34 3% 197,716.648 10,196,172 161,198.093 1,611.981 322.396 1 289 585 536,912 752,673 14,498,115 1,075,069 35 2034 -35 3% 203,648,147 10.221,662 167,155,083 1,671.551 334.310 1.337241 565,505 771,735 15.269,851 1,106.046 36 2035 -36 3% 209.757,591 10,247,216 173.290.082 1,732.901 346.580 1386321 594,953 791,367 16,061,218 1,137,948 37 3036 -37 3% 216,050.319 10,272,835 179,608.427 1,796084 359217 1 436 867 625,281 811,586 16,872.804 1,170.803 38 2037 -38 3% 222,531,829 10,298.517 186,115.619 1,861,156 372231 1488925 656,516 832,409 17,705.213 1,204.640 39 2038 -39 3% 229,207,784 10.324,263 192,817,320 1,928.173 385635 1542539 588.684 853,855 18,559.068 1,239,489 4o 2039 -40 3% 236,084,017 10,350,074 199,719,364 1,997,194 399439 1597155 721,814 875,941 19,435,009 1,275,380 41 2040 -41 3% 243,166.538 10,375.949 206,827,760 2.068.278 413656 1654622 755,934 898,688 20,333.697 1,312,344 42 2041 -42 3% 250.461,534 10,401,889 214,148.696 2.141487 428.297 1 713 190 791,075 922,115 21,255,812 1.350,412 43 2042 -43 3% 257,975,380 10,427,893 221,688.547 2.216 885 443 377 1 773 508 827,266 946,243 22.202.055 1,389,620 44 2043 -44 3% 265,714.641 10.453,963 229.453,878 2.294.539 458.908 1835631 864,539 971,092 23.173.146 1.429,999 45 1 2044 -45 3% 273.686.080 10.480.098 237,451,452 2,374.515 474,903 1899612 902,928 99,684 24,169,830 1,471,587 Totals 23.802.095 50,140,794 10,025.198 40.100.792 15,930,962 24,169,830 34,195.028 Net Present Value (based on a 6% return) 10.606.151 2.245.543 8.982,173 3,162,687 5,819,486 8,065.029 Notes. BY = Base Year Growth Rates over 2% reflect the statutory 2% assessed value increase limit per Pmpos4lon 13, plus assessed valuation increases due to new wnstructan and reassessment from property sales. Housing set aside per Section 33334.2, Community Redevelopment Law (Health 6 Safety Code) Statutory payments per Section 33607.5 (b), (c), and (d), Community Redevelopment Law (Health 8 Safety Code) Tax Increment not collected in Year 1 due to assumed adoption date after January 1, 1999 Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 28 City of San Bernardino TABLE 7 ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO PROPOSED PROJECT AREA NEW DEVELOPMENT SCENARIO Increased Assessed Project Value Roll Year I. Expansion of existing Grocery Store $1,954,102 2000 -011roll2001 -02 II. Big box user 120K sq. ft. $6,422,880 2001 -021roii 2002 -03 III. Rehab of existing retail $1,034,130 2000 -01 /roll 2001 -02 IV. Senior Housing Project 60 units $4,800,000 2000 -01 /roll 2001 -02 V. Rehab of triplexes $759,383 2002-03/roll 2003-04 VI. Development of vacant land $831,600 2003-04/roll 2004-05 VII Senior Housing Project 100 units $8,000,000 2002-03/roll 2003-04 In an attempt to identify the funds available for redevelopment implementation purposes, Tables 8 and 9 identifies the maximum bonding capacity. Maximum potential bonding capacity is based upon the net redevelopment funds available to the subject area in year 20, which is consistent with the CRL's 20 -year limit to incur debt. The potential bonding capacity for the net redevelopment and combined with Low and Moderate Income Housing Fund's ( "Housing Fund ") has also been identified. The CRL allows an agency to incur debt beyond the 20 -year time limit to meet housing obligations. As shown in Table 8, the estimated bonding capacity for the Redevelopment Fund is projected at $6.0 million by fiscal year 2019 -20. The Redevelopment Fund and the Housing Fund have a projected bonding capacity of $8.6 million by fiscal year 2019 -20. The 20 -year limit on incurring debt is critically important in determining the financial feasibility of a potential project area. For a new project to generate sufficient revenue to address blight, new development value must be added before the 20 -year deadline to enable an agency to finance (bond) needed area improvement. Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 29 City of San Bernardino BONDING OF -. San Bernardino Economic Development Agency TABLES 40th Street Study Area Plan Fiscal Net Debt Issuance Reserve 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) 6% 2% 10% 1.15 5% BY 1999 -2000 1 2000 -01 - 0 0 62.737 2 2002 -03 62,737 0 110.012 3 2002 -03 110,012 0 - 172.720 4 2003 -04 172,720 - 0 - 193.702 5 2004 -05 193.702 - - - 0 210,528 6 2005 -06 2006 210.528 228,021 2,729,278 54,586 272,928 2,401,765 198,279 198,279 1.15 13.646 43.388 7 -07 198,279 1.24 13,646 61,576 e 2007 -08 246,209 198,279 1,34 13.646 80,486 9 2008 -09 265.119 198,279 146 13,646 105.026 10 2009 -10 289 659 198,279 1.55 13,646 123.574 11 2010 -11 308 207 - - - 198,279 1.65 13,646 143.044 12 2011 -12 327677 - - - 198.279 1.76 13,646 163.482 13 2012 -13 348115 198,279 1,84 13.646 180.668 14 2013 -14 365 30C - - - 198.279 1.93 13.646 198.537 15 2014 -15 2015 383165 401 745 2079422 41.588 207,942 1.829,892 151.068 349,347 1.15 24,044 76,446 16 -16 349,347 1.21 24.044 95,764 17 2016 -17 421068 - - - 349.347 1.26 24.044 115.852 to 2017 -18 441155 - 349,347 1.32 24,044 134,142 19 2018 -19 459445 - - - zsn r-)20 2019 -20 476.371 1.250.000 25.000 125,000 1,100,000 97,783 447,130 1.07'. 30.294 61,535 21 2020 -21 497 957 - - - 447,130 1.11 30.294 81,120 447,130 116 30,294 101,387 n 2021 -22 518.224 447.130 1.21 30,294 122,360 23 2022 -23 539.197 - - - 447,130 1.25 30.294 140.979 24 2023 -24 557.816 - - - 447,130 1.29 30,294 160.153 25 2024 -25 576.990 - - - 447,130 1.33 30,294 179,899 26 2025 -26 596.736 - - - 447,130 1.38 30,294 200,235 27 2026 -27 617.072 - - - 447.130 1.43 30.294 221,178 2e 2027 -28 638.015 - - - 447,130 1.48 30,294 242.746 29 3o 2028 -29 2029 -30 659.583 681.795 - - - 447,130 1.52 30.294 264.959 447,130 1.56 30,294 281,904 31 2030 -31 698,740 447,130 1.60 30,294 299,355 32 2031 -32 716.191 447,130 1.64 30.294 317,327 33 2032 -33 734.164 447,130 1.68 30,294 335,836 34 2033 -34 752.673 447,130 1.73 30,294 354,899 35 2034 -35 771,735 TOTAL BONDING 447,130 1.77 30,294 374,531 36 2035 -36 791,367 CAPACITY 248,851 3.26 30,294 593,028 37 3036 -37 811,586 $6,058,701 248,851 3.35 30,294 613.851 36 2037 -38 832.409 FUNDS REMAINING 248,851 3.43 30,294 635,297 39 2038 -39 853.855 $13,160,301 248,851 3.52 30,294 657,383 46 2039 -40 875,941 (includesfundsavailableafterdebt 41 2040-41 898.688 service and interest on reserve 248.851 3.61 30,294 680.130 42 2041 -42 922.115 funds) 248.851 3.71 30.294 703,557 248,851 3.80 30.294 727.685 43 2042 -43 946.243 1 1 248,851 3.90 30,294 752.534 u 2043 -44 971.092 248,851 4 01 30,294 778.126 a5 2044 -45 996.684 Totals 24,169.830 6.058,701 121,174 605,870 5,331.657 447,130 13,022,774 1,006,623 12,153,678 Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 30 City of San Bernardino k TABLE 9 San Bernardino Economic Development Agency 40th Street Study Area Fiscal Net Debt Issuance Reserve Net Bond Total Bond Coverage Interest Surplus Plan Tax Issued Costs Funds Proceeds Debt Service Debt Ratio on Reserves Resources Year Year Service Increment 1.15 5% 6% 2% 10% BY 1999 -2000 0 - 1 2000 -01 0 83,650 2 2002 -03 83,650 0 146.683 3 2002 -03 146,683 p - 230,294 4 2003 -04 230,294 0 258,269 5 2004 -05 258.269 - 0 280.703 6 2005 -06 280,703 304,028 3,639,038 72,781 363,904 3,202.353 264.372 264,372 1.15 18,195 57.851 7 2006 -07 264.372 1.24 18,195 82,101 e 2007 -08 328.278 264,372 134 18,195 107,315 9 2006 -09 353,492 264,372 146 18.195 140,035 10 2009 -10 386.212 - 264.372 1.56 18,195 167,169 11 2010 -11 413,346 - - - 264.372 1.67 18,195 195,653 12 2011 -12 441,830 - - - 264,372 1.78 18,195 225,554 13 2012 -13 471,731 - - - 264.372 1.88 18.195 250,696 14 2013 -14 496,873 - - 264.372 1.98 18,195 276,837 15 2014 -15 523.014 550.195 2,946,481 58.930 294,648 2,592,903 214.059 478.431 1.15 32.928 104.692 16 2015 -16 478,431 121 32,928 132,955 n 2016 -17 578.458 - - - 478.431 127 32,928 162.343 1e 2017 -18 607,846 - 478.431 1.33 32,928 189.100 19 2018 -19 634.603 - - - Mi T—m 2019 -20 662,291 2,000,000 40,000 200,000 1,760,000 145,298 623.729 1.06 42.928 42.928 81,490 110,143 21 2020 -21 690.944 - - - 623,729 623.729 1.11 1.16 42,928 139,793 22 2021 -22 720,594 - - - - 623.729 1.20 42.928 170.476 n 2022 -23 751,277 - - 623.729 1.25 42.928 197.714 24 2023 -24 778.515 - - - 623.729 1.29 42.928 225.765 f 25 2024 -25 806,566 623,729 134 42.928 254,653 26 2025 -26 835,454 623.729 1.39 42.928 284,404 27 2026 -27 865,205 - - - - 623 729 1 44 42.928 315,043 2e 2027 -28 895.844 - - 623.729 1.49 42,928 346,596 29 2028 -29 927,397 - - - 623.729 154 42,928 379.092 3o 2029 -30 959,893 023 729 1.58 42,928 406.627 31 2030 -31 987.428 623 729 1 63 42.928 434,985 32 2031 -32 1,015,786 TOTAL BONDING 623 729 1 68 42,928 464,191 33 2032 -33 1,044.992 CAPACITY 623 729 1.72 42.928 494,268 34 2033 -34 1,075,069 $8,585,519 623729 177 42,928 525.245 35 2034 -35 1,106.046 FUNDS REMAINING 623729 182 42.928 557,147 36 2035 -36 1,137,948 $16,508,182 623729 1 88 42,928 590.002 37 3036 -37 1.170,803 (includesfunds available afterdebt 623 729 1 93 42,928 623.839 3e 2037 -38 1,204.640 service and interest on reserve 623 729 1 99 42.928 658,688 39 2038 -39 1,239.489 funds) 623 729 2 04 42.928 694,579 4o 2039 -40 1,275,380 623 729 2 10 42.928 731,543 41 2040 -41 1,312,344 623 729 2 17 42,928 769,611 42 2041 -42 1,350,412 623 729 223 42,928 808,819 43 2042 -43 1.389,620 623 729 229 42,928 849.198 44 45 2043 -44 2044 -05 1,429.999 1,471,587 623 729 2.36 42.928 690,786 858.552 7,555,256 623.729 20.510.015 1,411,584 15,096,597 Totals 34,195,028 8,585,519 171,710 Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 31 City of San Bernardino APPENDIX I Summary of Attached Photos 1,2 exposed wiring 3 deteriorated eaves and overhangs, dry rot 4 buckled foundation 5,6 chipped and peeling paint 7 deteriorated roofing materials 8 deteriorated exterior building materials 9 outdoor storage 10 vacant building 11 trash and debris 12 vacant building 13 exposed wiring /missing, deteriorated exterior building materials 14 broken window /vacant building 15 vacant building 16 inadequate drainage, vacant building 17 inadequate loading 18 deteriorated exterior building materials /substandard exterior plumbing 19 trash and debris 20 inadequate loading 21 substandard exterior plumbing 22 deteriorated exterior building materials 23 deteriorated foundation 24 exposed wiring 25 broken window, peeling paint, vacant 26 faulty addition 27 deteriorated exterior building materials 28 faulty electrical 29 faulty addition 30 broken and deteriorated roofing materials 31 vacant building Rosenow Spevacek Group, Inc. Feasibility Study for the July, 1999 32 City of San Bernardino e e �ti E .se Photograph 1: APN: 0154 - 222 -Ul 4253 North Sierra Way Photograph 2: APN: 0154 - 222 -25 175 East 44th Street Photograph 3: APN: 0154 - 222 -23 4202 Sepulveda Avenue Photograph 4: APN: 0154 - 222 -23 4202 Sepulveda Avenue OPP" Ny Photograph 5: APN: 0271 - 062 -12 3952 North Mountain View Avenue 74 4" � -- Photograph 6: APN: 0271-062-16 3932 North Mountain View Avenue T77 Photograph 7: APN: 0271-062-17 3924 North Mountain View Avenue Photograph 8: AFN: uzii- udc -.L/ 3924 North Mountain View Avenue Photograph 9: APN: 0271- 062 -24 3894 North Mountain View Avenue Photograph 10: APN: 0271 - 062 -id 3932 North Mountain View Avenue Photograph 11: APN: 0271- o62 -VS 3934 North Mountain View Avenue y Photograph 10: APN: 0271 - 062 -id 3932 North Mountain View Avenue Photograph 11: APN: 0271- o62 -VS 3934 North Mountain View Avenue Photograph 12: APN: 0154- 4bL-UL 161 East 40th Street Photograph 13: APN: 0154 - 462 -02Z 191 East 40th Street Photograph 14: APN: 0154 - 462 -02 161 East 40th Street m Photograph 15: APN: 0154 - 462 -02Z 191 East 40th Street Photograph 16: APN: 0154 - 462 -13 Commercial Retail Center at 201 East 40th Street Photograph 17: APN: 0154 - 462 -13 Commercial Retail Center at 201 East 40th Street Photograph 18: APN: 0154 - 462 -13 Commercial Center at 201 East 40th Street Photograph 19: APN: 0154 - 452 -49 277 East 40th Street Photograph 20: APN: 0154 - 452 -46 265 East 40th Street Photograph 21: APN: 0154 - 452 -44 255 East 40th Street ri i �4 4 r - +g�g[ Y � M Mn Photograph 21: APN: 0154 - 452 -44 255 East 40th Street ri h Photograph 22: APN: 0154 -452 -44 255 East 40th Street IL Photograph 23: APN: 0154 - 452 -43 233 East 40th Street Photograph 24: APN: 0154 - 462 -13 201 East 40th Street rl A..i 0 WOO 74= q � 3 q � r Photograph 26: APN: 0154 - 461 -08 133 East 40th Street Photograph 27: APN: 0154 - 263 -12 3981 North Sierra Way Photograph 28: APN: 0154 - 262 -20 3948 North Sierra Way Photograph 29: APN: 0154 - 262 -03 3955 Genevieve Photograph 30: APN: 0154 - 261 -2v 3951 North Mountain View Avenue Photograph 31: APN: 0154 - 261 -20 3951 North Mountain View Avenue 0 J Photograph 34: APN: 0154 - 221 -33 4352 North Sierra Way Photograph 35: APN: 0154 - 221 -31 4276 North Sierra Way Photograph 32: APN: 0154 - 242 -02 194 East 40th Street Photograph 33: APN: 0154 - 242 -28 4151 North Sierra Way