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Adopt a resolution to establish a County Capital Investment Incentive Program for qualified manufacturing facility companies on North Mare Island in Vallejo
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Published Notice Required? Yes ____ No _X _
Public Hearing Required? Yes ____ No _X _
DEPARTMENTAL RECOMMENDATION:
The County Administrator’s Office recommends that the Board adopt a resolution to establish a Capital Investment Incentive Program for qualified manufacturing companies on North Mare Island, Vallejo, CA.
SUMMARY:
The California Capital Investment Incentive Program (CIIP), California Govt. Code section 51298, is an existing State adopted program that authorizes local governments to establish a program which may provide for abatement of a portion of property taxes for large capital investments made by qualified manufacturing facilities for up to fifteen (15) consecutive years. The program requires a minimum capital investment of taxable real assets with a value that exceeds $150 million. Under the program, the County may agree to rebate up to 75 percent of the County’s share of property taxes received from a qualified manufacturing facility as an incentive for locating, investing and operating a new manufacturing facilities on North Mare Island. The Board is asked to adopt a resolution (attachment A) as an initial step required by the CIIP legislation to indicate the County’s willingness to participate in the program. Approval of the attached resolution does not obligate the County to offer any specific incentive at this time, but indicates a willingness to do so. Further negotiation and a subsequent written agreement would be required.
FINANCIAL IMPACT:
There is no fiscal impact to the County to adopting this resolution. A qualified manufacturing facility if built and operational, with assessed real property value in excess of $150 million could provide new property taxes to the County on vacant city owned land on North Mare Island. Under the CIIP, the County could make rebate payments of up to 75 percent of the County’s share of the increase in property taxes attributable to a new investment for up to 15 years.
DISCUSSION:
Established in 1997, the California Capital Investment Incentive Program (CIIP), California Govt. Code section 51298, is an existing State incentive program that allows local governments with opportunities to attract large manufacturing facilities by providing an incentive to locate and invest in those facilities in California. The CIIP program allows for the County to enter into an agreement with a developer/owner of a qualified manufacturing facility to rebate a portion of the County’s share of property taxes generated by the facility subject to certain conditions:
a. Proponent must invest at least $150 million in the facility confirmed by County Assessor.
b. County would/could then rebate a portion (up to 75%) of the County’s share of property tax generated on the facility (from both real and personal property) in excess of $150 million for up to 15 consecutive fiscal years.
c. Proponent would have to pay a community service payment to the County in amount equal to 25% of the rebate amount but capped at $2 million annually.
Other benefits of a CIIP Program include requiring hiring targets for the facility, establishment of average weekly salaries for employees not less than average weekly salary in the state, default provisions for delinquent payments or failure to operate the facility as proposed as well as the prohibition of assessment appeal challenges.
Staff is recommending that the Board authorize the participation in the CIIP Program for North Mare Island, in Vallejo, CA due to the higher than average unemployment rate in Vallejo, compared to the County-wide average and the fact that North Mare Island has the largest area of land available to large-scale manufacturing facilities.
If the County elects to participate in the program, a manufacturing proponent would have to make a written application to the County for the incentive under the CIIP Program. This application would include a detailed outline of the investment being proposed and the number of jobs that would be created. The County would then negotiate the terms under which the incentive would be rebated, memorialized in a community services agreement, presented to this Board for final approval.
ALTERNATIVES:
The Board could choose to not adopt the resolution which would prohibit the County’s participations in the CIIP program.
OTHER AGENCY INVOLVEMENT:
County Administrator’s Office and County Counsel have worked collaboratively with the staff from the City of Vallejo, the Governor’s Office of Business and Economic Development, and Solano Economic Development Corporation.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION