HomeMy WebLinkAboutR-2006-141 2006 Allocation of Federal Renewal Community Commercial Revitalization DeductionsRESOLUTION NO. R-2006-141
A RESOLUTION approving projects for the 2006 allocation of the federal Renewal
Community Commercial Revitalization Deduction, and directing the City
Manager to submit the list of approved projects to the Washington State
Department of Community, Trade and Economic Development (C 1ED)
for ratification and commitment.
WHEREAS, economic development is a priority of the City of Yakima, and the City
intends to approach economic development on a comprehensive basis involving public, private
and community-based efforts to achieve new investment and redevelopment in the City; and
WHEREAS, the City has been formally designated a Renewal Community under the
Empowerment Zones and Renewal Communities Initiative by the federal government; and
WHEREAS, the Renewal Communities Program includes, in part, an opportunity for
Renewal Communities to participate in a Commercial Revitalization Tax Deductions plan
whereby certain local development projects (including certain rehabilitation of existing
development) may qualify for accelerated partial deduction of development costs by way of
enhanced federal income tax deductibility; and
WHEREAS, the City of Yakima retains responsibility for developing and administering
locally a Qualified Allocation Plan for evaluating eligible development activities within the
community; and
WHEREAS, the City of Yakima has an allocation of $12 million in Commercial
Revitalization Tax Deductions for the year 2006 that must be allocated by December 31, 2006;
and
WHEREAS, applications for the 2006 Commercial Revitalization Deduction were made
available to, and were received from the public; and
WHEREAS, a total of eleven (11) applications were submitted to the City for
consideration of the Commercial Revitalization Deduction; and
WHEREAS, eight (8) project applications were determined to be eligible to receive a
2006 Commercial Revitalization Deduction allocation; and
WHEREAS, the City Council appointed Commercial Revitalization Deduction
Allocations Committee reviewed and recommends approval for the eight projects in the amount
of $12,000,000; and
WHEREAS, the City Council finds it is in the best interests of the City of Yakima to
approve and submit for federal Commercial Revitalization Deductions the projects listed on the
attached sheet; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKEVIA:
1. The City Council approves the attached list of projects to receive allocations from the
2006 federal Renewal Community Commercial Revitalization Deduction in the
amount of $12,000,000; and
2. The City Manager is hereby authorized and directed to submit the list of approved
projects to the Washington State Department of Community, Trade and Economic
Development for ratification and commitment.
ADOPTED BY THE CITY COUNCIL this 3`d day of October, 2006
ATTEST:
AL-Arria
City lerk
David Edler, Mayor
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. /tom
For Meeting Of: October 3, 2006
ITEM TITLE: Approve projects for the 2006 allocation of the Commercial Revitalization
Deduction, and forward to state of Washington for commitment.
SUBMITTED BY: Michael Morales, Deputy Director of CED
CONTACT: Michael Morales, 575-3533
SUMMARY EXPLANATION:
The City of Yakima was designated a federal Renewal Community (RC) in January 2002, and
the current designation is set to expire on December 31, 2009. The RC designation provides a
variety of tax incentives to RC businesses located in Census Tracts 01, 02, 03, 06, 07 and 15.
These benefits include: RC Wage Credits ($1500 per employee), increased Section 179
Expensing ($35,000 annually), Zero Capital Gains Rate on qualified assets, and the
Commercial Revitalization Deduction (CRD).
The Commercial Revitalization Deduction (CRD) is a federal Renewal Community tax benefit
that allows accelerated depreciation of newly constructed or rehabilitated commercial buildings
within the Renewal Community census tract boundaries. It is the only tax incentive that requires
the direct involvement of the city. Each year, the city receives a $12 million allocation of CRD,
with the requirement that the entire amount of CRD be awarded within the calendar year. There
are no carryover provisions for any balance of the annual CRD allocation that is not awarded.
The CRD is strictly a tax incentive for investment. It is not a source of grant or loan funds.
CONTINUED ON NEXT PAGE
Resolution X Ordinance Contract Other:
Approval for Submittal: b
City Manager
STAFF RECOMMENDATION: Staff recommends approval of the allocations.
BOARD RECOMMENDATION: CRD Allocations Committee recommends approval.
COUNCIL ACTION: Resolution adopted. RESOLUTION NO. R-2006-141
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We are pleased to report that, with council approval today, the City will to use its entire $12
million 2006 allocation of CRD. The City received over $14 million of applications for this cycle.
Upon City Council approval, the list of projects will be forwarded to the state Department of
Community, Trade and Economic Development for ratification. After passage of a 45 -day
appeal period, CTED will then provide a binding commitment letter and certificate to the CRD
awardees for verification with the Internal Revenue Service. Another $12 million allocation of
CRD will be available for the city to award after January 1, 2007.
2006 Commercial Revitalization Deduction Projects, in order of ranking:
Applicant/Project Allocation Amount
1.) Gregory & Diane Vance $ 2,000,000
Rehabilitation of "Talcott Building" @ 302 W. Yakima Avenue
2.) Electrical Frontier, Inc. $ 120,000
New building for business operations @ 501 East "R" Street
3.) Susan Roark $ 955,000
Remodel/expansion of Suzie's Cafe & Lounge @ 1023 N. 1st St.
4.) Graf Investments $ 250,000
Remodel of office building @ 311 North 4th Street
5.) The Tower, LLC $ 1,420,000
Improvements to the Tower Building @ 402 East Yakima Avenue
6.) Morrier Hotel, LLC $ 5,400,000
New Hilton Garden Hotel @ 401 East Yakima Avenue
7.) Roche Fruit Ltd. $ 1,085,000
Controlled atmosphere storage building @ 1400 Gordon Road
8.) Aileene Roche Irrevocable Insurance Trust $ 770,000
Freezer storage building & loading dock @ 709 North 1st Avenue
TOTAL 2006 CRD ALLOCATIONS: $12,000,000
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