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Home My WebLink AboutR-2009-157 CTED Projects List - 2009 Allocation Renewal Community Commercial Revitalization DeductionRESOLUTION NO. R-2009-157 A'RESOLUTION approving projects for the 2009 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 (CTED) for certification. 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 buildings) 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 2009 that must be allocated by December 31, 2009; and WHEREAS, applications for the 2009 Commercial Revitalization Deduction were made available to, and were received from the public; and WHEREAS, a total of five (5) applications were submitted to the City for consideration of the Commercial Revitalization Deduction; and WHEREAS, all applications were determined to be eligible to receive a 2009 Commercial Revitalization Deduction allocation; 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 following projects: 1. Yakima Hospitality, LLC (Holiday Inn) 2. Fruit Packers Supply, Inc. 3, Roche Fruit, Ltd. 4. Bob's Burgers & Brew, LLC 5. Mike Olsen Chrysler -Jeep -Dodge 5. Stewart Subaru Total 2009 CRD Allocation Now, therefore, $8,400,000 $ 535,000 $ 563,000 $1,690,000 $ 500,000 $ 312.000 $12,000,000 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: 1. The City Council approves the projects recommended herein to receive allocations from the 2009 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 certification. ADOPTED BY THE CITY COUNCIL this 1st ATTEST: David Ed er, Mayor ITEM TITLE: BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. Ci For Meeting Of: December 1, 2009 Approve projects for the 2009 allocation' of the Commercial Revitalization Deduction, and forward to state of Washington for certification. SUBMITTED BY: Michael Morales, Deputy Director of CED CONTACT: Michael Morales, 575-3533 SUMMARY EXPLANATION: The Commercial Revitalization Deduction (CRD) is a federal Renewal Community tax incentive that allows accelerated depreciation of newly constructed or rehabilitated commercial buildings within the RC. The CRD is strictly a fax incentive for investment, and is not a source of grant or loan funds. Each year, the city receives a $12 million allocation of CRD that must be awarded within the calendar year. The list of recommended projects is as follows: 1. Yakima Hospitality, LLC (Holiday Inn) 2. Fruit Packers Supply, Inc. 3. Roche Fruit, Ltd. 4. Bob's Burgers & Brew, LLC 5. Mike Olsen Chrysler -Jeep -Dodge 5. Stewart Subaru Total 2009 CRD Allocation $8,400,000 $ 535,000 $ 563,000 $1,690,000 $ 500,000 $ 312,000 $12,000,000 Upon City Council approval, the list of projects will be forwarded to the state Department of Community, Trade and Economic Development for certification. . Resolution X Ordinance Contract Other: STAFF RECOMMENDATION: Staff recommends approval of the allocations. BOARD RECOMMENDATION: COUNCIL ACTION: The City of Yakima was selected as a federal Renewal Community (RC) in January 2002,. one of only 40 in the nation. The current designation is set to expire on December 31, 2009,. but there is pending legislation in Congress to extend the designation: 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 RC tax incentive package has served as one of the most effective economic development incentive tools that the city has employed. It has helped small and Targe businesses, retail and manufacturing. The City of Yakima receives zero funding to implement this program, but the economic impact of the program has proven well worth our investment. For this reason, the city's top federal legislative priority has been the extension of this package in some form for the next five years. Attached is a Power Pointpresentationhas used as part this lobbying effort to demonstrate the diverse impacts of the program.. 1 Yakima Renewal Community A Catalyst for Economic Recovery Downtown Yakima From 1999-2001, a six -block area in the core of Downtown Yakima, including the block pictured, was completely vacated. 500 jobs and $50 million of economic activity was lost, and it rippled through the entire Central Business District, where nearly half the buildings or lots were vacant. Unemployment in Yakima reached 14% as our agriculture base also suffered. Yakima was designated one of 40 Renewal Communities in 2002, and the simple package of tax incentives provided by that designation have helped revive and diversify our economy. •Over 1,000 jobs created or retained by Commercial Revitalization Deduction (CRD). •$96 million of CRD has been allocated to a broad range of projects •$150 million in private investment leveraged by CRD projects. •$30 million of public infrastructure and facilities investment in RC to date, with nearly $100 million planned by 2015. Renewal Community Leverages Partnerships JEM Building: On the National Register of Historic Places, this building sat vacant, and at one point was planned for demolition. A job training/creation grant was used to attract customer service centers to a section of the building, which now employ 200 residents and utilizes RC wage credits for nearly half the workforce. The owner has invested over $2 million in the building, and used the Commercial Revitalization Deduction. The Tower: The tallest building in Yakima was only 35% occupied before the RC designation. With CRD assistance, the owner has invested $3.1 million and the building is at 76% occupancy. Hilton Garden Inn: The Yakima RC leveraged $14 million of private investment with $8 million of CRD, a $3.5 million Section 108 loan and New Markets Tax Credits to convert a former department store into this hotel. Renewal Community Rebuilds Neighborhoods Westside Business District RC benefits have transformed a two block area of the Westside business district into a bustling commercial area with a mix of new and restored buildings. Bridmar Building: $2 million CRD and 3 new businesses Banner Bank Tony's Steakhouse: $1,300,000 CRD and 35 new jobs Columbia River Bank These two banks built new regional centers, bringing 75 professional jobs to the Westside district. They have counted $4 million of CRD as a primary reason to invest. 3 Agriculture and Manufacturing Many of Yakima's major agricultural employers have benefitted from the RC incentives, and the RC is a factor in their ability to grow and remain competitive in the global economy, which had hit the fruit industry hard in the late 1990's. Washington Fruit — Roche Fruit/Jewel Apple RC wage credits are used on 90% of the employees for Washington Fruit and Roche Fruit,. New facilities by Washington Fruit, Roche Fruit and Shields Bag & Printing were also assisted with CRD. Job Recruitment and Retention $6,500,000 of CRD and RC wage credits helped Yakima RC retain 125 family wage jobs when Jeld-Wen was searching for new facilities. JeId-Wen also chose the Yakima RC for a new materials processing facility, using a $1.5 million CRD to remodel an abandoned warehouse next to the new plant. These investments were only made possible by the 2004 RC boundary expansion. 4 Hospitality and Tourism Tourism accounts for $327 million of spending in the Yakima Valley and supports over 3,000 jobs. The Yakima RC has become the hotel industry hub, providing $17,000,000 of Commercial Revitalization Deduction to three new hotels since 2003. Ledgestone Hotel: $5 million of CRD, and $30,000 annual savings in RC wage credits. Local - Independent Business Fiesta Foods: $3 million CRD - $100,000 annual savings in RC wage credits. Using the CRD as an investor recruitment tool, an independent grocer constructed a new store that not only caters to the largely Hispanic neighborhood, but also attracts shoppers from neighboring communities. 5