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HomeMy WebLinkAboutItem 17 - Public Hearing for Five-Year Economic Development Subsidy Reports Community Development Agency www.santa-ana.org/community-development Item # 17 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report February 18, 2025 TOPIC: Public Hearing for Five-Year Economic Development Subsidy reports for TACenergy and THRIVE Santa Ana, LLC AGENDA TITLE Public Hearing for Five-Year Economic Development Subsidy Reports for TACenergy and THRIVE Santa Ana, LLC Legal notice published in the OC Reporter on February 5, 2025. RECOMMENDED ACTION 1. Conduct Public Hearing to consider any written or oral comments on the information contained in the Five-Year Economic Development Subsidy reports for TACenergy and THRIVE Santa Ana, LLC. 2. Receive and File Reports. GOVERNMENT CODE §84308 APPLIES: Yes DISCUSSION Government Code Section 53083, subsection D, requires that the City Council must hold a noticed public hearing and, prior to the public hearing, provide information to the public through the City's website regarding any proposed economic development subsidy. The Government Code 53083 also requires that within five-years of the approval of the subsidy, the City must prepare a new subsidy report (Attachments 1&2) that includes the original subsidy information plus net tax revenue and net number of jobs created by the subsidy. On March 3, 2020, City Council approved two separate agreements that were considered to provide an economic development subsidy. At the March 2020 meeting, the City Council approved a sales tax sharing agreement with TACenergy, one of the largest national wholesale fuel suppliers in the country, with annual sales exceeding 2.7 billion gallons and more than $5 billion in revenue. During the term of the 25-year agreement, the City shares 50% of the sales tax generated by TACenergy. The City has prepared the Five-Year Subsidy Report (Exhibit 1) which includes the following key points for TACenergy: Public Hearing Five-Year Subsidy Reports February 18, 2025 Page 2 4 8 4 1 •The Agreement term is for 25 years (through December 31, 2045); •The City has retained $2,048,530 of total sales tax revenues; •The City has provided TACenergy with $2,048,530 of sales tax rebates; •A total of 20 full time jobs were added in association with the economic subsidy. In a separate action, the Council approved a Disposition and Development Agreement (DDA) with THRIVE Santa Ana, Inc., for the development of a micro-farm at 1901 W. Walnut Street and executed a 99-year Ground Lease. An economic development subsidy was provided since the property was appraised at $817,000. The City has also prepared the Five-Year Subsidy Report (Exhibit 2) which includes the following key points for THRIVE Santa Ana Inc.: •The Ground Lease term is for 99 years (through December 15, 2121) at $1 per month; •Lost revenue was $817,000, the appraised value of the property; •Upon completion, property taxes are estimated to be at $1,500 annually; •Upon completion, the subsidy will create five (5) full-time jobs, 10 part-time jobs, and 10 temporary positions. Since execution of the DDA, THRIVE has been working to develop a microfarm to grow and distribute fresh produce and ornamentals, and host weekly open-air markets and community activities that promote health at the project site. The site has been vacant for over 12 years and was acquired by the City in 2007. THRIVE has received all necessary permits and are very close to completing the project. Economic Development Division staff continue to oversee compliance by each entity, ensuring that all requirements are met in accordance with the terms of their respective agreements. As required by law, a notice of public hearing was published and the Five- Year Economic Development Subsidy reports have been posted on the City’s website: https://www.santa-ana.org/subsidy-reports/. FISCAL IMPACT There is no fiscal impact associated with this action. EXHIBIT(S) 1. Five-Year Subsidy Report - TACenergy 2. Five-Year Subsidy Report - THRIVE Santa Ana, Inc. 3. Public Notice Submitted By: Michael L. Garcia, Executive Director of Community Development Approved By: Alvaro Nuñez, City Manager Five-Year Economic Development Subsidy Report Pursuant to Government Code Section 53083 For a Sales Tax Sharing Agreement between the City of Santa Ana and TACenergy at 4 Hutton Centre, Ste 700, Santa Ana, CA Pursuant to Government Code Section 53083, the City Council of the City of Santa Ana must hold a noticed public hearing and, prior to the public hearing and within five-years of approval of the subsidy, provide all of the following information in written form and available to the public through the City’s website regarding a proposed economic development subsidy provided by the City pursuant to a Sales Tax Sharing Agreement between the City of Santa Ana and TACenergy (Agreement). Notice was published on the City’s website for a public hearing to be held on February 18, 2025 The purpose of this report is to provide the information required pursuant to Government Code Section 53083 in regards to the Agreement. This report shall remain available to the public and posted on the City’s website until the end date of the economic development subsidy, as further described in number 2 below. (1)The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy, if applicable. The Agreement is with TACenergy, who owns and operates the existing business that will benefit for the economic subsidy: TACenergy 4 Hutton Centre Dr, Ste 700 Santa Ana, CA 92707 (2)The start and end dates and schedule, if applicable, for the economic development subsidy. Upon City Council approval, the proposed agreement commenced on April 1, 2020, and ends on December 31, 2045. The economic development subsidy be paid quarterly within thirty days of receipt from TACenergy of the required documentation per executed Agreement. (3)A description of the economic development subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the local agency as a result of the economic development subsidy. The economic development subsidy is equal to fifty percent (50%) of the sales tax received by the City quarterly, for each year, during the 25-year agreement period. No expenditure of public funds is anticipated by this agreement. EXHIBIT 1 (4) A statement of the public purposes for the economic development subsidy. On August 5, 2013, the City Council approved the execution of a sales tax sharing agreement with IPC (USA), Inc., an independent wholesale distributor of gasoline, diesel, jet fuel, and other refined petroleum products throughout the United States. The Agreement provided for a 50 percent sharing of local sales tax generation, plus a 70 percent (IPC) and 30 percent (City) sharing of additional sales tax generation above $1.4 million dollars. On November 1, 2019, IPC (USA), Inc. was acquired by TACenergy, one of the largest national wholesale fuel suppliers in the county, with annual sales exceeding 2.7 billion gallons and more than $5 billion in revenue. Since the agreements execution, IPC has been a top ten sales tax producer for the City. This sales tax generated is directly deposited into the City’s General Fund which is primarily used to fund police, fire, homeless reduction, and parks and recreational services for the City’s residents. Without this agreement, several of the City’s general services may be cut or reduced for its residents. (5) The net tax revenue accruing to the local agency as a result of the economic development subsidy. Since the commencement of the Agreement, $4,097,060 in total sales tax has been generated by TACenergy. The City has retained 50% of that amount: $2,048,530. (6) The net number of jobs created by the economic development subsidy, broken down by full-time, part-time and temporary positions. The Agreement has retained approximately 20 positions. The company has reported that challenges arising from the COVID-19 pandemic, along with regulatory changes at both the Federal and State levels, have impacted the fuel sales sector. However, their overall growth has aligned with the broader trends in transportation fuel demand, and it is expected that further hiring will take place in the near future. EXHIBIT 1 Five-Year Economic Development Subsidy Report Pursuant to Government Code Section 53083 For a Ground Lease with THRIVE Santa Ana, Inc. Pursuant to Government Code Section 53083, the City Council of the City of Santa Ana must hold a noticed public hearing and, prior to the public hearing, provide all of the following information in written form and available to the public through the City’s website regarding a five-year economic development subsidy provided by the City pursuant to a Ground Lease at 1901 W. Walnut Street, Santa Ana, CA 92703, with THRIVE Santa Ana, Inc. Notice was published on the City’s website for a public hearing to be held on February 18, 2025. The purpose of this report is to provide the information required pursuant to Government Code Section 53083 in regards to the Agreement. This report shall remain available to the public and posted on the City’s website until the end date of the economic development subsidy, as further described in number 2 below. (1)The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy, if applicable. The Agreement is with THRIVE Santa Ana, Inc., a 501(c)(3) tax exempt California Public Benefit Corporation. THRIVE Santa Ana, Inc. P.O. Box 1935 Santa Ana, CA 92702 (2)The start and end dates and schedule, if applicable, for the economic development subsidy. Upon City Council approval of a Disposition and Development agreement, and if certain conditions for the development of the site are met, a proposed 99-year Ground Lease agreement is estimated to commence on April 1, 2021, and end on March 31, 2120. (3)A description of the economic development subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the local agency as a result of the economic development subsidy. The economic development subsidy is in the form of a subsidized 99-year ground lease for 1901 W. Walnut Street, Santa Ana, CA, 92703. The estimated amount of lost revenue is estimated at $817,000, the appraised value of the property. No expenditure of public funds is anticipated by this agreement. EXHIBIT 2 (4) A statement of the public purposes for the economic development subsidy. The property at 1901 W Walnut has been vacant for over 15 years. Development of the site as a microfarm would bring positive community benefits to the area that include: 1) making organic produce and other healthy options more available in the local neighborhood, 2) implementing a membership-based model to provide monthly baskets of vegetables, fruit and other garden products to members at a low cost, 3) creating worker cooperative jobs, 4) encouraging participation from local residents which can contribute to the local neighborhood economy, civic engagement, and prevention of costly health conditions including obesity and mental health illnesses. (5) The net tax revenue accruing to the local agency as a result of the economic development subsidy. Property tax revenue to the City is anticipated to be approximately $1,500 per year. No sales tax revenue would be generated as a result of the economic development subsidy as the sales for a microfarm with organic produce would not be subject to sales tax. (6) The net number of jobs created by the economic development subsidy, broken down by full-time, part-time and temporary positions. Upon completion of the micro-farm, the project will create approximately 5 full-time jobs, 10 part-time jobs, and 10 temporary positions within the next five years. EXHIBIT 2 ORANGE COUNTY REPORTER -SINCE 1921 600 W SANTA ANA BLVD STE 812, SANTA ANA, CA 92701 Telephone (714) 543-2027 I Fax (714) 542-6841 ABIGAIL ALCALA CITY OF SANTA ANA/CITY CLERK 20 CIVIC CENTER PLAZA M-30 SANTA ANA, CA-92701 PROOF OF PUBLICATION State of Calif ornia County of ORANGE (2015.5 C.C.P.) ) ) ss Notice Type: HRG -NOTICE OF HEARING Ad Description: PH Notice -TACEnergy and THRIVE I am a citizen of the United States and a resident of the State of California; I am over the age of eighteen years, and not a party to or interested in the above entitled matter. I am the principal clerk of the printer and publisher of the ORANGE COUNTY REPORTER, a newspaper published in the English language in the city of SANTA ANA, county of ORANGE, and adjudged a newspaper of general circulation as defined by the laws of the State of California by the Superior Court of the County of ORANGE, State of California, under date 06/20/1922, Case No. 13421. That the notice, of which the annexed is a printed copy, has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to-wit: 02/05/2025 Executed on: 02/05/202 5 At Los Angeles, California I certify (or declare) under penalty of perjury that the foregoing is true and correct. 11111111 1111 11111 11111 11111 11111 1111111111 11111 1111m1Im 11111 11111111 *A D D D D D 7 D 1 9 6 4 1 * Email This space for filing stamp only OR#: 3889562 NOTICE OF PUBLIC HEARING BEFORE THE SANTA ANA CITY COUNCIL OF THE CITY OF SANTA ANA NOTICE IS HEREBY GIVEN-The City Council of the City of Santa Ana will hold a public hearing to co nsider a Flve-Year Economic Developmen t Subsidy R eport r��. T��en��ror�n !eHR�� S��l�fa�: Governmen t Code, Sectio n 53083. TAC Energy Project Description: Th e economic develoRmen t subsidy is equal to fifty perc en t (50%) of the sa les lax received by the City quarter1y, for each year, durin g the 25-y ear agreemen t period. The subsidy report will be made available onli ne before the scheduled Public Hearing at: https://www.santa­ana.org/cd/economic-developmen t­subsidy-reports THRIVE Santa Ana Inc. Project Description: The economic development subsidy is in the form of a subsidized 99-year ground lease for 1901 W. Walnul Street, Santa Ana, CA, 92703. The estimated amount of lost reven ue is estimaled al $817,000, lhe appraised value of the property. No exp enditure of pub lic fun ds is anticipated by this agree ment. The subsidy report will be made available onlin e before the schedul ed Public Hearing at: https://www.santa-ana.org/cd/eco nomic­development-subsldy-reports Meeting Time and Date -This public hearing will be held on Tuesday, February 18, 2025, at 5:30 p.m., or as soon thereafter as the matter may be heard, in lhe Cily Council Chamber, 22 Civic Center Plaza, Sa nta Ana, CA 92701. Members of the public may attend this meeting In-person or join via Zoom. For the most up to date information on how to participate virtually in this meeting, please visit https://www.santa-ana.orglag en das­and-minules/. Written Comments: If you are unable to participate in the meetin g, you may send written comments by a.mail to eCommen t@santa-ana.org (reference the Agenda Hem # in the subject li ne) or mail lo Jennifer L. Hall, City Clerk, City of Sa nta Ana, 20 Civic Cen ter Plaza -M30, Sa nta Ana, CA 92701. Deadline to submit written comm en ts is 4:00 P.M. on th e day of the meetin g. Comments received after the deadline may not be distributed to the City Council but wil l be made part of the record. Where To Get More Information - All staff reports regarding any item on this agenda are available for public inspection �u�rn�s�1io�i:��d ��:dd��n�;ectt��� website the Tuesday prior to th e Council meeting at: www.santa-an a.org/agendas­an d-minutes. Who To Contact For Questions -Should you have any questions, please contact Marc Morley al (714) 647-5477 or you can send an email to mmorl ey@santa­ana.org. SI tlene preguntas en espai\ol, favor de llamar al 714-647-6520. N!u cin lien l�c bing tl!ng Vl�t, xln dltn tho�i cho Kristie Ha s6 (714) 667-2206. If you challenge the decision on the above matter, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Council of the City of Santa Ana at, or prior to, the public hearing, J en nifer L. Hall, CMC City Clerk 2/5/25 OR-3889562# EXHIBIT 3