Fresno City Councilman Lee Brand is rolling out a program of fee reductions and other financial incentives for job-creating businesses he hopes will spur industrial growth citywide and boost commercial development in some of Fresno’s economically disadvantaged areas.
The proposal being formally announced Tuesday by Brand includes stringent screening and reporting requirements. Additionally, it calls for the city to take leadership roles in marshaling business-finance and venture-capital resources for small businesses and coordinating workforce improvement efforts such as vocational and career-technical education.
Brand, who represents northeast Fresno’s District 6 and is running for mayor, will introduce the plan to the Fresno City Council at its March 17 meeting.
Rather than some previous economic development deals (Fresno Metropolitan Museum and Granite Park, for instance) that have left the city on the financial hook for failed projects, “this is laid out in a way that doesn’t give away the farm,” Brand said Monday. Instead of guaranteeing loans or serving up title to city-owned property, Brand is proposing features that reduce a developer’s initial costs to help a project pencil out financially.
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Some of this stuff has been done on a case-by-case basis, which is stupid.
Fresno Councilman Lee Brand, describing past business incentive programs
Those include reducing or waiving development impact fees – money collected from a developer to balance out a project’s effects and demand for police, fire, street and other city services. “Those impact fees can be substantial,” Brand said, “maybe 5 to 10 percent of your costs depending on your situation.”
A second level of incentive includes providing for off-site improvements such as streetlights, curbs, gutters and other infrastructure needs that are not immediately on the development parcel.
“That can be thousands of dollars, so it’s a significant subsidy for someone who qualifies,” Brand said. The developer would pay for such improvements up front and eventually be reimbursed from the increased share of property or sales taxes the city receives as a result of the project.
Under prior policies, “some of this stuff has been done on a case-by-case basis, which is stupid. … It’s depended on who you are,” Brand said. “We need to have a definitive policy so that everybody’s treated the same.”
A third tier of incentives, reserved for major-league economic projects that generate at least 500 new jobs, is a partial sharing of revenues a development generates in sales or property taxes. Brand cited Fresno’s pursuit of a Nordstrom’s e-commerce fulfillment site as an example.
“Nordstrom is going to have to create 800 jobs before we even kick in these performance-based incentives,” Brand said. “They’re projecting to do something like $100 million a year in sales.”
Fresno would be in line to receive a share of sales taxes in the neighborhood of $750,000 a year as a result. “So Fresno agreed to abate 75 percent up to $12 million,” he said. “Anything they produce is new – new jobs, new taxes. We’re still going to net a couple of hundred thousand a year.” Nordstrom told the city last year that it expects its e-commerce center to bring 1,000 jobs or more to the region.
The act calls for annual detailed reports of the fees waived and tax-sharing revenues shared by the city under the program, as well as an accounting of jobs created or preserved, and verification of capital expenditures made by participating developers.
“There’s a payback, and we’re going to measure that payback,” Brand said. “We’re going to get back every dollar we invest.”
A city spokesman said Monday that Brand’s proposal has the support of Mayor Ashley Swearengin and City Manager Bruce Rudd.
Brand said the timing of his announcement just a few months before the June primary election for mayor is coincidental, not political. He said he began researching and putting together drafts of the plan more than a year and half ago, and said his original intention was to seek City Council approval last year, but put it on hold and fine-tuned it after discussions with Swearengin.
“The mayor’s input, with her background in job development with the Regional Jobs Initiative, helped shape a better final product,” Brand said.
He said the city’s new development code that promotes infill, approved in late November, also played into the timing of his agenda.