A program of economic incentives for job-creating businesses in Fresno will be taking effect soon – but only after the Fresno City Council debated whether those incentives should be limited to businesses locating in disadvantaged parts of the community.
Council Member Esmeralda Soria, who represents the Tower District and other portions of west-central Fresno, found herself on the losing end of last Thursday’s 6-1 vote after she unsuccessfully sought to confine at least some of Council Member Lee Brand’s proposed incentives to downtown Fresno.
Brand’s Economic Expansion Act prioritizes levels of economic breaks by distinguishing two levels of industries: “primary” industries such as agribusiness, manufacturing, warehousing/distribution centers, health/medical care and renewable energy, which Brand described as “job catalysts”; and “secondary” industries including retail, commercial and residential developments that employ people “but don’t have the catalytic impact that primary industries have,” Brand said.
The Economic Expansion Act includes reducing or eliminating fees paid to the city by developers to make up for the cost of providing city services such as police, fire, streets and traffic signals to a new project.
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Fresno already offers a break on these “development impact fees” for some types of businesses. The act expands the types of businesses that can qualify for fee relief in economically disadvantaged areas of Fresno, including the Blackstone corridor south of Shaw Avenue, downtown Fresno, Chinatown, and southeast and southwest Fresno.
Grocery stores, professional or medical offices, banks and credit unions and mixed-use commercial/residential projects were included in the Economically Disadvantaged Neighborhoods Act, drafted by Soria, co-sponsored by District 7 Council Member Clint Olivier and adopted by the City Council in December.
Brand’s act adds new high-end hotels and large office and retail stores to the eligibility list for reducing or waiving those impact fees. It also expands fee reductions citywide to large office employers – including call centers, corporate headquarters, software companies and others – that generate at least 250 new full-time jobs.
For companies whose projects create substantial new income for Fresno’s treasury through sales and property taxes or hotel room taxes, the city can reimburse developers for the costs of “off-site improvements.” Those could include streetlights, curbs, gutters and other infrastructure needs that are not on the development parcel.
The highest level of incentives is reserved for the largest prospective industrial employers – those that create at least 500 jobs. In those cases, the city could rebate back to the business a share of the new revenue that Fresno receives from increased property or sales taxes, business license fees or hotel room taxes generated by the project. Any subsidy over $1 million would trigger a stringent review process already on the city’s books before the money could be paid out.
Soria suggested, and Brand agreed, that at least half of the new jobs created by businesses qualifying for the highest tier of revenue-sharing incentives be reserved for Fresno residents.
“If we are going to be giving out taxpayer money, I believe it would be important to make sure 50 percent of the jobs are for our local folks,” Soria said. “It’s important for our local residents to benefit from these incentives that we’re giving.”
But Brand, bolstered by council colleague Olivier, rejected Soria’s request that incentives for large hotels be limited to the downtown area and those for large offices be restricted to economically challenged areas rather than anywhere in the city.
“I was very intentional about how I drafted the language” of the Economically Disadvantaged Neighborhoods Act, Soria said. “If we’re serious about revitalizing downtown and attracting tourism and great hotels, and really putting our efforts into downtown, that’s what we should be limiting it to.”
Brand said he agreed that downtown needs to be a focus. “I would try to emphasize and steer someone to downtown or a similar area,” he said. “But if they said, ‘I want Fig Garden Village (in northwest Fresno),’ … I don’t want to have an opportunity where we have somebody major who really wants to come (to Fresno) and we potentially lose them” because incentives are excluded in the area where they want to locate.
Olivier, whose District 7 represents much of east-central Fresno including portions of the Blackstone Avenue corridor, said he agreed that incentives should not be restricted to downtown Fresno. “There are other areas of the city that require attention, not just downtown,” he told Soria. “From an area of the city that is in need of revitalization, I welcome the idea of a (four-star) hotel simply because of the sheer amount of investment that a property like that would bring. … I appreciate that this will apply to the city as a whole.”