Economic Vitality Committee Agenda and Packet 2021 10 22

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SUBJECT: ECONOMIC VITALITY STRATEGIC PLAN ITEM #1-3 DATE: OCTOBER 5, 2021 PAGE 3 OF 6 signing. It also means businesses that are not aware of the BAP or this timing requirement may miss an opportunity to take advantage of the program. • Recommendation: Require businesses to submit a completed application prior to signing a lease or closing on a property. The application will then be processed as usual and the business may proceed with a property commitment or wait for approval. There could be some risk for the business if it commits to a property without BAP approval, since approval is not guaranteed. Add Rebate of Sign Permit Fees • Eligible businesses may currently receive rebates of 40-50% on in-house Building Permit Fees and Construction Use Tax. These rebates may apply to tenant improvements on a facility and/or the construction of a new core and shell building. Rebates are generated when the business completes its permitted work and receives a Certificate of Occupancy or Completion. Both Building Permit Fees and Construction Use Tax are based on the valuation of the project and paid at time of permit. • Recommendation: Add Sign Permits as an item on which applicants may be approved for rebates of in-house Permit Fees and Construction Use Tax. Applicants would still be required to go through the Sign Permit application process and pay all required fees up front. New signage can be an added expense for a new business or one that is relocating, especially for small businesses. This enhances the incentives paid but still generates some new revenue to the City. Add a Vacancy Bonus Incentive • The current program does not differentiate incentives in any way for businesses that occupy an existing space vs. those that decide to construct new space. In fact, the program provides greater dollar value rebates to businesses that construct new space, because they are eligible for a greater rebate of Building Permit Fees and Construction Use Tax than those only performing tenant improvements. Though the reasons commercial vacancies occur and are sustained are mostly driven by the market and the priorities of the commercial property owners, long-term vacancies create a negative perception for the City. Lengthy vacancies also have a negative impact on surrounding businesses and mean there is no revenue generation to support City services. • Recommendation: Provide a bonus to an applicant that signs a lease to operate a retail business in a commercial space that has been vacant for two or more years. The length of vacancy would be verified by staff through tax licensing. There was some discussion about the particular structure of this incentive —such as a standard amount or an amount related to business size or rent, capped at a certain threshold. Committee members supported an incentive based on a per square foot basis; staff feels the incentive could be $1 per foot of leased retail space, capped at $50,000. This structure provides a larger incentive for the more significant vacant retail spaces; and this incentive would not preclude the applicant from seeking the other available incentive forms. A new commercial space that has CITY COUNCIL COMMUNICATION Agenda Packet P. 13