C. 50% allocation
City Hall
10300 Torre Avenue
CUpertino;CA 95014-3255
Telephone: (408) 777-3220
Fax: (408) 777-3366
cIfY~OF .
CUPEIUINO
DEP AR1MENT OF ADMINISTRATIVE SERVICES
SUM::MARY
Agenda Item No~ C
Meeting Date: June 5, 2007
SUBJECT AND ISSUE
Consider allocating 50% of discretionary funds from the Redevelopment Agency (RDA) future
tax increment to be earmarked for infrastructure improvements~
BACKGROUND
The City adopted the Cupertino Square Project Area on August 21, 2000. With that adoptio.n,
planned expenditures from tax increment included:
)> Infrastructure Improvements - Including construction, reconstruction, widening or other
improvements to streets and roadways, traffic signals, curbs, gutters and sidewalks, water,
sewer and flood control systems, parking facilities within or serving the Project Area and
streetscape and street lighting expenditures; .
);> Economic Development Programs - Including implementation of a business attraction
and recruitment program, commercial facade enhancement program, and a storefront
rehabilitation program;
)- Low-and-Moderate Income Housing Programs - Including 25% set aside for
construction, rehabilitation and preservation of low-and-moderate income housing in
Cupertino neighborhoods outside the Project Area~
After seven years, the owners of Cupertino Square have made substantial progress toward the
development of the mall property. Improvements-to-date include the addition of a 16-screen
AMC theater and two parking structures and approval for additional restaurants and a mixed use
development of housing and retail on the Rose Bowl site. To assist in the fmancing of these
projects, the Agency has been asked to designate future tax increment to help pay for a portion of
the infrastructure improvements.
Based on the request, staff updated the calculations performed by our consultants, Keyser
Marston and Associates, of future tax increment based on the owners' projections of built-out
infrastructure (see' schedule A)~ The RDA receives tax increment based on the assessment roll
growth over the base assessment value at the time of plan adoption. Once additional
infrastructure is built, the "new" tax increment generated from the increased property value is
available for re-investment in the RDA~
C - 1
Printed on Recycled Paper
While utilizing the new estimates, staff has denoted additional obligations of the RDA to arrive
at a projected net available tax increment (see schedule B). These additional obligations include
staff, audit and. consultant costs, an allocation for an RDA/Economic Development division, and
the contractual costs associated with the Santa Clara County (See) agreement from June of.2000
for addition~l sheriff services~ This agreement, which was. necessary for see approval of the
RDA, required the city to annex the areas of Rancho Rinconada, Garden Gate and Manta Vista,
provid.e additional sheriff coverage and enter into a sales tax sharing once sales/square foot at
Cupertino Square exceeds $375. .
Based on the projected tax increment revenue minus outstanding future obligations,' it appears
that the RDA would have net available increment in fiscal .years 2007/08 through 2029/30. If
500/0 of this amount were earmarked for infrastructure improvements, this would equate to
approximately $13,000,000 over the life of the RDA (30 years) towards this improvement. Once.
tax increment begins to flow to the. City, staff would consider bonding off of this revenue stteam,
which would extend the life of the RDA out to 45 years~
Please note that the original projected build out and resulting tax increment at the adoption of the
plan was not realized~ Not only did the owners not implement improvements to the property for
the. first 5 years, but also two major property owners re-assessed their property values - thus
putting the project area below the tax base for generating tax reven~e~ Although the numbers
presented to you in this report are the best guess estimates at. this time, revenue increases are
predicated on the build out value/schedule as supplied by the developer and staff does not attest
to these estimates. We therefore recommend that no tax increment be passed on to the owner
until the city actually starts receiving the cash~
RECOMMENDATION:
Adopt a resolution stating the intention of the Board to allocate 50% of discretionary funds from
the Redevelopment Agency future tax increment to be earmarked for infrastructure
improvements, based on the estimates. in Schedules A and B~
Submitted ~y:
~JJ ahubrz/~
Car . 1 A~ Atwood .
Director of Administrative Services.
Approved for submission:
~
David W~ Knapp
City Manager
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