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HomeMy WebLinkAbout04/21/2003 B A K E R S F I E L D Mike Maggard, Chair Harold Hanson Mark Salvaggio Staff: Darnell Haynes BUDGET AND FINANCE COMMITTEE MEETING of the City Council - City of Bakersfield Monday, April 21,2003 4:00 p.m. City Manager's Conference Room, Suite 201 Second Floor - City Hall, 1501 Truxtun Avenue, Bakersfield, CA AGENDA 1. ROLL CALL 2. ADOPT MARCH 17, 2003 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. DEFERRED BUSINESS A. Staff report and Committee recommendation regarding future park amenities - Rojas B. Staff report and Committee recommendation regarding additional review of park fee credit- Rojas C. Review and Committee recommendation on Economic Development Loan Policy Guidelines - Tandy 5. NEW BUSINESS 6. COMMITTEE COMMENTS 7. ADJOURNMENT S:\Darnell~.003Bud&FinCom~bf03apr21agen.doc D AFT B A K E R S F I E L D L~/)~.~~~ Mike Maggard, Chair A-'i~r~ ~ar~dy'City ~ger Harold Hanson Staff: Darnell W. Haynes Mark'Salvaggio AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING. Monday,. March 17, 2003 · 4:00 p.m. City Manager's Conference Room - City Hall 1. ROLL CALL Called to Order at 4:08 p.m. Present: .Councilmembers Mike Maggard, Chair; and Harold Hanson Absent: Councilmember MarkSalvaggio 2. ADOPT FEBRUARY 10, 2003 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. Staff report and Committee recommendation on Fiscal Year 2003-04 Community Development Block Grant (CDBG), Home Investment Partnerships (HOME), and Emergency Shelter Grant (ESG) Annual Spending Plan Community Development Coordinator George Gonzales stated the City's entitlement for FY 2003-04 was increased about $600,000 for Community Development Block Grant (CDBG); an increase in HOME Investment Partnership Program (HOME) monies; and a very small increase in the Emergency Shelter Program (ESG). The City receives annual entitlements in order to improve Iow-income neighborhoods. The City's entitlements for FY 2003-04 are: $4,003,000 CDBG funds; $1,786,088 for HOME; and $107,000 for ESG, for a total of $5,896,088 in funds available from HUD. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Monday, March 17, 2003 Page - 2 - A Notice of Funding Availability was sent out to non-profits, agencies and City departments, so they could submit possible projects for FY 03-04 funding. Non- profits and agencies submitted 33 proposals totaling approximately $8 million. City departments submitted 21 projects totaling approximately $7.3 million. It is important to note staff has put forth projects to recommend for funding that are ready to start this year. In the past, monies have been put aside yearly toward large projects until there was enough funding to start the project. This is penalizing the City's drawdown rate from HUD. If a project is on the list for HUD funding and the project does not move forward this year, HUD will reduce the City's entitlement by that amount next year. George Gonzales gave an overview of the summary of proposed projects for the Action Plan for FY 2003-04. It is estimated program income (repayment of loans, etc.) will be $110,000 for CDBG and $210,000 for HOME. Staff recommended projects for the Action Plan totaling $6,216,088 consisting of the following funding: CDBG $4,113,000 (Entitlement of $4,003,000 + program income $110,000) HOME $1,996,088 (Entitlement of $1,786,088 + program income $210,000) ESG $ 107,000 (Entitlement- no program income) HUD requires a 30-day public notice be published to give the public the opportunity to comment on the proposed plan for the City's entitlement. Staff requested approval from the Committee to move forward with the public notice. With the Committee's approval, after the 30-day public notice, staff would like to forward the FY 2003-04 Action Plan to the City Council. The application must be to HUD by May 15, 2003. Stephanie Campbell spoke regarding CDBG funds going to fund non-profit projects instead of toward projects that create jobs and also asked about getting access to funds for economic development in the Southeast. Donna Kunz responded to questions about CDBG funding for Mt. Elgon. Mt. Elgon withdrew their application because their project was not going to be ready for construction this year. Stephanie Campbell inquired about the Housing Authority's project on East California. Donna Kunz responded they need about $1.2 million for their project. They have submitted an application under the business loan program and $200,000 is currently committed to the project. Staff has been working with them to find another funding source. Vernon Strong spoke about funding for his project and his request for funding in the amount of $487,850. He questioned the paperwork needed. In order to access the City's loan assistance program he stated you need to complete an application including requested attachments: financial statement, balance sheet, AGENDA SUMMARY REPORT D AFT BUDGET AND FINANCE COMMITTEE MEETING Monday, March 17, 2003 Page - 3 - income statement, profit and loss, pro forma, cash flow statement, additional two-years' income, a narrative supported by a pro forma on how the business assistance program funds will help the business, individual Federal Income Tax for three years, personal financial statement current at time of application date, and source of funds (bank, investment, personal including terms and conditions). As the City only funds ten to twenty percent of a project, a bank loan or money is needed to fund a large part of the project and it is hard to qualify for a bank loan. Donna Kunz explained the information being requested is much the same as for any loan. A copy of the HUD loan guidelines was provided. Projects are evaluated on equity of the real estate and the income it will generate (rents, etc.). The City looks for projects where the applicant has gone to a bank and the bank has approved their loan and the applicant then applies to the City for gap-financing to complete the funding for the project. The problem at this time is SB 975 requires prevailing wage to be paid on any project using government funds. This drives the total project cost up 30% to 40% percent and makes it difficult to qualify for a bank loan. The City is not the principal lender on projects; CDBG funds are used to augment funding for projects. Committee Member Hanson made a motion to approve staff moving forward with the 30 day public notice and then forwarding the FY 2003-04 CDBG, HOME, and ESG Action Plan to the City Council. The motion was unanimously approved (Committee Member Salvaggio absent). B. Review and Committee recommendation on Economic Development Loan Policy Guidelines Last year the City Council set aside approximately $740,000 of CDBG funds for the purpose of economic development activity--loans for businesses expanding or locating in the southeast. Councilmember Carson referred a request to the Budget and Finance Committee to review the loan policy guidelines used for the Economic Development Loan Program. There have been complaints that the current loan program makes it hard to qualify for loans and discourages applicants from applying. The current loan policy guidelines were approved by the Budget and Finance Committee on September 12, 2002. In response to the request, Economic Development Director Donna Kunz explained staff reviewed the policy and provided the following proposed changes for the Committee's review, which should make the loans available to more applicants: 1) Allow the loans to be forgiven after five years; 2) Lighten up the collateral and underwriting policies - allow collateral other than real estate; and 3) Allow more than 10% - 30% of public funds be available to the project. AGENDA SUMMARY REPORT DRAFT BUDGET AND FINANCE COMMITTEE MEETING Monday, March 17, 2003 Page - 4 - Donna Kunz explained all of the proposed changes are allowable under the current HUD guidelines. HUD allows the local jurisdiction to establish its lending policy. Changing the guidelines may encourage more applicants to apply. Staff has received inquiries, but only one completed application for a commercial development on East California. The Committee had concerns changing the policy would create more complaints, because the suggested changes make the loan policy and approving loans subjective to staff's decisions in evaluating one project against another. The current loan policy treats every applicant the same with decisions on viable projects based on financial information. The Committee voted not to change the current loan policy (Committee Member Salvaggio absent). Committee Chair Maggard requested Donna Kunz to prepare a memo Councilmember Carson could use for reference when responding to complaints. It should capture the idea the stricter the policy the more evenly it is understood and the fairer it is. Also include the information that SB 975, which requires paying prevailing wage, is driving the cost of projects up 30% to 40% and that is the reason qualifying for the loans is difficult. Also provide information where applicants for loans can go to get help in preparing their application paperwork, as staff must remain somewhat neutral. 5. COMMITTEE COMMENTS 6. ADJOURNMENT The meeting adjourned at 5:09 p.m. Attendance: City Attorney Bart Thiltgen; Assistant City Manager John W. Stinson; Assistant to the City Manager Darnell Haynes; Economic Development Director Donna Kunz, ED/CD Business Manager Rhonda Barnhard; and Community Development Coordinator George Gonzales. Others: James Childs; Vernon Strong; and Stephanie Campbell, Cornerstone. cc: Honorable Mayor and City Council S:\Damell\03Budget and Finance~bf03mar17summary 13 A K E R S F I E L D CITY OF BAKERSFIELD MEMORANDUM April 15, 2003 TO: ALAN TANDY, CITY MANAGER FROM: RAUL M. ROJAS, PUBLIC WORKS DIRECTOR ~"~~. SUBJECT: PARK DEVELOPMENT FEE This memo addresses the following two council referrals to the Budget and Finance Committee involving the Park Development Fee. Future park amenities (council meeting date of 11/20/02): Councilmember Couch referred the issue of how parks are landscaped, what amenities (equipment, etc) are provided, and how that affects the Park Development Fees. Park Fee Credit (council meeting date of 12/11/02): Councilmember Couch requested additional review of the Park Fee Credit by the Budget and Finance Committee. FUTURE PARK AMENITIES · Revised Cost of Current Amenities The last detailed worksheet summarizing costs for basic amenities within a 10 acre park was prepared as justification for a fee increase approved by Council in January, 2001. A copy of this worksheet is attached for reference (Exhibit "A"). This worksheet estimates the cost to construct a typical 10 acre park at $867,000 (adjusting the per unit cost to $635). The next increase to this fee, approved by Council on December 11,2002, was based upon the construction cost index (CCI). At that time, the CCI used was 1.95% and the fee increased to $647 per unit. Applying this same construction cost index to the $867,000 (basis of January, 2001, fee increase) yields a revised estimated cost of approximately $884,000. Exhibit B applies the 1.95% CCI to each park amenity item. As a result of this referral, Parks and Engineering staff reevaluated the amenities, with their associated costs, of a typical 10 acre neighborhood park. Parks and Engineering staff researched the costs through various internal and external sources. In addition, the estimates included several assumptions as summarized in an April 10, 2003, memo marked as Exhibit "C". Comparing the cost of amenities as last adjusted by the construction cost index ($884,000) to the newly revised costs ($1,350,000 Exhibit "C") for the same items, yields an increase of $466,000 (53%). Following is a side by side comparison of these items (detailed descriptions of each line item can be found on the individual worksheets): Page 2 Estimated Costs to construct a typical 10 acre park (rounded to the nearest hundredth) Exhibit "B" Exhibit "C" Estimated Costs Revised Current 2002 Costs 1. Earthwork/Grading* $52,000 $135,000 2. Utility $37,700 $45,500 3. Irrigation System** $68,300 $258,000 4. Security Light System $53,000 $50,000 5. Restroom Facilities w/storage $81,600 $120,000 6. Parking Lot $63,200 $22,400 7. Concrete Work $45,900 $46,500 8. Picnic Facilities $40,800 $50,000 9. Landscape Plant Material*** $91,800 $149,300 10. Drinking Fountains $5,100 $3,000 11. Multi-game Slab $13,300 $18,000 12. 360 day maintenance $56,100 $57,000 13. Playground Equipment $126,400 $124,000 14. Sign/Monument Wall $2,500 $3,600 15. 1/2 Street Improvements/2 sides $113,100 $92,000 16. Design/Development/Administration .... $33,200 $176,000 TOTAL $884,000 $1,350,300 *Note 1 - Depending upon actual site conditions, the cost for grading and drainage could be substantially different than what is listed on the analysis. Staff estimated grading and drainage costs based upon what one would expect to see for a "typical" 10 acre park. **Note 2 - Landscape area was based on a gross park area of 10-acres, less a 40-stall parking lot, less the basketball court, less the 900 square foot shade area, less the tot play area, and less the concrete walks throughout the park, with a net area of 380,000 square feet. Current pricing for landscaping is $0.68 per square foot yielding the total of $258,000. ***Note 3 - Park development within Northeast Bakersfield would require a substantial increase in landscaping costs due to soil conditions. These increased landscaping costs are not included in this analysis. .... Note 4 - The revised current costs column uses a factor of 15% of construction costs for this estimate. This rate is used for the City's capital improvement program budget estimates. · Recommended Additions/Deletions to Park Amenities Parks and Engineering staff then reviewed what amenities should be included in a typical 10 acre park. Staff recommends that several more amenities, as detailed on the last page of Exhibit "C", be added to the above list. Staff also recommends removing item 15 (1/2 street improvements on 2 sides of park site) from the list of amenities in a typical 10-acre park. By doing this, an assumption was made that the developer would be responsible for all improvements in adjacent streets. The net increase for these items are estimated at $243,500. Based upon staff's analysis, the total cost to construct a 10 acre park would be $1,594,000 if the amenities recommended by staff are adopted. Using these G:\GROHPDAT~Georgina\Park Development Fees\memo 4- I 1-03.doc Page 3 amenities and their costs, yields a per unit park development fee of $1,196 ("Exhibit "D"). This is an 85% ($549) increase over the current per unit fee of $647. As noted earlier, the last fee increase, based upon the Construction Cost Index, was approved by Council in' December, 2002. Annual index averages were used for the most current calendar years for which a full 12 months of indexes were available (2001 and 2000). The annual index for calendar year 2002 is now available. It reflects an increase of 3.09% as compared to the 2001 annual index. Since it may take some time to respond to comments from the Building Industry Association (BIA) and other interested parties regarding staff's list of amenities and the associated costs, staff recommends proceeding with a fee adjustment based upon the 3.09% construction cost index increase. · PARK FEE CREDIT Staff contacted Councilmember Couch on this referral to obtain clarification. He indicated this item has already been answered by staff. Therefore, no information was provided on this item. Staff has only recently provided this information to the BIA. Due to time constraints, sufficient time was not provided to them to review the package before the Budget and Finance Committee meeting on April 21st. Staff recommends allowing the BIA ample time to review the data and formally respond with questions, issues, or 'concerns. Since this review process could take some time, staff recommends proceeding with a fee adjustment based upon the 3.09% CCI increase as discussed earlier. cc: Brian Todd, BIA Arnold Ramming Ken Trone Georgina Lorenzi G:\GROUPDAT~Georgina\Park Development Fees\memo 4-I 1-03.doc Deveiopment of T~,:icai 10 Acre Park-Al CiTy Cost EXHIBIT "A" ~,s scnedute excludes land acquisition costs ~ ~ ~ ,m~.~ -~w ~ ' ,~- ~., ~.~ uecemoer ~, 2000 , Earthwork,,Gradlng (Flat, Hilly PlaCeld. =to.-Subj ect to spec)tic site conditions) 5,100 51 000 2 Utilit,/(Eiectricai/%,Vater/Sew er-Suh_,iec: :: s0ecific design requirements) 3.700 37.000 3 A. Irrigation System 5,700 57,000 B. Booster Pump (Not required for a 10 acre park-Would be required for larger parks N/A 0 C. Maxicom System N/A 10,000 . SUBTOTAL FOR ITEM #3 5,700 67,000 4 Security Light System (20 poles for 10 acres) 5,200 52,000 5 Restroom Facilities With 400 square foci storage-ADA Accessible N/A 80,000 (Restroom Facilities are required w itha ! 0 acre park) 6 Parking Lot (36-40 Cars; w/landscapincj: may not occur at each park) 6,200 62,000 7 Concrete Work IntedoflDdveway & Mowstdp-minimum hardscape 4,500 45,000 8 Picnic Facilities (BBQ's, tables, shade structures, etd) 4,000 40,000 9 Landscape Plant Matedal (Trees, Shrubs, and Grass) 6,500 65,000 10 Drinking Fountains (Combination Standard/ADA) 500 5,000 11 Mulitgame Slab (60x60; ½ court; wire reinforcement footing; no lighting) N/A 13,000 12 360 Day Maintenance 5,500 55,000 13 Playground Equipment With ADA Requirements A. Slides, Swings, Safety Surface, Sand, Trashcans, Compliance audit of playgroun 9,600 96,000 equipment, etc. B. Shade Structure (1) N/A 8,000 C. Concrete-Amount can vary per park si;e N/A 10,000 D. Benches-2 per acre 1,000 10,000 SUBTOTAL FOR ITEM #13 10,600 124,000 14 Sign/Monument Wall (5'x 12') N/A 2.500 15 ½ Street Improvements on 2 Sides of Pa,'",( Site A. Sidewalk: 1,250 LF * 5.5' wide * $2.30/SF N/A 15,800 B. Curb & Gutter: 1,250 LF * $10.90/LF N/A 13,600 C. Pavement: 32,600 SF ° $2.50/SF N/A 81,500 SUBTOTAL FOR ITEM #15 N/A 110,900 SUBTOTAL OF ESTIMATED COSTS 809,400 15 Design/Dev elopmentJAdministration N/A 57,600 TOTAL ESTIMATEDI COSTS 867.000 G:'..GROU PDAT~Georg~ca ,PKACRECOST.wb31 Exhibit "B" Page 1 of 2 ~- Development of Typical 10 Acre Park - At City Cost ~' This schedule excludes land acquisition costs. ] December 1900 Cost Basis I j I · Est. °02 Cost Based ICost per Acre 10-Acre Cost on CCI of 1.95% I Earthwork/Grading (Flat, Hilly Playfield, Etc.- Subject to specific site conditions) $5,100 $51,000 $52,000 2 Utility (Electrical/Water/Sewer - Subject to specific design requirements) 3,700 37,000 37,700 3 A. Irrigation System 5,700 57,000 58,112 B. Booster Pump (Not required for a 10 acre park - would be required for larger parks) N/A 0 C. Maxicom System N/A 10,000 10,195 SUBTOTAL FOR ITEM #3 5,700 67,000 68,300 4 Security Light System (20 poles for 10 acres) 5,200 52,000 53,000 5 Restroom Facilities with 400 square foot storage - ADA Accessible N/A 80,000 81,600 (Restroom Facilities are required with a 10 acre park) 6 Parking Lot (36-40 Cars; w/landscaping; may not occur at each park) 6,200 62,000 63,200 7 Concrete Work Interior/Driveway & Mowstrip - minimum hardscape 4,500 45,000 45,900 8 Picnic Facilities (BBQ's, tables, shade structures, etc.) 4,000 40,000 40,800 9 Landscape Plant Material (Trees, Shrubs, Grass, and Ground Cover) 9,000 90,000 91,800 10 Drinking Fountains (Combination Standard/ADA) 500 5,000 5,100 11 Multigame Slab (60x60; 1/2 court; wire reinforcement footing; no lighting) N/A 13,000 13,300 12 360 Day Maintenance 5,500 55,000 56,000 13 Playground Equipment with ADA requirements A. Slides, Swings, Sand, Trashcans, etc. 9,600 96,000 97,872 B. Shade Structure (1) N/A 8,000 8,156 C. Concrete - amount can vary per park site N/A 10,000 10,195 D. Benches - 2 per acre 1,000 10,000 10,195 SUBTOTAL FOR ITEM #13 10,600 124,000 126,400 G :\G ROU PDAT\Georgina\Park Development Fees\Dev Costs 4/14/2003 Exhibit "B" Page 2 of 2 ~ Development of Typical 10 Acre Park - At City Cost ~-~ This schedule excludes land acquisition costs. I December 1999 Cost Basis I i Est. '02 Cost Based ICost per Acre 10-Acre Cost on CCI of 1.95% 14 Sign/Monument Wall (5'x12') N/A 2,500 2,500 15 1/2 Street Improvements on 2 sides of park site A. Sidewalk: 1,250/LF * 5.5' wide * $2.30/SF N/A 15,800 16,108 B. Curb & Gutter: 1,250 LF * $10.90/LF N/A 13,600 13,865 C. Pavement: 32,600 SF * $2.50/SF N/A 81,500 83,089 SUBTOTAL FOR ITEM #15 N/A 110,900 113,100 SUBTOTAL OF ESTIMATED COSTS 834,400 850,671 16 Design/Development/Administration N/A 32,600 33,200 TOTAL ESTIMATED COSTS $867,000 $883,900 G:\GROUPDAT\Georgina\Park Development Fees~Dev Costs 4/14/2003 EXflIBIT "C" page 1 of 4 B A K ER S' FI E.L D Public Works Department Memorandum TO: Raul Rojas, Public Works Director FROM: ~~-'~old Ramming, Civil Engineer IV DATE: April-10, 2003 SUBJECT: Park Development Costs Design Engineering staff has reviewed Recreation and Parks Department's cost estimate to develop a Typical 10 Acre Park, dated May 2002. Our revised cost estimate is organized in the same format as in the currently adopted development cost 10 acre park estimate, dated March 2000. The following assumptions / conditions were used to develop the attached costs: 1. Costs are based upon a net ten (10) acre park site. 2. The bottom line, total costs are based on the adjacent developer(s) being responsible for all improvements in the adjacent streets. 3. Recreations and Parks Department's quantities for park amenities were accepted. 4. Depending on actual site conditions, the cost for grading and drainage could be substantially different. Development cost in the northeast section of Bakersfield may reqUire substantial additional cost for landscaping due to soil conditions. For a specific park site, these assumptions and conditions might vary resulting in a higher actual cost to develop that park site. Attachment: Development Cost for Typical 10 Acre Park Site c: Jack LaRochelle Bill McClure Reading File Wgm 4/10/03 S:~°ROJECTS~BilItTypica110 Acre Park~Development Fee Memo,doc I~'H[B'~T "C" page 2 of 4 Analysis of Development Cost for Typical 10 Acre Park Prepared April 2003 MARCH 2000 IMPROVEMENT ITEMS Item Description Cost 1 Earthwork / Grading (Flat, Hilly Playfield, Etc. - Subject to specific site conditions) $135,000 Item Qty Unit Unit Price Extension Clear and Grub Site 10 Acre $1,500 $15,000 Rough Grade Site 24000 CY $5 $120,000 1.5 foot average over site 2 Utility (Electrical/Water/Sewer- Subject to specific design requirements) $45,500 Item Qty Unit Unit Price Extension 6" Water Service / Meter / Backflow I LS $30,000 $30,000 Prevention / Connection Electrical Meter & Panel 1 LS $5,000 $5,000 4" Sewer Service Line 300 LF $25 $7,500 Sewer Cleanout 2 EA $1,500 $3,000 3 Irrigation System $258,000 Item Qty Unit Unit Price Extension A Automatic Irrigation System 380000 SF $0.68 $258,000 B Booster pump (Not required for 10 acre park) $0 C Maxicom System (Included in Automatic Irrigation System) $0 4 Security Light System (20 poles for 10 acre) $50,000 Item Qty Unit Unit Price Extension Convenience Lighting 20 EA $2,500 $50,000 5 Restroom Facility with storage room - ADA Accessible $120,000 Item Qty Unit Unit Price Extension Restroom 600 SF 1 LS $120,000 $120,000 6 Parking Lot (36-40 Cars: w/landscaping) $22,440 Item Qty Unit Unit Price Extension 40 Stall Parking Lot (16,000 SF) 4" AB and 2" AC Aggregate Base 380 Ton $18 $6,840 Asphalt Concrete 200 Ton $42 $8,400 Curb & Gutter 400 LF $13 $5,200 Commercial Driveway 2 EA $1,000 $2,000 7 Concrete Work Interior/Driveway & Mowstrip- minimum hardscape $46,500 Item Qty Unit Unit Price Extension 4' Wide Sidewalk 12000 SF $3.00 $36,000 Mow Curb 1400 LF $7.50 $10,500 8 Picnic Facilities (BBQs, tables, shade structures, etc.) $50,000 Item Qty Unit Unit Price Extension Picnic'Facilities 10 EA $5,000 $50,000 G:\GROUPDAT~Georgina\Park Development Fees\10 Acre Park Costs.xls Page 1 of 3 F2~I[B'[T "C" page 3 of 4 9 Landscape Plant Materials (Trees, Shrubs, Grass and Ground Cover) $149,340 Item Qty Unit Unit Price Extension Soil Amendment 380000 SF $0.19 $72,200 24' Box trees 136 EA $200.00 $27,200 5 Gallon Plants 200 EA $13.20 $2,640 Hydroseed Turf 380000 SF $0.10 $38,000 Mulch 3" Deep 300 CY $31.00 $9,300 10 Drinking Fountains (Combination Standard/ADA) $3,000 Item Qty Unit Unit Price Extension Drinking Fountain 2 EA $1,500 $3,000 11 Multigame Slab (60x60; 1/2 Court; wire reinforcement footing; no lighting) $18,000 Item Qty Unit Unit Price Extension Game Court 3600 SF $5.00 $18,000 12 360 Day Maintenance $57,000 Item Qty Unit Unit Price Extension Landscape & Irrigation System 380000 SF $0.15 $57,000 13 Playground Equipment with ADA Requirements $124,000 Item Qty Unit Unit Price Extension A Slides, Swings, Sand, Trashcans, etc. Tot Lot Equipment 2 to 5 years 1 LS $20,000 $20,000 Tot Lot Equipment 5 to 12 years 1 L $40,000 $40,000 Washed Sand 400 CY $30 $12,000 Resilient Rubber Surfacing 600 SF $25 $15,000 Trash Receptacles 10 EA $500 $5,000 B Shade Structure (size not specified) Shade Structure 900 SF 1 LS $15,000 $15,000 C Concrete - Amount can vary per park site Tot Lot Concrete Perimeter Edge 500 LF $10 $5,000 D Benches-2 per acre Park Benches 16 EA $750 $1'2,000 14 Sign/Monument Wall (5'x12') $3,600 15 1/2 Street Improvements on 2 Sides of Park Site $92,000 Item Qty Unit Unit Price Extension A Sidewalk: 1250 LF 5.5"wide 5.5' Wide Sidewalk 6900 SF $3 $20,700 B Curb & Gutter 1250 LF $13 $16,250 C Pavement: 32,600'SF 6" Aggregate Base 1180 Ton $18 '$21,240 4" Asphalt Concrete 805 Ton $42 $33,810 Construction Total $1,174,380 16 Design / Development/Administration, including Construction Inspection (15% of Construction Total) $176,000 TOTAL REVISED COSTS OF DECEMBER 2000 IMPROVEMENT ITEMS $1,350,380 G:\GROUPDAT~Georgina\Park Development Fees\10 Acre Park Costs.xls Page 2 of 3 F.~q~IBIT wC" page 4 of 4 " ADDiTiONAL REQUIRED AMENmES AND COSTS 17 Civil Site Work - Storm Drain System $41,000 Item Qty Unit Unit Price Extension 18" PVC Storm Drain 1500 LF $25 $37,500 24" Christy Box Catch Basin 7 EA $500 $3,500 18 Architectural - Trash Enclosure $8,500 Item Qty Unit Unit Price Extension Trash Enclosure (Walls and Slab) 1 LS $8,500 $8,500 19 Site Furnishings - Basketball Pole & Backboards $5,000 Item Qty Unit Unit Price Extension Basketball Pole & Backboards 2 EA $2,500 $5,000 20 Site Lighting- Parking Lot, Basketball Court, Electrical $45,000 Item Qty Unit Unit Price Extension Parking Lot Lighting 4 EA $2,500 $10,000 Basketball Court Lighting (30 foot tall 4 EA $6,250 $25,000 poles, 2 ~ 1000 watt lamps per pole) Electrical Distribution to Parking Lot and 1 LS $10,000 $10,000 Basketball Court 21 Delete Offsite Street Improvements -$92,000 Item Qty Unit Unit Price Extension 5.5'Wide Sidewalk -6900 SF $3 -$20,700 Curb & Gutter -1250 LF $13 -$16,250 6" Aggregate Base -1180 Ton $18 -$21,240 4" Asphalt Concrete -805 Ton $42 -$33,810 22 Double Size of Game Court $18,000 Item Qty Unit Unit Price Extension Game Court 3600 SF $5.00 $18,000 Sub-total of Construction Costs for Recommended Changes $25,500 23 Mobilization (5% of All Construction Costs)* $60,000 24 Contingency (10% of Construction Total)** $126,000 Sub-total of items 17 to 24 $211,500 25 Design / Development / Administration, including Construction Inspection on items 17 to 24 $32,000 (15% of Construction Total) B TOTAL COSTS FOR NEWLY ADDED ITEMS $24:3,500 TOTAL COSTS FOR TYPICAL 10 ACRE PARK (A + B) $1,593,880 *Sum of Construction Total on page 2 ($1,174,380) and Sub-total of Construction Costs for Recommended Changes on page 3 ($25,500). **Construction Total computed as follows: Construction Total on page 2 $1,174,380 Plus Sub-total of Construction Costs for Recommended Changes on page 3 $25,500 Plus Item 23, Mobilization $60,000 $1,259,880 G:\GROUPDAT~Georgina\Park Development Fees\10 Acre Park Costs.xls , Page 3 of 3 ; E3(~IIBIT PARK DEVELOPMENT FEE WORKSHEET Method Used to Calculate Fee: 1. A 10-acre park serves 4,000 people based upon the General Plan and Bakersfield Municipal Code Chapter 15.80 standard of providing park land at a rate of 2.5 acres per 1,000 population. 2. Cost of developing a 10-acre park is divided by 4,000 people to obtain a cost per person. a) $1,594,000 + 4,000 = $398.50 cost to # pop. Served cost per person develop by 10-acre park to develop park 10-acre park 3. Number of persons per dwelling unit type: Type of Unit 2000 Federal Census Persons Per Unit Single Family (SFR) 3.01 Multiple Family (MFR) 2.77 Note: Consistent with the Planning Division, permits are categorized into 2 type of units as identified above. In prior calculations, 1990 Federal Census Persons Per Unit data was used for the duplex and mobile home units. The 2000 Federal Census recategorized many of the unit types. Mobile Home and duplex information are now included with multiple family. 4. Based on last 5 years of building permit data, the ratio of type of building permits is: For every 100 permits there are 97 permits for single family and 3 permits for multiple family. 5. Weighted average of persons per dwelling unit: 97 SFR X 3.01 persons per unit = 291.97 3 MFR X 2.77 persons per unit = 8.31 (291.97 + 8.31) + 100 = 3.00 weighted average persons per unit (pp/du). 6. Calculate the fee using the weighted average persons per unit: 3.00 pp/du X $398.50 (cost/person to develop park) = $1,195.50 per unit (round to $1,196/unit) G:\GROUPDA%Georgina\Park Development Fees~odf wksht 4/14/2003 BAKERSFIELD Economic and Community Development Department MEMORANDUM April 16, 2003 TO: Budget and Finance Committee FROM: Donna L. Kunz, Economic Development Director "~..~/~ -~_~. SUBJECT: Information Regarding Economic Development Loan Policy Guidelines The following is provided for your information and consideration subsequent to a meeting with Councilmember Carson, City Manager Alan Tandy, and myself on April 2, 2003. HUD has established guidelines for evaluating project costs and financial requirements. HUD's guidelines are designed to assist jurisdictions underwrite economic development projects and were designed to help jurisdictions determine which projects are financially viable and will result in the most efficient use of CDBG funds. However, the use of HUD's guidelines is voluntary. What is required is that jurisdictions must conduct basic financial underwriting of projects considered for funding under economic development. The HUD guidelines were followed by my staff to develop our EDCD loan underwriting guidelines and policies for the City's CDBG loan program. Without some form of guidelines and underwriting procedures it is very difficult for my staff to fairly evaluate a financial assistance request. I strongly believe that guidelines and a loan policy should be continued. However, I am sensitive to the SE community perception that it might not be worth the lengthy time and effort to complete the necessary paperwork for economic development funds if they can only be received in the form of a loan. Some economic development projects might require CDBG "equity" investment from the City, ultimately creating jobs and allowing a small business to establish and flourish in a targeted revitalization area. In my March 17, 2003 memo to the Budget and Finance Committee, I suggested three items for consideration for change in our policy. These items were: 1) Allow the loans to be forgiven after five years; 2) Lighten up the collateral - allow collateral other than real estate; and 3) allow more than 10%-30% of the public funds be available to the project- say 50%. Perhaps changing one or more of these three items will change the southeast community perception that the loans are to much work for the financial benefit received. S:\DEBBIE'S\Budget & Finance\B & F atloanpolicy.doc Changing of any of the three items does not release the applicant from completing the City's required paperwork/application. It also does not release an applicant from following the SB 975 rules if the commercial project involves construction or rehabilitation. Currently exempt from the SB 975 prevailing wage rule are self-help housing programs as defined by the California Housing Finance Authority, affordable housing development that only involves funds from the local redevelopment affordable housing fund and private funds and a "minimal cost" exemption whereas public assistance is only a tiny portion of the overall project costs and is limited to the public improvements. We have used these exemptions successfully on larger scale projects in recent months. Lastly, an application is absolutely necessary in order for EDCD staff to fairly analyze the financial request and make a qualified recommendation to the City Council for consideration. I have attached a copy of the HUD policy and underwriting guidelines for your reference. S:\DEBBIE'S~Budget & Finance\B & F atloanpolicy.doc § 570.209 24 CFR Ch. V (4-1-98 Edition) ~ii) .Ail housing activitie~ for which unde:~rricing and selecting CDBG-as- ".he Community Development Finan- sis~ed economic development ci~ I~cicutio~obligates CDBG ~ist- which are Fmanciallv ~able ~d wi~ a~ce during the program year may be make the most e~tive ~e of the :o~m:der~ ~o be a single s~-dcture for CDBG funds. These ~uideli~. P,J~s of applying the criteria at fe~ to ~ ~e under.rig p~-agraph (a)(3)of ~is ~on. lines. ~e published ~ append~ A to ~[7} Where an activity m~ting ~he cN- ~is pa~. ~e use of ~e under.nE te~.a at i~70.209~)(2)(v) ~y also meec ~idelin~ published by HL~ ~ not the requiremen~ of eith~ paragraph m~dato~. However. ~ el~g (d){5)(i) or (d)(6)(i) of th~ ~c~on. the grantee way elect ~o qu~ the activ- not to use these ~idel~ wo~d ~ed to conduct b~ic ~ un- ity under either ~e ~ea ~ne~t cfi- debiting prior to ~e pro.ion of te~a at ~ragraph (a) (1) (vii) of ~is ~ion or the job a~egation criteria CDBG fin~cial ~ist~ce ~ a for- at p~ag~ph (a) (i) (vi) ~) of ~ ~c- profit busing. ~ere approp~te. :ion. but not ~. Where an activity HUD's under, ting ~idel~es r~og- may m~: the job a~rega~on crite~ n~e ~t di~erent levels of renew a: ~ p~grap~ (a)(4)(~)~) ~d ~} appropriate to take into ac~t dif- of Lhis s~Jon, the ~t~ may elect ferenc~ in the size and ~o~ of a pr~ ~o qu~ the acti~ under eider ~i- posed project, ~d in ~e ~ of a te~on, but not both. micr~nte~se or o~er s~ b~i- n~ co ~e ~to account ~e dif- ~S~ FR ~4~. ~oc. ~. 1988:~3 ~R H~. Oct. ~I, ferenc~ in the capaciw ~d level o~- 1~. ~ ame~d~ ac ~ FR I~. J~. S. ~ FR 1744~..Amt. 6. 1~: ~ FR i6912. Nov. 9, phistica~on ~ong b~in~ of I~; 61 FR 1~4, Apr. ~. 1~] fe~ng s~. R~ipien~ ~e en~u~g~, when ~ey develop ~eir o~ pro~ I570~ G~de~ for ev~ua~g and unde~cing c~teNa, to ~ ~d ~lec~ econo~c develo~ merit project. ~e facto~ into accost. ~ objec- tiv~ of ~e unde~iting ~idel~ ~e The :%llc'.ing guidelines ~e provided ~o e~ure: :o ~c ~e recipien~ to ~ua:e ~d (1) T~ project cos~ are ~nable;~ selec~ ac~'/i~es co be c~ ouc for (2) Thac ~1 ~urces of proj~ ~c- ~onomic development pu~ses. Spe- in~ ~e commi~; c~ly. ~e ~idelin~ ~e applica- (3) ~ac to ~e ~en~ p~c~le. hie co a~vicies ~a~ ~e eligible for CDBG ~n~ ~e not su~t~ for CDBG ~ce under f570.203. Thee non-F~er~ financial suppo~; gulde!in~ ~o apply co a~i~cies ~ ouc under the au~ori~ of ~ 570.2~ (4) ~ac the projec~ ~ ~n~ly f~- ~hac woulfl o~e~ ~ eligible under sible: ~;7 ~ (5) ~at to ~e ~en~ P~ble. . 0..~. ~ere it not for ~e involve- men: of a Co~i~-B~ Develop- ~e re:urn on :he o~er's ~ ~n: Or~on (CBDO). ~is v~:enc ~11 no: ~ u~bly '*'o~d include acti~:i~ wh~e a CB~ high; ~d mak~ lom~ ~o for-profi: busing.) (6) ~ to ~e e~en: P~le. ~ ~ideEnes ~e com~d of ~o CDBG funds ~e disbu~ on a pro com~nen~: ~idelin~ for ev~ua:in8 b~ ~ o~er fi~c~ pro~d~ p~o]~ cc~ and fin~c~ ~uir~ :he projec:. men~: ~d s~nd~ for ev~ua:ing ~) Sramd~ Eot e~u~~k p:blic ~nefi:. ~e s~nd~ for ev~u- e~r. ~e ~ ~ ~po~ible for a~n8 public ~nefi: ~e m~da:o~, bu~ ~Ln~ sure ~a: a~ le~: a ~um :he ~ideilnes for ev~ua~g proj~ level of public ~n~: ~ ob~ ~m c~ ~d financiE requ~emen~ are ~e ~ndi~re of CDBC ~ ~er nc~. ~e ~:ego~ of eli~bili~ (a) Ouid~ a~d obj~ ~or e~u- by ~e guidehnes. ~e st~d~ a~ proj~ cos~ ~d Cm~dM ~u~e- fo~ ~low iden~ :he ~ of public m~. HL~ h~ develo~ ~idelm~ ~nefi: ~ac ~I1 ~ r~n~ for 5ha: ~e d~i8n~ :o provide ~e r~ipi- pu~ ~d ~e min~ level of ~ch en: wi~ a framework for ~n~cially ~ac mus: ~ ob:in~ for ~e ~un: 62 Oft. of Asst. Secy., Comm. Planning, Develop., HUD § 570.209 of CDBC funds used. Unlike the guide- of an area, the grantee may elect to lines for project costs and financial re- count the activity under either the quirements covered under paragraph jobs standard or the a~ea residents (a) of this section, the use of the stand- standard, but not both. ards for public benefit is mandatory. (iv) Where CDBC assistance for a~ Ce.~cain public facilities and improve- activity is limited to job r. raining and ments eli§ible under §$70.201(c) of the placement and/or other employment regulations, which are undertaken for support services, the jobs a~sisted with economic development purposes, are CDBG funds shall be considered to be also subject to these standards, as created or retained jobs for the pur- s-~eci,~ed in §570.208(a)(i)(vi)(F)(2). poses of applying the aggregate stand- (l) Standards for activities in the ague- ards. gate. Activities covered by these g~ide- (v) Any activity subject to these lines must. in the aggregate, either: guidelines which meets one or more of (9 Create or retain at least one full- the following criteria may, at the ~me equivalent, permanent job per grantee's option, be excluded from the S35.000 of CDBG funds used: or aggregate standards described in para- (ii) Provide goods or services to resi- graph Co) (I) of this section: dents of an area. such that the number (A) Provides jobs exclusively for un- of low- and moderate-income persons employed persons or participants in residing in the areas served by the as- one or more of the following programs: sisted businesses amounts to at least (1) Jobs Training Parrnership Ac~ one low- and moderate-income person (J'TPA): .:>er $350 of CDBG funds used. (:2) Jobs Opportunities for Basic {2) Applying de aF~?reo~-are standards. Skills (JOBS): or (i) A mer-ropolitan city or an urban ($) Aid to Families with Dependent county shall apply the aggregate Children (AFDC): s-. ~ndards under paragraph Co)(1) of r2ris section to all applicable activities for (B) Provides jobs predominantly for '.'bach CDBG funds are first obligated residents of Public and Indian Housing ~.rinin each single CDBG program year, units; w~.~hout regard to the source year of (C) Provides jobs predominantiy for the funds used for the activities. A homeless persons; grmntee under the HUD-Administered (D) Provides jobs predominantly for Small Cities or Insular Areas CDBG low-skilled, low-and moderat~income programs shall apply the aggregate persons, where the business agrees to sran.dards under paragraph Co)(I)oft his provide clear opportunities for pr~ section to all funds obligated for appli- morion and economic advancement. cable activities from a given grant: such as through the provision of train- program 'income obligated for applica- ing: ble activities will. for these purposes. CE) Provides jobs predominantly for be aggregated with the most recent persons residing within a census trac~ open grant. For any time period in (or block numbering area) that has at which a community has no open HLq~- least ZO percent of irs residents who are Administered or Insular Areas grants, in poverty; the aggregate standards shall be ap- (F') Provides assistance to busi- plied to all applicable activities for ness(es) that operate(s)within a census wKich program income is obligated tract (or block numbering area)that during that period, has at least Z0 percent of irs residents (ii) The grantee shall apply the ag- who are in povert~a. gregare standards ro the number of (G) Stabilizes or revitalizes a neigh- jo~s to be created/retained, or to the borhood ~at has at least 70 percent of number of persons residing in the area irs residents who are low- and mod- served (as applicable), as determined at erate-income: the rime funds are obligated to activi- CH) Provides assistance to a Commu- r..ies, nity Development Financial Institu- <iii) Where an activity is expected ~:ion that serve an area that is predomi- both to create or retain jobs and ro nantly low-and moderate-income per- pruvide goods or services to residents sons: 63 § 570.209 24 CFR Ch. V (4-1-98 Edition) (I} Provides assisr~nce to a Commu- findin§s of noncompliance relatin~ to ni~.'-E~ased DeveIopmen[ O~anizacion previous C~BC assistance provided by serving a neighborhood tha~. has a: :he recipiens. lea.sc 70 percent of its residents who are (4) Appl. yin~ [he individua, i ac~dt'~, Iow- a~d moderate-income; $~andard$. (i) 1/vt~ere an activity is ex- (J) Provides employment opportuni- pected both to create or retain jobs and ties that are an integral component of to provide goods or services to resi- a project designed to promote spar_ia~ dents of an area. it will be disquali~ed deconcentration of low- and moderate- only if the amount of CDBC assistance income and minori~ persons: exceeds both of the amounts in para- (t~) With prior HUD approval, pro- g.-aph (b) (3) (i) of this section. rides substantial benefit to low-income (ii) The individual activin/standards persons through other innovative ap- in paragraph (b)(3)(i) of this section proaches; shall be applied to the number ot'jobs ~I_) Provides services to the residents to be' created or retained, or to the of an area pursuant to a strategy ap- number of persons residing in the area proved by Ht~D under the provisions of served (as applicable), as determined at §91.215(e) of this title: the time funds are obligated to activi- 0v() Creal:es or retains jobs through ties. businesses assisted in an area pursuant (iii) Where CDBC assistance l~or an to a s=rategy approved by HUD under activin/ is limited to job training and the provisions of §91.Z1$(e) of r~is tide. placement andYor other employment (3) Standards riot' individual activities, suppor~ services, the jobs assisted with Any activity subject to these guide- CDBC funds shall be cor~idered to be lines which fa/Is into one or .more of created or recaLned jobs for the put- the following categories will be consid- poses of applying the individual ac~iv- ered by HUD to provide insu~icient i~v standards in paragraph (b)(3)(i) of public benefit, and therefore may under tills section. no c~cums~ances be assLsted with (c) A~endmenr. s co economic develop. CDBC f~ncls: menc projecr, s aFzer review dec--ar, ions. (i) The amount of CDBC a~sistance ~f, after the grantee enters into a con- exceeds either of the trollov~.ng, as ap- r.-act to provide a~sistance to a project, pLicable: the scope or t~nancial elements of the (A) $$0.0~ per ~ull-time equivalent, project change to the extent thai: a sig- permanent job created or retained: or nLficant contract amendment is appro- {B) $1.000 per low- and moderate-in- pria[e, the project should be reevalu- come person to which goods or services ated under these and the recipient's are provided by the activity, guidelines. (This would include, t'or ex- (ii) The activitSt consists of or in- ample, situations where the business cludes any ot'the following: requests a change in the amount or (A) Ceneral promotion of the commu- te.m~s of assistance being provided, or rdt-y as a whole (as opposed to the pro- an extension to the loan payment motion of specific area~ and programs): riod required in the contract.) ~ a CB) Assistance to professional spor~.s evaluation of the project indicates that teams; r. he financial elements and public be. ne- (C) Assistance to privately.wried fit to be derived have also substan- recreational facilities that serve a pre- ~ally changed, then the recipient dornina~tiy higher-income clientele, shou2d make appropriate adjustments where the recreational benefit to users in the amount, type. terrr~ or condi- or members clearly outweighz employ- r. ions of CDBG assistance which has ment or other benefits to low- and been o~ered, to reflect the impact of mederate-income persons; the substantial change. (For example. (D) Acquisition of land for which the if a change in the project elements re- specLfic proposed use has not yet been sults in a substantial reduction of the identLf~ed; and total project costs, it may be appro- (E) Assistance to a for-profit business priate for the recipient to reduce the while that business or any ocher busi- amount of total CDBG a.~siscance.) It' ness owned by the same person(s) or :he amount of CDBG assLstance pro- entity(les) is the subject of unresolved vided to the project is increased, the Ofc. of As.st Secy., Comm. Planning, Develop., HUD § 570.301 amended project must s:~-ii comply lng selection criteria), and how much wi~h The public beneClc st~d~-~ unde~ ~d under what te~s ~e ~is~nce p~-a~raph ~)of chis sec=ion, w~ll ~ provided, or in the c~e o~ a (d) Doc~en~a~on. The g:~ mus: pl~n~ public facili~ or improve- mann.in su~cien~ recor~ co dem- men~. how [= expec~ co de~e~e o~trace ~e level of public ~ne~. l~ation. b~ed on ~e a~ve s~nd~. ~at ~ ~) Fl~r-funded a~i~ ~d ~n- actu~ly achieved upon comple~on of te~. A r~ipient may use und~bu~ ~e CDBG-~ted economic ~velo~ funds in ~e line of cr~it ~d i~ CDBG ment activity(i~) ~d how ~at com- progr~ accoun~ ~at ~e budget~ in p~es to ~e level of such ~fit ~- statemen~ or ac~on pl~ for one or ~cipated when the CDBG ~ce more o~her ac~vities ~t do not w~ obligated. If ~he ~t~'s actu~ ~e funds immediately, sub~t ~0 r~ul~ show a pattern of ~tial limitatio~ d~c~bed ~low. Such v~ation from ~ticipat~ r~. ~e ~nds sh~l be refe~ed to ~ ~e "float" gr~tee ~ ~ to ~e ~i actio~ for p~ of t~ se~ion ~d ~e ac- ~nably wi~in i~ con~I to in- ~on pl~. Each a~i~ ~ out prove ~e acc~acy of i~ proj~o~. If ~ing ~e float m~t meet ~ of ~e actu~ resul~ demo~te ~at ~e r~quiremen~ that apply to ~e recipient ~ failed the public ~n- CDBG-~t~ ac~ivi~ gener~y, ~d eF~t s~d~, HUD may r~u~e ~e must be ~t~ to p~uce ~cipient · to meet more s~gent income in ~ ~ount at le~t ~u~ ~d~ds in ~t~e y~ ~ appro- ~e ~ount of ~e float ~ ~ed. ~en- p~ate, ever the r~ipient propos~ to ~ [~ ~ 1947. J~. 5. 1~. ~ amem~ a~ ~ FR activi~ ~h ~e float, it m~t include 17~S. Apr. 6. 1995] ~e acti~ ~ i~ ac~on pl~ or ~d ~e ac~on pl~ for the ~ent pr~ ~bpa~ D--En~ement Gran~ gram ye~. For pu~s~ of ~ tion, an acti~ t~t u~ such ~ ~cE: 53 ~ ~. Sept. 8. 1~. ~s will ~ c~ a "float-~d~ a~.- o~e~ not~. (1) ~ float-fund~ a~ be individu~y l~t~ ~d d~ ~ 570~ Ge~. such in ~e action pl~. ~ sub~ d~ ~ne ~lici~ {Z)(i) ~e ex~ time ~ ~d pr~ur~ governing ~he ~g ~n obligation of ~ce for a of comm~i~ develop~nt bilk float-~d~ acti~ ~d r~eipt of ~ to en~ement co~ti~, progr~ ~come in ~ ~ount at ~e ~lici~ and pr~edur~ ~ fo~ in ~u~ to ~e fu~ ~ount dra~ ~m ~bp~ A, C. J. K. ~d O of ~ p~ ~e fl~ ~o fund ~e acti~ ~y ~ apply to enticement ~t~. ~c~ 2.5 ye~. ~ a~ ~m which pro~ ~come s~t ~ ~ ~70.301 A~ location md fl~t- cover ~e full ~ount of ~e fl~t ~d~g. s~ce ~ ~ to be gene~t~ ~e co~o~dat~ pl~. a~on pI~. more ~ Z.S y~s ~er oblivion ~d ~endmen~ submi~ion ~uire- may not be ~nd~ ~om ~e float, but men~ refe~ to in ~ ~on ~e ~y ~ includ~ in ~ a~on pl~ ~ in 24 CFR ~ 91. ~ ~nd~ ~m CDBG fun~ o~er t~ (a) For a~ivi~ for which ~e ~t- ~e floa~ (e.g., ~t f~ds or pr~ ~ h~ not yet decid~ on a ~c Io- ~om an approv~ ~on 1~ 1o~ ~on. such ~ when ~e ~t~ ~ ~- l~ng ~ ~o~t of ~ ~ ~ ~ (ii) ~y ~e~ion of ~e r~ent for m~ng 1~ or ~ to b~i- ~ for a fl~t-~nd~ a~vi~ ~ or for ~sidenti~ re~bili~on. ~ co~ider~ to ~ a ~w fl~t-~ ~e deception ~ ~e a~ion pl~ or acti~ for ~ pu~os~ ~d ~y ~y ~endment s~l iden~ who ~y ~plement~ by ~e g~t~ o~y ff ~ply for ~ ~i~ce, ~e p~ by ~e~ion ~ made subject to ~e ~e w~ch ~e ~t~ e~ to sel~t limitaOo~ and r~uiremen~ ~ apply who ~11 r~eive ~e ~is~ce (~clud- to a new float-fund~ a~. BAKERSFIELD Economic and Community Development Department MEMORANDUM ¢J'"/~'~'~"~ March 14, 2003 TO: Budget and Finance Committee FROM: Donna L. Kunz, Economic Development Director SUBJECT: Economic Development Loan Policy Guidelines Background The City of Bakersfield has made several economic development loans over the past 7 years. In some cases, loans were forgiven over a 5 year period, some were loaned at 0% interest with a balloon payment due at the end of five years and some were combined with tax increment rebates if the projects were located in qualifying redevelopment project areas and a significant private investment was made. The attached list provides the detail of our loan activity since 1995. Last year, one of our. deferred loan recipients experienceda downtUrn in business'and approached the City to modify'the terms of his loan. Since there waSn't a'n'established policy concerning forgiving or requiring repayment on our loans, staff brought the request to the City Council with several alternatives, one which called for forgiveness of his 10an and another alternative which called for a modified repayment schedule. The City Council referred the loan' modification request to the Budget and Finance Committee to establish a loan policy and report back to the City Council concerning the loan modification request. The following Loan Policy and guideline was unanimously approved at the September 12, 2002 Budget and Finance Committee meeting. These guidelines provided staff a framework to fairly evaluate requests for financial assistance, review qualifications of prospective borrowers, establish criteria for protecting the public investment, and provide justification of the use of public funds with a cost-benefit analysis. Since the time the City's loan policy was approved, a state legislative bill also passed that required any public financial assistance to projects - below market loans or grants to private activities for construction or development costs, automatically triggered prevailing wages on the construction costs associated with the entire project. This action has significantly curtailed our economic development and redevelopment lending and grant activity. / C:~Oocuments and Settings~dkrameP, Local Settings~Temp~B & F memo ED loan policy,doc Last year, the City Council set aside approximately $740,000 of CDBG funds for the purpose of economic development activity - loans for businesses expanding or locating in the Southeast. Staff sent out hundreds of letters to business owners and business tenants located in the Southeast informing them of the loan program. Businesses that indicated an interest in the program were then sent a loan application, a copy of our loan policy and guidelines and information explaining the prevailing wage issues associated with SB975. Staff received a few inquiries, but only one completed application - the Housing Authority for a planned commercial development on East California. The complexities of the CDBG program requirements and the SB975 legislative requirements have made it extremely difficult for staff to attract and process loan requests. It has been suggested that the City change some of its policies concerning the loan program to encourage more applicants. These suggestions include: 1 .) Allow the loans to be forgiven after 5 years 2.) Lighten up the collateral and underwriting policies, - allow collateral other than real estate. 3.) Allow more than 10%-30% of public funds be available to the project. All of these suggestions are allowable under the current HUD guidelines. HUD allows the local jurisdiction to establish its lending policy. CURRENT LOAN POLICY GUIDELINES 1) Basic tenets a) The City of Bakersfield is a funder of last resort. b) The City of Bakersfield will only provide gap financing. c) Repayment begins immediately (nothing less than annual payments). No balloon payments. d) Projects must meet the "but for" test: the applicant must demonstrate the proposed project cannot succeed but for City assistance. 2) Qualifications a) A completed loan application with all required attachments must be submitted. Our clock begins ticking only when a completed package has been submitted. b) Determination of sound credit position of borrower(s). c) A proven ability of borrower(s) to repay. C:~Documents and Settingstdkramer~Local Settings~Temp~B & F memo ED loan policy, doc 3) Criteria a) Security (collateral) must be, i) equal to or greater than the amount of the loan. ii) in a form acceptable to the City of Bakersfield (preferably real estate). b) The proposed project must demonstrate the ability to (at least one), i) create jobs. ii) retain jobs (defined as those that would be lost "but for" this assistance). iii) reduce blight. c) The borrower(s) will accept the City's efforts to protect the community's investment in the proposed project through one or all of the following: i) clawback (recovery of all or part of the subsidy costs if the project fails to meet performance criteria). ii) penalty (fines or charges for non-performance or relocation)i iii) recalibration (adjustments to the amount of the subsidy to reflect changing business conditions). d) The responsibility for maintaining the property rests with the property owner and will run with the property. 4) Cost-benefit analysis a) Identify all costs: i) cost of the loan amount. ii) cost of interest that the City could be earning on funds if the funds were not used as loan proceeds. iii) time value of money - the cost to the City of Bakersfield of not having the use of the funds. iv) loss of tax revenue, if any. v) any negative impacts (direct or indirect) to our area's existing businesses. vi) assistance will not diversify our local economy, if applicable. C:~Documents and Settings~dkramer~Local Settings~Temp\B & F memo ED loan policy.doc Vii) spur revitalization. viii) increase tax revenue b) Identify all benefits i) monetary (1) increase in property tax revenue, if any (2) increase in sales tax revenue, if any (3) increase in business license revenue, if any (4) increase in other tax revenue, if any ii) non-monetary (1) assistance will positively directly impact our area's existing businesses. (2) assistance will diversify our local economic base. (3) assistance will play a pivotal role in strengthening existing clusters or forming new clusters in our area. c) Evaluate the following to determine whether the proposed use will result in a cost or a benefit: i) the business will produce a product for export outside our area. ii) the quality of the jobs to be created. (1) benefits. (a) the percent of jobs to be created that will provide benefits. (b) how the benefits provided by the new jobs compare to those provided by others in local industry. (2) wage rate. (a) the wage rate of jobs compared to others in local industry. iii) whether .the business will target Iow- and moderate-income individuals for employment. d) are other types of government assistance received by the borrower(s)? C:\Documents and Settings~dkramer~Local Settings\Temp~B & F memo ED loan policy.doc Companies Assisted by the City of Bakersfield Economic & Community Development Department March 2003 Company Location of Type of work Owner/CEO/ Total $ of agreement # jobs Source of Use of funds Date Assisted affected performed by Developer to be created funds project company AB Dick 1200 18th Street Computers & Bentley $30,000 N/A Tax off-site improvements 8/I 2/02 RDA Copiers Sales Parmership tax increment Increment HPS Mechanical 3100 E. Belle Plumbing Les DenHerder $50,000 20 CDBG permit fees and 10/3/01 Terrace Avenue Contractor 5 year loan at 0% Tax equipment CDBG $20,000 Increment 7/9/01 RDA tax increment Specialty Trim & 631 California Canvas Awnings Jerry Margrave $10,000 N/A Tax permit fees and 2/12/01 RDA Awning Avenue tax increment Increment development costs Victory Circle 700 S. Mount Race car chassis Les DenHerdcr $50,000 21 CDBG permit fees and 8/16/00- Vernon Avenue mfg 5 year loan at 0% Tax equipment CDBG $20,000 Increment 8/14/00 RDA tax increment Bks Civic Light 1931 Chester Theater Bks Civic Light $75,000 3 new CDBG lease reduction 6/8/00:[: Opera Opera 5 year forgivable loan 6 retained Sangera Auto Auto Mall Auto Sales Mehnga Sanghera $60,000 10 CDBG equipment 1/26/00o 5 year loan at 0% Stiers RV Sales Auto Mall RV Sales Mike Stier $60,000 10 CDBG equipment 10/21/99:[: 5 year loan at 0% · No funds were "actually distributed to the listed company," since payments were provided directly to a vendor. Therefore, the date listed is the date the agreement was approved by the Bakersfield City Council. ~:Date that funds were "actually distributed to the listed company." ...Assistance provided this company did not involve the "use of the Community Development BIock'Grant (CDBG) and other funds that primarily benefit low to moderate income persons." Pleasant 7500 District Call Center/ Ed Hogan $250,000 300 CDBG equipment purchase 7/21/99- Travel Service Blvd. Travel Agency 5 year forgivable loan Rite Aid 1701 23~ Street Drug Store Kevin Tweed $13,000 N/A Tax offsite _ tax increment Increment improvements 11/9/98 RDA Sonic Burger 1401 23rd Street Fast Food Scott Mc Millan $22,500 N/A Tax offsite _ tax increment Increment improvements 11/9/98 RDA DOPACO, Inc. 5801 District Cardboard Edward Fitts $200,000 75 CDBG equipment purchase !/14/995 Blvd. Packaging & 5 year forgivable loan 4/9/985 Printing Step2 7021 Schirra Plastic Products Tom Murdough $137,200 180 CDBG equipment purchase 8/12/98. Company Court 5 year forgivable loan Harvel Plastics 7001 Schirra Plastic Pipe Earl Wismer $125,000 40 CDBG fees and 3/11/98. Court 5 year forgivable loan equipment Kern-Tech, Inc. 405 East 19th Tooling Mike Miller $170,246 18 new CDBG equipment purchase 3/26/975 Street equipment Cliff David 5 year loan at 0% 10 retained 3/27/995 Galey's Marine Auto Mall Drive Boat sales and Don Galey $60,000 6 new CDBG fees and equipment 7/23/985 Supply service 5 year loan at 0% 14 retained 8/20/98~ L&A Oak 2401 East Furniture mfg Leslie Mufioz & $30,000 61 retained CDBG equipment purchase 3/28/96. Designs~ Inc. Brundage Lane Armando Nava 2 year loan at 8% Guy Chaddock & 2201 East Furniture mfg Guy Chaddock $200,000 130 new and CDBG buy down lease rate 6/26/96- Co. Brundage Lane 5 year forgivable loan transfers Southwest 1500 South Pipeline Floyd E. $150,000 16 retained CDBG purchase of property 4/3/975 Contractors, Inc. Union Avenue operations mfg Bowman, Jr. 5 year 9 new forgivable loan Hammons Meats, 1700 South Wholesale meat Craig Hammons & $35,000 23 retained CDBG equipment purchase 12/4/96. Inc. Union Avenue distributor Donald Hammons 5 year 6 new forgivable loan John Q. Hammons 801 Truxtun Hotel John Q. Hammons .land & 100 .Transient 'offsetting operational 6/29/955 Hotels Avenue improvements: $4.5 M Tax costs 8/31/955 · CDBG: $2.5M .Tax .furniture, fixtures, 9/21/955 Increment and 10/19/955 · CDBG equipment 11/14/952 Holiday RV 2710 Auto Mall RV sales and Newton Kindlund $65,000 23 retained . CDBG permit fees and 9/14/95~ Drive service forgivable loan 15 new equipment 1 / 18/96~ · No funds were "actually distributed to the listed company," since payments were provided directly to a vendor. Therefore, the date listed is the date the agreement was approved by the Bakersfield City Council. 5Date that funds were "actually distributed to the listed company." ._Assistance provided this company did not involve the "use of the Community Development Block Grant (CDBG) and other funds that primarily benefit low to moderate income persons." KGET 2120 L Street TV station KGET, Ackerly $175,000 N/A Tax rehabilitate building _ Communication tax increment Increment 6/24/96 RDA Group Carlson 1120 2 i st Street Educating & Gayle Carlson $12,000. N/A Tax Off-site improvements _ Development training redevelopment Increment 4/5/95 RDA ~ people with assistance disabilities Total Community Development Funds Committed $4,217,446 Jobs to be created/retained by Companies Using the funds 1,096 Cost Per Job Created by CDBG funds $3,848 S:~ED Projects\Companies provid~ CDBG or RDA (1995 thru March 2003).DOC · No funds were "actually distributed to the listed company," since payments were provided directly to a vendor. Therefore, the date listed is the date the agreement was approved by the Bakersfield City Council. .~Date that funds were "actually distributed to the listed company." _Assistance provided this company did not involve the "use of the Community Development Block Grant CDBG) and other funds that primarily benefit Iow to moderate income persons."