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Home My WebLink AboutMinutes - November 6, 2007 SSCITY OF LODI INFORMAL INFORMATIONAL MEETING "SHIRTSLEEVE" SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, NOVEMBER 6, 2007 An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, November 6, 2007, commencing at 7:00 a.m. A. ROLL CALL Present: Council Members — Hansen, Katzakian, Mounce, and Mayor Johnson Absent: Council Members — Hitchcock Also Present: City Manager King, City Attorney Schwabauer, and Deputy City Clerk Perrin B. TOPIC(S) B-1 "Presentation of the Redevelopment Project Feasibility Study and Proposed Survey Area" City Manager King introduced the subject matter of the redevelopment project Feasibility Study and proposed survey area and introduced consultants Don Fraser and Ernie Glover. With the aid of a PowerPoint presentation (filed), Mr. King explained that, although it is not required, the City prepared a Feasibility Study for a potential redevelopment project and stated that no official Council action has been taken to date. The first formal step is the designation of a survey area, and the Feasibility Study helps to provide guidance in that selection process. Following Council action on the survey area, the Planning Commission will be asked to select a project area, which could consist of all or part of the survey area; however, it could not be any larger. In determining the survey area, staff considered the 2002 project area, which consisted of 1,184 acres primarily in the downtown area and eastside and had a projected tax increment of $187.9 million in future dollars (or $41.1 million at present value). There has been debate on the size of the project area and whether or not residential should be included; therefore, staff prepared two options. Option A consists of 1,583 acres, which follows the commercial corridors (i.e. Cherokee Lane, Kettleman Lane, Lockeford Street, and Stockton Street) with residential filling in the remainder. The tax increment projection for Option A is $331.9 million in future dollars (or $130.9 million at present value). Option B incorporates the commercial corridors only at 732 acres and a projection of $210.1 million in future dollars (or $83.2 million at present value). At the request of staff, the Lodi Budget/Finance Committee reviewed this matter and recommended the City move forward with consideration of the project area and further recommended that additional areas be included; therefore, Option Al was created, which added areas to the southwest along Ham Lane and to the northwest along the railroad tracks and included neighborhoods above the Grape Festival grounds. Mr. King explained the process of determining the tax increment projections, which included opportunity sites based on the current General Plan, commercial square footage of approximately 666,000, industrial square footage of 924,800, and background growth rate of 5%. The tax increment would be reduced by the property tax administrative fee and the pass-through amount as required by Assembly Bill (AB) 1290. Mr. King demonstrated how the tax increment is divided among the taxing agencies. Assuming Council established 2007-08 as the base year, increment growth would occur in 2008-09 and 45 years would be the maximum length of time. A redevelopment agency collects 80%, with a housing set aside of 20% taken off the top prior to the increment occurring. Don Fraser with Fraser and Associates explained that redevelopment provides a tool to foster economic development within a community by encouraging additional private sector investment into a project area. Larger areas are typically easier to finance in terms of Continued November 6, 2007 issuing bonds due to the improved credit rating. In addition, a larger area with a mix of uses (i.e. commercial, industrial, residential, etc.) is typically the more prudent option. Commercial and industrial investments come from the private sector; whereas, residential investment is more likely to come from area agencies that provide assistance with housing and infrastructure rehabilitation. Mr. King provided details and en example of the methodology of the tax increment. He explained that the Council needs to consider bonded indebtedness, in which case the City would be asked to set a limit. Council Member Hansen questioned if the limit could be changed once it is set, to which Mr. King responded that, if the redevelopment plan changes, the City would need to repeat all of the steps. The law requires obligation, which is a statement of indebtedness, in order to collect. There will be no difference on property tax bills; however, the County Auditor will hold the money for the Lodi Redevelopment Agency in accordance with the pass-through formula. The City will be required to submit a statement of indebtedness, which would include administrative costs, contract obligations, and bonded indebtedness on borrowed money that the City is to repay. That figure should match the amount of the increment, after which the City would collect the money. In response to Mayor Johnson, Mr. Fraser stated that, to the best of its ability, the City should set the limit to cover its needs throughout the term of the plan; however, it may be necessary to revisit the analysis after 10 to 15 years. Mr. Fraser provided examples of types of debt of a redevelopment agency. Mayor Pro Tempore Mounce questioned what would happen if the agency acquired more debt than the tax increment pays. Mr. Fraser responded that projections used to create the initial plan would be revised during the first year of increment and would be based on actual County reports of assessed value. This would help to better determine the amount of increment the agency would have and how much debt to incur in the first year. If the agency wanted a larger pot, it could borrow from the City, assuming it could repay the loan. Bonds in the bond market could leverage dollar for dollar; however, there should be a cushion of 25% more revenue than the debt amount. Mr. King stated that bonded indebtedness is issued by a redevelopment agency based upon projections of tax increment. Prior to AB1290, there was no limit on the amount of increment that could be raised and the objective was to create as much debt as possible, which is no longer the case. In response to Mayor Johnson, Mr. Fraser confirmed that the redevelopment agency has its own rating; the City has no obligation in the redevelopment bonds. Council Member Hansen questioned if the State could take money away from a redevelopment agency, to which Mr. King responded that it could if there was no contract in place that obligated the funds toward a specific project. As a policy choice, Mr. King recommended that the Lodi Redevelopment Agency reimburse money for projects, rather than provide loans. As an example, a developer building an affordable housing project could be reimbursed costs (e.g. impact fees) from the agency following the completion of the project. City Attorney Schwabauer confirmed that there is a provision in the Constitution that prohibits the passage of a law preventing one from meeting its contract obligations. Discussion ensued between Council Member Hansen, Mr. King, and Mr. Fraser regarding the boundaries of the plan, the current General Plan versus the future update, land use decisions, and zoning of properties within the plan. W Continued November 6, 2007 Council Member Hansen suggested that the area encompassing the old Sunset Theater and Alexander's Bakery be included in the survey area as they are blighted properties that could receive some benefit from the project. City Manager King stated that Council has the ability to change the boundaries and pointed out that the land does not have to be contiguous. Mayor Johnson questioned why the large block of parcels on the east side was not included in the area, to which Mr. King stated that some of the properties may not meet the requirements. He added that the County is supportive of the City moving forward with a redevelopment agency and he did not want to receive resistance from the County by having to justify portions of the project area. He agreed that some of the industrial areas to the south could be added. Mayor Johnson felt that the risk of having to justify with the County was worth adding the subject portion. It was pointed out that adjustments to the project area could result in minor additional mapping costs. Mayor Pro Tempore Mounce suggested the area near Turner Road and Stockton Street be included, to which Mr. King pointed out that Council Member Katzakian would be conflicted out. Mr. Fraser further explained the pass-through formula that was imbedded into AB1290. During the term of the tax increment, 20% will be paid initially to taxing entities (e.g. county, school district, etc.), and over the years, it will gradually increase, reaching an average of 30% to 35%. The school district has the ability to keep a portion of its pass- through amount for its facilities in the project area within the school district boundaries and, therefore, has a tendency to be supportive of redevelopment agencies. Discussion ensued between Mayor Johnson, Council Member Hansen, Mr. King, and Mr. Fraser regarding the current real estate market and its affect on the agency. Mr. Fraser acknowledged that timing would have been better five years ago and added that the outlook could depend upon whether or not the County Assessor has already lowered values. Mr. King reported that the purpose of the Feasibility Study is to see if the threshold requirements can be met. The area must be predominantly urbanized, and there must be one criterion each of physical and economic blight. Based on previous Council comments, the schedule has been adjusted in order to set the effective year as 2007-08, which would require that Council take final action no later than June 2008. Mr. King provided the schedule of activities and stated the next steps include Planning Commission approval of the project area on November 14 and City Council establishment of 2007-08 as the base year on December 19. Ernie Glover with GRC Consultants reported that the process can take 12 months, due in part to the required review of the blight documentation, and he believed there was adequate opportunity for public participation in following the proposed schedule. The blight analysis involves a parcel -by -parcel review of existing conditions in the area, which takes into consideration dilapidated buildings, social issues (e.g. crime, adult uses, etc.), and depreciating property values. In response to Mayor Pro Tempore Mounce, Mr. King assured that the Feasibility Study would be corrected to reflect that Intimates on Cherokee Lane is not a topless bar. In response to Council Member Hansen, Mr. Glover stated that those who could potentially challenge the designation of a blighted property include the state, county, taxing entities, city, or private citizen. Mayor Pro Tempore Mounce asked for clarification on the difference between a public and private project as it relates to eminent domain. Mr. King stressed that the use of eminent domain by the Lodi Redevelopment Agency was removed completely from the plan regardless of whether it is a public or private project; however, the City could exercise its power of eminent domain and sell properties to the agency. 3 Continued November 6, 2007 Mr. Schwabauer added that, if the City used eminent domain under its current ordinance, it could not turn over property to a private entity/developer and added that a majority of the Council would have to approve such an action. Mr. Glover explained that, because the agency is directly and financially involved with the project, it must offer forms of assistance to owners and tenants in the project area. PUBLIC COMMENTS: 00 Myrna Wetzel questioned if a redevelopment agency could provide assistance to those in the project area who are on a fixed income, particularly for the cost to install required water meters. Mr. King responded that replacement of water meters would be eligible under the plan and the Council would have options on how to implement such a program. The agency could utilize the housing money that is set aside for low- to moderate -income property owners on a citywide basis, or it could budget money for water meters and rehabilitation of water services for all parcels within the project area. Mr. Glover stated the advantage of including residential in the project area is that the tax increment can be used to improve streets and public rights of way and to upgrade neighborhoods. Mr. King stated that one of the first programs he would recommend to the Council is a "paint up/fix up" program, which would provide available funds to those in the project area, on a reimbursement basis, for use in rehabilitating their properties. C. COMMENTS BY THE PUBLIC ON NON -AGENDA ITEMS None. D. ADJOURNMENT No action was taken by the City Council. The meeting was adjourned at 8:31 a.m. ATTEST: Jennifer M. Perrin Deputy City Clerk al AGENDA ITEM B-01 is% CITY OF LODI %W COUNCIL COMMUNICATION TM AGENDA TITLE: Presentation of Redevelopment Project Feasibility Study and Proposed Survey Area MEETING DATE: November 6,2007 (Shirtsleeve Session) PREPARED BY: City Manager RECOMMENDED ACTION: No action required. BACKGROUND INFORMATION: The City Council will be asked to designate a Redevelopment Project Survey Area at its November 7h Regular Meeting. The purpose of the Shirtsleeve presentation is to review a Feasibility Study that the City prepared to assist in the selection of a Project Area. Although not required by law, many communities prepare an initial feasibility study to help select the boundaries cf a Redevelopment Survey Area and the subsequent Project Area. Based upon the Council's July 19, 2007, direction, City staff, using the services of GRC Consultants, prepared a Feasibility Study. The Feasibility Study looked at two areas in general as possible Redevelopment Projects, one small and the other large. The areas were given a preliminary visual inspection to determine if they were legally permissible and projections of possible tax increment revenue were developed. The Shirtsleeve presentation will review the assumptions used to develop the tax increment projections and the plan adoption process. The Feasibility Study has been reviewed by the Budget and Finance Committee and presented to the Planning Commission. As a note, the Council will hear references to a variety of legally required documents as the Redevelopment Plan adoption process moves forward. The Feasibility Study is not to be confused with the Preliminary Plan, Preliminary Report, and Redevelopment Plan. FISCAL IMPACT: NIA FUNDING AVAILABLE: NIA Wrimp Blair King, City a a er Attachment: Feasibility Study APPROVED: C� Bit Kg, City Manager October 29, 2007 Feasibility Study for a Potential Redevelopment Project in East Lodi LODI REDEVELOPMENTAGENCY Feasibility Study for a Potential Redevelopment Project in East Lodi LODI REDEVELOPMENTAGENCY FRASER &ASSOCIA TES CDC uEDEVELOIDMENT COMULTANT6 701 8. Darker 6treef GSC Guile 7400 Orange,CA 92868 TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES Feasibility Study for a Potential Redevelopment Project in East Lodi Background--------------------------------------------------------------------------------------------- 1 Requirements of State Law....................................................................3 General Observations............................................................................. 7 Survey Area Boundaries....................................................................... 17 Financial Projections............................................................................21 Preliminary Projects and Programs.....................................................29 Recommendation.................................................................................. .31 Table 2 —Tax Increment Projection — Option A .................................. .24 Table 2.1— Tax Increment Projection — Option B ................................ 26 Figure 1— Survey Area — Option A ...................................................... 18 Figure 2 — Survey Area — Option B ...................................................... 19 i Lodi RedevelopmentAgency '0U� "03 This page intentionally left blank '0'0'w BACKGROUND There are over 400 redevelopment agencies in charge of nearly 800 redevelopment project areas throughout the State of California. In a study performed by the Center for Economic Development at California State University, Chico for the fiscal year of 2002-03, redevelopment agencies have: • Increased state income by $16.56 billion • Created over 300,OOOjobs • Increased tax revenues for state and local governments by $1.58 billion • Constructed over 37,600 new affordable housing units and rehabilitated nearly 20,000 existing affordable housing units (in a ten-year period) With this in mind, the Lodi City Council on July 19, 2007, acting as the City's Redevelopment Agency (the "Agency"), directed that studies begin to see if redevelopment is feasible in portions of east Lodi, and to determine where the initial boundaries should be. A redevelopment program in the City could help support a number of goals for improving the community. However, to undertake a redevelopment plan adoption requires a significant commitment of time and financial resources. Therefore, the Agency requested this Feasibility Study to analyze the area before such a commitment. The analysis included herein provides a generalized discussion of existing physical and economic conditions as they relate to California Community Redevelopment Law (Health and Safety Code Section 33000 et seq.; the "CRL"), a general outline of projects and programs, a potential future work program the adoption process, and financial projections. Detailed studies and analyses will be provided in subsequent documents if the formal adoption process begins. I Lodi Redevelopment Agency n n n This page intentionally left blank aaa AM ►IREMENTS OFSTATELI W Blight Definition According to the CRL, a city may adopt a redevelopment plan to address an area that is blighted. A blighted area is an area: 1. That is predominately urbanized; 2. That is characterized by one or more conditions of physical blight and one ore more conditions of economic blight; and 3. In which the combination of such conditions is so prevalent and so substantial that it causes a reduction of, or lack of, proper utilization of the area to such an extent that it constitutes a serious physical and economic burden on the community that cannot reasonably be expected to be reversed or alleviated by private enterprise or governmental action, or both, without redevelopment. Urbanization Section 33320.1 of the CRL requires that the area proposed for redevelopment be predominantly urbanized. This means that not less than 80%of the area is either of the following: • Has been or is developed for urban uses • Is an integral part of one or more areas developed for urban uses that are surrounded or substantially surrounded by parcels that have been or are developed for urban uses. Physical Blight According to CRL Section 33031(x), the following conditions are the physical characteristics that cause blight: 3 Lodi Redevelooment Aoencv • Buildings in which it is unsafe or unhealthy for persons to live or work. These conditions may be caused by serious building code violations, serious dilapidation and deterioration caused by long-term neglect, construction that is vulnerable to serious damage from seismic or geologic hazards, and faulty or inadequate water or sewer utilities • Conditions that prevent or substantially hinder the viable use or capacity of buildings or lots. These conditions may be caused by buildings of substandard, defective, or obsolete design or construction given the present general plan, zoning, or other development standards • Adjacent or nearby incompatible land uses that prevent the development of those parcels or other portions of the project area • The existence of subdivided lots that are in multiple ownership and whose physical development has been impaired by their irregular shapes and inadequate sizes, given present general plan and zoning standards and present market conditions Economic Blight According to CRL Section 33031(b), the following conditions are the economic characteristics that cause blight: • Depreciated or stagnant property values • Impaired property values, due in significant part, to hazardous wastes on property where the agency may be eligible to use its authority • Abnormally high business vacancies, abnormally low lease rates, or an abnormally high number of abandoned buildings • A serious lack of necessary commercial facilities that are normally found in neighborhoods, including grocery stores, drug stores, and banks and other lending institutions • Serious residential overcrowding that has resulted in significant public health or safety problems. • An excess of bars, liquor stores, or adult-oriented businesses that has resulted in significant public health, safety, or welfare problems. • A high crime rate that constitutes a serious threat to the public safety and welfare. Not every parcel of land in a redevelopment area must be blighted. Unblighted land may be included if it is necessary for effective redevelopment and not included solely to collect tax increment revenue. I Feasibility 5tudv The `Five -Part Test" In conclusion, a redevelopment area must pass five basic tests. Land being considered for inclusion in a redevelopment project area: I.) Must be urbanized (as defined above). 2) Must have prevalent physical and economic blight (as defined above). 3) The blight must cause a lack of proper utilization of the area. 4) The improper utilization must be a serious burden on community. 5) The burden cannot be reversed by private enterprise acting alone, by the City acting alone, or by both acting together without the assistance of a redevelopment agency. The analysis in this Study derived from looking at properties in eastern Lodi based on these definitions and the "five-part test" on a general level. If the adoption process is started by the Agency, then detailed studies will begin to research and document blight and urbanization. Changes to the boundaries may be needed after additional study. I Lodi Redevelopment Agency This page intentionally left blank aaUs GENERAL OBSERVA TIONS At first look, the properties in eastern Lodi should, theoretically, have very few problems. Consider that Lodi is served by a well -traveled freeway, has an established wine industry, and the nearby population has a per capita income 8%higher than the County.' However, when looked at in more detail, portions of the community appear to be suffering from a variety of adverse conditions. Building deterioration, obsolete commercial structures, piecemeal development, antiquated parcel shapes and sizes, junk and equipment openly stored, and old or nonexistent infrastructure are just some of the problems that contribute to the overall decline of the community. To begin the process of preliminarily evaluating existing conditions in the eastern Lodi area (the "Study Area"), general field surveys were conducted. Properties in the Study Area were evaluated on a block - by -block basis, using the blight definitions described in the CRL, as discussed earlier. This preliminary research included general observations of conditions in the Study Area as well as parcel -specific data from the San Joaquin County Assessor. A database was then prepared to store and retrieve information. This database will be updated and expanded throughout the adoption process, if the Agency chooses to begin such an endeavor. The remainder of this section will discuss initial findings within the boundaries of the Study Area. These findings are not meant to fulfill the blight documentation required by law; rather, they are intended to be used as a general description of existing conditions to determine Survey Area boundaries and recommendations regarding additional steps. 1 1999 income, 2000 United States Census and City of Lodi. 7 Lodi Redevelopment Agency Buildings ThatAre Unsafe or Unhealthy While there is a significant amount of building deterioration in the Study Area, the bulk of it does not appear to he life-threatening. The type of deterioration observed is more of a hindrance to the vitality of current uses, and a virtual roadblock for future improvements because it is an economic burden. Therefore, it will be discussed in more detail in the next section. However, based on construction dates from the Assessor, thousands of structures in the Study Area are likely to contain asbestos, lead-based paint, or other common hazardous materials. This does not necessarily mean that these structures are contaminated, but any expansion, modernization, or other rehabilitation project is severely limited due to the costs involved with abating these once -popular building materials. These building materials are dangerous enough because of the inherent health and safety risks, but the related physical and economic burdens can also force an area into stagnation. This may be partially to blame for the apparent lack of reinvestment in the Study Area, However, if the area is included in a redevelopment project, financial assistance could be available. Other forms of hazardous materials may exist in the auto -related businesses along Cherokee Lane and Kettleman Lane, and in the industrial areas by the railroad tracks and east of Highway 99. Historically, these types of uses, which include auto repair, body shops, and light and heavy manufacturing, are notorious for contaminating air, soil, and groundwater. Additional study would be required to determine if such problems exist. Significant code violations in the areas with high concentrations of deteriorated structures may also show structures that are unsafe or unhealthy to occupy. Such code violations may include unpermitted construction, inadequate building materials, unsafe wiring, or other dangerous problem. Discussions with the City's code enforcement staff will be necessary to fully characterize this condition. Conditions That Prevent or Hinder Viable Uses of Buildings or Lots There appear to be several conditions that harm the properties in the Study Area, including building deterioration, commercial obsolescence, and inadequate infrastructure. Building deterioration was observed throughout the Study Area, with a significant number of buildings in need of moderate -to -major repairs 8 Feasibility Study or substantial rehabilitation. The most severe conditions include damaged roofs and exterior walls, bare plywood or other inappropriate building material, wood rot, chunks of missing plaster or stucco, and large areas of peeling paint. These conditions were observed in commercial and residential portions of the Study Area. Commercial obsolescence appears to have been a problem in the Study Area for a long time. Antiquated facades; neighboring buildings with a variety of setbacks, heights, styles, and exterior treatments; limited display areas; old motels; and buildings constructed for specific uses but no longer housing those uses are plentiful. It is clear that commercial development in the Study Area has occurred in a piecemeal fashion, and without any coordinated effort. The hodgepodge development pattern has led to a variety of site layouts, multiple curb cuts, and signage that creates a visual and functional chaos. The symptoms of obsolescence are costly to alleviate, but must be addressed for the overall economic health of the area. The lack of adequate public facilities also has a major negative affect on properties in the Study Area. Initial observations reveal the following problems throughout the Study Area: • Streets in poor condition • Curbs, gutters, and sidewalks in poor condition (or non-existent) • Drainage problems • Lacy of parking • Exposed utility lines • Lack of landscaping Other infrastructure items that are not visible, but are likely to be needed, include upgrades to sewer and water lines. These improvements may require significant amounts of funding, which are simply not available. The City is not in a financial position to pay for all of the improvements that are needed in the Study Area, and the private sector has neither the funds nor the authority to do so. However, one of the basic elements of improving an area through redevelopment is the construction of public facilities and infrastructure. If this project is adopted, funds will be in place to "bridge the gap" between what is needed and what is available. Incompatible Uses The piecemeal development discussed previously creates changing land use patterns and, in turn, incompatible and nonconforming uses. 0 Lodi Redevelopment Agency This situation is especially pronounced along Cheroltee Lane, Kettleman Lane, Sacramento Street, Lockeford Street, Stocltton Street, Lodi Avenue, and Central Avenue. In these areas, residences are located in commercial and industrial areas, and/or are abutting commercial and industrial uses with no buffers of any kind. Without redevelopment, the abatement of incompatible uses is highly unliltely, because owners, especially absentee owners, are unlikely to invest money in such properties in such a manner as to eliminate any incompatibilities by replacing one use for another, through screening, or through any other means. These lots are themselves relatively small, malting conversion to more intense use impossible without parcel assembly. Consequently, the transformation of incompatible uses and small parcels into an area more easily developed for its intended uses is infeasible and, therefore, is a substantial burden on the community. Irregular Parcels A significant characteristic of blight in the Study Area is the lack of adequate commercial land. For example, along Sacramento Street the average commercial parcel size is only 0.23 acre, and 93% are under 0.50 acre. These are unusually small parcels and not large enough to accommodate modern development or allow existing businesses to expand. Industrial uses along Sacramento Street are equally constricted with an average of 0.58 acre, including 81%that are less than 1.00 acre. Parcels that are too small result in buildings that are too small, which does not provide an adequate return of the investment to the business or property owner. When these situations occur, stores have minimal setbacks (if any) with cramped parking lots, multiple curb cuts, and are "wedged into mid -block locations with no regard for how they look or function with neighboring properties. This leads to an overall obsolescence of the Study Area, as discussed earlier. Generally, it is not a particularly attractive — or convenient — place to shop or do business. Buildings are poorly maintained, products are difficult to see from the busy corridors, access and parking are often difficult, signage is out-of-date and inconsistent, businesses and residences appear to be randomly placed on their properties without adequate buffers, and pedestrian amenities are lacking. Property Values and Lack of Investment An evaluation of current property values reported by the County Assessor shows that single-family residential, multi -family residential and commercial uses in the Study Area are assessed much lower than those in the rest of the City (see table below). Only industrial uses 10 Feasibility Study were higher, but only by 2%. This may likely be attributed to the fact that nearly all of the City's industrial uses are located in the Study Area, thereby making a small sample size for the remainder of the City. Use Study Area $/Acre Remainderof City $/Acre Commercial 25 36 Industrial 17 15 Single -Family Residential 24 33 Multi -Family Residential 29 83 Additional value analyses are needed to fully characterize this condition. However, these data prove that properties in the Study Area are not holding their values, which is indicative of a blighted area. Vacancies Vacant commercial and industrial units were observed throughout the Study Area, and illustrate the complex nature of blight. Poor physical conditions lead to decreased values and sales, which, in turn, lead to poor economic conditions. Vacancies not only give the area a run- down look and reduce local job opportunities, but they do not generate sales tax revenue, frequently lower surrounding property values, increase crime and the risk of fire, and pose hazards to children. Empty buildings exhibiting characteristics of neglect and abandonment such as broken windows, abandoned garbage, or other such indications of neglect, are typically regarded as attractive nuisances and neighborhood burdens. Additionally, the standard concept of "The Broken Window Effect", which is widely accepted in professional planning literature, points strongly to a very high degree of correlation between apparent building abandonment and crime. Successful implementation of a redevelopment program can address vacancies by providing incentives to attract new businesses, or facilitating parcel assembly, which could create properties that are viable in today's market. 77 Lodi Redevelopment Agency Lack of Necessary Commercial Facilities A number of basic neighborhood services appear to be lacking in the Study Area. For example, there are very few supermarkets and drug stores located in or near the Study Area. Banks and financial institutions are slightly more prevalent, but it is clear that the businesses in the Study Area are oriented more to travelers along Highway 99 and Kettleman Lane than to the local population. Additional study will be needed to fully assess this issue. Residential Overcrowding Although some signs of residential overcrowding were observed — converted garages, multiple vehicles parked during the day, etc. — it is not likely to be a significant problem. A check of census data will be necessary, but this does not appear to be a condition of blight that seriously affects the Study Area. Excess o fA d ul t Businesses Some drinking establishments were observed along major corridors, and there is a topless bar and massage parlor on Cherokee Lane. If the adoption process begins, an analysis will be needed to quantify the number of adult businesses in the area. In addition, various City departments will be contacted to see if there is a connection between such businesses and public health, safety, or welfare. High Crime Crime statistics were not analyzed for the scope of this Study, so the impact of crime on the Study Area is not known. However, the transient nature of uses along Cherokee Lane and Kettleman Lane (with a mix of motels, liquor stores, auto repair, etc.) often creates higher crime. In addition, most, if not all, commercial uses in the eastern portion of Lodi are likely to be included in any future redevelopment area. Therefore, the shear number of commercial units alone would suggest it is one of the higher crime areas of the City. If the City Council elects to begin the adoption process, details from the City's Police Department will be important to characterize the extent of crime in the Study Area. SUMMAR K OF OBSER VA TIONS The results of the initial field work show that conditions of blight exist throughout the Study Area. The matrix below summarizes specific 12 Feasibility Study physical and economic conditions of blight that were found. The matrix also provides a measure of the extent of each condition based on initial preliminary observations. Each characteristic of blight (as defined by the CRL) was evaluated and given an initial ranking of "minor," "moderate," or "extensive," based on the following criteria: Minor - Of limited extent or importance throughout the entire area, but may be concentrated in one particular location. Not in and of itself a significant blighting characteristic, but may contribute to other conditions of blight. Moderate - While not widely spread or of major importance, it is a major blight characteristic in one or a few areas. Contributes significantly to overall blight, but not a prevalent characteristic of blight in and of itself. Extensive - Of widespread extent and importance throughout the entire area, and is a commonly found characteristic in most, if not all, of the area. In and of itself can be considered a prevalent characteristic of blight. 13 Lodi Redevelopment Agency PHYSICAL CONDITIONS OF BLIGHT PHYSICAL. CONDITION .. DRESENCE EXTENT :: NOTES Buildings in which it is unsafe or Yes Minor/ Severe building dilapidation is relatively unhealthy for persons to live or Moderate minor; however, code violations could be work. These conditions may be extensive and there is a significant caused by serious building code likelihood of hazardous material presence violations, serious dilapidation and with asbestos and lead-based paint. deterioration caused by long-term neglect, construction that is vulnerable to serious damage from seismic or geologic hazards, and faulty or inadequate water or sewer utilities Conditions that prevent or Yes Extensive Significant commercial obsolescence. substantially hinder the viable use Significant infrastructure deficiencies. or capacity of buildings or lots. Significant building rehabilitation and These conditions may be caused by maintenance needs. Obvious piecemeal buildings of substandard, defective, development with no apparent plan. or obsolete design or construction Minimal construction and design standards. given the present general plan, Lack of landscaping and pedestrian zoning, or other development amenities in commercial areas. standards Adjacent or nearby incompatible Yes Moderate/ Many residences are located adjacent to land uses that prevent the Extensive commercial and industrial uses without development of those parcels or adequate buffers. There are also other portions of the project area residences located in commercial and industrial areas. The existence of subdivided lots Yes Moderate/ Many commercial parcels too small or too that are in multiple ownership and Extensive oddly shaped for expansion or new modern whose physical development has development. been impaired by their irregular shapes and inadequate sizes, given present general plan and zoning standards and present market conditions 14 Feasibility Study ECONOMIC CONDITIONS OFBLIGHT ECONOMIC;CONDITION PRESENCE EXTENT NOTES Property values in Study Area are lower Depreciated or stagnant property Yes Moderate/ values Extensive than rest of City. Many commercial and industrial buildings are obsolete and have not seen much reinvestment, if at all. Lack of adequate parcel shapes and sizes hinders economic growth. Impaired property values, due in Likely Moderate/ Number of auto -related business and significant part, to hazardous Extensive manufacturing uses indicates an existence wastes on property where the of hazardous materials. agency may be eligible to use its authority Abnormally high business Yes Minor/ Number of vacancies appears to be above vacancies, abnormally low lease Moderate normal, and have been vacant for rates, or an abnormally high extended periods, which adds to decline of number of abandoned buildings area. A serious lack of necessary Yes Moderate Adequate and modern neighborhood commercial facilities that are commercial uses, such as supermarkets normally found in neighborhoods, and drug stores, are lacking in the area. including grocery stores, drug stores, and banks and other lending institutions Serious residential overcrowding Unlikely, but Unknown Residential overcrowding does not appear that has resulted in significant possible to be a problem, but additional study is public health or safety problems needed. An excess of bars, liquor stores, or Possible Unknown Adult uses exist in the form of a topless adult-oriented businesses that has bar, massage parlor, and several liquor - resulted in significant in public related establishments. Additional study is health, safety, or welfare problems needed. A high crime rate that constitutes a Likely Moderatel Poor building conditions and commercial serious threat to the public safety Extensive uses oriented to travelers often result in and welfare higher crime areas. Police statistics will be needed to fully characterize. Urbanization There are only about 84 acres of vacant land in the entire Study Area, mostly small lots spread throughout. However, most, if not all, of the vacant land is substantially surrounded by developed urban uses, which means it is counted as urbanized according to the CRL. The result is that the Study Area appears to fall safely within the 80% threshold of urbanized land, and is likely to be 100% urbanized. 75 Lodi Redevelopment Agency Z3�UZU This page intentionally left blank 'OF xu zu W, SURVEYAREA BOUNDARIES After reviewing the properties in the Study Area, it is recommended that for comparative purposes the Agency consider two boundary options for the formal Survey Area: One, Option A, includes all properties that appear to qualify for redevelopment under the CRL (see Figure 1);and two, Option B, focuses only on the corridors of the Study Area (see Figure 2). An analysis of the two options, as well as a recommendation, is included in the following chapters. 17 Lodi Redevelopment Agency www This page intentionally lefl blank www 20 Feasibility Study This part of the feasibility study includes preliminary tax increment projections for the two alternative Survey Area boundaries, as shown on Tables 1 and 2. The property values shown on the tables are based on the actual 2007-08 secured value for parcels that are in each of the alternative boundaries. For purposes of the projections, we have assumed that the City would adopt a Redevelopment Plan by July 2008, which would make 2007-08 the base year. The first year for receipt of tax increment would be 2009-10. We have shown the projections over a 30 year period, since this would correspond with the period when the Plan would be effective. The Agency would also be eligible to receive tax increment for up to 45 years, but the final 15 years would be limited to the repayment of debt. The projections are, in part, based on new development/redevelopment activities that could take place within the Survey Area. The assumptions for new development are, in part, based on information provided by City staff. All projections have been made on the basis of currently allowable development under the City's General Plan. Should land uses change in the future, the scope and type of development will be different than that shown used in the projections. The chart below shows the potential scope of development. Commercial Square Industrial Square Footage Footage 666,000 924,800 The other source for tax increment growth would be turnover of property. In order to evaluate this, we have looked at the growth in taxable values over the past five years in the general area of the two 21 Lodi Redevelopment Agency boundary alternative. Overall, taxable values have been growing in a range of between 5 to 7 percent per year. This has occurred during a period of rapidly escalating property values. For purposes of the projections, we have assumed a 5 percent growth in taxable values. Overall, total cumulative tax increment has been estimated on both a future dollar basis and on a net present value basis (adjusted for inflation). The amounts are shown in the chart below: I Scenario Future Dollars Net Present Value Dollars Survey Area Option A $440.1 Million $171.1 Million Survey Area Option B $277.1 Million $108.2 Million We have reduced total tax increment by the following adjustments and liens. 1. Property Tax Administration Fees: State law allows counties to charge taxing entities, including redevelopment agencies, for the cost of administering the property tax collection system. The fees have been estimated and shown on Tables 1 and 2. 2. AB 1290 Payments: Pursuant to 1994 legislation, Ala 1290, the Agency would be required to mare payments to the affected taxing entities from tax increment generated in a project area. The tax sharing payments are based on a three tier formula. All payments are made after the Agency's deposit to its housing set-aside. The chart below shows how such payments are calculated. 22 Feasibility Studv Tier Payment Required Tier 1 25% of total tax increment during the entire term $331.9 Million the Agency receives tax increment. Tier 2 Beginning in the 1Ith year that the Agency $83.2 Million receives tax increment, an additional payment equal to 21 % of the tax increment attributable to growth above year 10 levels. Tier 3 Beginning in the 31 st year that the Agency receives tax increment, an additional payment equal to 14% of the tax increment attributable to growth above year 30 levels. After reductions for the above liens, tax increment under each alternative is shown in the chart below. Scenario Future Dollars Net Present Value Dollars Survey Area Option A $331.9 Million $130.9 Mffim Survey Area Option B $210.1 Millim $83.2 Million The Agency will also be required to use at least 20% of the total tax increment it receives for affordable housing projects and programs. The amount available for such activities will range from $88 million (Option A) to $55 million (Option B), in future dollars. In present value terms, the range is estimated to be from $34 million (Option A) to $22 million (Option B). To put these numbers in perspective, five miles of landscaped medians would cost an estimated $2.5 million, a 10,000 square foot youth or senior center costs $6.2 to $7.0 million, or street reconstruction for up to five miles of streets would cost $3.3 million. Five miles of replacement water mains would cost $6.1 million. Replacing five miles of sewer mains would cost an estimated $3.4.million. The above numbers are examples only. Refined program costs will be developed as part of the detailed area documentation. 23 Lodi Redevelopment Aoencv Table 1 City of Lodi Redevelopment Feasibility Study TAX INCREMENT PROJECTION -SURVEY AREA OPTION A (000's Omitted) (4) Total Escalated (1) Value (3) Property (5) Tax Increment Fiscal Prior Year New (2) Total Over Base Of Tax Tax Admin. Statutory Retained Year Value Development Value 780,025 Increment Fees Payments By Agency 2007 - 2008 NIA NIA NIA NIA NIA NIA 2008 - 2009 819,026 0 819,026 39,001 NIA NIA N/A NIA 2009 - 2010 859,977 0 859,977 79,953 800 16 126 657 2010 - 2011 902,976 8,391 911,367 131,342 1.313 26 208 1,080 2011 - 2012 956,935 24,760 981,696 201,671 2,017 40 319 1,658 2012 - 2013 1,030,780 32,149 1,062,929 282,905 2,829 57 447 2,325 2013 - 2014 1,116,076 19,060 1,135,135 355,111 3,551 71 561 2,919 2014 - 2015 1,191,892 19,511 1,211,403 431,378 4,314 86 682 3,546 2015 - 2016 1,271,973 18,279 1,290,252 510,227 5,102 102 806 4,194 2016 _ 2017 1,354,765 76,786 1,431,551 651,526 6,515 130 1,029 5,356 2017 - 2018 1,503,129 76,546 1,579,674 799,649 7,996 160 1,263 6,573 2018 - 2019 1,658,658 27,080 1,685,737 905,713 9,057 181 1,431 7,445 2019 - 2020 1,770,024 12,589 1,782,613 002,589 10,026 201 1,713 8,113 2020 - 2021 1,871,744 1,427 1,873,171 ,093,147 10,931 219 1,976 8,737 2021 - 2022 1,966,830 0 1,966,830 186,805 11,868 237 2,248 9,382 2022 - 2023 2,065,171 0 2,065,171 ,285,147 12,851 257 2,534 10,060 PZIJ Feasibilitv Studv (4) Total Escalated (1) Value (3) Property (5) Tax Increment Fiscal PriorYear New (2) Total Over Base Of Tax Tax Admin. Statutory Retained Year Value Development Value 780,025 Increment Fees Payments By Agency 2023 - 2024 2,168,430 0 2,168,430 1,388,405 13,884 278 2,834 10,772 2024 - 2025 2,276,851 0 2,276,851 1,496,827 14,968 299 3,150 11,519 2025 - 2026 2,390,694 0 2,390,694 1,610,669 16,107 322 3,480 12,304 2026 - 2027 2,510,229 0 2,510,229 1,730,204 17,302 346 3,828 13,128 2027 - 2028 2,635,740 0 2,635,740 1,855,715 18,557 371 4,193 13,993 2028 - 2029 2,767,527 0 2,767,527 1,987,502 19,875 398 4,576 14,902 2029 - 2030 2,905,903 0 2,905,903 2,125,879 21,259 425 4,978 15,855 2030 - 2031 3,051,199 0 3,051,199 2,271,174 22,712 454 5,401 16,857 2031 - 2032 3,203,759 0 3,203,759 2,423,734 24,237 485 5,844 17,908 2032 - 2033 3,363,946 0 3,363,946 2,583,922 25,839 517 6,310 19,013 2033 - 2034 3,532,144 0 3,532,144 2,752,119 27,521 550 6,799 20,172 2034 - 2035 3,708,751 0 3,708,751 2,928,726 29,287 586 7,312 21,389 2035 - 2036 3,894,189 0 3,894,189 3,114,164 31,142 623 7,851 22,667 2036 - 2037 4,088,898 0 4,088,898 3,308,873 33,089 662 8,417 24,009 2037 - 2038 4,293,343 0 4,293,343 3,513,318 35,133 703 9,012 25,419 Cumulative Totals 440,084 8,802 99,329 331,953 Net Present Value (6) 171,074 3,421 36,732 130,921 (1) Future year property values increased at 5 percent per year. (2) See Report for new development assumptions. (3) Based on the application of the 1 percent tax rate to incremental value. (4) Estimated based on 2 percent of tax increment. (5) Payments per the provisions of AB 1290. Amount shown is net of the City share (6) Net presentvalue calculated at 5 percent discount rate. 25 Lodi Redevelopment Agency Table 2 City of Lodi Redevelopment Feasibility Study TAX INCREMENT PROJECTION -SURVEY AREA OPTION B (000s Omitted) (4) - 2008 Total Escalated (1) Value (3) Property (5) Tax Increment Fiscal Prior Year New (2) Total Over Base Of Tax Tax Admin. Statutory Retained Year Value Development Value 369,470 Increment Fees Payments By Agency 2007 - 2008 NIA NIA NIA NIA NIA NIA 2008 - 2009 387,944 0 387,944 18,474 NIA NIA NIA NIA 2009 - 2010 407,341 0 407,341 37,871 379 8 60 311 2010 - 2011 427,708 8,391 436,099 66,629 666 13 105 548 2011 - 2012 457,904 24,760 482,664 113,194 1,132 23 179 930 2012 - 2013 506,798 32,149 538,947 169,476 1,695 34 268 1,393 2013 - 2014 565,894 19,060 584,953 215,483 2,155 43 340 1,771 2014 - 2015 614,201 19,511 633,712 264,241 2,642 53 418 2,172 2015 - 2016 665,397 18,279 683,676 314,206 3,142 63 496 2,583 2016 - 2017 717,860 76,786 794,647 425,176 4,252 85 672 3,495 2017 - 2018 834,379 76,546 910,924 541,454 5,415 108 855 4,451 2018 - 2019 956,471 27,080 983,550 614,080 6,141 123 970 5,048 2019 - 2020 1,032,728 12,589 1,045,317 675,846 6,758 135 1,150 5,473 2020 - 2021 1,097,583 1,427 1,099,010 729,540 7,295 146 1,306 5,844 2021 - 2022 1,153,960 0 1,153,960 784,490 7,845 157 1,466 6,222 2022 - 2023 1,211,658 0 1,211,658 842,188 8,422 168 1,633 6,620 2023 - 2024 1,272,241 0 1,272,241 902,771 9,028 181 1,810 7,038 2024 - 2025 1,335,853 0 1,335,853 966,383 9,664 193 1,994 7,476 2025 - 2026 1,402,646 0 1,402,646 1,033,176 10,332 207 2,189 7,936 Feasibility Study (4) Total Escalated (1) Value (3) Property (5) Tax Increment Fiscal PriorYear New (2) Total Over Base Of Tax Tax Admin. Statutory Retained Year Value Development Value 369,470 Increment Fees Payments By Agency 2026 - 2027 1,472,778 0 1,472,778 1,103,308 11,033 221 2,393 8,420 2027 - 2028 1,546,417 0 1,546,417 1,176,947 11,769 235 2,607 8,927 2028 _ 2029 1,623,738 0 1,623,738 1,254,268 12,543 251 2,831 9,460 2029 - 2030 1,704,925 0 1,704,925 1,335,455 13,355 267 3,067 10,020 2030 - 2031 1,790,171 0 1,790,171 1,420,701 14,207 284 3,315 10,608 2031 - 2032 1,879,680 0 1,879,680 1,510,210 15,102 302 3,575 11,225 2032 - 2033 1,973,664 0 1,973,664 1,604,194 16,042 321 3,849 11,872 2033 - 2034 2,072,347 0 2,072,347 1,702,877 17,029 341 4,136 12,553 2034 - 2035 2,175,965 0 2,175,965 1,806,494 18,065 361 4,437 13,267 2035 - 2036 2,284,763 0 2,284,763 1,915,292 19,153 383 4,753 14,017 2036 - 2037 2,399,001 0 2,399,001 2,029,530 20,295 406 5,085 14,804 2037 - 2038 2,518,951 0 2,518,951 2,149,481 21,495 430 5,434 15,631 Cumulative Totals 277,050 5,541 61,393 210,115 Net Present Value (6) 108,222 2,164 22,845 84,213 (1) Future year propertyvalues increased at 5 percent per year. (2) See Report for new development assumptions. (3) Based on the application of the 1 percent tax rate to incremental value. (4) Estimated based on 2 percentof tax increment. (5) Payments per the provisions of AB 1290. Amount shown is net of the City share (6) Net present value calculated at 5 percent discount rate. 27 Lodi RedevelopmentAgency 'swru This page intentionally left blank 1J0z 28 Mif This section of the report provides information on the types of activities redevelopment agencies engage in as a means to alleviate blight and includes a discussion of general methods found for financing redevelopment. One set of programs that the Agency may implement would be in the area of economic development. Adoption of a redevelopment project area would provide the Agency with the tools to alleviate blight in part by encouraging new commercial, mixed use, and residential development in the area through a variety of redevelopment programs. The Agency may enter into public private partnerships by assisting with land assembly, site preparation, offsite improvements, disposition of property, and relocation assistance to existing property owners and tenants. The Agency could also encourage existing property owners and businesses to upgrade the exterior of buildings, correct code violations, renovate the interior of buildings and assist in installing fire suppression systems. Such a program could provide deferred payment and low interest loans to property owners to mare the types of improvements described above. Expenses could also be reimbursed to business owners for fagade improvements. Another major area where projects may be undertaken would be the installation of needed infrastructure. Projects in this area could include one or more of the following: 1) Improvements to public streets including the installment of lighting needed and desired in existing neighborhoods, and the construction of curbs, gutters and sidewalks. 2) Storm drainage and water quality improvements. 3) Improvements to pedestrian and bicycle facilities and linkage with other existing bicycle and pedestrian facilities in the community. 29 Lodi RedevelopmentAgency 4) Install and construct other public improvements to eliminate blight and improve the local economy of the area, including parking and transit facilities. Finally, the Agency would lilcely be involved in various types of programs to create more affordable housing in the area. A variety of projects may be undertaken, including: First -Time Homebuyer Assistance Programs: Programs designed to assist first-time homebuyers to purchase homes. Housing set-aside monies could be used provide second mortgages to bridge the gap between the first mortgage and purchase prices. Match to State and Federal Grants: Funds could also be used to match other grants to provide a variety of housing opportunities. Land Banking: Identify and purchase key properties that may not be suitable for development at this time, but will be suitable for housing or mixed-use development in the future. In some cases, land banking and site assembly will be needed to remove constraints to development on irregularly shaped or configured parcels. New Housing Development: New housing focused on both affordable rental and home ownership units developed in conjunction with either local non-profit or for-profit developers. Housing may be directed at special needs and/or incorporate self-help or other models. Rehabilitation Pro rte: Funds to blighted properties to allow commercial, industrial, and residential property owners and tenants to rehabilitate, restore, and address code compliance issues. 30 RECOMMENDA TION The final step in analyzing redevelopment feasibility is to relate projected revenue to the redevelopment program designed to eliminate blight. As discussed earlier, such a program could include: • Various economic development assistance programs designed to spur private investment • Business attraction and retention programs • Rehabilitation loan and grant programs • Infrastructure upgrades and improvement • Affordable housing programs Based on the tax increment projections, it is estimated that the Agency would have $83 - $131 million in tax increment revenue (in 2007 dollars), depending on the boundary alternative. A redevelopment project would not be expected to provide the full funding for all of the above programs, but rather would serve as one source of funding. Because the larger boundary provides a significantly higher revenue stream for improvements, and appears to qualify under the CRI. requirements, it is recommended that Option A be adopted by the City Council as the Survey Area. A document called the Preliminary Plan would then be prepared and submitted to the Planning Commission, which then selects Project Area boundaries from within the Survey Area. These actions would formally start the adoption process. 31