C. 50% allocation
City Hall
10300 Torre Avenue
Cupertino, CA 95014-3255
Telephone: (408) 777-3220
Fax: (408) 777-3366
CUPEIUINO
DEPARTMENT OF ADMINISTRATIVE SERVICES
SUMMARY
Agenda Item No. C.
Meeting Date: June 5, 2007
SUBJECT AND ISSUE
Consider allocating 50% of discretionary funds from the Redevelopment Agency (RDA) future
tax increment to be earmarked for infrastrncture improvements.
BACKGROUND
The City adopted the Cupertino Square Project Area on August 21, 2000. With that adoptiop.,
planned expenditures from tax increment included:
> Infrastructure Improvements - Including construction, reconstruction, widening or other
improvements to streets and roadways, traffic signals, curbs, gutters and sidewalks, water,
sewer and flood control systems, parking facilities within or serving the Project Area and
streetscape and street lighting expenditures; .
:> Economic Development Programs - Including implementation of a business attraction
and recruitment program, commercial facade enhancement program, and a storefront
rehabilitation program;
:> Low-and-Moderate Income Housing Programs - Including 25% set aside for
construction, rehabilitation and preservation of low-and-moderate income housing in
Cupertino neighborhoods outside the Project Area
After seven years, the owners of Cupertino Square have made substantial progress toward the
development of the mall property. Improvements-to-date include the addition of a 16-screen
AMC theater and two parking structures and approval for additional restaurants and a mixed use
development of housing and retail on the Rose Bowl site. To assist in the financing of these
projects, the Agency has been asked to designate future tax increment to help pay for a portion of
the infrastructure improvements.
Based on the request, staff updated the calculations performed by our consultants, Keyser
Marston and Associates, of future tax increment based on the owners' projections of built-out
infrastructure (see schedule A). The RDA receives tax increment based on the assessment roll
growth over the base assessment value at the time of plan adoption. Once additional
infrastructure is built, the "new" tax increment generated from the increased property value is
available for re-investment in the RDA.
C--I
While utilizing the new estimates, staff has denoted additional obligations of the RDA to arrive
at a projected net available tax increment (see schedule B). These additional obligations include
staff, audit and consultant costs, an allocation for an RDAJEconomic Development division, and
the contractual costs associated with the Santa Clara County (SCC) agreement from June of.2000
for additional sheriff services. This agreement, which was necessary for SCC approval of the
RDA, required the city to annex the areas of Rancho Rinconad~ Garden Gate and Monta Vist~
provide additional sheriff coverage and enter into a sales tax sharing once sales/square foot at
Cupertin.o Square exceeds $375. .
Based on the projected tax increment revenue minus outstanding future obligations,' it appears
that the RDA would have net available increment in fiscal years 2007/08 through 2029/30. If
50% of this amount were eannarked for infrastructure improvements, this would equate to
approximately $13,000,000 over the life ofthe RDA (30 years) towards this improvement. Once
tax increment begins to flow to the City, staff would consider bonding off of this revenue strean1,
which would extend the life Qfthe RDA out to 45 years.
Please note that the original projected build out and resulting tax increment at the adoption of the
plan was not realized. Not only did the owners not implement u:nprovements to the property for
the. first 5 years, but also two major property owners re-assessed their property values - thus
putting the project area below the tax base for generating tax revenl:le. Although the numbers
presented to you in this report are the best guess estimates at this time, revenue increases are
predicated on the build out value/schedule as supplied by the developer and staff does not attest
to these estimates. We therefore recommend that no tax increment be passed on to the owner
until1he city actually starts receiving the cash.
RECO:MME1\TDATION:
Adopt a resolution stating the intention of the Board to allocate 50% of discretionary funds from
the Redevelopment Agency future tax increment to be eannarked for infrastructure
improvements, based on the estimates in Schedules A and B.
Submitted by:
Approved for submission:
~ aiw?0>~
Car 1 A. Atwood
Director of Ad...rninistrative Services.
~
David W. Knapp
City Manager
c.-l
DRAFT
RESOLUTION NO. 07-01
A RESOLUTION OF THE CUPERTINO REDEVELOPMENT AGENCY
STATING THE INTENTION OF THE BOARD TO ALLOCATE 50% OF DISCRETIONARY
FUNDS TO BE EARMARKED FOR INFRASTRUCTURE IMPROVEMENTS IN THE
CUPERTINO SQUARE PROJECT AREA
WHEREAS, the Cupertino Square Project Area is currently in development with major
planned improvements; and
WHEREAS, such planned improvements will produce future tax increments which can
be utilized for investment back into the project area; and
WHEREAS, the owners of Cupertino Square have requested tax increment monies to
assist in the financing of these infrastructure improvements; and
WHEREAS, a infrastructure improvements were planned as a part of the original
Cupertino Square redevelopment;
NOW, THEREFORE, BE IT RESOLVED that the Cupertino Redevelopment Agency
does hereby state its intent to allocate 50% of discretionary funds from the Redevelopment
Agency future tax increment to be earmarked for infrastructure improvements, based on the
estimates in Schedules A and B (attached).
PASSED AND ADOPTED at a regular meeting ofthe Cupertino Redevelopment Agency
this 5th day of June 2007, by the following vote:
Vote
Members of the Redevelopment Agency
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVED:
Chairman, Redevelopment Agency
ATTEST:
Secretary
(-3
Sc~cd,!!c A ____._~!
l{eal Property Vll1ue Added.' . .
Cupert1i~_ Square Redevelopment ProjecC-==
City of Cupertino
(OOO'S Omitted) -- ..- . -
i
~
i
,
,
-r
_~_'"-__k"_~__
IDevelopment Descrintion
-i-~C-i6 'f11eatre . .
2"-, park11g Structures At Macy's and JCP
- 3 IHotel . ---.-
__4 iNortli._~~st Ii~ilsin~(150 Units)
.2~ose )3owl RetaiIlGarag~___
_U~~ restarraots __.
_.I.1.g..~~~i!..~!!..f!ont of Peuneys
_B~J~5~~5ourtynits @1?50K each .______..___
9 :Zale'~_.i~p'~"y~_ments, etc ____~__.__.
10 :IT's. 30 tennants (4,000 su ft '" 30*$175/ft
_~ I !:0~~~~_rfimprovemel1ts ___m_.___.~~~'~.~~== .
}]..J:!:'!~ 30 telmants (4,000 su ft '" 30"'$17_~/!l.....___...._..
I ....-+-.-----:--i---
_._t-~=:-~~-i.=~_~~~~- . I . --t . . I
! !! I
Value 1 ; 2 -.-- T-3-: 4 5! 6
--..-- Added 2005-06! 2006:(Vr...t~2007=-68t2008-09 2009-2010 :2010-2011
--~,OOO -..-t---70,oooI--~-~--______}___ ;
._-~~= __ ;~:~~~ i --3CbQOQ.t=---._- ._-.~.~_L~.~ 30,000 i i
__.?~.OOO ._L_____L.....2?.t900! I
120000 .--i.---- i 120,000
8,000 ___. ________~.___ _.__~~90 !
5,000 _...____._ .J.__?LO.QQ..
3,000 .___.. ... _.~_ __~Q9.Q. ___ . i
4,000 _____... ._.i-_._-..1,9QQ.. f------
21,000 21,000 ;
1,000 __ __~~_=::.~~.:~..::.--i~.9..0f =~._.
21,000 ;
_.....J.
f-
----_.~
I
ow'i-
i
j
!
21,000
-~
I
Total Real Property Value 388,000 0 100.0001 13.000 134,000 141,000 I
~~1;~~7~I~I:&~~--0~f=~~~~i=4S-~~fl~--~~~$ -~ I
o
._J__._=
I
I
, ;
, !
.qj
,
.-. I
!
n
\
-c.,
Per information from Mlka RoMa. General Mgr, Cupertino Square - 5130107
RDA .13x Incremenl projectl,,". 6-Q7,xls
Schedule B
TSI Iucl-ement Revenue Pl'ojectioD
Cupertino Square Redevelopment Project
Cill' of Cupertino
OOO's Omitted)
Gross City SCC Net I
Base Base Total Total Total hlctemeUI Incremenl Housing To>: Tier I Tier 2 Tier 3 Statutory Net
Fiscal Real lnf1atio~ New Real Personal Project Over Balle Leveoue (I Set Aside Revenue Pass Thru Pass TIU1J Pass Thru Pass Tax xpe~?ditUflObligation: Available
Year Pronerlv Orowtb Projects Pronerlv Prooer1Y Value $116,135 II#I#If#I# -25.00%AfterHS/-18.75% -15.75% -10.50% Throuph Revenue 21 (3) Incremeu
1 2000-01 0 (284) 0 0
2 2001-02 0 (39) 0 0
3 2002-03 0 (100) 0 0
4 2003-04 0 (99) 0 0
5 2004-05 0 (59) 0 0
6 2005-06 102,500 102,500 4,215 106,715 0 0 0 0 0 0 0 0 0 (105') (159) 0
7 2006-07 102,500 2,050 104,550 4,213 108,765 0 0 0 0 0 0 0 0 0 (110) (166) 0
5 2007..08 104,550 2,091 100,000 206,641 4,215 210,856 94,721 986 (246) 139 (185) 0 0 (185) 554 (115) (175) 265
9 2008-09 106,641 2,133 ll5,OOO 223,774 4,215 227,989 1l1,853 1,164 (291) 873 (218) 0 0 (iI8) 655 (438) (184) 33
10 2009-10 108,774 2,175 251,300 362,249 4,215 366,464 250,329 2,605 (651) 1,954 (488) 0 0 (488) 1,465 (460) (193) 812
11 2010-Il Il 0,949 2,219 397,326 510,494 4,215 514,709 398,514 4,147 (1,037) 3,llO (778) 0 0 (778) 2,333 (483) (202) 1,648
12 2011-12 113,168 2,263 405,273 520,704 4,215 524,919 408,784 4,253 (1,063) 3,190 (798) 0 0 (798) 2,393 (507) (212) 1,673
13 2012~13 ll5,432 2,309 413,378 531,118 4,215 535,333 419,198 4,362 (1,090) 3,271 (818) 0 0 (818) 2,453 (532) (223) 1,698
14 2013-14 111,740 2,355 421,646 541,741 4,215 545,956 429,820 4,472 (1,118) 3,354 (839) 0 0 (839) 2,516 (559) (234) 1,722
15 2014-15 120,095 2,402 430,078 552,575 4,215 556,790 440,655 4,585 (1,146) 3,439 (860) 0 0 (860) 2,579 (587) (246) 1,746
16 2015-16 122,497 2,450 438,680 563,627 4,21$ 567,842 451,707 4,700 (1,175) 3,525 (881) 0 0 (881) 2,(/44 (616) (258) 1,769
17 2016-17 124,947 2,499 447,454 574,899 4,215 579,114 462,979 4,817 (1,204) 3,613 (903) 0 0 (903) 2,710 (647) (271) 1,791
18 2017-18 127,446 2,549 456,403 586,397 4,215 590,612 474,477 4,937 (1,234) 3,703 (926)DilliI 0 (1,703) 1,999 (679) (285) 1,035
19 2018-19 129,995 2,600 465,531 598,125 4,215 602,340 486,205 5,059 (1,265) 3,794 (949) (797) 0 (1,745) 2,049 (7!3) (299) 1,036
20 2019-20 132,595 2,652 474,841 610,088 4,215 G14,303 498,168 5;183 (1,296) 3,888 (972) (8IG) 0 (1,788) 2,099 (749) (314) 1,036
21 2020-21 135,247 2,705 484,338 622,290 4,215 626,505 510,369 5,310 (1,328) 3,983 (996) (836) 0 (1,832) 2,151 (787) (330) 1,034
22 2021-22 137,952 2,759 494,025 634,735 4,215 638,950 522,815 5,440 (1,360) 4,080 (1,020) (857) 0 (1,877) 2,203 ($26) (346) 1,031
23 2022-23 140,711 2,814 503,905 647,430 4,215 651,645 535,510 5,572 (1,393) 4,179 (1,045) (878) 0 (1,922) 2,257 (867) (363) 1,026
24 2023-24 143,525 2,870 513,984 660,379 4,215 664,594 548,458 5,707 (1,427) 4,280 (1,070) (899) 0 (1,969) 2,311 (911) (382) 1,019
25 2024-25 146,395 2,928 524,263 673,586 4,215 677,801 561,666 5,844 (1,461) 4,383 (1,096) (920) 0 (2,016) 2,367 (956) (401) 1,010
26 2025-26 149,323 2,986 534,748 687,058 4,215 691,273 575,138 5,984 (1,496) 4,488 (1,122) (943) 0 (2,065) 2,424 (1,004) (421) 999
27. 2026-27 152,310 3,046 545,443 700,799 4,215 705,014 588,879 6,127 (1,532) 4,595 (1,149) (965) 0 (2,114) 2,482 (1,054) (442) 986
28 2027-28 155,356 3,107 556,352 714,815 4,215 719,030 602,895 6,273 (1,568) 4,705 (1,176) (988) 0 (2,164) 2,541 (1,107) (464) 970
29 2028-29 158,463 3,169 567,479 729,112 A,2]5 133,327 617,19] 6,422 (1,605) 4,816 (1,204) (1,011) 0 (2,216) 2,601 (1,162) (487) 952
30 2029-30 161,632 3,233 578,829 743 694 4,215 747;909 631773 6,574 (J,643) 4,930 112331 11.0351 0 (2,268) 2,662 il220\ . Cm) 931
31 2030-31 164,865 3,297 590,406 758,568 4,215 762,783 646,647 6,728 (1,682) 5,046 (1,262) (1,060) 0 (2,321) 2,725
32 2031-32 168,162 3,363 602,214 773,739 4,215 777,954 661,819 6,886 . (1,722) 5,165 (1,291) (1,085) 0 (2,376) 2,789
33 2032-33 171,525 3,431 614,258 789,214 4,215 793,429 671,293 7,047 (1,762) 5,285 (1,321) (1,110) 0 (2,431) 2,854
34 2033-34 174,956 3,499 626,543 804,998 4,215 809,213 693,078 7,211 (1,803) 5,409 (1,352) (1,136) 0 (2,488) 2,921
35 2034-35 178,455 3,569 639,074 821,098 4,215 825,313 709,178 7,379 (1,845) 5,534 (1,384) (1,162) 0 (2,546) 2,988
36 2035-36 182,024 3,640 651,855 837,520 4,215 841,735 725,600 7,550 (1,887) 5,662 (1,416) (1,189) 0 (2,605) 3,058
37 2036-37 185,665 3,713 .664,893 854,270 4,215 858,485 742,350 7,724 (1,931) 5,793 (1,448) (1,217) 0 (2,665) 3,128
38 2037-38 189.378 3,788 678,190 871,356 4,215 875,571 759,435 7,902 (1,975) 5,926 (1,482) (1,245)Qill (3,556) 2,371
39 2038-39 193,165 3,863 691,754 888,783 4,215 892,998 776.863 8,083 (2,021) 6,062 (1,516) (1,273) (849) (3,637) 2,425
40 2039-40 197,029 3,941 705,589 906,559 4,215 910,774 794,638 8,268 (2,067) 6,201 (1,550) (1,302) (868) (3,721) 2,480
41 204041 200,969 4,019 719,701 924,690 4,2.15 928,905 812,769 8,457 (2,114) 6,343 (1,586) (1,332) (888) (3,806) 2,537
42 204142 204,989 4,100 734,095 943,184 4,215 947,399 831,263 8,649 (2,162) 6,487 (1,622) (1,362) (908) (3,892) 2,595
43 204243 209,088 4,182 748,777 962,047 4,215 966,262 850,127 8,846 (2,211) 6,634 (1,659) (1,393) (929) (3,981) 2,654
44 204344 213,270 4,265 763,753 981,288 4,215 985,503 869,368 9,046 (2,261) 6,784 (1,696) (1,425) (950) (4,071) 2,714
45 2044-45 217,536 4351 779 028 #11#IIII## 4,215 II#Iffl#IIiI 888 994 9,250 (2,312) 6,937 [J 734) (l,4571 (971) (4,162) 2,775
TOTAL (YEARS 6-30)
110,524 (27,631) 82,893 (20,723) (11,723)
o (32,446) 50,446 (17,]95) (7,568) 26,224
TOTAL (YEARS 645)
229,551 (57,388) 172,163 (43,041) (30,470) (7,193) (80,703) 91,460 (17,195) (7,568) 26,224
n
(
luput Growth % - 2%
Input City cost incr- 5.0%
(1).lncludes pre-1989 property lax override: COUllty
Retirement Levy (.0388%) BUd Couuty Library
(2) Includes SIllff costs, audit, cOllSultants and
an economictRoA dlvisioo
(3) Includes part of the SCC contractual obligalion-
sheriff cost only; no lllIl1exation costs included
~ Prepared by Keyser Marston Associates, Inc.
Filename: RDA -tax Incremenl projections 5-Q7.xls: TI_Summary w formulas; 5/31/2007; 2:17 PM: RJW