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Want To See What LB/HB Offered Amazon For Its 2nd Corp HQ? LBREPORT.com Made Pub Recs Request Months Ago...And Has It Now


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(Jan. 19, 2018, 4:55 p.m.) -- The cities of Long Beach and Huntington Beach proposed to negotiate "incentives" that included portions (requiring approval by their cities' respective City Councils) of Long Beach hotel room tax revenue, sales tax revenue, property tax revenue and, in some cases land use approvals, if Amazon located its 2nd corporate headquarters at three combined locations -- two in Long Beach, one in Huntington Beach -- that the two cities dubbed "Sand, Sea, and Air."

LBREPORT.com obtained the 128 page proposal after making October 2017 Public Records Act requests (to both Long Beach and Huntington Beach) which both cities declined to provide while the proposal was pending. When Amazon declined to include the LB-HB proposal among its top 20 finalists, LBREPORT.com sought immediate access to the document from the City of LB's Records Coordinator. The City released the document on Jan. 19 and in the public interest LBREPORT.com makes it available here (129 MB pdf, 128 pages.)


[Scroll down for further.]

The proposal includes an October 9, 2017 letter from Long Beach Mayor Robert Garcia (who has no policy setting authority, which rests with the City Council) that expresses his "strong support" for the proposal (which if it had been accepted he would have no vote to approve.) (In contrast, Huntington Beach's Mayor is a voting Councilmember.)

The LB-HB proposal said the two cities have "developed a comprehensive toolkit of incentives that can be explored and negotiated to help make Amazon Coast a reality. Please note the incentives itemized in the proposal are an illustrative sampling of potential incentives and do not represent an exhaustive list. In addition, it is important to note that each incentive would require the approval of the City Council."

It said that "both cities have a solid history and track record of promoting redevelopment and economic development in their communities over the past 40 years, and partnering with HBLB is an opportunity like no other. Written Letters of Support from local elected officials are included in this package as a testament of their support for Amazon Coast and all it has to offer. We Want You!"

Sponsor

Sponsor

Amazon Coast offered three combined sites: an Amazon Coast "Sand" site in Huntington Beach (5301 Bolsa Ave.), An Amazon "Air" Campus -- adjacent to Long Beach Airport offering 26 acres with 4 million square feet of maximum buildable square footage comprising the soon-to-exit Boeing aircraft facility east of Cherry Ave., north of runway 25R, crossing Wardlow Rd, and extending nearly to 36th St. -- and an Amazon "Sea" campus at 1 World Trade Center.(north side of W. Ocean Blvd.) and 1 and 11 Golden Shore (south side of W. Ocean.) The current owner of 1 World Trade Center is Greenlaw Partners; the current owner of 1 and 11 Golden Shore Keesal, Young and Logan (law firm.).

Regarding permitting for the Amazon "Sea" campus:

Owned by Greenlaw Partners and Keesal, Young & Logan, the Long Beach Waterfront properties comprising the Amazon Sea campus are located in the center of the Downtown area at the World Trade Site and Golden Shores Site and total up to 2,075,000 sq. ft. The site is zoned within a Planned Development PD-30 (high intensity employment, mid/high rise residential, cultural, entertainment quality mixed use development) and PD-6 (high quality mixed use development). Associated environmental review would be concurrent with entitlements. Additional details regarding the site include:

  • Existing 6 story office building - 103,634 sq. ft.
  • Existing 2 story office building - 32,000 sq. ft.

    Permitting:

    PD-30: Allows approximately 6-9 months for entitlements. Associated environmental review to ensure consistency with the Downtown Plan would need to be prepared. Environmental would be concurrent with the entitlements.
    PD-6: In order to change the desired ground floor area of the office, a Zone Change, new Master Plan, associated environmental review would need to be prepared and approved by the City Council. Allow for 9-12 months to achieve proper zoning. All infrastructure is adjacent to the site, including fiber and ample cellular coverage including all major carriers. No foreseeable hurdles are anticipated. The City has a dynamic multi-disciplinary development team that will work to overcome any hurdles that may arise and assist to expedite the project.

  • Sponsor


    Regarding the "Air" campus:

    Owned by the Boeing Company, they are relocating away from site and is available in 2018. To be sold at fair market value, this site is a prime location for Amazonís second headquarters. The site is zoned within a Planned Development PD-19 which is General Industry with building height restrictions. It is adjacent to the Long Beach Airport. The Air Campus currently has two large industrial buildings on the site that can be reused/tenants improvements or new construction on the site.

    Permitting

    A Zone Change and associated environmental review to allow for additional development capacity (and probably traffic-related infrastructure as well) would be needed to be prepared and approved by the City Council. Allow 9-12 months to get the zoning in place. Allow 12-18 months for environmental. All infrastructure is adjacent to the site, including fiber and ample cellular coverage including all major carriers. No foreseeable hurdles. The City has a dynamic multi-disciplinary development team that will work to overcome any hurdles that may arise and assist to expedite the project.

    Sponsor

    Sponsor

    Regarding "Public Private Partnerships":

    We are your partners. The cities could consider contracting with a development partner to assist in the purchase, design and construction of the Amazon Coast in a public private partnership. An example of one such development partner that has engaged in a unique public-private partnership with HBLB is Plenary Edgmoore for the new Civic Center and Port Headquarters in Long Beach, California.

    The New Long Beach Civic Center Project will bring to downtown a revitalized civic core to serve local residents and businesses, attract visitors and provide safe and efficient city operations to serve the citizens of Long Beach. The $520 million, design-build-finance-operate-maintain civic center will replace the old city hall and provide efficient new offices for the Port of Long Beach, a new city library and a retail marketplace and public park that will serve residents and visitors of Long Beach for years to come.

    Under "Incentives/Capital and Operating Costs," the proposal told Amazon:

    WE want you! The State of California is creating a specialized package to assist Amazon to select Amazon Coast. In addition to the State of Californiaís customized incentive package, a variety of local government incentives can be provided for businesses to locate or relocate to Huntington Beach (HB) and Long Beach (LB). Incentives may be financial in nature, as well as a commitment on the part of both cities to streamline and expedite the planning and entitlement processes for Amazon.

    Initial Cost and On-going Cost of Doing Business

    The subject properties in the bid package are all owned by a private party and would need to be purchased by Amazon; however, the City would provide any assistance necessary to help achieve success for all parties in the real property negotiations. In California, property value is consistently increasing. By purchasing land, Amazon would have an outstanding asset that continues to appreciate year after year, decade after decade. As part of our Incentive Package, several of the incentives provided for your consideration could assist in alleviating Amazonís total costs.

    Both Huntington Beach and Long Beach score well in the Cost of Doing Business. The business license for both cities has a base tax and a small charge for additional employees. Unlike other cities, neither city charges a gross receipts business license tax. More importantly, both cities manage their own water and sewer departments at the local level, and provide some of the lowest prices for utilities in the region.. Some of the most creative conservation programs in the State provide streamlined rebates for high-efficiency appliances, irrigation controllers, and other innovative devices that lower operating costs for local businesses. Further, Long Beach is one of just a few cities that owns its own gas utility, providing further ability to be expedient and agile which results in lower prices for local businesses.

    Staff from Huntington Beach and Long Beach will work with all of the utility companies to do annual utility audits to assist Amazon in the lowering of costs associated with your campus. Our goal is to become the most business and environmentally friendly region in the world by making it easy to conserve, and we are here to help your bottom line!

    Incentives

    The incentives listed below are illustrative and are not binding or exhaustive. They do, however, provide a robust toolbox for HBLB to work with Amazon to achieve considerable savings. With the rich legacy of redevelopment in California, both Huntington Beach and Long Beach have vast experience with providing provocative development incentives to businesses and developers alike to spur the local economy. These potential local incentives, combined with the Stateís customized incentive package, create a compelling portfolio of benefits making Amazon Coast a viable and attractive location.

    Property Tax

    Numerous property tax incentives can be considered for a relocation of this magnitude. HBLB has a solid history of entering into Property Tax Sharing Agreements of varying forms for significant new development projects. Both cities have provided millions of dollars in incentives to redevelop and revitalize their cities over the past 40 years, since the establishment of redevelopment in California. One option is for HBLB to Establish a Tax Increment Finance District (TIF). A portion of the districtís revenue from property tax (as a result of an increase in property tax due from the increase in value), such as 50 percent above the existing tax base, could be set-aside for the TIF to assist in development costs, infrastructure costs and/or for future area investments, similar to many redevelopment agreements adopted in recent years.

    It listed as an example:

    In the City of Long Beach, the Capital Investment Incentive Program (CIIP) Property Tax Sharing program has been used to help businesses grow, returning as much as 75 percent of the property tax increase to the business for up to 15 years. Amazon can have confidence in the City's history of implementing these types of programs, and that the City is willing to share in the cost of capital improvements that bring jobs and economic development to the region.

    Additional information will need to be made available by Amazon to determine the best approach for establishing a TIF, CIIP or other property tax sharing incentive and would need to take place during the negotiation phase of the RFP and would be subject to governing body approval.

    TOT Investment Program

    ...The establishment of a Transient Occupancy Tax (TOT) Investment Agreement could provide a portion of TOT revenue to be invested into public infrastructure and services benefit the community surrounding the Amazon campus, based on the total number of rooms reserved by Amazon, or your employees, over a 10 to 20-year period. For example, a TOT revenue sharing program would be limited to hotel room nights from Amazon usage in either Huntington Beach or Long Beach. The investment program could be dispersed in annual increments starting the first year after occupancy based on using the annual 233,000 room nights reserved at the Seattle headquarters as a guide...

    ...A negotiated Sales Tax Sharing Agreement could provide a rebate to Amazon for the sales tax increase related to the economic impact of new employee local spending. A 10% rebate would equal $3.65 million. The payout could be dispersed in annual increments starting the first year after occupancy and based on the actual number of new employees added to the local economy.

    Capital Improvement/Tax Sharing Agreement

    In cooperation with the projectís master developer, provide an incentive that shares a portion of the use and sales tax received from construction and tenant improvement activities for all three building construction phases. As one of the conditions of approval granted during the entitlement process, both e cities would require that contractors obtain a "Construction Site Sub-Permit"

    Capital Improvement/Tax Sharing Agreement

    In cooperation with the projectís master developer, provide an incentive that shares a portion of the use and sales tax received from construction and tenant improvement activities for all three building construction phases. As one of the conditions of approval granted during the entitlement process, both e cities would require that contractors obtain a "Construction Site Sub-Permit" which would provide a way for qualifying purchases by qualifying contractors and subcontractors to be allocated to either city.

    Through an operating covenant, the city can share a portion of the sales and use tax received through Amazonís construction and capital purchases. The city can make the requirement through a condition of approval with the developer. The developer would need to make it a requirement with their contractors and subs. The ability to collect tax hinges on whether the contractors qualify based on the ability to obtain a construction site sub-permit. Amazon presently does this with many of their fulfillment centers in California. More information will need to be obtained by HBLB, specifically dealing with naming the Master Developer and understanding more information about the various contractors that will be involved with the build out of the project.

    These types of Agreements have been used by both cities, in fact HBLB have provided over 12 Sales Tax Sharing Agreements ranging between 20 to 30 years and sharing a portion of sales tax revenue. Staff would complete a detailed proposal to establish the full value of this benefit based on the number and size of buildings constructed...

    Timing and Processing of Incentives

    State of California -- The Honorable Edmund G. Brown Jr. has pledged the Stateís full support for the Amazon Headquarters. In addition to the current State incentives, the Governor will present as part of his January 2018 budget package additional incentives for job creation for the second Corporate Headquarters. The current APPROVED incentives from the State includes: California Competes Tax Credit, New Employment Credit, Employee Training Panel, California Infrastructure and Economic Development Band CLEEN Center, Industrial Development Bonds. These programs have multiple application periods and are fully funded.

    HBLB - The cities of Huntington Beach and Long Beach are the prime location for the new Amazon Coast Headquarters. Once our bid is considered, any and all potential incentives would need to be review, finalized and approved by each cityís respective City Council. The final package would be developed working with Amazonís team to ensure it is a win-win scenario. HBLB staff would work diligently to expedite approvals with each City Council.

    The proposal also included letters of recommendation from state Senators Janet Nguyen (R, SE LB-HB) and John Moorlach (R, OC) -- but without letters from state Sen. Ricardo Lara (D, LB-Huntington Park) or Assemblyman Patrick O'Donnell (D, LB-SP).

    Others submitting letters of support included the LB Convention and Visitors Bureau, Downtown Long Beach Associations, Affiliated Development Group (by President/CEO George Medak) and DJM Capital Partners, among others.



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