City Council Approves CRA Funds to Reduce Project Costs for Med. Center Expansion

The City Council voted 5 – 0 last night to use more than 75% of the $100,000 in Community Redevelopment Agency Funds (CRA) they had allocated for this year for the CRA’s Business Incentive Program.  The purpose of the Incentive Program is to assist with the development of desirable businesses within the redevelopment area by subsidizing the Public Facilities Fee (PFF), also known as development impact fees.  The incentive program authorized staff of the Planning Dept. to approve up to 30% per project, requiring requests for more than 30% to be approved by the Council.

Dr. Hani Sami had requested a subsidy of 70% for the expansion of his medical facility at 147 W. Sierra Madre Blvd.  That expansion includes the addition of a new two-story, 7,000 sq. ft. medical building behind the existing medical offices, which had been approved by the Council at its August 10, 2010 meeting.  At that time, Dr. Sami agreed to pay $20,000 to the City in “in-lieu” parking fees, 10 spaces at $2,000 each, in order to satisfy the parking requirements of the City.  The City has since placed a moratorium on the use of in-lieu parking, although another project located across the street had also taken advantage of the program prior to the moratorium.

In a letter to the City, Dr. Sami noted that his project satisfied the requirements of the three criteria set by the CRA Board for the Business Incentive Program.  He stated that the project reflects and complements the character of the existing development, satisfying the first requirement that a project be reflective of and complements the overall pattern of development and contributes to the character of existing development.  He stated that the second requirement, that the project accomodates a diversity of uses or a use intended to meet the needs of local residents, one of which is defined as health care, was also satisified by the project. 

The third requirement is that the project must do one of the following:

  1. expect to generate increased sales tax revenue for the City
  2. eliminate blight
  3. be an existing business expansion that would result in or increse of more than 10 new employees of skilled, technical and professional positions
  4. be an existing business expansion that increases the business employment, sales or property tax projections by more than 50%.

Dr. Sami stated in his letter that the project would increase sales tax, result in the addition of 13 new positions at his facility, and increase his property tax by more than 100%.

The PFF for Dr. Sami’s projects, calculated at $15,582.12/1,000 sq. ft., is $109,074.84.  Dr. Sami’s requested 70% subsidy totals $76,352.38, with Dr. Sami to pay $32,722.45.  The City will still receive the full $109,000+, but more than $75,000 will be paid by the CRA rather than Dr. Sami.

Council member Moran and  Mayor Buchanan both expressed concern about using so much of the $100,000 that has been allocated on one project, but the lack of projects in the pipeline and the City’s ability to replenish the program with additional CRA funds ultimately satisfied those concerns and the Council approved the subsidy unanimously.