Policies that helped transform Gilroy into a shopper’s Mecca
could get overhauled this week by city officials anxious to clamp
down on spending and lure new businesses to town.
Gilroy – Policies that helped transform Gilroy into a shopper’s Mecca could get overhauled this week by city officials anxious to clamp down on spending and lure new businesses to town.
Stores such as Costco and Wal-Mart have sidestepped hundreds of thousands of dollars in development fees by promising to pour similar amounts into local tax coffers. In the past decade, the city’s “economic incentive program” has freed businesses from nearly $16 million in fees typically levied against new development, with another $3 million expected in the next few years. The lost fees, used to build new roads and pay for public safety, are subsidized by the city’s general fund.
The city does not provide data on tax contributions of individual companies that have passed through the incentive program, since the figures are protected as private business information. But even as officials point to humming retail centers as evidence of the program’s success, budget pressures and the city’s growing allure as a retail business location have prompted them to rethink the incentives.
“I think we’re at a point where we need to regroup and pick and choose and fine-tune things,” Mayor Al Pinheiro said. “We’ve done a great job in planting the seed and getting things going. When people talk about Gilroy being the crossroads, a retail area positioned just right for companies to set up shop, that’s what we need to have as the bait, if you will. Now, maybe we need to be more in tune with the needs of our community.”
For the mayor, that means shifting the focus of incentive programs to the downtown area. The city has waived development fees for new construction and major renovations in the area for the past four years. The move, which has saved developers more than $2 million, has sparked a surge of “mixed-use” projects combining street-level storefronts with above-ground apartments and condominiums.
To attract the types of businesses that generate foot traffic, officials will now consider narrowing the focus of the downtown incentive program, according to Wendie Rooney, the city’s community development director.
“Our goal is to really (enact) the vision of the Downtown Specific Plan,” she said, “by focusing incentives on those uses that will enliven the area – restaurants, entertainment, retail and residential.”
Rooney and other city staff will ask council to not only narrow the focus of the program, but extend it from 2008 to 2011.
On Friday, during a day of informal policy talks at police headquarters, council members also will debate whether to limit citywide economic incentives to biotechnology firms and other businesses that bring high-paying jobs.
“We all may want high tech jobs from XYZ company, but we don’t want to limit our incentives too much,” warned Larry Cope, director of the Gilroy Economic Development Corporation. “It could limit the type of jobs we can create. It’s really a balancing act.”
