AGENDA #5a
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Report on Financing of Improvements in Downtown Monrovia, California
DATE: May 21, 2001
This report summarizes some of the financing strategies used by Monrovia, California, in its downtown vitalization efforts.
As one of its goals for 2000, the Council requested that the Manager provide a report on the City of Monrovia’s downtown redevelopment program. On January 8, 2001, the Manager provided a report (Attachment 2) that summarized historical and demographic information about Monrovia. The report provided information about the historic center of Monrovia and its “Old Town” downtown area. Work on the downtown area has been an ongoing project for the last 25 years. In the late 1970s, a specific plan was prepared to revive the Old Town area. Monrovia created an overlay Historic District zone, and established the 1920s-1930s era as the design theme. A key decision was to reduce the area of retail zoning in Old Town, gradually decreasing the size over time to a more realistic area where activity could be concentrated.
Over the last 25 years, focus has been on public improvements, streetscape elements, achieving consistency in design elements, and creating a pedestrian feel to downtown. Working with merchants has been a key to success. There is now a 12-screen movie theater (a 15 million dollar project), and Monrovia continually tries to bring new businesses into the Old Town area. Restaurants are beginning to come into Old Town, partly because of the presence of the movie theater. The pace of zoning and planning changes is described as “gradual.”
According to Glenn Cox, Assistant Executive Director of Monrovia’s Redevelopment Agency, Monrovia developed a 15-page Redevelopment Project Plan. (A description of Monrovia’s plan for the Central Redevelopment Project is included as Attachment 1.)
Goals of the plan included having north and south anchors in the downtown, with a high-tech area and a retail area on each side. The downtown is six blocks long, with a wide main street. The Redevelopment Plan appears to have worked. In 1978, 40% of the downtown buildings were vacant. Over the years, this percentage has dropped to 6%.
On January 19, 2001, the Council reaffirmed the goal for 2001 and asked the Manager to seek further information about Monrovia, requesting information on its financing plan to bring businesses to downtown and how Monrovia financed its land purchases.
Monrovia began its downtown vitalization efforts in 1977-78, with $998,000 per year available from federal Revenue-Sharing funds. With the advent of the Reagan administration in the early 1980s, that funding ended.
Tax increment financing has allowed Monrovia to freeze taxes in the downtown project area. As permitted by California law, the tax rate was established at the time when the Redevelopment Area was formed. Over subsequent years, the local government continues to receive only the frozen amount, while the excess in what would have been generated goes into a special fund for the Monrovia Redevelopment Agency. The city invested approximately $40 million in the immediate downtown project area, which continually added value to the downtown. As Tax increment financing grew, Monrovia’s downtown retail projects continued to develop as the city reinvested that money. Today, Monrovia is one of the highest per capita sales tax generators in Los Angeles County. The Redevelopment Agency now receives approximately $5 million in Tax increment financing for the downtown project area.
North Carolina governments do not have authority for tax increment financing, according to Professor David Lawrence at the Institute of Government. This authority has been considered twice by the General Assembly in the last 10-15 years, but has not been adopted.
Mr. Cox says that the first years of the Monrovia project were a struggle, describing the process as “like pulling teeth.” The city had to be aggressive in recruiting anchors for its downtown and in marketing itself. The City Council was also specific in identifying business anchors that it wanted to recruit. This pursuit included the north and south retail anchors. To the north is a 7-acre shopping center with a high-end grocery store as the anchor. To the south is a series of high-tech industrial buildings. One goal, says Mr. Cox, was to create a large daytime population to work, shop, and eat in the downtown area.
With the use of tax increment financing, Monrovia was able to offer $250,000 in loans to businesses to redo their facades. Loans generally were offered for $15,000, payable over 15 years. The first payment started after five years, at 3% interest. If a building was sold, the loan was due and payable at the time of sale. Funding was available for external improvements only, then eventually made available for interior improvements.
The city also obtained more than $4 million in Urban Development Administration grants, which are no longer available. Monrovia received more Urban Development Administration grants than any city west of the Mississippi River other than Los Angeles.
In the last few years, the town passed a $5 million bond package for downtown, and recently used $1.5 million to improve the area around the new theater. The area surrounding the theater is used as a model for what can be done to upgrade building exteriors and streetscapes.
Although the Redevelopment Plan for the Central Redevelopment Project allows the Redevelopment Agency to acquire property through eminent domain, the city has not needed to do this in most cases, purchasing land with only a few condemnations. The City’s staff has worked closely with property owners when condemnation was necessary. Sec. 516 of the Redevelopment Plan includes a description of the City’s process for assisting displaced property owners in finding a new location. “[T]he Agency shall assist such persons, business concerns, and others in finding new locations that are decent, safe, sanitary, within their respective financial means, in reasonably convenient locations, and otherwise suitable to their respective needs.”
A provision of the Redevelopment Plan (Sec. 514) also assists low- to moderate-income families. The section requires that “no persons or families of low and moderate income shall be displaced unless and until there is a suitable housing unit available and ready for occupancy by such displaced person or family at rents comparable to those at the time of their displacement.”
Mr. Cox says that Monrovia’s downtown vitalization efforts have generated mostly positive feedback. Mr. Cox said that there have been three negative articles in the last 28 years about the redevelopment efforts, while there have been more than a dozen positive articles and editorials.
Monrovia is currently exploring a possible Assessment District in the downtown. If the Assessment District referendum passes, downtown businesses will be assessed approximately $80 to $100 a month on the basis of how many linear feet of frontage they have. Funds will provide money for streetscape improvements, additional lighting, landscaping, and new benches. Merchants seem generally supportive of this, and Mr. Cox is optimistic that it will pass. To pass, the referendum will require a majority vote, but the amount of square footage of a business will be taken into consideration (votes will be structured so those with larger square footage will receive a larger voting share). He expects the referendum to occur late in 2001.
The City also has the Monrovia Business Association, made up of merchants who promote the downtown and generally operate the downtown, and the Monrovia Advisory Committee, to which property owners pay an annual business license fee to promote the downtown.
Monrovia has explored several diverse funding mechanisms for its downtown vitalization efforts. The use of tax increment financing and award of various federal grants have enabled the city to reinvest in its downtown. Tax increment financing in particular has played a key role in freezing taxes so that the excess amount raised can be used in other areas. North Carolina governments do not have authority for tax increment financing at this time. Monrovia’s potential downtown Assessment District may also generate new revenue by assessing downtown businesses approximately $80 to $100 a month on the basis of their linear street frontage.
The City of Monrovia Marketing CD and the city’s marketing video, Monrovia: HomeTown USA, are available in the Council Reading Room for further information.