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Campaign stresses RDA importance
Strategy is to combat states stealing of RDA taxes
Spreckels Sugar was torn down to make way for the 362-acre multi-use Spreckels Park development that rates as the city’s most successful redevelopment agency project. - photo by Bulletin file photo
Spreckels Sugar plant would probably still be standing today as an abandoned and shuttered complex complete with four 15-story silos some 14 years after closing.

It isn’t because the Manteca Redevelopment Agency was able to parlay an outright $1 million investment and more than $5 million in loans for infrastructure that have all been repaid ahead of time.

The history of the Manteca Redevelopment Agency as well as its purpose and showcasing of key projects will be presented to the Manteca Planning Commission during Tuesday’s 7 p.m. meeting at the Civic Center, 1001 W. Center St.

It is part of an orchestrated statewide effort by redevelopment agencies to educate the public and to enlist support in combating the state’s ongoing raid on RDA funds. It is in response to the action in May when the state for the ninth time since 1992 took money from local RDAs in a bid to try and balance deficit spending in Sacramento created by runaway state spending. The latest taking of money - $2.05 billion statewide - came on the heels of a Sacramento Superior Court’s decision on April 30, 2009 that found a similar action in 2008 of the state taking $350 million was unconstitutional.

The California Legislature responded by changing wording slightly in their resolution and then doing the same thing that the court held was unconstitutional.

Manteca lost $6.6 million in RDA funds to the state in May. The city will lose another $1.4 million next year.

Since 1992, the City of Manteca and Manteca RDA have lost more than $24 million to state money grabs.

Manteca redevelopment staff will make the presentation along with representatives of RDA general counsel Richard, Watson & Gershon

Spreckels Park
key RDA project
It wasn’t a fun time for Manteca in February 1996. Spreckels Sugar - a company that had literally helped the city grow by providing hundreds of jobs for 75 years - was closing down.

Holly Sugar was willing to take over other Spreckels Sugar refineries but not Manteca.

The prospect of an abandoned sugar mill with four 15-story silos, a pile of lime large enough to take care of San Joaquin County farming needs for 100 years and a massive amount of cow waste from the old Moffat stockyards made the site less than appealing to developers.

Each potential developer contacted by the sugar firm that was trying to sell it avoided it like the plague due to uncertainties over clean-up issues such as what was in the ground as well as the cost to demolish and level the land to get to the point where it could be developed. Raw, flat land or “green fields” as they are called in the industry are risky enough and much easier to develop.

Having an unsightly abandoned plant at Manteca’s front door wasn’t an image city leaders wanted. They knew all too well the stigma of abandoned buildings that had limited appeal. The burned out shell of the El Rey Theatre had been standing in downtown Manteca boarded up just two doors down from the heart of the city at Yosemite and Main.

The El Rey had been an albatross on downtown Manteca’s neck for two decades. The city had just inherited an even bigger problem but it covered 362 acres.

Banks wouldn’t
touch it
The best the city could have hoped for with the plant standing and soil issues unresolved was some peripheral development along Yosemite and Moffat.

The future was anything but sweet.

But the City Council led by then Mayor Bill Perry knew they had a powerful tool at their disposal created decades ago by the California Legislature to fight blight and spur economic development - the RDA.

A group of developers and associates led by Mike Atherton of AFK Development saw potential where banks didn’t.

The South Carolina elevator company that had bought what was left of Spreckels Sugar and was trying to dispose of the property had no stomach for demolishing the plant and silos they couldn’t sell. At first when they bought the company and a year or two before they made their intent to close the plant public, they pushed a proposal to build a business park, a 9-hole golf course, nearly 1,000 homes and commercial development around the plant and then market parcels. No one in the development community would touch it with a 10-foot pole.

AFK was able to piece together a deal with the South Carolina Company but they didn’t have the money needed to do both clean-up and install infrastructure. And even though the group had the ability to ultimately spend over $1 million alone in soil studies to make sure the site was clean plus pay for preparing the site that included imploding the silos and working 3 million yards of lime into the site to flatten the land it didn’t have the money for infrastructure such as streets as well as sewer, water and storm lines.  No bank was interested still in loaning money for infrastructure.

RDA makes
project work
That is the where RDA came into the picture.

Spreckels Park is where it is today because of $6.1 million in RDA investment and the  development team’s willingness to pursue a “loss leader” strategy, where they initially lost money on deals they brokered for the first commercial and industrial projects.

The Home Depot deal was tricky. The home improvement center wanted a site visible from Highway 99 but there was no street. The extension of Northwoods Avenue - Commerce Drive -wasn’t among the road projects identified for funding from growth fees.

The developers had to get much of the land from adjoining property owners since only a sliver belonged to Spreckels. The $1.1 million cost looked like a deal killer.

That’s where RDA came in. AFK secured RDA assistance in the form of a $6.1 million combo loan. Of that, $1.1 million would be forgiven if Home Depot opened on time. The balance -which was to complete streets, sewer and water lines, plus other infrastructure throughout the park that excluded the Curran Grove residential parcel that had been sold off just in time to keep the project afloat - had to be repaid with interest.

The RDA deals for Spreckels Park also included $319,000 to help keep Tradeway Chevrolet from relocating elsewhere to less expensive sites to develop outside the city which would have meant the loss of a huge chunk of sales tax. The Target deal also involved $958,000 in what the RDA refers to as a performance grant.

Altogether, there was $6.377 million in RDA funds put on the table.

The RDA has been paid back $4.1 million with another $200,000 coming back through an innovative equity sharing program in the Target performance grant.

The RDA negotiated a deal that required everything in equity above the market value of the land at the time the deal was made - $11 per square foot - would be split 50-50 with the RDA. The deal for Pier 1 and TJ Maxx netted the RDA $100,000 alone in equity

In order for the performance grant to be forgiven, Spreckels Park had to generate $1.8 million in sales tax and property taxes alone to cover the “loan.’

Based on state taxable transactions figures, Home Depot alone generated half that amount just in sales tax in just two years for the city.

Developer Mike Atherton several years ago noted that Target was just as tough to land as Home Depot.

Manteca wasn’t on their list of possibilities for a store site for perhaps five or so years. The fact there were two Target stores within 15 miles - Modesto and Tracy - also played against Manteca.

Deals of a
lifetime turn tide
“We offered them a deal of a life time,” said Atherton in 2006. “The RDA help made that possible. It was a deal they couldn’t refuse.”

Commercial real estate professionals contacted by the Bulletin indicated that Home Depot and Target in Manteca was the critical mass to get other companies to consider locating here. The list of those that started looking at Manteca ranged from Costco to Best Buy.

Spreckels Park has since generated significant revenue for the RDA that allowed the city to build the Big League Dreams sports complex and the infrastructure needed to allow a developer to build Stadium Retail Center anchored by Costco and Kohl’s.