Redevelopment staff proposes larger grants, new tenant-improvement rebate and clarifications to visual-improvement rules

Redevelopment staff on Thursday outlined a set of proposed changes to the agency's development incentives, saying the updates are intended to better target resources, reflect rising construction costs and support downtown rehabilitation.

Tracy Reich, redevelopment manager, told the board the agency wants to "increase the available amount from 25,000 to 50,000" for the Visual Improvement Program (VIP) and add a clear definition of what counts as a "significant improvement." Reich said the change would prevent "spot fixing" such as a single sign or a single coat of paint from receiving full grants and would update eligible zoning language to include form-based code.

The presentation reviewed a suite of existing and proposed incentives. Reich described the electrical utility incentive, which supports undergrounding or relocation of electrical utilities but requires coordination and approved plans with NVE. She also reviewed tax-increment financing (TIF), which she said uses the increase in property tax revenue after a project to rebate funds for key infrastructure and that TIF "will trigger prevailing wage requirements." The city also uses tourism improvement districts and federal tools such as new markets tax credits; Reich said Opportunity Zones 2 will take effect in 2027 and that the city will nominate census tracts to the state for federal consideration.

On multifamily housing, staff proposed renaming the program to the "Multifamily Renovation Program," raising required expenditures from $20,000 to $30,000 per door, increasing the minimum property size from four to five units, and clarifying that a qualifying unit must include a living/bedroom area, a kitchen or kitchenette and a separate three-quarter or full bathroom. Reich said single-family conversions are not eligible and that units must be leased to an individual or family for 12 months to qualify.

Reich proposed a new tenant-improvement program (TIP) aimed at improving substandard office space and other commercial properties. The rebate would be up to 10% of TI value, two-tiered, "a maximum of 50,000 for properties that are 25,000 square feet to 49.99 square feet and 95,000 for properties 5,000 square feet and above," and could allow multiple incentives per building. Reich said that, "If you have a tenant the lease term of the tenant must be 5 years but you do not have to have a tenant." She also said qualifying projects would need to meet at least two of: a minimum leasable space threshold, a dollar-per-square-foot threshold of eligible expenses, or creation of at least 10 full-time jobs.

Board members pressed staff on details. Member Sam Cherry expressed support, saying the VIP increase helps cover higher construction costs and has produced taxable activity in areas such as the Arts District and Fremont East. A question about whether the 10-job requirement applied to the tenant or to construction work was answered by Reich: the jobs requirement applies to the tenant. When asked whether additional funds for increased credits come from the city's general fund, Reich said the additional funds for these incentives "we're generating through the redevelopment area." Member Ryan and others raised concerns over the "one incentive per APN per year" rule for multi-tenant buildings and asked whether tenant-level incentives could be structured to allow smaller amounts for multiple tenants in a single building; Reich said staff would review that with counsel and leadership.

No formal action was taken on the incentive changes; Reich asked for feedback as staff continue drafting program language and eligibility criteria. Reich also noted two additional incentives under study: a demolition incentive for vacant or abandoned buildings and an infrastructure incentive to address aging downtown utilities.