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ITEM #14 CITY OF COLTON For the City Council Meeting of August1,2006 TO: Honorable Mayor and Counclimembers FROM: Candace E. Cassel, Economic Development Directo(15— SUBJECT: Consideration of City Council Resolution Authorizing Execution of Memorandum of Understanding between City of Colton, City of San Bernardino, County of San Bernardino and IVDA to Enable Application of a New Enterprise Zone DATE: July 20, 2006 BACKGROUND In 1986, San Bernardino County, Riverside County, and the cities of Colton, Rialto, and Riverside established a Joint Powers Authority, AMIGA (Ague Mansa Industrial Growth Association) for the purpose of creating and managing the State's 1,934.18 acre Agua Mansa Enterprise Zone (AMEZ), which was also established in 1986. State enterprise zones offer various incentives to businesses located within a zone including: 1) employment tax credits; 2) employee salary reimbursements; 3) sales and use tax credits for purchase of new machinery; and 4) low cost loans and bonds. Businesses receive the credits upon filing their tax returns with the State. The AMEZ originally was set to expire in October 2001, 15 years after its designation. In 2001, the AMEZ was approved for a 5 -year extension to October 2006. In preparation for the expiration of the AMEZ (October 2006), staff from the participating jurisdictions have been evaluating alternatives for the future of an enterprise zone: 1) do nothing, with the AMEZ expiring October 14, 2006; 2) re -apply for a new zone with the participating jurisdictions; or 3) re -apply for a new zone with a new make-up of participating jurisdictions. Regardless of the ultimate decision and outcome, the AMIGA governing body will need to continue to meet until 2032 due to its issuance of CFD bonds, which cover areas within the County of Riverside. Three of the five participating AMIGA jurisdictions (Rialto, City of Riverside and County of Riverside) elected not to participate in an application for a new zone, leaving the City of Colton and County of San Bernardino with a desire to take advantage of an enterprise zone as an economic development tool. In addition, the City of San Bernardino expressed interest in participating on a joint application. Simultaneously, IVDA was also considering submitting for enterprise zone designation. On March 22, 2006, IVDA tabled an item on its agenda to issue an RFP for the preparation of an enterprise zone application, pending discussions with AMIGA, at the request of Colton. IVDA later awarded a contract to a consultant to prepare an application on behalf of the interested jurisdictions. Staff from the City of Colton, City of San Bernardino, County of San Bernardino and IVDA has been pursuing application options in a joint effort for the past two months.