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Council stalls business incentive plan

POSTED October 26, 2010 9:29 p.m.

A plan to offer fee breaks to new businesses opening in vacant storefronts was sent back to the drawing board by the Turlock City Council on Tuesday evening.

The proposed program would have offered up to $5,000 in fee breaks – offsetting costs of capital facility fees, occupancy and fire inspections, zoning certificates, building inspections, grading, and encroachment permits – to new businesses that open up shop in existing buildings. Intended to create sustainable jobs and sales tax revenue while reducing the number of vacancies, the “Turlock Partnership Incentives” plan would have required participating businesses to file business plans, attend predevelopment meetings with the city, and report quarterly on sales and job creation.

“Yes ($5,000) is not a lot in the whole scheme of things, but there’s a reason why it’s called a ‘Partnership Incentive,” said Turlock Downtown Property Owners Association Executive Director Trina Walley, who worked with the group that drafted the plan. “It’s sending a message that Turlock wants to do business with you whether you’re big or you’re small.”

In order to pay city departments for the work still required to perform inspections and check permits, the plan called for $150,000 to be set aside from Turlock’s $13.5 million General Fund Reserve account to fund the fee breaks.

That use of Turlock’s savings drew questions from councilmembers and the audience alike. Vice Mayor Kurt Spycher took issue with the notion that tax dollars would be used to fund private businesses.

“Ultimately, we’re getting way out of the arena where we should be as government,” Spycher said.

Turlock City Council Candidate David “DJ” Fransen expressed concern that Turlock city employees had recently agreed to pay cuts while money could be sent to private enterprise. He said, by creating private jobs, city employees may be eliminated.

 “With that loss of jobs we may be losing services,” Fransen said. “I think that’s what people pay taxes for.”

Fransen also questioned if the measure could be throwing money away, given the high failure rate of new businesses.  He referenced the downtown Angela’s Sweets, which opened and closed in the past year.

Walley said that through meetings, the group comprised of city, Turlock Chamber of Commerce, DTPOA, and Alliance representatives came to the conclusion that most new businesses fail because they do not adequately prepare prior to opening – hence the required business plan and predevelopment meeting. She went on to say that while 80 percent of small businesses fail within the first seven years, 80 percent of job growth comes from small businesses with fewer than 20 employees.

But concerns still reigned whether the Turlock Partnership Incentives plan was the best way to spend the city’s limited reserves. Councilmember Mary Jackson asked whether the city should instead offer no-interest loans, pledge incentives to particular sorts of businesses like electronic stores, hire a business consultant, or simply work to start selling Turlock to potential businesses.

Councilmember Amy Bublak, who worked with the group which drafted the plan, said that all the feedback she had received indicated that new businesses’ greatest need was to reduce startup costs. Any dollar saved could be invested back into inventory or advertising, helping to grow the business.

“We keep talking about how we need to encourage the economy,” Bublak said. “We can keep putting it off or we can start doing something now and redefine it as we move along.”

As the plan was not agendized as an action item, the Turlock City Council could not immediately move forward with the plan Tuesday evening. But the council opted instead to send the plan back to the planning group for “massaging.”

Mayor John Lazar said he hopes the group can come up with a comprehensive plan which would increase the success rate of businesses across Turlock, and make the city a good place to do business. He asked that Bublak remain the council representative with the group, and also that a council workshop be held at a later date to discuss business incentive plans.

Despite the non-action on the proposed Turlock Partnership Incentives plan, council remained unified on the stance that something must be done about what are seen as excessive fees. Currently, action on revising the fee structure is pending a fee study being performed by the Turlock Development Collaborative Advisory Committee.

 “I think as we talk about this, about all of this, we’re really not addressing what the core problem is, and that’s the price that’s being charged to all is too high,” Spycher said. “If we really want to do something positive to all businesses, we need to get those prices down.”

To contact Alex Cantatore, e-mail acantatore@turlockjournal.com or call 634-9141 ext. 2005.

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