Council okays tax breaks for VF Outdoor expansion

Council okays tax breaks for VF Outdoor expansion

Michele Ellson

The City Council agreed Tuesday to double VF Outdoor’s existing package of tax and fee breaks, to a maximum of $2 million, in exchange for a planned expansion that could nearly double the company’s Harbor Bay Business Park campus by the end of 2020 and increase its local workforce by more than a third.

The council voted 4-0 to approve the tax breaks, after city staff touted a list of economic benefits of helping the company expand here. Councilman Stewart Chen was absent from Tuesday’s meeting.

“We are pleased that you have made the City of Alameda your home, and we look forward to having a fruitful partnership in the days to come,” Mayor Marie Gilmore told a representative from the company.

Councilman Tony Daysog said Alameda is in a “tough competitive environment” with neighboring cities and that the city needs to do everything it can to attract business. He said attracting global brands like VF Outdoor – whose parent company, Vice Mayor Marilyn Ezzy Ashcraft noted, is number 250 on this year’s Fortune 500 list – will “separate Alameda from other cities.”

“We don’t forego revenues at the snap of a finger,” Daysog said. If the city can attract a global company like VF, “we should jump at the opportunity.”

The city agreed in 2010 to provide up to $1 million in tax rebates over 12 years, when VF Outdoor – which owns The North Face, JanSport and lucy – sought to move its company headquarters here to Alameda from San Leandro. Now, the company is proposing to bring its rapid prototyping and warranty business to the Island, in a move that could nearly double the size of its new Harbor Bay Business Park campus and increase its Alameda workforce by about a third.

The city’s original deal offered the tax and fee breaks in exchange for four new, LEED-certified buildings and at least 400 new jobs; at the time, city staffers estimated that the project could generate as many as 650 permanent jobs – raising the census at the business park by more than 20 percent – and about $3 million for the city over 12 years.

The company bought the four-building, 160,000-square-foot campus, and has plans to construct its originally planned fifth building, according to a city staff report; the 619 permanent jobs the company brought make VF Outdoor one of Alameda’s largest private employers.

In addition to the planned fifth building, the company would like to construct a 50,000-square-foot building to house its warranty and rapid prototyping business and another, 45,000-square-foot building. The three new buildings could house an additional 230 workers, the staff report says.

The company asked for the additional $1 million in tax reimbursements in exchange for the new business, the report says; under the terms of the new deal, the company would get the full amount if all three new buildings are constructed by December 31, 2020.

So far, the city has reimbursed the company $446,000 – the amount of property transfer tax it paid when it bought the Harbor Bay Business Park Campus – and could pay an additional $55,272 a year, up to the original $1 million cap, for the next 11 years VF Outdoor occupies it. The city now expects to net $800,000 in taxes from the company over that same time period, the staff report says.

The new buildings would net $148,000 a year in taxes, half of which would be paid back to VF Outdoor over the course of a decade, the report says. The city could also reap sales taxes from construction of the buildings, though a revenue estimate was not available.

Community Development Director Debbie Potter said the city is also in talks with the company to collect sales taxes generated by online sales activity, and she said the company’s presence could bring more business to the Harbor Bay Landing Shopping Center and encourage more amenities in the business park.

She also noted the company’s recent decision to donate $50,000 in tax rebates to the Alameda Education Foundation – philanthropy the company intends to continue, a representative said.

VF Outdoor’s Scott Blechman said approval of the new tax breaks would be “tremendously helpful” as the company seeks the money it needs to expand its Alameda campus from its corporate parent.

“We’re excited about the opportunity to bring more jobs to the City of Alameda,” said Blechman, VF Outdoor’s chief financial officer. “We are very proud of our campus and we want to expand.”

Comments

Submitted by Marilyn Pomeroy (not verified) on Wed, Dec 18, 2013

It would be interesting to learn how many current VF Sport employees are living in Alameda, The impression the article creates is that the company will hire local people, however there is no real incentive for them to do so.

Submitted by Michele Ellson on Wed, Dec 18, 2013

Hi Marilyn - thanks for mentioning this, these are numbers I would like to see too. One of the things city staff listed as a benefit of the company's presence and expansion here was that it would improve the city's "jobs-housing balance." (When Target came I heard that they had done a lot of local hiring, particularly at the College of Alameda, but I wasn't able to get the company to respond to my request to confirm those numbers.)