CALIFORNIA CITY — The City Council unanimously approved a development agreement that caps the amount of city taxes the business pays at current rates for 30 years.
The development agreement with Traditional Trio LLC is for a cannabis business park, which includes facilities for cultivation, manufacturing, testing and distributing cannabis.
The development is on three separate sites, in the vicinity of Yerba Boulevard and Lindbergh Boulevard.
The company has building permits and has started construction on two of a planned six buildings, with a target opening date of the first part of next year.
When fully built, the project is estimated to generate about $1.38 million annually in city cannabis taxes on the cultivation operations alone, which is tax the city can collect no matter how much product the firm sells.
In terms of manufacturing and distribution, a conservative estimate of the potential taxes to the city is more than $1.1 million annually, according to the firm’s presentation.
The development agreement locks in the cannabis tax rate at today’s level, although it also provides to pay a lower rate, should one be established within the 30 years of the agreement.
It also includes provisions for the firm to “use its best efforts” to hire locally, including for construction.
The Planning Commission recommended approval of the development agreement at its Nov. 16 meeting.
Councilmember Kelly Kulikoff balked at some of the terms, specifically in regards to assigning the agreement to another party should the firm sell or lease the facility. He questioned if they would realize the profits and wanted a minimum guarantee for payments should the facilities be sold or leased to others.
“Companies expect to get some kind of benefit” for developing, Mayor Jeanie O’Laughlin said. “I’m surprised this is all they’re asking for, quite frankly.”
O’Laughlin also noted that the property tax on the sites is increased with the development, also benefiting the city.
“This is something we want to attract in California City,” businessman D.J. Twohig said.
Kulikoff also accused the developer of skirting the city’s permit process, which Councilmember Karen Macedonio disputed.
Resident Ron Hogan argued the development agreement doesn’t benefit the city because he doesn’t expect the firm to stick around long enough for it to pay off, and the developer doesn’t need the help.
Former Councilman Don Parris questioned the timing of the agreement, coming after the project has begun construction.
“There are many glaring problems with this development agreement,” he said, citing wording of the project in the future sense.
Seth Nelson offered his support for the agreement, saying it is not often Cal City gets a business willing to invest millions in the community.
A company the size of Traditional Trio is necessary to bring the cannabis industry to the city as envisioned, he said.