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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 01/04/2000 - SECOND READING OF ORDINANCE NO. 191, 1999, ADDING 11 AGENDA ITEM NUMBER:ITEM SUMMARY DATE: January 4, 2000 . FORT COLLINS CITY COUNCIL STAFF • Ken Waldo SUBJECT: Second Reading of Ordinance No. 191, 1999,Adding a New Division 4 to Chapter 25,Article II of the Code of the City of Fort Collins Establishing a Program for a Rebate of the City's Sales and Use Taxes for Materials Used in the Construction of Affordable Housing Units,and the Deferral of The Payment of Sales and Use Taxes Thereon. RECOMMENDATION: Staff recommends adoption of the Ordinance on Second Reading. i EXECUTIVE SUMMARY: Ordinance No. 191, 1999,which was unanimously adopted on First Reading on December 7, 1999 establishes a program to provide for a rebate of the City's Sales and Use Taxes for affordable housing units. The impetus for the program comes from the City Council's 1999-2001 Policy Agenda,Theme IV.Helping Make Housing Affordable to Our Citizens-E.Rebates.The Sales and Use Tax Rebate Program would be another direct financial incentive program which would logistically operate similar to the previous "Development Impact Fee Rebate Program." R On Second Reading,a new provision has been added to Section 25-57 of the Code to clarify that the rebate of sales and use tax for affordable housing units would be available only to those applicants I who pay the tax after the effective date of the Ordinance, i.e., January 14, 2000. I i s i �' I ORDINANCE NO. 191, 1999 OF THE COUNCIL OF THE CITY OF FORT COLLINS ADDING A NEW DIVISION 4 TO CHAPTER 25, ARTICLE II OF THE CODE OF THE CITY OF FORT COLLINS ESTABLISHING A PROGRAM FOR A REBATE OF THE CITY'S SALES AND USE TAXES FOR MATERIALS USED IN THE CONSTRUCTION OF AFFORDABLE HOUSING UNITS,AND THE DEFERRAL OF THE PAYMENT OF SALES AND USE TAXES THEREON WHEREAS, the City has established several programs to promote the development of affordable housing units, including the City's "Priority Processing Program" and "Development Impact Fee Collection Delay Program'; and WHEREAS, the City Council has determined that it is in the best interests of the City to establish a program for the rebate of the City's sales and use taxes collected for materials used in the construction of affordable housing units,which program shall be established as a "pilot" program to continue in existence for a period of two years and automatically terminate unless extended by the Council by ordinance; and WHEREAS, the Council has further determined that another program should also be established for deferring the payment of sales and use taxes for materials used in the construction • of affordable housing units,with said payment to be made at the time of issuance of certificates of occupancy. NOW, THEREFORE,BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the Code of the City be,and hereby is, amended as follows: Section 1. That Chapter 25,Article II of the Code of the City of Fort Collins be amended by the addition of a new Division 4 to be entitled Affordable Housing Rebate,which division shall read as follows: DIVISION 4. AFFORDABLE HOUSING REBATE Sea 25-55. Establishment. There is hereby established a sales and use tax rebate program to provide relief from sales and use taxes charged on purchases of materials used in the construction of affordable housing units as that term is defined in §26-631. Sec. 25-56. Application for Rebate. Application for the sales and use tax rebate for affordable housing units shall be made on forms to be provided by the City. See. 25-57. Qualifications. In order to qualify for the rebate,the following requirements must be met: (1) The applicant must demonstrate to the satisfaction of the city that the materials upon which the sales and use taxes have been paid have been used in the construction of an affordable housm,g unit as defined m 26-631 an iai u ? aOfand that the applicant requesting the rebate is the same as the payor of the taxes,or,if not the same,has presented to the city the written permission of the payor to request and receive the rebate; (2) The applicant shall be in full compliance with all provisions of the Code and shall not be in default of the terms of any obligation, contract or other agreement with the city. If any application for a rebate is approved under the provisions of this Division,and the applicant for such rebate subsequently becomes delinquent in the payment of any tax,fee,charge or utility bill owed to the city, the rebate otherwise due said applicant may be applied by the city in whole or in part toward the payment of the delinquent tax, fee, charge or bill. Sec.25-58. Amount of rebate. The amount of the rebate payable hereunder shall be the full amount of sales and use taxes paid for materials used in the construction of the affordable housing unit. The rebates provided for under this Division are subject to the appropriation of necessary funds and the provisions of this Division shall not be construed as establishing any right or entitlement to a rebate on the part of any applicant. Sec.25-59. Administration. The Financial Officer shall administer the program established by this Division and may prepare a rebate application form, adopt rules and regulations consistent with the provisions of this Division and audit and verify the applications submitted pursuant to this Division. Any rebate application form shall require the claimant to verify and sign the application under oath. The burden of proving eligibility for a rebate under this Division is on the claimant. The Financial Officer may require reasonable information to support the rebate application. Sec.25-60. Sunset Provision. The sales and use tax rebate provisions established in this Division shall terminate and be of no further force and effect on December 1, 2001, and no rebate shall be paid after said date except for affordable housing projects for which building permits have theretofore been issued,unless this sunset provision is repealed or modified by the City Council. Section 2. That the Code of the City of Fort Collins be, and hereby is, amended by the addition of a new Section 25-130,to read as follows: Sec. 25-130. Deferred sales and use tax payments for affordable housing projects. All sales and use taxes for materials purchased and used in the construction of an affordable housing unit as that term is defined in §26-631 shall,upon the request of the applicant, be deferred until the date of issuance of the certificate of occupancy (whether temporary or permanent) for such affordable housing unit, or portion thereof, or until the first day of December of the year in which the deferral was obtained,whichever first occurs. At the time of application for any such deferral,the applicant shall pay to the city a fee in the amount of fifty dollars ($50.) to partially defray the cost of administration. No person shall knowingly make any false or misleading statement of fact in order to obtain any deferral of taxes under this section. Introduced and considered favorably on first reading and ordered published this 7th day of December, A.D. 1999,and to be presented for final passage on the 4th day of January, A.D. 2000. Mayor ATTEST: City Clerk Passed and adopted on final reading this 4th day of January, A.D. 2000. Mayor ATTEST: City Clerk AGENDA ITEM SUMMARY ITEM NUMBER: 16 DATE: December 7, 1999 • FORT COLLINS CITY COUNCIL STAFF: Ken Waldo SUBJECT: First Reading of Ordinance No. 191, 1999,Adding aNew Division 4 to Chapter 25,Article Ii of the Code of the City of Fort Collins Establishing a Program for a Rebate of the City's Sales and Use Taxes for Materials Used in the Construction of Affordable Housing Units,and the Deferral of The Payment of Sales and Use Taxe�ereon. RECOMMENDATION: UP y Staff recommends adoption of the Ordinance on First Reading. The Affordable Housing Board voted unanimously to recommend adoption of the program. FINANCIAL IMPACT: Based on a review of activity over the past three years(average of 190 units/year),the amount of tax rebate on an affordable housin t yuld ran e , e an 1,000 per unit. The production goals contained in the Pnonty Afforda7e Ho i ds a ' Strategies report(2/99) establish an average of 337 units for th ears 20400 aln 00 If the pry` uction goals were to be achieved, the cost of the program would rang"e between approximately 2,000 and $337,000 per year in rebates. Increases in yearly development totals would, obviously,result in higher amounts of sales and use tax rebates. EXECUTIVE SUMMARY: Since 1993,the City of Fort Collins•has es h grams to promote the development Al of affordable housing units i§n the commum o p as deal with the soft costs of development involving the pressing of devel nt applic ons, e.g., the "Priority Processing Program,"while others more dirwtlyionstitut in eaal incen n es,e.g.,the"Development Impact Fee Collection Delay Program." The current proposal is to establish a program to provide for a rebate of the City's Sales and Use Taxes for affordable housing units. The impetus for the program comes from the City Council's 1999-2001 Policy Agenda,Theme IV.Helping Make Housing Affordable to Our Citizens-E. Rebates. The Sales and Use Tax Rebate Program would be another direct financial incentive program which would logistically operate similar to the previous"Development Impact Fee Rebate Program." Basically, builders of affordable housing units would need to pay the City's Sales and Use Taxes for materials used in the units. The City would then, after completion of the units and verification that they were occupied by income eligible families,rebate the amount of City Sales and Use Taxes paid by the builder for the affordable units (only). The Program would operate for two DATE: December 7, 1999 2 ITEM NUMBER: 16 (2) years, after which time it would be reviewed for possible continuation. A second part of the proposal is to include sales and use taxes in the "Development Impact Fee Collection Delay Program" whereby the payment of sales and use taxes would not occur at the time of the issuance of a Building Permit but,rather,would be delayed until the issuance of a Certificate of Occupancy. BACKGROUND: Earlier this year, staff began to investigate financial incentives for the development of affordable housing units involving the Cit;Y;s-SQes d-U e i for the investigation came from the City Council's 19?99-2001 licy g d IV. Helping Make Housing Affordable to Our Citizens-E.Rebat Seve o ns wer vestigated including:establishing a separate Sales Tax for affordablg ho&i g, s l' g a Sal d Use Tax payment exemption; earmarking taxes paid for the City's Affordable Housing Fund; and delaying the payment of Sales and Use Taxes, as in the existing "Development Impact Fee Collection Delay Program." Each option was analyzed as to its advantages (pros) and disadvantages (cons) which included reviews of such issues as voter approval,financial impacts,and the effect of Article X, Section 20(TABOR amendment) of the State Constitution. At the Council Finance Committee meeting on June 16, 1999, staff presented three options for the committee's consideration. Th manc Cormittee asked for some additional information regarding the impacts of a Sales and Taxxl c e ending as defined by the TABOR amendment. On July 21, 1999,the Finance Committee met to review the TABOR related information collected j by staff. After discussion on the legal and financial issues,the Committee directed staff to prepare a proposal for a"Sales and Use Tax Rebate Program." Basically,as proposed, a"Sales and Use Tax Rebate Program" would provide for the return to the builder of an affordable housing unit a rebate equal to the amount of Sales and Use Taxes paid to the City for materials used in the unit. On August 18, 1999, the Finance ttee'•'re e o epare an ordinance for the full Council's consideration establishing a S sand s eba rogram for the affordable housing units in an affordable housing pro ect an ode c lection o ales and use taxes,on a trial basis, for two(2)years. The Program woad bee lishe with the ouncil's adoption of this Ordinance. After two years the Program will be reviewed for possible continuation. Qualifying for a Rebate The City would still collect the total amount of Sales and Use Taxes owed by an "Affordable Housing Project" for all affordable housing units in the project. In order to receive a rebate, the builder would be required to submit documentation to the City's Advance Planning Department that the unit was occupied by an income qualified family and the unit meets the City's definitions, and any other pertinent regulations, as either an "Affordable Housing Unit for Rent" and/or an "Affordable Housing Unit for Sale." The Advance Planning Department would then notify the Finance Department that the builder was qualified for a rebate, and the amount of a rebate. The Finance Department would then issue a rebate check to the builder. Rebates would range between $660 to$1,000 per unit. The production goals contained in the Priority Affordable Housing Needs DATE: December 7, 1999 3 ITEM NUMBER: 16 and Strategies report (2/99) establish an average of 337 units for the years 2000 and 2001. If the production goals were to be achieved,the cost of the program would range between approximately $202,000 and $337,000 per year in reduced revenue to the City. Increases in yearly development totals would, obviously, result in higher amounts of sales and use tax refunds and lost revenue. A second part of the proposal is to defer payment of sales and use taxes in a manner similar to the "Development Impact Fee Collection Delay Program" whereby the payment of sales and use taxes would not occur at the time of the issuance of a building permit but,rather,would be delayed until the earlier of the issuance of a C �Gi ate ofAccupPpr flh 1 onth of the year in which the building permit was issued. AFFORDABLE HOUSING BA RECO NDATI; The Affordable Housing Board,at its regular monthly meeting on November 4, 1999,reviewed the proposed Sales and Use Tax Rebate Program for affordable housing units and voted unanimously to recommend adoption of the program. PN kli •