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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/16/2004 - SECOND READING OF ORDINANCE NO. 166, 2004 APPROPRI ITEM NUMBER: 10 AGENDA ITEM SUMMARY DATE: November 16, 2004 FORT COLLINS CITY COUNCIL STAFF: Alan Krcmarik SUBJECT Second Reading of Ordinance No. 166,2004,Appropriating Prior Year Use Tax Carryover Reserves for the Manufacturing Equipment Use Tax Rebate Program. RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. EXECUTIVE SUMMARY In March 1996,Council approved a temporary rebate program for use taxes paid on manufacturing equipment. The goal of the program is to maintain the local economic base by providing modest tax relief to manufacturing concerns in Fort Collins. The program has provided rebates to manufacturers for use taxes paid during the calendar years 1996 through 2001. The rebate program was discontinued for calendar year 2002 due to challenging economic conditions. Council reinstated the program in January of 2004 for a two-year period. Under the rebate program,the payments are made in arrears. This is a rebate of taxes paid in 2003 and not a tax exemption. Six companies have filed applications this year for a total of$172,093 in rebates. Based on review of the applications, the amount was reduced from$265,000 on First Reading. The source of funding for the rebate program is the sales and use tax fund, specifically the use tax carry-over reserve. A listing of the six companies has been added to the agenda summary. Ordinance No. 166,2004,was adopted 6-0(Councilmember Bertschy was absent)on First Reading on October 19, 2004. List of Companies that Applied for the 2003 Manufacturer's Use Tax Rebate Program Company Amount Requested Amount Eligible Advanced Energy $ 36,618.15 $ 27,464.00 Agilent Technologies 79,336.46 59,502.00 Anheuser-Busch, Inc. 73,896.00 55,422.00 Atrix Laboratories, Inc. 1, 016.59 25,415.00 New Belgium Brewery 2,811.46 2,109.00 Odell Brewery 2,907.44 2,181.00 REBATE TOTAL $ 172,093.00 ORDINANCE NO . 166 , 2004 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROPRIATING PRIOR YEAR USE TAX CARRYOVER RESERVES FOR THE MANUFACTURING EQUIPMENT USE TAX REBATE PROGRAM WHEREAS , in March 1996 , the City Council originally approved a temporary rebate program for use tax paid on manufacturing equipment; and WHEREAS , the City Council extended that temporary program on an annual basis through tax year 1999 , and in December 2000, adopted Ordinance No . 173 , 2000, approving the rebate program for tax years 2000 and 2001 ; and WHEREAS , in January of 2004 the City Council extended the Manufacturing Equipment Use Tax Rebate Program for the use tax years 2003 and 2004 through the adoption of Ordinance No. 174, 2003 ; and WHEREAS , the goal of this program is to support the local economic base by providing modest tax relief to manufacturing concerns located in Fort Collins ; and WHEREAS , the City has received six applications requesting rebates of 2003 use taxes for a total of approximately $265 ,000 $ 172 ,093 to be returned to the manufacturers through the rebate program; and WHEREAS , the money to rebate these funds is available in the Sales and Use Tax Fund Use Tax Carryover Reserve; and WHEREAS , Article V, Section 9, of the Charter of the City of Fort Collins permits the City Council to appropriate by ordinance at any time during the fiscal year such funds for expenditure as may be available from reserves accumulated in prior years, notwithstanding that such reserves were not previously appropriated. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS that there is hereby appropriated for expenditure from the Sales and Use Tax Fund Use Tax Carryover Reserve, the sum of - ( 000) ONE HUNDRED SEVENTY-TWO THOUSAND AND NINETY-THREE DOLLARS ($ 172 ,093 ) for the Manufacturing Equipment Use Tax Rebate Program. Introduced, considered favorably on first reading, and ordered published this 19th day of October, A.D. 2004, and to be presented for final passage on the 16th day of November, A.D . 2004 . Mayor ATTEST : City Clerk Passed and adopted on final reading this 16th day of November, A.D . 2004 . Mayor ATTEST : City Clerk ITEM NUMBER: 13 AGENDA ITEM SUMMARY DATE: October 19, 2004 FORT COLLINS CITY COUNCIL STAFF: Alan Krcmarik SUBJECT SM First Reading of Ordinance No. 166, 2004, Appropriating Prior Year Use Tax Carryover Reserves for the Manufacturing Equipment Use Tax Rebate Program. RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. FINANCIAL IMPACT For taxes paid on eligible equipment by manufacturers in the year 2003, the City has received rebate requests of approximate) 00 ately $2 million in the use tax carry-over reserve, which is e des te)Py� or the rebate program. The amount of funding for the re to pro the 2005 budget exceptions process and the appropriations rep e . EXECUTIVE SUMMARY In March 1996, Council approved a temporary rebate program for use taxes paid on manufacturing equipment. The goal of the program is to maintain the local economic base by providing modest tax relief to manufacturing concerns in Fort Collins. The program has provided rebates to manufacturers for use taxes paid during the calendar years 1996 through 2001. The rebate program was discontinued for calendar year 2002 due to challenging economic conditions. Council reinstated the program in January of 2004 for a two-year period. Under the rebate program, the payments are made in arrears. This is a rebate of taxes paid in 2003 and not a tax exemption. Six companies have filed applications this year for a total of $265,000 in rebates. The source of funding f re r is sa and use tax fund, specifically the use tax carry-over reserve. BACKGROUND The Manufacturing Equipment Use Tax Rebate Program was initiated in 1996 and was intended to focus on encouraging the reinvestment by local manufacturing firms in new manufacturing equipment. Traditionally, this type of investment was made every three or four years. The standard today is that the reinvestment in equipment occurs as quickly as 15 to 18 months. The -2- Item No. 13 more frequent reinvestment could result in a relative windfall for the community since there is little added cost of impact when existing firms upgrade equipment. The program has provided the f 1ev�g �arr4� i Year Numbe of Com ntes 1�}De mount Rebated AL 1996 10 $373,600 1997 17 439,917 1998 10 385,845 1999 13 329,135 2000 14 332,780 2001 11 440,905 2002 Program not active. 2003 6 265,000 Total 81 $2,567,182 Summary The Manufacturing Equipmen seoers. atP is portant economic incentive for retaining and supporting local anufacas a erienced strong growth in use tax revenues in 2004. Our manufa u> n mai a very important element of our tax base. Staff recommends that the Council adopt the Ordinance on First Reading. In 2003, the program was renewed for 2003 and 2004 for rebates in 2004 and 2005. Staff anticipates that the program will be reviewed in 2005 and a recommendation to continue the program will be presented to the Council in the fourth quarter of 2005.