HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/15/2005 - FIRST READING OF ORDINANCE NO. 142, 2005, APPROPRI ITEM NUMBER: 16
AGENDA ITEM SUMMARY DATE: November 15, 2005
FORT COLLINS CITY COUNCIL STAFF: Chuck Seest
Jeremy Reese
SUBJECT
First Reading of Ordinance No. 142,2005,Appropriating Prior Years Use Tax Carryover Reserves
for the Temporary Manufacturing Equipment Use Tax Rebate Program.
RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
FINANCIAL IMPACT
The City received rebate requests of approximately$168,000 for taxes paid on eligible equipment
by manufacturers from the year 2004. The City has approximately$3.8 million in the use tax carry-
over reserve, which is the designated source of funding for the Temporary Manufacturing
Equipment Use Tax Rebate Program. The amount of funding for the Rebate Program will not
interfere with the 2007 budget exceptions process.
EXECUTIVE SUMMARY
In March 1996, City Council approved a Manufacturing Equipment Use Tax Rebate Program
("Rebate Program") for use tax paid on manufacturing equipment. The goal of the program was to
maintain the local economic base by providing modest tax relief to manufacturers located in Fort
Collins. The Rebate Program has provided rebates to manufacturers for the calendar years 1996
through 2001. The Rebate Program was suspended for calendar year 2002 due to economic
conditions. Council reinstated the program in January of 2004 for a two year period to coincide with
the biennial budget. Under the Rebate Program,the rebate payments are paid by the City during the
year following the year in which the use tax was remitted by the vendor. This is a rebate of taxes
paid in 2004 and not a tax exemption. Twelve companies have filed applications this year for a total
of$168,000 in rebates. The source of funding for the Rebate Program is the sales and use tax fund,
specifically the use tax carry-over reserve.
BACKGROUND
The Rebate Program was initiated in 1996, and was intended to focus on encouraging the
reinvestment made by local manufacturing firms in new manufacturing equipment. This type of
investment used to be made every three or four years. The standard today is that the reinvestment
in equipment occurs every fifteen to eighteen months. This type of continual reinvestment could
result in a relative windfall for the community since there is little added cost or impact associated
November 15, 2005 -2- Item No. 16
with existing firms.
The program has provided the following results:
Year Number of Companies Applied Amount Rebated
1996 10 373,600.00
1997 17 439,917.00
1998 10 385,845.00
1999 13 329,135.00
2000 14 332,780.00
2001 11 440,905.00
2002 Program not active.
2003 6 172,093.00
2004 12 168,000.00
Total 92 $ 2,642,275.00
SUMMARY:
The Rebate Program is an important economic incentive for retaining and supporting local
manufacturers. Our manufacturers have remained a very important element of our tax base. In
2003, the program was renewed for 2003 and 2004 for rebates to be paid in 2004 and 2005,
respectively. Staff anticipates that a recommendation to continue the program will be presented to
Council in late 2005 or early 2006.
ORDINANCE NO. 142, 2005
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PRIOR YEAR USE TAX CARRYOVER RESERVES
FOR THE TEMPORARY MANUFACTURING EQUIPMENT
USE TAX REBATE PROGRAM
WHEREAS, in March 1996, the City Council originally approved a Temporary
Manufacturing Equipment Use Tax Rebate Program (the 'Rebate Program") for use tax paid on
manufacturing equipment; and
WHEREAS,the City Council extended that Rebate 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 again extended the 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 manufacturers located in Fort Collins; and
WHEREAS, as a result of the Rebate Program, the City has received twelve applications
requesting rebates of 2004 use taxes for a total of approximately$168,000; 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 ONE HUNDRED SIXTY-EIGHT THOUSAND DOLLARS
($168,000) for the Manufacturing Equipment Use Tax Rebate Program.
Introduced, considered favorably on first reading, and ordered published this 15th day of
November, A.D. 2005, and to be presented for final passage on the 20th day of December, A.D.
2005.
Mayor
ATTEST:
City Clerk
Passed and adopted on final reading this 20th day of December, A.D. 2005.
Mayor
ATTEST:
City Clerk
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