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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 02/04/2003 - DISCUSSION OF A DRAFT RESOLUTION PLACING A ONE-PER AGENDA ITEM SUMMARY ITEM NUMBER: 34 FORT COLLINS CITY COUNCIL DATE: February 4, 2003FROM: Diane Jones SUBJECT : Discussion of a Draft Resolution Placing a One-percent Construction Tax Measure and a One- quarter Cent Sales and Use Tax Measure Before the Voters at the April 8, 2003 Municipal Election. Option 1: A new 'A cent sales and use tax commencing July 1, 2003. Option 2: A renewal of the Building Community Choices Community Enhancements 1/4 cent sales and use tax commencing January 1, 2006. RECOMMENDATION: EXECUTIVE SUMMARY: On January 28, 2003, Council provided staff with direction to prepare a resolution for its consideration to place two ballot measures before the voters at the April municipal election. The draft resolution for Council consideration includes the following: 1. Construction Tax: A construction tax would be placed on the ballot for voter approval. The 1% tax would be effective beginning October 1, 2003, and would apply to all new construction which either adds a residential unit or adds square footage to a commercial or industrial building. Affordable housing projects, as defined by the Council would be exempt. Additional elements in the ballot measure include: • The term of the tax will be 10 years, with a renewal provision in the ballot language that would require Council to ask voters to consider extending the tax after 2013. • A project list including: Harmony Road, College to Seneca College/Harmony intersection Shields/Harmony intersection Timberline Road, Prospect to Drake Timber]ine/Prospect intersection Mason Transportation Corridor Lemay Avenue, Lincoln to Conifer Right-of-Way College/Drake Intersection Taft/Elizabeth Intersection Shields/Elizabeth Intersection DATE: FeDruary ITEM NUMBER: 34 2. Sales and Use Tax: A sales and use tax would be placed on the ballot for voter approval. The '/4 cent sales and use tax would be effective beginning July 1, 2003. Additional elements in the ballot measure include: • Grocery food and prescription drugs would be exempt. • The term of the tax would be 10 years, with a renewal provision in the ballot language that would require Council to submit a ballot measure to the voters before the end of 2013 to consider extending the tax for an additional ten-year period. • The same project list, namely: Harmony Road, College to Seneca College/Harmony intersection Shields/Harmony intersection Timberline Road, Prospect to Drake Timberline/Prospect intersection Mason Transportation Corridor Lemay Avenue, Lincoln to Conifer Right-of-Way College/Drake Intersection Taft/Elizabeth Intersection Shields/Elizabeth Intersection Council discussed two options for when the 'A cent sales and use tax would take effect and asked staff to prepare two options for its consideration and discussion at the February 4 meeting. • Option 1: a new r/4 cent sales and use tax dedicated to transportation capital needs, effective on July 1, 2003. This new tax would provide a dedicated revenue stream for construction of transportation capital projects in accordance with the project list included in the ballot language and the 20 year Master Transportation Plan. • Option 2: a replacement r/4 cent sales and use tax dedicated to transportation capital needs, effective on January 1, 2006. This would extend the Building Community Choices Community Enhancements tax to provide a dedicated revenue stream for construction of transportation capital projects in accordance with the project list included in the ballot language and the 20 year Master Transportation Plan. The Community Enhancements sales and use tax is currently set to expire on December 31, 2005. e ruary 4, DATE: ITEM NUMBER: 34 Issues for Council consideration in selecting between Options A and B include the following: SALES AND USE TAX PROS CONS New 1/4 cent in 2003 Funds available 2003 • Tax increase • Construction begins • Economic conditions not necessarily 2004 favorable for tax increase Extended 1/4 cent in No increase to current 3 years until funds become available 006 tax rates Construction of many projects • Basic service delayed until at least 2007 emphasized Prolonged congestion • Competing general capital needs could not be addressed through a renewal of the BCC tax • Possible loss of opportunity to receive federal funding for Mason Transportation Corridor • Possible difficultly in securing bond for Mason project if federal funding is in question • Tax does not expire until 2005 so renewal would be well in advance of expiration—voters may rather wait and vote closer to the expiration date. • Voters see no results of the election for at least four years after the vote takes place. Staff recommends that Council place Option 1, the new sales and use tax, before voters for their approval. Construction Tax Exemption for Base Industries Council provided direction to eliminate the option of providing exemptions from the construction tax for base industries. In the future, if Council wishes to consider economic incentives for base industry, it could either provide rebates of the construction tax from the General Fund or ask the voters to approve an exemption for base industries. e ruary , DATE: ITEM NUMBER: Project List Council directed staff to modify the proposed project list in the ballot language to include only right-of-way acquisition for the Lemay Avenue, Lincoln to Conifer project. Staff recommends that Council discuss the issues presented and seek public input at the February 4 Regular Council meeting. Staff can then finalize the ballot measure(s) and present them for Council action at the February 18 meeting. • RESOLUTION 2003- OF THE COUNCIL OF THE CITY OF FORT COLLINS SUBMITTING TO THE REGISTERED ELECTORS OF THE CITY TWO PROPOSED TAXES FOR THE PURPOSE OF OBTAINING ADDITIONAL REiVENU SITTg CE A1vSPORTATION t �i WHEREAS, on August 20,2002,the City Council adopted Resolution 2002-081,adopting a strategy for long term transportation capital funding for the City; and WHEREAS,such strategy includes the imposition of a 0.25 cent sales and use tax dedicated to transportation capital,exempting groceries and prescription drugs,as well as a new,twenty-year 1% construction excise tax for the same purpose; and WHEREAS,in view of the City's pressing transportation capital improvement needs and the lack of sufficient revenues to fund those needs,the City Council believes it to be in the best interest of the City to submit to the registered electors of the City the question of whether to foregoing taxes should be imposed by the Council; and WHEREAS, the impositioq"of such taxespires voter approval under Article X, Section 20 of the Colorado Constitution,and • WHEREAS, a regular City election is scheduled to be held onApril 8, 2003. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the ballot measures shown on Exhibits"A"and"B",attached hereto and incorporated herein by this reference, shall be submitted to the registered electors of the City of Fort Collins at the regular municipal election to be held on April 8, 2003. Passed and adopted at a regular meeting of the City Council held this * day of,*,A.D. 2003. Mayor ATTEST: City Clerk • EXHIBIT"A" CITY OF FORT COLLINS BALLOT ISSUE A CITY•INITIATED MEASURE PROPOSING A 1% CONSTRUCTION TAX TO FUND CERTAIN TRANSPORTATION CAPITAL IMPROVEMENT PROJECTS SHALL CITY OF FORT COLLINS TAXES BE INCREASED BY AN ESTIMATED$ MILLION FOR THE FIRST FULL FISCAL YEAR AND BY SUCH AMOUNTS AS MAY BE GENERATED ANNUALLY THEREAFTER BY THE IMPOSITION OF A TAX ON THE ISSUANCE OF BUILDING PERMITS FOR ALL NEW CONSTRUCTION AND RECONSTRUCTION IN THE CITY AT THE RATE OF I%OF THE COST OF SUCH CONSTRUCTION OR RECONSTRUCTION,EXCEPT FOR: • RESIDENTIAL REMODELING PROJECTS THAT DO NOT CREATE ADDITIONAL DWELLING UNITS; COMMERCIAL AND INDUSTRIAL REMODELING PROJECTS THAT DO NOT ADD SQUARE FOOTAGE;AND • "AFFORDABLE HOUSING PROJECTS"AS DEFINED BY THE CITY COUNCIL, COMMENCING OCTOBER 1, 2003,AND CONTINUING THROUGH NOVEMBER 30, 2013, WITH THE QUESTION OF EXTENDING SUCH TAX FOR ANOTHER TEN(10)YEARS TO BE SUBMITTED TO THE REGISTERED ELECTORS OF THE CITY BEFORE THE END OF THE INITIAL TEN-YEAR PERIOD,AND WITH THE PROCEEDS OF SUCH NEW TAXES,TOGETHER WITH INVESTMENT EARNINGS THEREON, TO BE USED TO PAY FOR THE PLANNING, DESIGN, ACQUISITION AND CONSTRUCTION OF CERTAIN TRANSPORTATION CAPITAL IMPROVEMENT PROJECTS, TO BE DESIGNATED BY THE CITY COUNCIL NO LESS THAN ONCE EVERY FOUR (4) YEARS AS THE HIGHEST PRIORITY TRANSPORTATION PROJECTS SHOWN ON A TWENTY(20)YEAR TRANSPORTATION MASTER PLAN, WITH THE FIRST PHASE OF SUCH PLAN TO INCLUDE,BUT NOT BE LIMITED TO,THE FOLLOWING PROJECTS: HARMONY ROAD, COLLEGE TO SENECA COLLEGE/HARMONY INTERSECTION SHIELDS/HARMONY INTERSECTION TIMBERLINE ROAD,PROSPECT TO DRAKE TIMBERLINE/PROSPECT INTERSECTION MASON TRANSPORTATION CORRIDOR LEMAY AVE., LINCOLN TO CONIFER RIGHT OF WAY COLLEGE/DRAKE INTERSECTION TAFT/ELIZABETH INTERSECTION SHIELDS/ELIZABETH INTERSECTION WITH EACH SUCH PROJECT TO BE CONTINGENT UPON THE AVAILABILITY OF SUFFICIENT LOCAL, STATE AND/OR FEDERAL FUNDS TO COMPLETE THE PROJECT AND WITH THE SCOPE,COST AND SCHEDULING OF EACH PROJECT TO BE DETERMINED BY THE CITY COUNCIL;AND SHALL THE CITY OF FORT COLLINS BE AUTHORIZED TO COLLECT AND EXPEND ALL OF THE PROCEEDS OF SUCH NEW TAXES AND INVESTMENT EARNINGS THEREON, NOTWITHSTANDING ANY APPLICABLE LIMITATION ON REVENUES AND EXPENDITURES,INCLUDING THE LIMITATIONS SET FORTH IN ARTICLE X,SECTION 20 OF THE COLORADO CONSTITUTION? YES NO • February 4, 2003 • EXHIBIT`B" - OPTION 1 SALES AND USE TAX COMMENCING IN 2003 CITY OF FORT COLLINS BALLOT ISSUE A CITY-INITIATED MEASURE PROPOSING A 0.25 % INCREASE IN CITY SALES AND USE TAXES TO FUND CERTAIN TRANSPORTATION CAPITAL IMPROVEMENT PROJECTS SHALL CITY OF FORT COLLINS TAXES BE INCREASED BY AN ESTIMATED $. MILLION FOR THE FIRST FULL FISCAL YEAR AND BY SUCH AMOUNTS AS MAY BE GENERATED ANNUALLY THEREAFTER BY AN INCREASE IN THE RATE OF SALES AND USE TAXES OF 0.25 % (25¢ ON A $100 PURCHASE), ON ALL TAXABLE ITEMS EXCEPT FOOD, COMMENCING JULY 1, 2003, AND CONTINUING THROUGH JUNE 30, 2013, WITH THE QUESTION OF EXTENDING SUCH TAX FOR ANOTHER TEN(10)YEARS TO BE SUBMITTED TO THE REGISTERED ELECTORS OF THE CITY BEFORE THE END OF THE INITIAL TEN-YEAR PERIOD,AND WITH THE PROCEEDS OF SUCH NEW TAXES,TOGETHER WITH INVESTMENT EARNINGS THEREON, TO BE USED TO PAY FOR THE PLANNING, DESIGN, ACQUISITION AND CONSTRUCTION OF CERTAIN TRANSPORTATION CAPITAL IMPROVEMENT PROJECTS, TO BE DESIGNATED BY THE CITY COUNCIL NO LESS THAN ONCE EVERY FOUR(4)YEARS AS THE HIGHEST PRIORITY TRANSPORTATION PROJECTS SHOWN ON A TWENTY(20)YEAR TRANSPORTATION MASTER PLAN,WITH THE FIRST PHASE OF SUCH PLAN TO INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING PROJECTS: • HARMONY ROAD, COLLEGE TO SENECA COLLEGE/HARMONY INTERSECTION SHIELDS/HARMONY INTERSECTION TIMBERLINE ROAD, PROSPECT TO DRAKE TIMBERLINE/PROSPECT INTERSECTION MASON TRANSPORTATION CORRIDOR LEMAY AVE., LINCOLN TO CONIFER RIGHT OF WAY COLLEGE/DRAKE INTERSECTION TAFT/ELIZABETH INTERSECTION SHIELDS/ELIZABETH INTERSECTION WITH EACH SUCH PROJECT TO BE CONTINGENT UPON THE AVAILABILITY OF SUFFICIENT LOCAL, STATE AND/OR FEDERAL FUNDS TO COMPLETE THE PROJECT AND WITH THE SCOPE, COST AND SCHEDULING OF EACH PROJECT TO BE DETERMINED BY THE CITY COUNCIL; AND SHALL THE CITY OF FORT COLLINS BE AUTHORIZED TO COLLECT AND EXPEND ALL OF THE PROCEEDS OF SUCH NEW TAXES AND INVESTMENT EARNINGS THEREON, NOTWITHSTANDING ANY APPLICABLE LIMITATION ON REVENUES AND EXPENDITURES,INCLUDING THE LIMITATIONS SET FORTH IN ARTICLE X,SECTION 20 OF THE COLORADO CONSTITUTION? YES NO • February 4, 2003 . EXHIBIT"B" - OPTION 2 (Sales and Use Tax Commencing in 2006) CITY OF FORT COLLINS BALLOT ISSUE A CITY-INITIATED MEASURE PROPOSING THE EXTENSION OF AN EXISTING 0.25 % SALES AND USE TAX FOR THE PURPOSE OF FUNDING CERTAIN TRANSPORTATION CAPITAL IMPROVEMENT PROJECTS WITHOUT INCREASING THE CURRENT RATE OF SALES AND USE TAXES, SHALL THE EXISTING CITY OF FORT COLLINS 0.25 % SALES AND USE TAX FOR COMMUNITY ENHANCEMENT CAPITAL PROJECTS, WHICH IS SCHEDULED TO EXPIRE DECEMBER 31, 2005, BE EXTENDED, SO AS TO GENERATE AN ESTIMATED $ MILLION IN 2006 AND SUCH ADDITIONAL AMOUNTS AS MAY BE GENERATED ANNUALLY THEREAFTER, FOR A TEN-YEAR PERIOD BEGINNING JANUARY 1,2006 AND ENDING DECEMBER 31,2015, WITH THE QUESTION OF FURTHER EXTENDING SUCH TAX FOR ANOTHER TEN (10) YEARS TO BE SUBMITTED TO THE REGISTERED ELECTORS OF THE CITY BEFORE DECEMBER 31, 2015, AND WITH THE PROCEEDS OF SUCH EXTENDED TAX, TOGETHER WITH INVESTMENT EARNINGS THEREON,TO BE USED AFTER JANUARY 1,2006,TO PAY FOR THE PLANNING, DESIGN, ACQUISITION AND CONSTRUCTION OF CERTAIN TRANSPORTATION CAPITAL IMPROVEMENT PROJECTS, TO BE DESIGNATED BY THE CITY COUNCIL NO LESS THAN ONCE EVERY FOUR(4)YEARS AS THE HIGHEST PRIORITY TRANSPORTATION PROJECTS SHOWN ON A TWENTY (20) YEAR TRANSPORTATION MASTER PLAN, WITH THE FIRST PHASE OF SUCH PLAN TO INCLUDE, BUT NOT BE • LIMITED TO, THE FOLLOWING PROJECTS: HARMONY ROAD, COLLEGE TO SENECA COLLEGEMARMONY INTERSECTION SHIELDS/HARMONY INTERSECTION TIMBERLINE ROAD, PROSPECT TO DRAKE TIMBERLINE/PROSPECT INTERSECTION MASON TRANSPORTATION CORRIDOR LEMAY AVE., LINCOLN TO CONIFER RIGHT OF WAY COLLEGEIDRAKE INTERSECTION TAFT/ELIZABETH INTERSECTION SHIELDS/ELIZABETH INTERSECTION WITH EACH SUCH PROJECT TO BE CONTINGENT UPON THE AVAILABILITY OF SUFFICIENT LOCAL,STATE AND/OR FEDERAL FUNDS TO COMPLETE THE PROJECT AND WITH THE SCOPE, COST AND SCHEDULING OF EACH PROJECT TO BE DETERMINED BY THE CITY COUNCIL; AND SHALL THE CITY OF FORT COLLINS BE AUTHORIZED TO COLLECT AND EXPEND ALL OF THE PROCEEDS OF SUCH TAX AND INVESTMENT EARNINGS THEREON,NOTWITHSTANDING ANY APPLICABLE LIMITATION ON REVENUES AND EXPENDITURES,INCLUDING THE LIMITATIONS SET FORTH IN ARTICLE X,SECTION 20 OF THE COLORADO CONSTITUTION? YES NO February 4, 2003