HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 09/06/2016 - SECOND READING OF ORDINANCE NO. 098, 2016, APPROPRAgenda Item 2
Item # 2 Page 1
AGENDA ITEM SUMMARY September 6, 2016
City Council
STAFF
Seonah Kendall, Economic Policy & Project Manager
SUBJECT
Second Reading of Ordinance No. 098, 2016, Appropriating Prior Year Reserves in the General Fund to
Reimburse Avago Wireless Technologies (U.S.A.) Manufacturing, Inc. For Use Tax and Business Personal
Property Taxes as Provided in Business Investment Agreements.
EXECUTIVE SUMMARY
This Ordinance, unanimously adopted on First Reading on August 16, 2016, appropriates $413,781 of prior
year reserves from the General Fund for a rebate to Avago Wireless Technologies (USA) Manufacturing, Inc.
for use tax and business personal property tax rebates under two business investment agreements. The
agreements provide business investment assistance to Avago for the expansion and retrofit of Avago’s
Building 4 for a wafer fabrication facility in 2012 and for a FBAR clean room facility in 2013. These two
projects created an additional 227 primary jobs in the City.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
1. First Reading Agenda Item Summary, August 16, 2016 (PDF)
2. Business Assistance Package Employment Verification (PDF)
3. Ordinance No. 098, 2016 (PDF)
Agenda Item 10
Item # 10 Page 1
AGENDA ITEM SUMMARY August 16, 2016
City Council
STAFF
Seonah Kendall, Economic Policy & Project Manager
SUBJECT
First Reading of Ordinance No. 098, 2016, Appropriating Prior Year Reserves in the General Fund to
Reimburse Avago Wireless Technologies (U.S.A.) Manufacturing, Inc. For Use Tax and Business Personal
Property Taxes as Provided in Business Investment Agreements.
EXECUTIVE SUMMARY
The purpose of this item is to appropriate $413,781 of prior year reserves from the General Fund for a rebate
to Avago Wireless Technologies (USA) Manufacturing, Inc. for use tax and business personal property tax
rebates under two business investment agreements. The agreements provide business investment
assistance to Avago for the expansion and retrofit of Avago’s Building 4 for a wafer fabrication facility in 2012
and for a FBAR clean room facility in 2013. These two projects created an additional 227 primary jobs in the
City.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
Agreement Summary
On July 19, 2011, City Council adopted Resolution 2011-066, approving a Business Investment Agreement,
which the City and Avago entered into on July 25, 2012 (the 2012 Agreement). The 2012 Agreement provides
business investment assistance to Avago for the expansion and retrofit of its Building 4 for a new wafer
fabrication facility. On October 16, 2012, City Council adopted Resolution 2012-096, approving a second
Business Investment Agreement with Avago, which the City and Avago entered into on June 5, 2013 (the 2013
Agreement). The 2013 Agreement provides business investment assistance to Avago for the expansion and
retrofit of its Building 4 - for a new FBAR clean room facility. The 2012 and 2013 Agreements provide that
Avago is eligible for the following rebates:
2012 Agreement (wafer fabrication facility)
Use tax on new “Eligible Manufacturing Equipment” (up to 100%) for the period beginning August 1,
2011 and ending December 31, 2013, subject to a limit on the total use tax rebate amount of
$1,725,000. A total of $1,089,734 in use tax rebates was paid to Avago in 2013 and 2014 under the
2012 Agreement. Avago is not eligible for any additional use tax rebates under the 2012 Agreement, so
no use tax rebate is now being requested under the 2012 Agreement.
Business Personal Property Tax Rebates (up to 50%) for a ten-year period for the Eligible
Manufacturing Equipment purchased for the period beginning August 1, 2011 and ending December
31, 2013. Each annual payment is limited to $81,700, or 50% of City business personal property taxes
actually paid for the Eligible Manufacturing Equipment so purchased for the wafer fabrication facility
ATTACHMENT 1
Agenda Item 10
Item # 10 Page 2
project, whichever is lower. For 2016, Avago is eligible for a business personal property tax rebate
of $27,663 under the 2012 Agreement.
2013 Agreement (FBAR clean room facility)
Use tax on new Eligible Manufacturing Equipment (up to 100%) for the period beginning October 26,
2012 and ending December 31, 2014, subject to a limit on the total use tax rebate amount of
$3,882,200. For 2016, Avago is eligible for a use tax rebate of $332,479 under the 2013 Agreement.
Business Personal Property Tax Rebate (up to 50%) for a ten-year period for the Eligible
Manufacturing Equipment purchased for the period beginning October 26, 2012 and ending December
31, 2014. A limit on each annual payment is $100,907, or 50% of City business personal property taxes
actually paid for the Eligible Manufacturing Equipment so purchased for the FBAR clean room facility,
whichever is lower. For 2016, Avago is eligible for a business personal property rebate of $53,639 under
the 2013 Agreement.
Employment Level Requirements
The two rebate categories were offered with the stipulation that Avago’s employment levels must be
maintained at no fewer than the number of employees within its Fort Collins facility as Avago employed as
of June 5, 2013 (437 employees). As of December 31, 2015, Avago had 1,404 full time equivalent employees.
Rebate schedule as agreed upon with Avago
Staff has developed a rebate schedule with Avago which is consistent with the 2012 and 2013 Agreements
whereby two rebate applications will be processed each year.
CITY FINANCIAL IMPACTS
The total rebate amount is $413,781 of prior year reserves from the General Fund.
ATTACHMENT 2
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ORDINANCE NO. 098, 2016
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PRIOR YEAR RESERVES IN THE GENERAL FUND
TO REIMBURSE AVAGO WIRELESS TECHNOLOGIES (U.S.A.)
MANUFACTURING, INC. FOR USE TAX AND BUSINESS PERSONAL
PROPERTY TAXES AS PROVIDED IN BUSINESS INVESTMENT AGREEMENTS
WHEREAS, the City and Avago Wireless Technologies (U.S.A.) Manufacturing, Inc.
(“Avago”) have previously entered into that certain “Business Investment Agreement For
Economic Development Related to Avago Technologies Building 4 Retrofit” dated July 25,
2012, (the “2012 Agreement”) and that certain “Business Investment Agreement for Economic
Development Related to Avago Technologies Building 4 Retrofit for New FBAR Clean Room
Facility” dated June 5, 2013, (the “2013 Agreement”); and
WHEREAS, the 2012 Agreement and 2013 Agreement shall hereinafter be referred to
jointly as the “Agreements”; and
WHEREAS, the 2012 Agreement was approved by City Council on July 19, 2011, in
Resolution 2011-066, and the 2013 Agreement was approved by City Council on October 16,
2012, in Resolution 2012-096; and
WHEREAS, the 2012 Agreement provides certain business investment assistance to
Avago for the retrofit of its Building 4 for a new wafer fabrication facility and the 2013
Agreement provides similar assistance to Avago for the retrofit of its Building 4 for a new FBAR
clean room facility; and
WHEREAS, the Agreements provide that Avago is eligible for reimbursement from the
City for the following paid by it to the City, subject to certain limitations: (1) Use Tax on new
Eligible Equipment, (2) Business Personal Property Tax on Eligible Manufacturing Equipment;
and
WHEREAS, under the Agreements, Avago can apply for reimbursement biannually for
both rebates; and
WHEREAS, all funds reimbursed must be appropriated by City Council as part of the
rebate process; and
WHEREAS, staff is requesting an appropriation for the full amount of $413,781 from
prior year reserves in the General Fund to reimburse Avago in accordance with the Agreements;
and
WHEREAS, Article V, Section 9, of the City Charter 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.
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NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
Section 2. That there is hereby appropriated for expenditure from prior year reserves
in the General Fund the sum of FOUR HUNDRED THIRTEEN THOUSAND SEVEN
HUNDRED EIGHTY ONE DOLLARS ($413,781) to reimburse Avago for Use Tax and
Business Personal Property Tax as required by the Agreements.
Introduced, considered favorably on first reading, and ordered published this 16th day of
August, A.D. 2016, and to be presented for final passage on the 6th day of September, A.D.
2016.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 6th day of September, A.D. 2016.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk