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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 09/06/2016 - SECOND READING OF ORDINANCE NO. 099, 2016, APPROPRAgenda Item 3 Item # 3 Page 1 AGENDA ITEM SUMMARY September 6, 2016 City Council STAFF Peggy Streeter, Senior Sales Tax Auditor Mike Beckstead, Chief Financial Officer SUBJECT Second Reading of Ordinance No. 099, 2016, Appropriating Prior Year Reserves in the General Fund to Reimburse Woodward, Inc. for Development Fees and Use Tax. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on August 16, 2016, appropriates $151,316 of prior year reserves for a rebate to Woodward, Inc. for use tax under an agreement that City Council approved on April 2, 2013 (Ordinance No. 055, 2013). The agreement provides Business Investment Assistance for the relocation of Woodward’s headquarters, as well as an expansion of its manufacturing and office facilities to a new location at the corner of Lincoln Avenue and Lemay Avenue. The project will retain or create between 1,400 and 1,700 primary jobs in the City. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. BACKGROUND /DISCUSSION On First Reading, Council requested information concerning business assistance package employment verification. Woodward’s Business Assistance Package stipulates that the employment FTE in Fort Collins reach 1,400 by December 31, 2018. The City has retained 40% of use tax and development fee rebates and will not release withheld amounts until the employment number has been met (no later than December 31, 2020). There is no stipulation on an employment growth plan before YE 2018 within the agreement. Before the release of the 40% use tax and development fee rebates, the Economic Health Office will work with the City’s Sales Tax Office and Woodward to verify employment figures have reached the stipulated employment FTEs. Thus, staff recommends moving forward with the rebates. ATTACHMENTS 1. First Reading Agenda Item Summary, August 16, 2016 (PDF) 2. Ordinance No. 099, 2016 (PDF) Agenda Item 11 Item # 11 Page 1 AGENDA ITEM SUMMARY August 16, 2016 City Council STAFF Peggy Streeter, Senior Sales Tax Auditor Mike Beckstead, Chief Financial Officer SUBJECT First Reading of Ordinance No. 099, 2016, Appropriating Prior Year Reserves in the General Fund to Reimburse Woodward, Inc. for Development Fees and Use Tax. EXECUTIVE SUMMARY The purpose of this item is to appropriate $151,316 of prior year reserves for a rebate to Woodward, Inc. for use tax under an agreement that City Council approved on April 2, 2013 (Ordinance No. 055, 2013). The agreement provides Business Investment Assistance for the relocation of Woodward’s headquarters, as well as an expansion of its manufacturing and office facilities to a new location at the corner of Lincoln Avenue and Lemay Avenue. The project will retain or create between 1,400 and 1,700 primary jobs in the City. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION Agreement Summary On April 2, 2013, City Council adopted Ordinance No. 055, 2013 approving an Economic Development Project Agreement (Agreement) between the City, the Downtown Development Authority, and Woodward, Inc. The Agreement specifies Woodward is eligible for a rebate in three areas:  Use Tax on Construction Materials and Eligible Equipment (up to 80%)  Development Fees (100%) Capital Improvement Expansion Fees and Utility PIF Fees (up to 50%). Employment Level Requirements The three rebate categories were offered with the stipulation that employment levels must reach or exceed 1,400 employees within the City by December 31, 2018.  If a rebate request is made prior to December 31, 2018, the City will withhold 40% of the rebate until set employment levels have been met. The remaining 60% of the earned rebates will be paid on the schedule agreed upon by Woodward (see below).  If the target employment level is reached after December 31, 2018 but before December 31, 2020, Woodward will receive the retained 40 percent less $500,000 (combined between use tax and development fee rebates). Woodward will not be entitled to the remaining 40 percent if the target level is not reached by December 31, 2020. ATTACHMENT 1 Agenda Item 11 Item # 11 Page 2 Rebate Schedule as agreed upon with Woodward Staff has developed a rebate schedule with Woodward which is consistent with the Agreement whereby two rebate applications will be processed each year. The two applications per year consist of the following components:  Application 1 includes: o January through June: Development Review and Capital Improvement Fees  Application 2 includes: o July through December: Development Review and Capital Improvement Fees o January through December: Use Tax Rebate funds will be appropriated by City Council biannually as part of the rebate process. This rebate application is for use tax paid from January through December 2015, and fees paid from July through December 2015 and include development review fees and capital improvement expansion fees. For the application period, Woodward earned a total of $252,192 in rebates. Of that amount, 40% is held back pending the aforementioned employee level requirements. The remaining 60%, which totals $151,316, is requested for rebate at this time. The 40% that is held back has been assigned within the General Fund in recognition of the potential future obligation. The use tax rebate includes a General Fund backfill requirement of the dedicated taxes:  .25% Natural Areas  .25% Streets and Transportation  .25% Building on Basics Projects  .85% Keep Fort Collins Great CITY FINANCIAL IMPACTS The total rebate amount is $151,316. The full amount will come from prior year General Fund Reserves and will be appropriated for the purpose of remitting the rebate to Woodward. -1- ORDINANCE NO. 099, 2016 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROPRIATING PRIOR YEAR RESERVES IN THE GENERAL FUND TO REIMBURSE WOODWARD, INC. FOR DEVELOPMENT FEES AND USE TAX WHEREAS, the City, the Fort Collins Downtown Development Authority, and Woodward, Inc. (“Woodward”) entered into that certain “Agreement with Woodward, Inc.” dated April 16, 2013, (the “Agreement”), which Agreement provides business investment assistance for the relocation of Woodward’s headquarters and the expansion of its manufacturing and office facilities in Fort Collins; and WHEREAS, the Agreement specifies that Woodward is eligible for reimbursement from the City for the following paid by it to the City: (1) “Use Taxes” on “Construction Materials” and “Eligible Equipment”, (2) “Development Fees”, and (3) “Capital Improvement Fees” as these terms are defined in the Agreement; and WHEREAS, under the Agreement, Woodward can apply for reimbursement biannually for Development Review and Capital Improvement Fees and once a year for the Use Tax rebate; and WHEREAS, all funds reimbursed must be appropriated by Council as part of the rebate process; and WHEREAS, the Agreement was approved by City Council pursuant to Ordinance No. 055, 2013, on April 2, 2013; and WHEREAS, the current total amount due to Woodward for the period of January 1, 2015, through December, 31, 2015, for eligible reimbursements is $151,316; and WHEREAS, in accordance with the terms of the Agreement, staff is requesting appropriation of $151,316 from prior year reserves from the General Fund to so reimburse Woodward; and WHEREAS, Article V, Section 9, of the City Charter also 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 as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. -2- Section 2. That there is hereby appropriated for expenditure from prior year reserves in the General Fund the sum of ONE HUNDRED FIFTY ONE THOUSAND THREE HUNDRED SIXTEEN DOLLARS ($151,316) to reimburse Woodward for Use Tax as required by the Agreement. 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