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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 11/18/2014 - SECOND READING OF ORDINANCE NO. 158, 2014, APPROPRAgenda Item 5 Item # 5 Page 1 AGENDA ITEM SUMMARY November 18, 2014 City Council STAFF Jessica Ping-Small, Revenue and Project Manager SUBJECT Second Reading of Ordinance No. 158, 2014, Appropriating Unanticipated Revenue and Prior Year Reserves in the General Fund to Reimburse Woodward, Inc. for Development Fees. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on November 4, 2014, appropriate $88,344 of current year General Fund Revenue and prior year General Fund Reserves for a rebate to Woodward of development fees as approved by City Council on April 2, 2013 (Ordinance No. 055, 2013). Ordinance No. 055, 2013 approved an agreement between the City, Downtown Development Authority (DDA), and Woodward, Inc. 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. The City’s assistance includes a rebate of Use Tax, Development Fees, and Capital Improvement Fees. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, November 4, 2014 (w/o attachments) (PDF) 2. Ordinance No. 158, 2014 (PDF) Agenda Item 8 Item # 8 Page 1 AGENDA ITEM SUMMARY November 4, 2014 City Council STAFF Jessica Ping-Small, Revenue and Project Manager SUBJECT SReading of Ordinance No. 158, 2014, Appropriating Unanticipated Revenue and Prior Year Reserves in the General Fund to Reimburse Woodward, Inc. for Development Fees. EXECUTIVE SUMMARY The purpose of this item is to appropriate $88,344 of current year General Fund Revenue and prior year General Fund Reserves for a rebate to Woodward of development fees as approved by City Council on April 2, 2013 (Ordinance No. 055, 2013). Ordinance No. 055, 2013 approved an agreement between the City, Downtown Development Authority (DDA), and Woodward, Inc. 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. The City’s assistance includes a rebate of Use Tax, Development Fees, and Capital Improvement Fees. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION Agreement Summary On April 2, 2013, City Council adopted Ordinance 055, 2013 approving an Economic Development Project Agreement (“Agreement”) between the City, the DDA, 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 Fees (up to 50%). Use Tax Woodward plans to invest approximately $169.1 million in new buildings and $50.5 million in new equipment as part of the Project. As outlined in the Agreement, City Council will rebate 80 percent of the use tax collected in connection with these investments. The rebate will include approximately $2.6 million of the total $3.3 million due on construction materials and $1.2 million of the total $1.4 million due on eligible equipment. The use tax rebate on both construction materials and eligible equipment go beyond the general fund portion of the use tax rate. As a result, the general fund must bear the additional cost of the rebate to avoid impacting revenue associated with the dedicated use tax (e.g., Open Space, Street Maintenance, Building on Basics, and Keep Fort Collins Great). This additional cost will be backfilled from the revenue generated by indirect and induced economic impacts to the community. ATTACHMENT 1 Agenda Item 8 Item # 8 Page 2 Development Fees As stated in the agreement, City Council will rebate 100 percent of the applicable Development Review Fees (e.g., Plan Check, and Base Building Permit Fee). The final rebate amount will be approximately $300,000. Capital Improvement Fees As part of the Agreement, City Council will rebate 50 percent of the applicable Capital Expansion, Street Oversizing and Utility Plant Investment fees due for the Project. The rebate will include approximately $3.0 million of the total estimated $5.4 million due. These fees are collected to offset the cost each new project imposes on the capital infrastructure within the City. As a result, the cost of the rebate must be backfilled from the revenue generated by indirect and induced economic impacts to the community. The backfilled revenue will make each capital fund whole. 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.  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. Rebate Summary Rebate Schedule as agreed upon with Woodward Two applications per year  Application 1 includes: o January through June Development Review and Capital Improvement Fees  Application 2 includes: o June through December Development Review and Capital Improvement Fees o January through December Use Tax. Key Stipulations  Of the rebate amounts eligible, 40% will be withheld in escrow dependent on Woodward reaching the 1,400 employee mark by December 31, 2018.  Use tax and Capital Expansion fees include a backfill requirement by the General Fund which will be accounted for at the time of appropriation. o 100% of the Capital Improvement Fee rebate will be backfilled by the General Fund o 100% of the dedicated taxes will be backfilled by the General Fund • .25% Natural Areas • .25% Streets and Transportation Agenda Item 8 Item # 8 Page 3 • .25% Building on Basics Projects • .85% Keep Fort Collins Great o Rebate funds will be appropriated by City Council biannually as part of the rebate process. Current Rebate Due for Period January 1, 2013 - June 30, 2014 Development Fee rebate due of $88,343.19. *Use Tax Rebate only paid once per year. The rebate amount of $88,343.19 includes a portion of Development Review Fees that were paid in 2013 as the project was in its initial phase. Woodward agreed to roll the 2013 fees paid into the first application for 2014. Moving forward, the rebate will be consistent per the agreed upon application schedule. The Council Finance Committee reviewed the appropriation ordinance at their October 20th, 2014 meeting with no suggested changes. FINANCIAL / ECONOMIC IMPACTS The total rebate amount is $88,344, of which $52,106 will come from unanticipated General Fund Revenue and $36,238 of prior year General Fund Reserves, will be appropriated for the purpose of remitting the rebate to Woodward. ENVIRONMENTAL IMPACTS The 101.5 acre project included a restoration of a 31-acre river buffer natural area which was transferred to the City upon completion. In addition, a 10-foot wide Poudre Trail was reconstructed through the new natural area. - 1 - ORDINANCE NO. 158, 2014 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROPRIATING UNANTICIPATED REVENUE AND PRIOR YEAR RESERVES IN THE GENERAL FUND TO REIMBURSE WOODWARD, INC. FOR DEVELOPMENT FEES 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 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 Tax on Construction Materials and Eligible Equipment, (2) Development Fees, and (3) Capital Improvement Fees; 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 reimbursement due to Woodward for the period of January 1, 2013, through June, 30, 2014, is $88,344 for eligible Development Fees; and WHEREAS, staff is requesting appropriation of $52,106 of unanticipated revenue and $36,238 from prior year reserves in the General Fund to reimburse Woodward in accordance with the Agreement; and WHEREAS, Article V, Section 9, of the City Charter permits the City Council to make supplemental appropriations by ordinance at any time during the fiscal year, provided that the total amount of such supplemental appropriations, in combination with all previous appropriations for that fiscal year, do not exceed the current estimate of actual and anticipated revenues to be received during the fiscal year; 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: - 2 - Section 1. That there is hereby appropriated for expenditure from unanticipated revenue in the General Fund the sum of FIFTY TWO THOUSAND ONE HUNDRED SIX DOLLARS ($52,106) to reimburse Woodward for Development Fees as required by the Agreement. Section 2. That there is hereby appropriated for expenditure from prior year reserves in the General Fund the sum of THIRTY SIX THOUSAND TWO HUNDRED THIRTY EIGHT DOLLARS ($36,238) to reimburse Woodward for Development Fees as required by the Agreement. Introduced, considered favorably on first reading, and ordered published this 4th day of November, A.D. 2014, and to be presented for final passage on the 18th day of November, A.D. 2014. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 18th day of November, A.D. 2014. __________________________________ Mayor ATTEST: _______________________________ City Clerk