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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 11/17/2015 - SECOND READING OF ORDINANCE NO. 136, 2015, APPROPRAgenda Item 3 Item # 3 Page 1 AGENDA ITEM SUMMARY November 17, 2015 City Council STAFF Seonah Kendall, Economic Policy & Project Manager SUBJECT Second Reading Ordinance No. 136, 2015, Appropriating Prior Year Reserves in the General Fund to Reimburse Custom Blending, Inc. For Use Taxes and Business Personal Property Taxes as Provided in the Business Investment Agreement. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on November 3, 2015, appropriates $13,130 of prior year reserves in the General Fund for a rebate to Custom Blending for use tax and business personal property tax rebates under an agreement approved by City Council on August 20, 2013 (Resolution 2013-073). The Agreement provides business investment assistance for the expansion of Custom Blending’s manufacturing facility and investment in additional manufacturing equipment. Custom Blending has retained or created 63 primary jobs in the city. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, November 3, 2015 (PDF) 2. Ordinance No. 136, 2015 (PDF) Agenda Item 9 Item # 9 Page 1 AGENDA ITEM SUMMARY November 3, 2015 City Council STAFF Seonah Kendall, Economic Policy & Project Manager SUBJECT First Reading Ordinance No. 136, 2015, Appropriating Prior Year Reserves in the General Fund to Reimburse Custom Blending, Inc. For Use Taxes and Business Personal Property Taxes as Provided in the Business Investment Agreement. EXECUTIVE SUMMARY The purpose of this item is to appropriate $13,130 of prior year reserves in the General Fund for a rebate to Custom Blending for use tax and business personal property tax rebates under an agreement approved by City Council on August 20, 2013 (Resolution 2013-073). The Agreement provides business investment assistance for the expansion of Custom Blending’s manufacturing facility and investment in additional manufacturing equipment. Custom Blending has retained or created 63 primary jobs in the city. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION Agreement Summary On August 20, 2013, City Council adopted Resolution 2013-073, approving an Economic Development Project Agreement between the City and Custom Blending Inc. The Agreement provides that Custom Blending is eligible for a rebate in two areas:  Use tax on new eligible manufacturing equipment (up to 75%) for the period beginning August 20, 2013 and ending December 31, 2014, subject to a limit on the total use tax rebate amount for the project of thirty-one thousand, one hundred thirty dollars ($31,130). The use tax rebate will be paid over a period of three (3) years, with the initial installment of thirty-three and one-third percent (33.3%) or $10,376.  Business Personal Property Tax Rebate (up to 50%) for a seven-year period for the eligible manufacturing equipment purchased for the period beginning August 20, 2013 and ending December 31, 2014. A limit on each annual payment is two thousand, seven hundred fifty-four ($2,754). Employment Level Requirements The two rebate categories were offered with the stipulation that Custom Blending’s employment levels must be maintained at the same number of employees within its Fort Collins facility as Custom Blending employed as of June 30, 2013 (35 employees), with the intent of creating approximately 16 net new jobs as of December 31, 2015. Currently, Custom Blending has sixty-three (63) employees. ATTACHMENT 1 Agenda Item 9 Item # 9 Page 2 Rebate Schedule as agreed upon with Custom Blending Staff has developed a rebate schedule with Custom Blending which is consistent with the Agreement whereby two rebate applications will be processed each year. CITY FINANCIAL IMPACTS The total rebate amount for 2015 is $13,130, of which $10,376 is use tax and $2,754 is business personal property tax. ORDINANCE NO. 136, 2015 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROPRIATING PRIOR YEAR RESERVES IN THE GENERAL FUND TO REIMBURSE CUSTOM BLENDING, INC. FOR USE TAXES AND BUSINESS PERSONAL PROPERTY TAXES AS PROVIDED IN THE BUSINESS INVESTMENT AGREEMENT WHEREAS, the City and Custom Blending, Inc. (“Custom Blending”) entered into that certain “Agreement with Custom Blending, Inc.” dated August 20, 2013 (the “Agreement”), which Agreement provides business investment assistance for the expansion of Custom Blending’s headquarters in Fort Collins; and WHEREAS, the Agreement specifies that Custom Blending is eligible for reimbursement from the City for the following paid by it to the City: (1) Use Tax on new Eligible Equipment, (2) Business Personal Property Tax on Eligible Manufacturing Equipment; and WHEREAS, under the Agreement, Custom Blending can apply for reimbursement biannually for both; 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 Resolution No. 2013-073, on August 20, 2013; and WHEREAS, the current reimbursement due to Custom Blending for the period of August 20, 2013, through December 31, 2014, is $13,130 for eligible Use Tax and Business Personal Property Tax; and WHEREAS, staff has determined that the requested amount of $13,130 is available from prior year reserves in the General Fund to reimburse Custom Blending in accordance with the Agreement; 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 that there is hereby appropriated for expenditure from prior year reserves in the General Fund the sum of THIRTEEN THOUSAND ONE HUNDRED THIRTY DOLLARS ($13,130) to reimburse Custom Blending for Use Tax and Business Personal Property Tax as required by the Agreement. Introduced, considered favorably on first reading, and ordered published this 3rd day of November, A.D. 2015, and to be presented for final passage on the 17th day of November, A.D. 2015. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 17th day of November, A.D. 2015. __________________________________ Mayor ATTEST: _______________________________ City Clerk