HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/06/2015 - FIRST READING OF ORDINANCE NO. 113, 2015, APPROPRIAgenda Item 15
Item # 15 Page 1
AGENDA ITEM SUMMARY October 6, 2015
City Council
STAFF
Peggy Streeter, Senior Sales Tax Auditor
Mike Beckstead, Chief Financial Officer
SUBJECT
First Reading of Ordinance No. 113, 2015, Appropriating Prior Year Reserves in the General, Capital
Expansion and Street Oversizing Funds to Reimburse Woodward, Inc. For Development Fees and Capital
Improvement Expansion Fees.
EXECUTIVE SUMMARY
The purpose of this item is to appropriate $180,994 of prior year reserves for a rebate to Woodward for fees
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 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 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 earned rebate
until set employment levels have been met, but will pay Woodward 60% of the earned rebates on the
schedule agreed to by the City and Woodward
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.
Agenda Item 15
Item # 15 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 fees paid from January through June 2015 and includes development review fees
and capital improvement expansion fees.
Rebate Payment
Development
Fees
100%
CIE Fees
50%
Utility PIF
50%
Not Eligible
for Rebate
Total
Total Fees Collected
$132,468 $201,572 $136,808 $62,288 $533,136
Rebate Owed
132,468 100,786 68,404 N/A 301,658
Rebate Eligible for
Payment - 60% 79,480 60,472 41,042 N/A 180,994
Rebate Holdback - 40%
52,988 40,314 27,362 N/A 120,664
Backfill
0 0 68,404 N/A 68,404
For the application period Woodward earned a total of $301,658 in rebates. Of that amount, 40% is held back
pending the aforementioned employee level requirements. The remaining 60% which totals $180,994 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.
In May 2015, staff proposed two options to Council with regard to backfilling the CIE Fees. Council approved
the CIE Fees be paid out of the corresponding Fund rather than being backfilled by the General Fund. Based
on that decision, payment of the CIE fees is proposed to be paid as follows:
Agenda Item 15
Item # 15 Page 3
CIE Fund Fees Paid Rebate Earned
Rebate
Owed 60%
General Government
$32,470 $16,235 $9,741
Police
9,344 4,672 2,803
Fire
16,586 8,293 4,976
Street Oversizing
143,172 71,586 42,952
Total
201,572 100,786 60,472
The development review fees and Utility PIF's will be paid from General Fund Reserves.
CITY FINANCIAL IMPACTS
The total rebate amount is $180,994.
The amount of $120,522 will come from prior year General Fund Reserves and the following amounts will
come from the Capital Improvement Expansion Funds:
General Government: $9,741
Police: $2,803
Fire: $4,976
Street Oversizing: $42,952
ATTACHMENTS
1. Powerpoint presentation (PDF)
Woodward Economic Rebate
10/6/15
ATTACHMENT 1
Woodward Rebate Summary
2
• Rebates Allowed Per the Agreement
• Use Tax on Construction Materials and Eligible Equipment (80%)
• Development Fees (100%)
• Capital Improvement Expansion Fees (CIE) & Utility PIFs (50%)
• Rebates Schedule as agreed upon with Woodward
• 2 applications per year
• Application 1 – Covers January - June
• Includes Development Review and Capital Improvement Expansion
Fees (CIE), and Utility PIF
• Application 2 Includes:
• June-December – Development Review, CIE Fees, Utility PIFs
• January-December – Use Tax
Estimated Current Rebate Due
For Period January 1, 2015 – June 30, 2015
3
Total Due: $180,994
Rebate Payment
Development
Fees
100%
CIE Fees
50%
Utility PIF
50%
Use Tax
80%*
Not
Eligible for
Rebate
Total
Total Fees Collected $132 $202 $137 $0 $62 $533
Rebate Owed 132 101 68 0 N/A 301
Rebate Eligible for
Payment - 60%
79 60 41 0 N/A 181
Rebate Holdback- 40% 53 41 27 0 N/A 120
Backfill** $0 $0 $68 $0 N/A $68
*Use Tax Rebate only paid once per year
** Backfill based on full rebate owed
($ 000s)
General Fund Backfill
4
• At the time the Woodward agreement was approved, the
structure was to “backfill” CIE fees from the General Fund
• After further consideration, the approach to backfill CIE fees has
been revisited with City Attorney’s Office
• A new option identified - Fund the CIE rebates out of the capital
improvement expansion funds instead of the general fund
• All other rebates to be paid from the General Fund
• Council Direction in May 2015 was to use CIE funds for rebate
Impact of Backfill to CIE Funds
5
CIE Fund
2014
Yearend
Balance
CIE Fees
Applicant Paid
Project to Date
Previous
Rebate
Earned
2015 Rebate
Earned
1/1-6/30/15
Total as % of
2014
Yearend
General
Government
$7,562 $115 $42 $16 0.8%
Police 927 33 12 5 1.8%
Fire 847 60 21 8 3.4%
Street
Oversizing
14,505 723 290 72 2.5%
Total $365 $101
Total impact: $466K
($ 000s)
Additional Considerations
6
• Rebate of CIE’s was/is an exception to normal practice
• Backfill decision is specific to the Woodward rebate and NOT a
long term policy decision on how other rebates may be addressed
in the future
• No impact to near term projects by not using General Fund backfill
• Police and Fire funds primarily used for debt service currently
• Street oversizing fees have long term funding requirements that exceed
revenue estimates
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ORDINANCE NO. 113, 2015
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PRIOR YEAR RESERVES IN THE GENERAL, CAPITAL EXPANSION
AND STREET OVERSIZING FUNDS TO REIMBURSE WOODWARD, INC. FOR
DEVELOPMENT FEES AND CAPITAL IMPROVEMENT EXPANSION 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 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 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,
2015, through June 30, 2015, is $180,994 for eligible fees; and
WHEREAS, in accordance with the terms of the Agreement, staff is requesting
appropriation of the full amount to reimburse Woodward from prior year reserves from the
following funds:
General Fund: $120,522
Capital Expansion Fund
General Government $9,741
Police $2,803
Fire $4,976
Capital Expansion Fund: $17,520
Street Oversizing Fund: $42,952
Total Reimbursement Request: $180,994
- 2 -
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 there is hereby appropriated for expenditure from prior year reserves
in the General Fund the sum of ONE HUNDRED TWENTY THOUSAND FIVE HUNDRED
TWENTY-TWO DOLLARS ($120,522) to reimburse Woodward for Development Fees and
Capital Improvement Expansion Fees as required by the Agreement.
Section 2. That there is hereby appropriated for expenditure from prior year reserves
in the Capital Expansion Fund the sum of SEVENTEEN THOUSAND FIVE HUNDRED
TWENTY DOLLARS ($17,520) to reimburse Woodward for Development Fees and Capital
Improvement Expansion Fees as required by the Agreement.
Section 3. That there is hereby appropriated for expenditure from prior year reserves
in the Street Oversizing Fund the sum of FORTY TWO THOUSAND NINE HUNDRED
FIFTY-TWO DOLLARS ($42,952) to reimburse Woodward for Street Oversizing Capital
Improvement Expansion Fees as required by the Agreement.
Section 4. That it is the City Council’s intent that this Ordinance and the
appropriations herein shall and do hereby supersede and control over any provisions to the
contrary in Chapters 7.5 and 8 of the City Code.
Introduced, considered favorably on first reading, and ordered published this 6th day of
October, A.D. 2015, and to be presented for final passage on the 20th day of October, A.D. 2015.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
- 3 -
Passed and adopted on final reading on the 20th day of October, A.D. 2015.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk