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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 12/19/2017 - SECOND READING OF ORDINANCE NO. 166, 2017, APPROPRAgenda Item 2 Item # 2 Page 1 AGENDA ITEM SUMMARY December 19, 2017 City Council STAFF Peggy Streeter, Senior Sales Tax Auditor Mike Beckstead, Chief Financial Officer John Duval, Legal SUBJECT Second Reading of Ordinance No. 166, 2017, 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 December 5, 2017, appropriates $42,614 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. The Ordinance has been revised between First and Second Reading to add a new recital. The new recital has been added to further clarify the Council’s findings for the public purposes of this appropriation. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, December 5, 2017 (PDF) Agenda Item 7 Item # 7 Page 1 AGENDA ITEM SUMMARY December 5, 2017 City Council STAFF Peggy Streeter, Senior Sales Tax Auditor Mike Beckstead, Chief Financial Officer John Duval, Legal SUBJECT First Reading of Ordinance No. 166, 2017, 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 $42,614 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 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 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 7 Item # 7 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 both use tax and development fees paid from January through December 2016. The rebate amount of development fees for the period January 1 through June 30, 2016, was minimal and is being included with the request for fees from July 1, through December 31, 2016. For the application period, Woodward earned a total of $71,023 in rebates. Of that amount, 40% is held back pending the aforementioned employee level requirements. The remaining 60% which totals $42,614 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 current number of employees within the City is approximately 915. The number is anticipated to increase upon completion of the Drake/Lemay renovation. 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 $42,614. The full amount will come from prior year General Fund Reserves and will be appropriated for the purpose of remitting the rebate to Woodward. Year to Date 2016 Development Fees 100% CIE Fees 50% Utility PIF 50% Use Tax 80% Not Eligible for Rebate Total Total Fees Collected $3,884 $0 $0 $83,924 $1,175 $88,983 Rebate Owed 3,884 0 0 67,139 N/A 71,023 Rebate Eligible for Payment ‐ 60% 2,330 0 0 40,284 N/A 42,614 Rebate Holdback ‐ 40% 1,553 0 0 26,856 N/A 28,409 Backfill 0 0 0 17,511 N/A 17,511 -1- ORDINANCE NO. 166, 2017 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, 2016, through December 31, 2016, for Development Fee and Use Tax eligible reimbursements is $42,614; and WHEREAS, in accordance with the terms of the Agreement, staff is requesting appropriation of $42,614 from General Fund prior year reserves for these reimbursements to Woodward; 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; and WHEREAS, City staff have determined that the appropriations as described herein are available and previously unappropriated in the General Fund; and WHEREAS, as the Council found in Ordinance No. 055, 2013, approving the Agreement, and hereby reaffirms, the Agreement was and is necessary, convenient, and in furtherance of the City’s purposes and in the best interests of the inhabitants of the City, and will -2- serve the important public purposes of maintaining and increasing employment in the City, stabilizing and improving the long term tax base of the City, and providing additional economic health benefits to the City; and WHEREAS, the Agreement has also resulted in the construction of significant public improvements related to the Woodward project. 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 FORTY-TWO THOUSAND SIX HUNDRED FOURTEEN DOLLARS ($42,614) to reimburse Woodward for Development Fees and Use Tax as required by the Agreement. Introduced, considered favorably on first reading, and ordered published this 5th day of December, A.D. 2017, and to be presented for final passage on the 19th day of December, A.D. 2017. __________________________________ Mayor Pro Tem ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 19th day of December, A.D. 2017. __________________________________ Mayor ATTEST: _______________________________ City Clerk