HomeMy WebLinkAboutMemo - Mail Packet - 4/26/2022 - Memorandum From Jennifer Poznanovic And Ginny Sawyer Re April 12, 2022 Work Session Summary - Sustainable Funding Plan
1
Finance Administration
215 N. Mason Street
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
MEMORANDUM
DATE: April 15, 2022
TO: Mayor and City Councilmembers
THROUGH: Kelly DiMartino, Interim City Manager
Travis Storin, Chief Financial Officer
FROM: Jennifer Poznanovic, Sr. Revenue Manager
Ginny Sawyer, Sr. Project Manager
RE: April 12, 2022, Work Session Summary - Sustainable Funding Plan
Attendees: All Councilmembers were present. Travis Storin, Jennifer Poznanovic and Ginny Sawyer
provided the presentation. The meeting was conducted via the Zoom platform.
Staff discussed specific identified funding needs as a first step in determining potential revenue sources.
Four specific needs were discussed: parks and recreation, transit, housing, and climate. Identified annual
shortfalls range from six to ten million per need annually. Staff also provided background information on
trends, and external forces.
Councilmembers highlighted the following:
Supportive of continued Council Finance meetings on funding mechanisms and implementation
timeline options prior to a future Council work session
The need for a better understanding of park standards and the appropriate levels of service in Fort
Collins
Suggested looking into Housing as infrastructure
Found the
informative and would like to see a similar format for Transit, Parks and Recreation
Next Steps:
Staff will continue to refine both the funding needs and the options for additional revenue
The next discussion will be at the Council Finance Committee on June 2, 2022 followed by a
work Session sometime in Q3
In response to the inquiry about the impact of the Wayfair decision, below is additional information on
the impact of marketplace facilitators and economic nexus on City sales and use tax revenue:
Marketplace and Economic Nexus Ordinance effective November 1, 2020
o Impact to November 2020 tax returns, December 2020 collections
94% from 2019 to
2021 ($9 million)
o Most online retailers are in the
fifth largest sales tax category in 2019 to the second
largest category, in 2021
Also attached is the presentation from the Marketplace & Economic
Nexus Update to Council Finance in March of 2021
Sales Tax Collections by Category:
1
Marketplace & Economic Nexus Update
March 15, 2021
Council Finance Committee
Agenda
Wayfair Background
Marketplace & Economic Nexus
Ordinance Impacts
Council Finance Committee
Discussion & Questions
2
Wayfair Decision June 2018
The Supreme Court held that an out-of-state retailer does not
need a physical presence in a state before the state can
require the retailer to collect and remit sales tax. However, a
substantial nexus is needed.
identified when a retailer had a substantial nexus with the state for
tax purposes:
Annual minimum sales of $100,000; or
A minimum of 200 separate sales transactions of
any amount
3
Colorado Department of Revenue
Implementation of Wayfair
4
Remote sellers above
the de minimis level
(same as South Dakota)
The State of Colorado
collects state sales tax
and local sales tax for
entities it collects for
Responsible for approx.
265 jurisdictions
150 statutory cities
All but two counties
24 home rule (state collected)
Colorado Department of Revenue
Implementation of Wayfair
5
State House Bill 19-1240 (July 2019)
Establishes economic nexus for purposes of retail sales
made by retailers without physical presence
Codifies destination sourcing
Establishes an exception to destination sourcing
As of October, requires marketplace facilitators to
collect and remit sales tax on behalf of marketplace
sellers
https://leg.colorado.gov/bills/hb19-1240
Marketplace Facilitator
An individual or legal entity
that operates a marketplace
May have physical nexus
Marketplace Seller
Someone who sells goods
through a marketplace
facilitator
6
Economic Nexus
Definition of engaged in business
Who is taxed and who is
compelled to collect the tax
Marketplace Facilitator
Definition of retailer
Who collects the tax
Self-Collecting Municipalities &
Implementation of Wayfair
SUTS System
Remote sellers with economic nexus can file &
pay via the SUTS System
Available for any business not just those with
economic nexus only
Businesses with physical presence would still
need to have a Fort Collins sales tax license
Model Ordinance
Colorado Municipal League
7
Fort Collins an early adopter of both Model Ordinance and SUTS System
Self-Collecting & Wayfair
What are other cities doing?
City Model Ordinance SUTS
Aurora Marketplace only
Effective August 1, 2020
Not yet participating
Golden Effective September 1, 2020 Participating
C. Springs Effective September 1, 2020 Participating
Fort Collins Effective November 1, 2020 Participating
Boulder Marketplace only
Effective November 1, 2020
Not yet participating
Lakewood Effective January 16, 2021 Participating
Denver Effective February 1, 2021 Participating
Thornton Not yet adopted Not yet participating
Source: Department or Revenue, March 5, 2021Source: Colorado Municipal League, March 8, 2021
Fort Collins & Wayfair
8
Marketplace Facilitators and Economic
Nexus Ordinance effective November 1, 2020
Impact to November tax returns, December
collections
Top Internet Retailers
Licensed in Fort Collins
9
Nationally e-commerce represents 14.0%* of total retail sales
Retailer** Ecommerce Share Licensed
Amazon 49.1% Yes
eBay 6.6% Yes
Apple 3.9% Yes
Walmart 3.7% Yes
The Home Depot 1.5% Yes
Best Buy 1.3% Yes
QVC Group 1.2% Yes
1.2% Yes
Costco 1.2% No
Wayfair 1.1% No
*U.S. Census Quarterly Retail E-Commerce Sales 4th Quarter 2020
**Top 10 US companies based on % of e-commerce sales, eMarketer, July 2018
Other licensed ecommerce
retailers:
Airbnb
Bonobos Inc
Chegg Inc
Chewy Inc
Google
IKEA
Intuit
Netflix
Nike
Overstock.com
Shipt Inc
Spotify
Zappos.com Inc
Zulily
City Sales Tax Collections
By Category
10
Marketplace & Economic
Nexus
19% in 2020 ($1.8M)
79% in Dec ($650k)
Fort Collins Sales Tax Collections by Category
Sales Tax Collections &
Miscellaneous Retailers
11
2020 Misc. Retailers Sales Tax Collections Marketplace & Economic
Nexus
Majority of online retailers in
79% in Dec ($650k)
66% in Jan ($850k)
71% in Feb ($550k)
Questions & Discussion
12