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HomeMy WebLinkAbout029 - 03/05/1996 - ESTABLISHING A TEMPORARY MANUFACTURING EQUIPMENT USE TAX REBATE PROGRAM FOR FORT COLLINS MANUFACTURE ORDINANCE NO. 29, 1996 OF THE COUNCIL OF THE CITY OF FORT COLLINS ESTABLISHING A TEMPORARY MANUFACTURING EQUIPMENT USE TAX REBATE PROGRAM FOR FORT COLLINS MANUFACTURERS WHEREAS, it is the intent of the City Council to preserve and stabilize the local economic base by encouraging local business currently located in Fort Collins to remain and flourish here; and WHEREAS,evidence supports the proposition that manufacturing enterprises in particular contribute to the health and stability of the local economy; and WHEREAS,facilitation of retooling and operational enhancements necessary for Fort Collins manufacturers to remain competitive in the marketplace will help to preserve and retain manufacturing operations now present and contributing to the Fort Collins economy; and WHEREAS, the imposition of use tax on purchases of manufacturing equipment for retooling and enhancement of manufacturing enterprises increases the costs for businesses and makes it more difficult for such businesses to remain in Fort Collins; and WHEREAS, the City Council has determined that a temporary program through which Fort Collins manufacturers may apply for end-of-the-year rebates based upon use taxes paid on manufacturing equipment during that year (the "Rebate Program") would result in increased retention of local manufacturing enterprises and related employment and other economic benefits; and WHEREAS, the retention of manufacturers with operations fully established in Fort Collins is of particular benefit to the City, due to the negative impacts likely to result from the loss of such businesses, and further because the most significant negative impacts of the growth related to such businesses have already been absorbed by the community; and WHEREAS,the City Council has determined that the Rebate Program should be available only to manufacturing operations that have existed in Fort Collins throughout the prior three years, in order to accomplish the objective of retaining established manufacturers, the impacts of which have already largely been absorbed in the community; and WHEREAS, it is the intent of the City Council that the Rebate Program be designed primarily to encourage retention of existing jobs; and WHEREAS, in addition, the retention and attraction of smaller-scale manufacturers is of particular benefit to the City,due to the quality of the job opportunities presented by such employers, and further because the impacts of the operation and expansion of such enterprises are easier for the community to absorb; and WHEREAS,consequently, the City Council has determined that the Rebate Program should be structured so as to provide a proportionally greater rebate to smaller manufacturers, with a larger percentage rebate available on smaller volumes of manufacturing equipment purchases; and WHEREAS, it is also the intent of the City Council that all local manufacturers, including larger manufacturers, which undertake one-time manufacturing equipment purchases necessary for major retooling of their operations should be encouraged to make the necessary investment to stay in Fort Collins, rather than relocating their operations; and WHEREAS, the City Council has determined that also offering a certain level of rebate for use taxes paid on very large manufacturing equipment purchases may encourage manufacturers to make such investments in Fort Collins rather than elsewhere; and WHEREAS, it is the intent of them City Council that the cost of providing the desired incentives for Fort Collins manufacturers be balanced against the competing demands for expenditures on other City services; and WHEREAS,the City Council believes that the Rebate Program to be established under the provisions of this Ordinance meets the foregoing policy objectives and strikes an appropriate balance among the various policy considerations related to such programs; and WHEREAS, it is the City Council's desire to evaluate the success and cost of the Rebate Program before establishing a permanent, ongoing program. NOW, THEREFORE , BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby adopts the foregoing recitals as findings of fact; determines that the City of Fort Collins Manufacturing Equipment Use Tax Rebate Program (the "Rebate Program"), a copy of which is attached hereto and incorporated herein by this reference as Exhibit "A," is in the best interests of the citizens of the City; and establishes the same for the calendar years 1996 or 1997 or until such earlier date as the Rebate Program may be terminated by the Council. Section 2. That the Rebate Program shall be implemented and administered by the City's Financial Officer until no later than two (2) years from the effective date of this Ordinance. Section 3. That the Financial Officer shall determine the size of rebate to be paid to each applicant for the same pursuant to the Rebate Program, based upon the rebate schedule and related requirements set forth in the Rebate Program Description. 2 Section 4. That all rebate payments pursuant to the Rebate Program shall be determined and paid by the City prior to the expiration date of the Program, and a report describing the Program shall be prepared by the Financial Officer and submitted to the Council for its review no later than June 1, 1998. Section 5. That the City Manager shall monitor the Rebate Program and its projected costs and impacts on a monthly basis throughout the term of the Program, and if the City Manager determines from that review, or from any other information, that the Rebate Program poses a financial,environmental or other threat to the well-being of the City, the City Manager shall report such determination to the Council with recommendations for changing or eliminating the Program as necessary to address the concerns presented. Section 6. That the Rebate Program may be discontinued, at the discretion of the Council, upon a finding that the costs of the Program are contrary to the financial well-being of the City. Section 7. That the provisions of this Ordinance shall not be construed as establishing any right or entitlement to a rebate of any taxes on the part of any applicant and that the actual rebate of use taxes under the Rebate Program shall be entirely discretionary with the City Council and shall be subject to the appropriation of funds for such purpose. Introduced, considered favorably on first reading, and order blished this 20t of February, A.D. 1996, and to be presented for final passage on, Sth da f March199 . r Mayor ATTEST: 2 City Clerk Passed and adopted on final reading this 5th day of ch,_A . 1996. r� yor ATTEST: — " City Clerk 3 Exhibit A CITY OF FORT COLLINS MANUFACTURING EQUIPMENT USE TAX REBATE PROGRAM I. DEFINITIONS The following definitions shall apply in the administration of this temporary program: A. Manufacturing shall mean the operation of producing, in an industrial setting, a new product, article, substance or commodity, different from and having a distinctive name, character, or use from raw or prepared materials. Manufacturing shall not include: publishing; ready-mixed concrete production; logging; mining; farming; construction by contractors; wood preserving;electroplating, plating, metal heattreating, and polishing for the trade; lapidary work for the trade, fabricating of signs and advertising displays; milk bottling and pasteurizing; various service industries to the manufacturing trade such as typesetting, engraving, plate printing, and preparing electrotyping and stereotype plates. Manufacturing shall not include product research and development and testing. B. Manufacturing equipment shall mean the equipment used by a manufacturer in the manufacturing process as defined above. Manufacturing equipment shall not include climate control equipment. C. Full time equivalent (FTE) shall mean a full time employee or the equivalent thereof. This definition includes seasonal, temporary, permanent, and contractual employees of the company and all employees of contract employment agencies who perform temporary manufacturing services for the applying company. II. QUALIFICATIONS A. Only firms engaged in the manufacturing process, as defined herein, are eligible for the manufacturing use tax rebate. B. The manufacturing operations of such firm must have existed in the City of Fort Collins for at least a three year period prior to application. C. Only purchases of machinery by a person engaged in manufacturing to be used in the City of Fort Collins directly and exclusively by such person 1 in the manufacture of tangible personal property, for sale or profit, are eligible for the rebate. D. All purchases by manufacturing firms will be subject to the full 3.0% sales and use tax rate. A rebate will only be granted upon application and approval of the specific manufacturing equipment purchases for which a rebate is requested. E. The rebate shall apply only to purchases where a 3.0% use tax has been paid directly to the City of Fort Collins by the manufacturing firm requesting the rebate. F. Sales or use taxes paid to another taxing jurisdiction for purchases of manufacturing equipment are not eligible for the rebate. G. Used manufacturing equipment purchased when a business is acquired through sale or transfer of title or possession is not eligible for the rebate unless the purchaser has been engaged in business in the City for at least three years. Assets acquired as a result of a merger between two firms located in Fort Collins will be eligible for the rebate if either of the companies has been engaged in business in Fort Collins for at least three years. H. Manufacturing equipment that is leased shall be subject to the full 3.0% sales and use tax rate imposed by the City and collected by the lessor. Sales or use tax paid to the lessor shall not be eligible for the rebate. I. Firms must certify as to compliance with Federal, State and local laws and regulations for the manufacturing facility located in Fort Collins. Firms must be current with all payments to the City of Fort Collins and firms must not be in default with any contractual agreements with the City. III. TIERED REBATE SCHEDULE A. The following tiered rebate schedule will be used to determine the amount of rebate to be granted: 2 CITY OF FORT COLLINS TIERED REBATE SCHEDULE Cost of Use Tax Manufacturing Equipment Rate Paid Use Tax Rebate 1%) Maximum Rebate $0 to $ 5,000,000 3.0% 2.00% $ 100,000 $ 5,000,001 to $15,000,000 3.0% 1.00% $ 100,000 $15,000,001 to $50,000,000 3.0% 0.00% $ 0 $50,000,001 and over 3.0% 2.00% $2,200,000 Total maximum rebate: $2,400,000 B. The maximum rebate given to any one company for purchases of manufacturing equipment will be $2,400,000. C. Any company whose purchases of manufacturing equipment exceed $50,000,000 in a calendar year, will be limited to a $200,000 rebate if the growth in the company's FTEs in Fort Collins exceeds 10% in that year. IV. PROCEDURES A. Prequalification The Financial Officer shall notify those companies who were listed in the Standard Industrial Code (SIC) classification as "manufacturers" for City of Fort Collins sales and use tax purposes on or before January 1 , 1996 of the temporary manufacturing use tax rebate. The company wishing to apply for a rebate under this program shall be required to complete a prequalification form as may be required by the Financial Officer. B. Monthly Reporting 1 . Companies that have been qualified to participate shall be required to submit a monthly report of manufacturing equipment purchases to the City. The report shall be in accordance with a prescribed format and schedule set forth by the Financial Officer. 2. The reports shall be filed with the company's sales and use tax return on the 20th of the month following date the equipment was purchased. 3 3. All qualifying manufacturers shall be required to file a monthly sales and use tax return. Quarterly and annual filings are not allowed. C. Year-end Rebate Process 1 . All participants must submit an application for rebate no later than January 20 following the calendar year for which the rebate is requested. Example: rebate requests for 1996 must be submitted by January 20, 1997. 2. Applications must be filed using the format prescribed by the Financial Officer. 3. Applications may be subject to audit as provided in Chapter 25 of the Code of the City of Fort Collins. 4. Applicants will be notified of the amount of the rebate by mail. 5. Should a dispute arise regarding the amount of rebate allowed by the City, the applicant may, within twenty (20) days after such decision is mailed, petition the Financial Officer for a hearing on the rebate claim. The Financial Officer will notify the applicant of the time and location of the hearing. All hearings will be held in Fort Collins. After the hearing, the Financial Officer will make a final ruling as he or she deems just and proper. A copy of the final ruling will be furnished to the applicant. 6. The right of any company to apply for a rebate under this program is not assignable. An application for rebate must be made by the company that paid the tax. 4