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HomeMy WebLinkAbout1992 Ordinance No. 034ORDINANCE NO.!il... SERIES OF 1992 BY AUTHORITY COUNCIL BILL NO. 30 INTRODUCED BY COUNCIL MEMBER HABENICHT AN ORDINANCE EXTENDING THE REBATE OF SALEf, !\ND USE TAX ON THE PURCHASES OF MACHINERY AND MACHINE TOOLS FOR BUSINF,SSES IN THE CITY OF ENGLEWOOD, COLORADO . WHEREAS, with the passage of Ordinance No . 2r,, Series of 1991 the Englewood City Council implemented a rebate of Sales and U.., Tu paid on the purchases of machinery and machine tools at lhe rate of two(~), of the S i,leo ant.I Use Tax of3.5% that ia 2/3.5 of the 3.5% rate imposed by the City of Englewood for tho i,-,1iod of July J.. 1991 to July 1, 1992; and WHEREAS, the Englewood City Council desires to stimulate the Englewood economy and encourage the competitiveness, expansion and success of manufacturing and related businesses by extending the rebate of Sales and Use Tax on the purchases of machinery and machine tools for businesses in the City of Enelewood for a period of another three years; and WHEREAS, City Council desires to extend this rebate of:::.l!es and Use Tax on the purchues of machinery and machine tool ■ for bulineues in the City for a period of and additional three yl!Jlrl to encourage buain1ue1 to expand and remain in tho community; NOW, THEREFORE, BE IT OP.I> ED PY THE CITY COUNCIL OF THE CITY OF ENGLEWOOD, COLORADO, AS M Ll.OWS: lkl:tilmJ, Rebote of Sale ■ and Use 'I "" r r, purchases of machinery and machine tools for businesses in the City of Englow ood, Colorado which was implemented by the passage of Ordinance No. 25, 1991 is hereby extended for another three years• J uly J.. 1992 to July 1, 1995. The Sales and Use Tax paid on purchases of machinery and machine tools shall be n1bated by an amount equnl to two percent (2%), of the Sales and Use Tu of 3.5% that is 2/3.5 of the 3.5% rate imposed by the City of Englewood for the period July 1, 1992 to July 1, 1993. Fifty percent of the rebate will be eranted after December 31, 1993, the remainrler will be rebated 25% after December 31 , 1993 and 25% after December 31 , 1994. The same calculatious and procedure will remain for the following two years, July 1, 1993 to July 1, 1994 and July 1, 1994 to July 1. 1995. The rebate will be credited against the sales and use taxes owed in the last qua.Tter of these years. If in excess of the taxes owed, a rebate check will be made to th e company. Machinery and machine tools must me,,t the definitions of Section 38, Property, as defined in the Internal Revenue Code of 1954 and r>ust have been ofa nature that would have qualified for the investment tax credit. ~-State Sales Tax Exemption Form DR119 l must be filed with the City of Englewood , Department of Revenue , to qualify for the Sales and Use Tax rebate. To qualify fo r the re bate the minimum purchase price of a single item must be $500 . ~-There is no intention to repeal any other secti on of the Englewood Municipal Cod e . -1- 10 b ~ No purchases made afterJ!l]y 1, 199G, lhalJ qualify for this rebate. All rebatea ahall be paid before July 1, 1998 and this Ordin&llce shall be null and void on and after July I, A 1998. • Intmluced, read in full, and puaed on 6rat readinr on the 3rd day of Aucuat, 1992. Published u a Bill (or an Ordinance on the 6th day o( Auiuot, 1992. ·.·· .( Read by title and paased on final readinron the 17th day of Aucuot, 1992. Publiahed by title u Ordinance No.& Series a( 1992, on the 19th day o( Auiuot, 1992. ATTEST: ~~ Patricia H. Crow, City Clerk I, Patricia H. Crow, City Clark ol'the Cit, o'l':"!lewood, Colorado, hereby certify that tht above and foresoinr l1 a tcyHcapy of the On'.ii· &r,c:e paased on final rudinr and published 'by title u Ordinance No. z;.. Series of 199\l. ~Aki#~ -Patricia H. Crow -2 - Date August 3 , 1992 IN111ATED BY STAFF SOURCE COUNCll. COMMUNICATION Agenda Item 11 a Community Development Subject Sales/Use Tax Rebate Program Evaluation Pam Pepper, EconomJc Development Admlntstrator ISSUE/ AC110N PROPOSED The Sales/Use. Tax Rebate Program ls proposed tote extended for three years to Aincrease participation In the program and the good ,\111 r eceived from the business -community. - PREVIOUS COUNCll. AC110N A year ago , City Council passed an ordinance for the rebate of 2% of the 3 .5% sales/use tax on machinery and machine tools. The n ,bate was to occur over a three ye ar time frame; 50 percent after the fl.:st year, 25 percent after the second year. and 25 percent after the third year. The rebai~ was for a trial period for purchases made fr om July 1. 1991 to July 1, 1992. STAFF ANALYSIS The purposes of the sales/use tax rebat~ ordinance are to encourage businesses to : l) Invest In the P.xpanston of their rnanu.lacturtng capabilities ; 2) hire new employe es and r emain competitive by purchasing up -to -date technology ; and 3) create a positive busin ess environment In Englewood. The program has now b een effective for almos t a year and Its Imp acts have been reviewed. from July 1, 199 1 to July 28, 1992 . seven companJes h ave applied for the use tax reb ate. Th ey h ave purchased a total of $215 ,656 In equJpment. for a rebate total of -S6.3 13 . This r eve nue loss Is s pread ove r three years , to be paid back as follo ws : Year Rebat,. 1993 $3 ,l . ' 1994 Sl,57ti 1995 $1,578 TOTAL $8,313 The total use tax to be collected from the non-retail sector for 1992 ts estlmated at S275,000. ThJs esttmate assumes that 90 percent of the use tax Involves the purchase of machinery and machine tools and eqlllpment. If correct, the City co uld potentially be liable for S141.429 In rebates (to be returned over three years). However, the City has only received requ ests fo r 6,3 13, or four percent. of that potential loss . BACKGROUND Given a low participation rate, the reb1,~c. ·•as not actually stlmulated stgntflcant Investment by the manufacturtng sector. iiowe,.,er, staff recommends extending the program for three years for the follow!J\g reasons: The program needs time to become better known to the manufacturtng community before we can evaluate tts true Impact. The program should receive more publlctty to Increase the participation rate and to measure Its effect on investment stimulation. - It Is an Important asset In business recruitment and markettng the City,_ as well as matntatntng positive r e.atlons with existing companies. The program demonstrates that we are a "business friendly'' community, and that we are willing to work with and assist our manufacturers . In discussions with our manufacturers, major Investments tn eqlllpment are made Infrequently, and some have not had an opportunity to participate tn the program, although they plan to durtng the next few years. Additionally , taxation ts an Important Issue tn the community. Those responding to the Englewood Herald's question on this Issue unanimously supported extending the program. Other cities that have this type of Incentive Include Sheridan, which has no use tax at all, and Arvada, which exempts the entire tax on machinery and machine tools . Brighton. Lolllsville , and Greenwood Village all have some exceptions to their use tax, however they are mostly minor exe mptions . FINANCIAL The potential financial Imp act' · "".r-gl ewood over the n ext stx years s hould be ml n1m al .