Loading...
HomeMy WebLinkAbout10049RESOLUTION NO. 10049 A RESOLUTION APPROVING A STIPULATION AND AGREE- MENT BETWEEN THE CITY OF PUEBLO AND TRAVELAIRE SERVICES, INC. RELATING TO FEES, CHARGES AND USE TAX PAYABLE TO THE CITY OF PUEBLO BY TRAVELAIRE SERVICES, INC. BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1 The Stipulation And Agreement dated as of January 26, 2004 between the City of Pueblo and Travelaire Services, Inc. relating to fees, charges and use tax payable to the City of Pueblo by Travelaire Services, Inc., a copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved. SECTION 2 The President ofthe City Council is authorized to execute and deliver the Stipulation And Agreement in the name of the City and the City Clerk is directed to affix the seal of the City thereto and attest same. INTRODUCED: January 26, 2004 By: Michael Occhiato UNCILPERSON APPROVED: gffg2i PRESI NT OF THE CITY COUNCIL ATTESTED CITY CLERK /'& 109 ID: ED 0 o° Background Paper for Proposed RESOLUTION AGENDA ITEM # 13 DATE: January 26, 2004 DEPARTMENT: Law Department TITLE A RESOLUTION APPROVING A STIPULATION AND AGREEMENT BETWEEN THE CITY OF PUEBLO AND TRAVELAIRE SERVICES, INC. RELATING TO FEES, CHARGES AND USE TAX PAYABLE TO THE CITY OF PUEBLO BY TRAVELAIRE SERVICES, INC. ISSUE Should the City Council approve the Stipulation And Agreement. RECOMMENDATION Approve the Stipulation And Agreement. BACKGROUND The Stipulation And Agreement resolves disputes which have arisen between the City and Travelaire Services, Inc. ( "Travelaire ") relating to use tax imposed on aircraft leased by Travelaire and the one (1) percent fee payable by Travelaire on gross revenues under the Operating Agreement and Land Lease ( "Lease ") dated January 26, 1987 between the City and Travelaire for lease of land at the aviation area of the Pueblo Memorial Airport ( "Airport"). Pending before the City Council is an ordinance amending the City's sales and use tax ordinances creating a credit in an amount equal to two- thirds of the sales and use tax imposed on aircraft used by a charter air carrier providing charter air transportation at the aviation area of the Airport. The credit would be applicable for calendar years commencing on or after January 1, 1999. The Stipulation And Agreement is contingent upon City Council approving this Ordinance. Travelaire will pay the City $28,806.51 representing additional 1 % fee payable from October 1999 through September 2002 together with an amount equal to 1 % of all gross revenue from October 1, 2002 through October 31, 2003 plus interest. Thereafter the 1 % fee will be imposed on gross revenue from aircraft charters that load passengers at the Airport. Travelaire will pay use tax imposed and assessed on its leased aircraft less the two - thirds credit. Travelaire's appeal of City's assessment of use tax will be dismissed with prejudice. FINANCIAL IMPACT The use tax credit will reduce Travelaire taxes imposed during the audit period (October 1999 through September 2002) from $144,025 to $48,808. The amount of the use tax to be paid after the audit period has not been computed but will be reduced by two- thirds, the amount of the credit. The 1 % fee during the remainder of the Lease will be based on gross income which does not include income or revenues derived from sales, operations and services conducted at locations other than the Pueblo Memorial Airport. -2- STIPULATION AND AGREEMENT THIS STIPULATION AND AGREEMENT ( "Agreement ") entered into as of �u4 n ac 36 , 200!/between City of Pueblo, a municipal corporation, 1 City Hall Place, Pueblo, Colorado, 81003 ( "City") and Travelaire Services, Inc., 525 Skyway Lane, Pueblo, Colorado, 81001 ( "Travelaire'), WITNESSETH: WHEREAS, certain disputes have arisen between the City and Travelaire relating to use tax imposed on aircraft leased by Travelaire and the one (1) percent fee payable by Travelaire on gross revenue under the Operating Agreement and Land Lease dated January 26, 1987 between the City and Travelaire ( "Lease') for the lease of land at the aviation area of the Pueblo Memorial Airport ( "Airport'), and WHEREAS, City and Travelaire are desirous of amicably resolving such disputes. NOW, THEREFORE, in consideration of the foregoing and mutual promises herein contained, City and Travelaire agree as follows: 1. Travelaire shall, upon the Effective Date as defined in paragraph 11 below, pay to the City the sum of $28,806.51, representing additional 1 % fee payable during the period from October 1999 through September 2002. In addition, Travelaire shall pay to City an amount equal to one percent (1 %) of gross revenues generated by its business located at the Airport during the period from October 1, 2002 through October 31, 2003 as determined by City's auditor in consultation with Travelaire's accountant. Such amount will be due and owing on the tenth (10') day of the calendar month after the calendar month in which the amount thereof is determined by the City's auditor. Payments not made within the time specified herein shall bear interest at the rate of eight (8) percent per annum until paid in full. 2. Effective November 1, 2003, paragraph 2(c) of the Lease shall be amended by the addition of the following provision: Only revenue from aircraft charters that load passengers at the Pueblo Memorial Airport will be considered as revenues derived under the terms of this paragraph. Lessee operates sales offices and leases hangars outside of the Pueblo Memorial Airport, therefore, revenues derived from sales, operations and services conducted on those locations will not be included as revenue under this paragraph. 3. City and Travelaire stipulate and agree that the sale, storage, use or consumption of aircraft used, purchased or leased for use by Travelaire, a charter air carver providing charter air transportation at the aviation area of the Pueblo Memorial Airport, is subject to City's sales and use tax. For calendar years commencing on or after January 1, 1999, Travelaire shall receive a credit against such sales and use tax imposed on its aircraft in an amount equal to two -thirds (2/3) of the sales and use tax levied and imposed upon such aircraft under City's sales and use tax ordinances. 4. Therefore, pursuant to the provisions of paragraph 3 above, Travelaire shall: (a) Pay to the City upon the Effective Date $48,008.33 plus interest thereon calculated to the Effective Date for use tax imposed and assessed on its aircraft during the period from October 1, 1999 through September 30, 2002. Upon receipt of such payment the City's Director of Revenue shall cancel the Hearing Determination Notice, Notice of Final Determination - Assessment - Demand for Payment issued August 12, 2003. (b) Pay to the City one -third (1/3) of the use tax imposed and assessed on its aircraft during the period from October 1, 2002 through the calendar month in which the Effective Date occurs plus interest thereon as determined by City's auditor in consultation with Travelaire's accountant. Such amount shall be paid by the tenth (10') day of the calendar month after the month in which the amount thereof has been determined by City's auditor. (c) For the months commencing on or after the calendar month in which the Effective Date occurs, Travelaire shall pay to the City one -third (1/3) of the use tax imposed and assessed against its aircraft under the City's sales and use tax ordinances. Said use tax payment shall be made in the time and manner provided under said ordinances. (d) Interest payable on use tax shall be computed at the rate specified in City's sales and use tax ordinances. 5. Travelaire and City stipulate and agree that Civil Action No. 03 CV 1162, Division C, Pueblo County District Court, shall be dismissed with prejudice, each partypaying its own costs and attorney fees. The parties will prepare and execute an appropriate stipulation and file same with the District Court together with an order of dismissal. 6. After City completes its negotiations with respect to Flower Aviation's fixed base operator lease which is anticipated to be concluded during May 2004, City and Travelaire will meet for the purpose of considering in good faith whether Travelaire's Lease will be extended and the terms and provisions of any such extension. 7. This Agreement shall be binding upon and inure to the benefit of the City and Travelaire and their respective successors and assigns. 8. If any provision of this Agreement shall be determined by a court of competent jurisdiction to be invalid or unenforceable, such determination shall not affect the remaining provisions of this Agreement which shall remain in force and effect. 9. This Agreement is solely for the benefit of City and Travelaire. No third party shall have any right or interest in this Agreement or any provisions hereof. Only City and Travelaire shall have the right to enforce this Agreement. This Agreement has been entered into to resolve existing -2- disputes between Travelaire and City and nothing in this Agreement shall be or be construed to be binding on the City with respect to any other person or taxpayer or the subject matter of this Agreement. 10. This Agreement shall be interpreted and applied in accordance with the laws of Colorado. The prevailing party in any action arising under this Agreement shall be awarded its costs and expenses, including reasonable attorney fees. Venue for any such action shall be Pueblo County, Colorado. 11. This Agreement is contingent upon and subject to the City Council of City adopting the Ordinance attached hereto. Therefore, this Agreement shall become effective upon the date the Ordinance is finally approved and enacted by the City Council of City ( "Effective Date). PUEBLO, A MUNICIPAL CORPO N By - Name: Randy Thiircton Title: President of City Council -3- TRAVELAIRE SERVICES, INC.