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HomeMy WebLinkAbout08509ORDINANCE NO. 8509 AN ORDINANCE AMENDING CHAPTER 4 OF TITLE XIV OF THE PUEBLO MUNICIPAL CODE RELATING TO AND ESTABLISHING CRITERIA, STANDARDS, RULES AND REGULATIONS FOR THE APPROPRIATION AND EXPENDITURE OF FUNDS IN THE 1992-2016 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND AND REPEALING ORDINANCES NOS. 6381, 7583 AND 7836 WHEREAS, the people of Pueblo by Ordinances Nos. 5668, 5978, 6683, 7464 and 8197 have repeatedly extended the one-half percent sales and use tax rate for primary job-creating capital improvement projects within the City and the Pueblo Memorial Airport/Airport Industrial Park and established the special fund now known as the 1992-2016 Sales and Use Tax Capital Improvement Projects Fund (the “Fund”) for the deposit of such revenue; and WHEREAS, the people of Pueblo by Ordinances Nos. 5668, 5978 and 8197 have authorized and directed the City Council to establish by ordinance the criteria, standards, rules and regulations for the appropriation and expenditure of such revenues and monies in the Fund for primary job-creating capital improvement projects and incidental primary job training programs within the City and the Pueblo Memorial Airport boundaries, and directed that none of such revenues shall be appropriated or expended except in conformity with such criteria, standards, rules and regulations; and WHEREAS, said criteria, standards, rules and regulations have heretofore been adopted by City Council by Ordinances Nos. 6381, 7583 and 7836; and WHEREAS, Council believes that it is fitting and appropriate that such criteria, standards, rules and regulations be updated to account for the realities of economic development in the Twenty-First Century and that the same be codified for easy reference by the public and those engaged in economic development efforts; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: (Brackets indicate matter being deleted; underscoring indicates new matter being added.) SECTION 1. Chapter 4 of Title XIV of the Pueblo Municipal Code, as amended, is hereby amended by the addition of new sections 14-4-85.1, 14-4-85.3, 14-4-85.5, 14-4-85.7 and 14-4-85.9 thereto to read as follows: Sec. 14-4-85.1 Sales and Use Tax Capital Improvement Projects Fund; Definitions. For purposes of Sections 14-4-85 through 14-4-85.9 of this Code, the following terms shall have the following meanings: (a) "Applicant" means the person, firm, partnership, corporation or other entity that intends to develop a Project and files a written application for Funds upon forms to be approved by the City Manager. (b) "Capital Improvement Project" or "Project" means a project or improvement of a permanent or fixed nature and includes the acquisition of property (both real property and tangible personal property, except inventory or property held for sale to customers in the ordinary course of business), the construction, extension, remodeling or rehabilitation of buildings or structures within which individuals are customarily employed or which are customarily used to house machinery or equipment, and the installation or extension of streets, sanitary sewer, water, or other utilities required to serve a Project. (c) "Construction Contract" means any and all contracts or other arrangements, including, without limitation, "design-build" arrangements, for construction work, labor, services and/or materials in excess of $50,000 for a Project. (d) "Funds" means the sales and use tax revenues collected and on deposit in the 1992–2016 Sales and Use Tax Capital Improvement Projects Fund and the fair market value of real property owned by the City to be transferred as part of the Project. (e) "Job Creating" means the creation of employment for new employees. (f) "New employee" means a person employed in a primary job at the Project after its substantial completion if such person performs duties on a regular full-time basis at least thirty-five (35) hours each week. The number of new employees at any stated time shall be determined on a quarterly basis by dividing the sum of the aggregate number of new employees on each business day of a quarter by the total number of business days in a quarter. (g) "Primary job" means a full-time position in private sector employment by manufacturing, business, commercial or service industries producing, assembling or distributing products or providing services primarily or ultimately for sale, consumption, or use outside of the City and County of Pueblo, Colorado. (h) "Project Value" means the fair market value of the real property and tangible personal property (except inventory or property held for sale to customers in the ordinary course of business) comprising the Project. The value of such property owned by the Applicant shall be its original cost or the fair market value of the property as represented by the Applicant, whichever is less. The value of buildings and structures constructed on real property as part of the Project, whether new construction or rehabilitation of existing buildings or structures, shall be the construction contract price therefore and shall not include expenditures commonly referred to as soft costs which include but are not limited to costs associated with legal, accounting and realtor fees; loan fees; sales and marketing; project signs; and rent lost during construction. (i) "Professional Services" means architectural, engineering, geotechnical, surveying, environmental, consulting, legal and other professional services which are necessary or desirable in connection with either a Project, prospective Project, shell building or acquisition and development of an industrial park or development site. Section 14-4-85.3 Sales and Use Tax Capital Improvement Projects Fund; approval, criteria and standards. (a) Application for Funds shall be filed in the office of the City Manager for preliminary review. If the City Manager determines that the application generally conforms with the provisions and intent of Sections 14-4-85 through 14-4-85.9, he shall forward the application and comments of the City's administrative staff, if any, to City Council for consideration. If the City Manager determines that the application does not generally conform with the provisions and intent of this Ordinance, he will return the application to the Applicant with the reasons for his determination. The City Manager shall act in a timely and expeditious manner. All applications for Funds shall include information required by the City to perform an economic impact evaluation of the Project prior to approval of an application. (b) Each of the following criteria and standards must be met before the City Council may by Resolution approve an application for Funds: (1) The Project may not be speculative in nature and the Applicant must document to the City's satisfaction the Applicant's financial ability and experience to complete the Project and fulfill the Applicant's representations and commitments made with respect to the Project, including, without limitation, the number of new employees, the Project Value, and the Project's gross salary. (2) The amount of Funds made available for the Project shall not be greater than either: (i) fifty percent (50%) of the Applicant's committed annual gross salary (excluding employee benefits) for new employees to be employed at the Project within two (2) years after its substantial completion; or, (ii) fifty percent (50%) of the Project value, as determined by the City Council in its sole discretion. (3) Employees employed by the Applicant within the City, at the Pueblo Memorial Airport or at Pueblo Memorial Airport Industrial Park (except employees transferred from outside the City and the County for purposes of developing the Project) on the date of the approval of the Applicant's application shall not be less than the average number of employees employed by the Applicant within the City and the Pueblo Memorial Airport during the twelve month period immediately prior to such date as computed pursuant to Section 14- 4-85.1(f). For purposes of this subsection (b), the number of new employees employed at a Project shall not include the number of employees employed on the date of the application or the average number of employees employed during the preceeding twelve (12) months, whichever is greater. (4) The Project must be consistent with the City's long- range planning objectives for the City as a whole as well as the location of the Project. Greater consideration shall be given for Projects which enhance the City's tax base. 5) The Project may not be for an activity or business which ( materially and substantially competes, as determined by the City Council in the exercise of its sole discretion, with an existing activity or business within the City. (6) If a Project is to be located at the Pueblo Memorial Airport or Pueblo Memorial Airport Industrial Park, except upon land which has been annexed into the City of Pueblo or will be so annexed in connection with the Project, (i) the Project may not result in the relocation, in whole or in part, of an existing business or industry from the City to the Pueblo Memorial Airport or Pueblo Memorial Airport Industrial Park, and (ii) the fair market value of any land or building transferred by the City to the Applicant shall be included as part of the Funds made available to the Applicant for purposes of subsection (b)(2) of this Section. (7) If the application is for a loan of Funds, (i) the loan may be at such interest rate as the City Council shall determine and must be secured by a first deed of trust and/or security interest in all or a portion of the Project or other collateral acceptable to the City, having a reasonable fair market value in relation to the principal amount of the loan, (ii) the term of the loan shall not exceed ten (10) years, and (iii) the difference in the interest to be paid on the loan and interest calculated by using the so-called "prime rate" of Wells Fargo Bank, N.A. plus three percent (3%) (as determined by the Director of Finance) shall be included as part of the Funds made available to the Applicant for purposes of subsection (b)(2) of this Section. (8) All Construction Contracts shall be awarded by competitive bidding. Based upon the nature of the construction contract, Applicant shall invite general contractors holding Building Contractors-A (General Unlimited) and/or Building Contractors-B (General Limited) licenses having their principal place of business in the City or County of Pueblo who are qualified and experienced to perform construction work for the Project ("Local Contractors") to submit bids. Applicant may invite other qualified general contractors with their principal place of business outside of Pueblo County, Colorado to submit bids. Applicant shall assure that the same scope of work to be bid is timely furnished to each general contractor invited to bid. For "design-build" or other contractual arrangements, this requirement may be accomplished by a pre-bid conference or other acceptable competitive bidding procedure which allows Local Contractors a reasonable opportunity to participate in the competitive bidding procedures. All bids will be received and opened publicly. Applicant will use its best efforts in good faith to award the construction to the lowest qualified bidder. A similar provision with respect to local subcontractors and suppliers shall be included as part of the construction contract between the Applicant and the general contractor who shall use its best efforts in good faith to engage local subcontractors and suppliers for such construction. If an Applicant, its employees or agents negotiate with a general contractor, subcontractor or supplier with respect to a Project prior to competitive bidding, the Applicant shall not enter into any Construction Contract with such general contractor, subcontractor or supplier for the Project. "Negotiate" means to discuss, confer upon, or arrange the terms and conditions of a Construction Contract including, without limitation, obtaining estimated of construction costs. (c) The City Council may grant a variance to the requirements set forth in subsection (b) of this Section, if the City Council determines in its sole discretion that the Project will create employment for new employees justifying the expenditure of Funds; provided, however, that such variance and the grounds therefor shall be set forth in the Resolution approving the application. Section 14-4-85.5 Sales and Use Tax Capital Improvement Projects Fund; Special Categories. (a) Subject to the requirements of this Section, City Council may authorize expenditure of monies in the Fund for the following items: (1) Acquisition of land and construction of so-called shell buildings or the acquisition, remodeling and renovation of existing buildings for the purpose of making such buildings available for Applicants or potential Applicants who meet the standards and criteria of this Ordinance. (2) Public infrastructure required to serve new major governmental facilities consolidated or relocated from outside of Pueblo County to an area within the City of Pueblo, as determined by the City Council. (3) Land acquisition, infrastructure development and Professional Services associated therewith to establish and facilitate the creation of primary jobs within the City of Pueblo and enhance the City’s tax base, including but not limited to establishment and development of one or more industrial parks or development sites. (4) For payment and reimbursement of reasonable expenses for contracted Professional Services associated with solicitation of Applicants and development of proposals for Projects. (5) For maintenance of shell buildings and rail spurs owned by City, including maintenance of landscaping located upon the property upon which shell buildings are located. (b) The provisions of Section 14-4-85.3(b)(1) through (b)(3), and (b)(7) shall not apply to the expenditure of funds authorized by this Section. Section 14-4-85.7 Sales and Use Tax Capital Improvement Projects Fund; Training. In order to provide a trained local workforce to match new or expanding company's job skills for specific permanent full-time primary jobs there is hereby created the Pueblo primary job training program ("Pueblo Program"). (a) The Pueblo Program may include any of the following, or any combination thereof: (1) pre-employment training of primary job workers; (2) training of primary job workers upon first being hired. (b) The Pueblo Program shall be instituted only when the sponsoring new or expanded company has identified specific permanent full-time primary job openings and has agreed to give graduates of the Pueblo Program hiring priority and to pay a minimum wage for each primary job of at least $10 per hour or the minimum hourly wage under Colorado First/Existing Industry Customized Training Programs, whichever is greater, plus fringe benefits. (c) Training shall not be provided when a trained or experienced work force, seeking employment, already exists in the City of Pueblo. (d) A company must agree to act as sponsor in the development and implementation of the training program. Training programs shall be designed with the direct cooperation and agreement of the sponsoring company. (e) Forty percent of training costs must be financed by the sponsoring company in cash or in-kind expenditures. The company shall be encouraged to participate with in-kind contributions of training space, training equipment, training supplies and technical assistance. (f) Training programs shall last no longer than the time required to provide workers with the primary job skills required by the sponsoring company. (g) Funds allocated for the Pueblo Program shall not be used to pay wages or stipends to trainees during a training session but may be used for the payment of all direct costs of the training program. Direct costs shall include: (1) Instructor wages, travel and per diem allowances; (2) Lease of training equipment; (3) Lease of training space; (4) Purchase of training supplies; (5) Development of instructional materials; and (6) Administrative costs directly associated with each training session. (h) Existing vocational or technical education facilities and resources located in the City of Pueblo shall be used in the Pueblo Program whenever such resources are available. The Pueblo Program shall be coordinated through existing vocational or technical education institutions located in the City of Pueblo. (i) The maximum training grant award for each employee under the Pueblo Program shall not exceed $800.00, and shall be made in a manner to supplement grants made available to the sponsoring company under the Colorado First/Existing Industry Customized Training Programs, or, if such grants are not so made available to the sponsoring company, the Pueblo Program grants may be paid directly to the existing vocational or technical education institutions providing and furnishing the training program. Sec. 14-4-85.9 Sales and Use Tax Capital Improvement Projects Fund; Anti- fraud and Performance Requirements. (a) When an application for Funds is approved by Resolution adopted by the City Council, the Applicant as a condition precedent to the receipt of any of the approved Funds, shall within sixty (60) days after the date of such approval, or such later date as the City and Applicant may mutually approve, enter into a written agreement with the City which contractually commits and binds Applicant to, and secures the performance of, all criteria and standards of this Ordinance or any other variance thereto approved by the City Council, and all representations contained in the Applicant's application or otherwise made to the City by Applicant. The agreement shall contain a provision whereby the Applicant represents and warrants that no person, entity or organization has been employed or retained or will receive or be paid, directly or indirectly, any commission, percentage, contingent fee or any other remuneration payment or receipt of which is contingent upon approval of its application; provided, however, that this representation and warranty is not intended to apply where (I) a customary and usual fee or commission is paid to a real estate broker with respect to sale or lease of a shell building or other facility constructed using Funds which is located within the secure area of Pueblo Memorial Airport and (II) the real estate broker to whom the fee or commission is paid has been selected by the City based upon qualifications following a duly advertised request for proposals. For breach or violation of such warranty, the City shall have the right to terminate the agreement, or recover the full amount of such commission, percentage, contingent fee or other remuneration, or to seek other such remedies legally available to City, which remedies shall be cumulative. (b) City staff designated by the City Manager shall monitor the compliance of all Applicants receiving Funds with the requirements of their employment commitment agreement and report the results of such monitoring activities in writing to the City Council at least quarterly. Such monitoring shall include: the number of full-time employees compared with employment commitments; the salaries and benefits of employees compared to salary and benefits set forth in the employment commitment agreements; the repayment of funds and the amount thereof if required because of the failure to meet employment commitments; and, such other matters as the City Council may designate by Resolution. (c) Any action taken by the City Council relating to an application for Funds is, and shall constitute, a legislative measure. No person or entity shall have a right to or be eligible to receive any Funds except as specifically authorized by Resolution of the City Council. Notwithstanding that an application for Funds may meet and comply with the criteria and standards of this Ordinance, the City Council reserves the right in its sole and absolute discretion to approve, reject, disapprove, or approve with modification any such application. No recourse shall be had against the City, the City Council or any officer, employee or agent of the City, by, or be available to, any Applicant or other person or entity resulting from or arising out of the filing of an application for Funds or the rejection, modification, approval or nonapproval of an application by the City Council. The filing of an application by an Applicant shall constitute and be construed to constitute an expresses waiver and release of the City, City Council, and officers, employees and agents of the City from any such recourse and all other claims or liabilities with respect to the application or any action taken or not taken thereon by the City or the City Council. (d) The provisions of this section requiring a written agreement with the Applicant shall not apply to the City when the City is undertaking: acquisition and construction of shell buildings, acquisition and renovation of shell buildings, provision of Professional Services authorized by Section 14-4-85.5(a)(5), maintenance of City-owned shell buildings or infrastructure authorized by Section 14-4-85.5(a)(6), or acquisition and development by City of sites or facilities authorized by Section 14-4-85.5(a)(3). SECTION 2. The City finds and determines that (a) the acquisition and construction or remediation of shell buildings is necessary to provide adequate and available facilities for attracting and creating Primary Jobs in a timely manner; (b) the redevelopment of underutilized urban areas within the City and provision of necessary infrastructure to facilitate the creation of Primary Jobs will have a greater job-creating effect as new employees will utilize other businesses surrounding the redevelopment zone and will enhance the City's tax base; and (c) location of a new government facility within the City will create employment opportunities for the residents of Pueblo and constitutes a primary job-creating capital improvement project within the meaning of Section 14-4- 85(f) of the Pueblo Municipal Code. SECTION 3. This Ordinance may be rescinded, modified or amended, in whole or in part, at any time by ordinance duly adopted by the City Council. SECTION 4. If any section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or enforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. SECTION 5. Ordinances Nos. 6381, 7583 and 7836 are hereby repealed provided that such repeal shall not affect any contract, obligation, right, remedy or privilege granted or existing prior to the effective date of this Ordinance. SECTION 6. This Ordinance shall become effective immediately upon final passage and approval. INTRODUCED: August 27, 2012 BY: Steve Nawrocki COUNCIL PERSON PASSED AND APPROVED: September 10, 2012 Background Paper for Proposed ORDINANCE DATE: AGENDA ITEM # R-3 August 27, 2012 DEPARTMENT: Law Department Thomas J. Florczak, City Attorney TITLE AN ORDINANCE AMENDING CHAPTER 4 OF TITLE XIV OF THE PUEBLO MUNICIPAL CODE RELATING TO AND ESTABLISHING CRITERIA, STANDARDS, RULES AND REGULATIONS FOR THE APPROPRIATION AND EXPENDITURE OF FUNDS IN THE 1992-2016 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND AND REPEALING ORDINANCES NOS. 6381, 7583 AND 7836 ISSUE Should City Council adopt an ordinance codifying and updating the criteria, standards, rules and regulations for expenditure of the so-called "1/2 Cent Sales Tax" funds? RECOMMENDATION Approve the Ordinance. BACKGROUND The 1992-2016 Sales and Use Tax Capital Improvement Project Fund (the "Fund"), commonly referred to as the "1/2 cent tax fund," was established by the voters of the City years ago, and extended several times, for the purpose of funding primary job- creating capital improvement projects within the City and at Pueblo Memorial Airport. By those voter-approved ordinances, the people also delegated to City Council the authority and direction to establish by ordinance criteria, standards, rules and regulations for the appropriation and expenditure of monies in the Fund, consistent with its purpose. City Council adopted such criteria, standards and regulations by Ordinance No. 6381, later amended by Ordinance Nos. 7583 and 7836. None of these ordinances were codified as part of the Pueblo Municipal Code, and they are difficult to work with and appear to need updating to remain effective based upon the current realities of economic development. The Ordinance under consideration does two things: first, it codifies the existing criteria and policies adopted by Council over time; secondly, it adds new provisions which grant Council additional flexibility or clarifies the criteria. These changes are summarized as follows:  Redefines a new employee as one working at least 35 hours a week, rather than 32.  Authorizes Building Contractors – B licensees to competitively bid on projects for which they are qualified. The Criteria Ordinance previously restricted invitations to only "A" Contractors.  Authorizes expenditures for land acquisition, infrastructure development and professional services associated therewith for development of industrial parks or development sites to establish and facilitate the creation of primary jobs.  Defines "Professional Services" as architectural, engineering, geotechnical, surveying, environmental, consulting, legal and other professional services which are necessary or desirable in connection with either a project, prospective project or the industrial park or site development and clarifies that expenditures of funds for these project costs are permitted.  Authorizes expenditure for maintenance of shell buildings and rail spurs owned by the City and maintenance of landscaping located on shell building properties.  Permits, on a very limited basis, the payment of usual and customary fees or commissions to competitively selected real estate brokers in connection with the sale or lease of a building or facility located in the secure area of Pueblo Memorial Airport and which is or has been constructed with ½ cent funds. FINANCIAL IMPACT There are approximately $30 million dollars of unobligated funds in the Fund. The City general fund has been indirectly subsidizing economic development by providing, through City personnel, engineering, technical and other professional services for economic development prospects. This ordinance will permit the hiring of such professional services payable instead from the ½ cent sales tax. Additionally, there is no provision in the current criteria ordinances for maintenance of shell buildings and rail spurs at the Airport Industrial Park. By authorizing these expenditures to be made from the 1/2 cent sales tax, the general fund will not provide subsidies for economic development.