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HomeMy WebLinkAbout09806ORDINANCE NO. 9806 AN ORDINANCE GRANTING PALMER NORTH AMERICA, LLC, A DELAWARE LIMITED LIABILITY COMPANY, A TAX CREDIT EQUAL TO FIFTY PERCENT (50%) OF THE SALES AND USE TAX ATTRIBUTABLE TO THE SALES, STORAGE, USE OR CONSUMPTION OF TANGIBLE PERSONAL PROPERTY PURCHASED FOR USE IN THE INITIAL CONSTRUCTION, EQUIPPING, MAINTENANCE AND REPAIR OF A NEW STEEL MANUFACTURING FACILITY TO BE LOCATED IN THE CITY OF PUEBLO BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The City Council hereby finds and determines that it would be in the best interest of the City and its citizens to grant sales and use tax economic development incentives to Palmer North America, LLC (“Palmer NA”) to encourage the construction of a new steel manufacturing facility within the City and thereby increase the City's tax base and opportunities for employment for the citizens of the City. The City Council further finds and determines that granting the tax credits of the sales and use tax set forth in this Ordinance is expressly permitted by C.R.S. 31-15-903. SECTION 2. A tax credit equal to fifty percent (50%) of the City’s sales or use tax applicable to tangible personal property purchased for use in the initial construction and equipping of the new steel manufacturing facility to be constructed by Palmer NA in the City of Pueblo. This tax credit shall be effective January 1, 2020 and shall also apply for a period of ten (10) years after the new steel manufacturing facility becomes operational, with respect to tangible personal property purchased for use in the repair, refurbishing, remodeling, substitution, relocation, or replacement of the new steel manufacturing facility, or any part thereof, but only to the extent that Palmer NA or any affiliated company, including but not limited to, New CF&I Inc., a Delaware Corporation, claiming such tax credit, maintains at least five hundred (500) primary jobs, as defined in Section 14-4-85.1 of the Pueblo Municipal Code, within the County of Pueblo and during any period for which the tax credit is claimed. This tax credit applies only to the City’s three percent (3%) sales tax. Special purpose sales and use taxes e.g. economic development (.5%) and public safety (.2%) are not included in the tax credits authorized by this Ordinance. SECTION 3. The officers and staff of the City are authorized and directed to perform any and all acts consistent with this Ordinance which are necessary or desirable to implement this change to the Pueblo Municipal Code. SECTION 4. This Ordinance shall become effective on the date of final action by the Mayor and City Council nunc pro tunc January 1, 2020. Action by City Council: Introduced and initial adoption of Ordinance by City Council on October 13, 2020 . Final adoption of Ordinance by City Council on October 26, 2020 . President of City Council Action by the Mayor: ☒ Approved on October 30, 2020 . ☐ Disapproved on based on the following objections: Mayor Action by City Council After Disapproval by the Mayor: ☐ Council did not act to override the Mayor's veto. ☐ Ordinance re-adopted on a vote of , on ☐ Council action on __________________failed to override the Mayor’s veto. President of City Council ATTEST City Clerk City Clerk’s Office Item # R-17 Background Paper for Proposed Ordinance COUNCIL MEETING DATE: October 13, 2020 TO: President Dennis E. Flores and Members of City Council CC: Mayor Nicholas A. Gradisar VIA: Brenda Armijo, City Clerk FROM: Daniel C. Kogovsek, City Attorney SUBJECT: AN ORDINANCE GRANTING PALMER NORTH AMERICA, LLC, A DELAWARE LIMITED LIABILITY COMPANY, A TAX CREDIT EQUAL TO FIFTY PERCENT (50%) OF THE SALES AND USE TAX ATTRIBUTABLE TO THE SALES, STORAGE, USE OR CONSUMPTION OF TANGIBLE PERSONAL PROPERTY PURCHASED FOR USE IN THE INITIAL CONSTRUCTION, EQUIPPING, MAINTENANCE AND REPAIR OF A NEW STEEL MANUFACTURING FACILITY TO BE LOCATED IN THE CITY OF PUEBLO SUMMARY: Attached is a proposed Ordinance which grants Palmer North America, LLC (“Palmer NA”) a 50% tax credit for sales and use taxes attributable to the construction and equipping of a new steel manufacturing facility in the City. PREVIOUS COUNCIL ACTION: On October 22, 2018, by Resolution No. 14071, City Council approved the following agreements:  Employment Agreement between the City and New CF&I Inc., a Delaware Corporation (the “Company”)  A Pre-Payment of Estimated Taxes Agreement between the City and Palmer NA. BACKGROUND: The Company has committed to invest at least two-hundred million dollars ($200,000,000.00) in equipment, other fixed assets and tangible personal property in a new rail mill to be located on land which has been annexed into the City of Pueblo. The Company has also committed to employ a minimum of one thousand (1,000) workers at an average annual pre-benefit salary of approximately $60,000 to $65,000 per employee between December 1, 2022 and November 30, 2029. To induce the Company to make the $200 million investment in a new rail mill, on October 18, 2018, by Resolution No. 14071, City Council authorized the transfer of $15 million from the City’s “Half-Cent Economic Development Fund” to help pay for the Company’s capital expenditures. FINANCIAL IMPLICATIONS: In addition to the $15 million in economic incentives, this Ordinance provides Palmer NA with a fifty percent (50%) sales and use tax credit during construction and for the first ten years of the operation of the new rail mill. This tax credit applies only to the City’s three percent (3%) sales tax. Special purpose sales and use taxes e.g. economic development (.5%) and public safety (.2%) are not included in the tax credits authorized by this Ordinance. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Ordinance. STAKEHOLDER PROCESS: Not applicable to this Ordinance. ALTERNATIVES: If this Ordinance is not approved, the Company will not construct its new rail mill manufacturing facility in the City of Pueblo. RECOMMENDATION: The Pueblo Economic Development Corporation recommends approval of this Ordinance. Attachments: Proposed Ordinance