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HomeMy WebLinkAbout07185ORDINANCE NO. 7185 AN ORDINANCE SUBMITTING TO THE REGISTERED ELECTORS OF THE CITY OF PUEBLO, COLORADO AT THE SPECIAL MUNICIPAL ELECTION TO BE HELD ON NOVEMBER 2, 2004 QUESTIONS RELATING TO AN AMENDMENT TO THE CITY'S SALES AND USE TAX ORDINANCE AND THE USE OF THREE AND THREE - TENTHS PERCENT (3.30 %) OF THE CITY'S SALES AND USE TAX REVENUE BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1 Questions of amending the City's sales and use tax ordinance and the use of three and three - tenths percent (3.30 %) of the City's sale and use tax revenue shall be submitted to a vote of the registered electors of the City of Pueblo at the special municipal election to be held November 2, 2004. The ballot titles (submission clauses and titles) therefor shall be as follows: Question No. Shall Ordinance No. 7181 (a copy of which is on file in the office of the City Clerk) of the City of Pueblo, Colorado be approved, which ordinance amends Chapter 4 of Title XIV of the Pueblo Municipal Code and authorizes the City to use three and three - tenths percent (3.30 %) of the City's sales and use tax revenue, which was previously being retained by the retailers who collect such tax on behalf of the City to cover their expenses in collecting and remitting such tax, for one or more of the following purposes, in such amounts and proportions as the City Council shall determine (1) paying the principal of, premium, if any, and interest on the Urban Renewal Authority of Pueblo, Colorado ( "Authority ") revenue bonds in the aggregate principal amount of $9,500,000 issued to finance initial construction of the Pueblo Convention Center and hotel complex, or any bonds issued to refinance such bonds, (2) paying the net operating and maintenance expenses of the Pueblo Convention Center, (3) financing the acquisition and construction of parking facilities, (4) assist in the financing, acquisition, construction and equipping of a health department facility, (5) paying the principal of, premium, if any, and interest on the Authority's revenue bonds in a principal amount not to exceed $12,000,000 to be issued to finance an expansion of the Pueblo Convention Center and related improvements after encumbering all tax allocation revenues of the Authority to the payment of such bonds, or any bonds issued to refinance such bonds, and /or (6) reimbursing retailers for their costs incurred in collecting and remitting the sales and use tax revenues to the City, authorizing the City Council to pledge irrevocably all or any part of the three and three - tenths percent (3.30 %) of the City's sales and use tax revenue for any of the foregoing purposes and payment thereof, and shall the revenues derived from such three and three - tenths percent (3.30 %) of the City's sales and use tax be collected and spent net of any constitutionally required tax cuts, without limitation or condition, as a voter approved revenue change and an exception to the limits which would otherwise apply under Article X, Section 20 of the Colorado Constitution or any other law? For the Ordinance Against the Ordinance Question No. Shall the City Council of the City of Pueblo, Colorado, be authorized to pledge three and three - tenths percent (3.30 %) of the City's existing sales and use tax revenue toward the payment of bonds to be issued by the Urban Renewal Authority of Pueblo, Colorado ( "Authority ") in a principal amount of up to $12,000,000 with a repayment cost not to exceed $28,500,000 to finance the expansion of the Pueblo Convention Center and related improvements after encumbering all tax allocation revenues of the Authority to the payment of such bonds? Yes No SECTION 2 The officers of the City are authorized and directed to take all action necessary, appropriate or required to effectuate the provisions of this Ordinance. SECTION 3 This Ordinance shall become effective upon final passage and approval. INTRODUCED Auaust 9. 2004 PASSED AND APPROVED August 23, 2004 �. _# /7 1gS7 F 0 M V, & Wo r Background Paper for Proposed ORDINANCE AGENDA ITEM # ;?/ DATE: August 9, 2004 DEPARTMENT: Law Department TITLE AN ORDINANCE SUBMITTING TO THE REGISTERED ELECTORS OF THE CITY OF PUEBLO, COLORADO AT THE SPECIAL MUNICIPAL ELECTION TO BE HELD ON NOVEMBER 2, 2004 QUESTIONS RELATING TO AN AMENDMENT TO THE CITY'S SALES AND USE TAX ORDINANCE AND THE USE OF THREE AND THREE - TENTHS PERCENT (3.30 %) OF THE CITY'S SALES AND USE TAX REVENUE ISSUE Should the City Council at the request of the Urban Renewal Authority of Pueblo, Colorado submit to a vote of the registered electors at the special municipal election to be held November 2, 2004 the two questions set forth in the attached ordinance and described under Background? RECOMMENDATION None. BACKGROUND The Urban Renewal Authority of Pueblo, Colorado ( "Authority ") is requesting the City Council to refer to the vote of the people on November 2, 2004 two ballot questions as follows: 1. Amending the City sales and use tax ordinance to authorize the City Council as a voter approved revenue change under TABOR to use the 3.30% of City's sales and use tax revenues, which were previously being retained by retailers who collect such tax on behalf of the City to cover their expense in collecting and remitting such taxes, for one or more of the following purposes: (1) paying the debt service on Authority's $9.5 million bonds issued to finance initial construction of the Pueblo Convention Center and hotel complex, or bonds issued to refinance such bonds, (2) paying the net operating and maintenance expenses of the Pueblo Convention Center, (3) financing the acquisition and construction of parking facilities, (4) assist in the financing, acquisition, construction and equipping of a health department facility, (5) after encumbering all tax allocation revenues of the Authority, paying the debt services on Authority's bonds in a principal amount of up to $12,000,000 to be issued to finance the expansion of the Pueblo Convention Centerand related improvements, and/or (6) reimbursing the retailers fortheircosts incurred in collecting and remitting the sales and use tax revenues to the City. (2) Specifically authorizing the City Council to pledge the revenues generated by 3.30% of City's existing sales and use tax toward the payment of Authority's bonds to be issued in a principal amount of up to $12,000,000 with a repayment cost not to exceed $28,500,000 to finance the expansion of the Pueblo Convention Center and related improvements. FINANCIAL IMPACT Historically, 3.3% of the City's sales and use taxes collected by retailers was retained by them to cover their expenses in collecting and remitting the taxes ( "Vendors' Fees "). By vote of the people in 1993, the Vendors' Fees were temporarily diverted from the retailers and authorized to be used to (a) pay the debt services on the Authority's $9.5 million bonds issued to finance initial construction of the Convention Center and hotel complex, or bonds issued to refinance such bonds, (b) pay the net operating and maintenance expenses of the Convention Center, and (c) reimburse the retailers. The Vendors' Fees generate $1.4 million in revenues annually and will generate additional revenues as the City's sales and use tax increases over the years. There is also generated within the urban renewal area $340,000 per year in tax increment revenues. Without any increase in Vendors' Fees, the Venders' Fees will generate at least $35,000,000 in revenue during the extended 25 -year period from 2004 to 2029. Assuming the tax increment revenue will be $340,000 per year, the tax increment revenue would generate an additional $8,500,000 during such period, or a total of $43,500,000. There is approximately $1.9 million in bond trust funds under the $9.5 million bond indenture. The Authority has over $1.1 million in unrestricted cash and investments. The Authority proposes to (a) refund the approximately $7.5 million balance of $9.5 million bonds, release the $1.9 million bond trust funds from any obligation to pay the $9.5 million bonds, and commit $1,675,000 of the bond trust funds for the construction of a parking structure in HARP. (b) use $713,850 of its $1 million in unrestricted cash and investments ( "excess tax increment revenues ")to purchase surface parking nearthe Convention -2- Center. (c) use the tax increment revenues for operation of the Authority other than the Convention Center, and for projects within the expanded urban renewal area without specifically identifying such projects or the amount of revenues to be generated by tax increment financing. (d) issue additional bonds in the principal amount of $12,000,000 to expand the Convention Center and related improvements. (e) authorize the City Council to commit the Vendors' Fees to the payment of debt service on the approximately $7.5 million refunding bonds, estimated to be $10,800,000, as well as to the payment of debt service on the additional $12 million bonds, estimated to be $28,500,000, or total debt services of $39,300,000. (f) commit and extend the Vendors' Fees to the payment of Authority's bonds and net operating expenses of the Authority for the expanded Convention Center for 25 years to 2029. Assuming the Authority has an operating loss of $500,000 per year instead of the $613,847 loss based upon the Authority's 2004 budget, such loss would exceed $12,500,000 over the next 25 years. Authority's audit for 2003 shows an operating loss of $860,705. However, additional informa- tion on page 17 of the audit presented for purposes of analysis and not a required part of the basic financial statements shows an operating loss of $497,756 including management fees and incentives. Authority's proposals will eliminate any possibility for 25 years from 2004 to 2029 that the Vendors' Fees may be returned to the retailers to cover their expenses in collecting and remitting the sales and use tax for the benefit of the City as well as any reasonably probability that the Vendors' Fees may be used for a health department facility or other needed public improvements. -3- ORDINANCE NO. 7181 AN ORDINANCE AMENDING CHAPTER 4, TITLE XIV OF THE PUEBLO MUNICIPAL CODE TO REALLOCATE THE USE OF THE THREE AND THREE - TENTHS PERCENT PORTION OF THE CITY'S SALES AND USE TAX REVENUES WHICH WERE PREVIOUSLY BEING RETAINED BY THE RETAILERS WHO COLLECT SUCH TAX ON BEHALF OF THE CITY TO COVER THEIR EXPENSES IN COLLECTING AND REMITTING SUCH TAX; AUTHORIZING THE CITY COUNCIL TO DEDICATE THE REVENUES FROM SUCH THREE AND THREE - TENTHS PORTION OF THE CITY'S SALES AND USE TAX TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE URBAN RENEWAL AUTHORITY OF PUEBLO, COLORADO ( "AUTHORITY ") REVENUE BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF $9,500,000 ISSUED TO FINANCE THE INITIAL CONSTRUCTION OF THE PUEBLO CONVENTION CENTER AND HOTEL COMPLEX, OR ANY BONDS ISSUED TO REFINANCE SUCH BONDS, TO THE PAYMENT OF THE NET OPERATING AND MAINTENANCE EXPENSES OF THE PUEBLO CONVENTION CENTER, TO THE FINANCING, ACQUISITION AND CONSTRUCTING OF PARKING FACILITIES, TO ASSIST IN THE FINANCING, ACQUISITION, CONSTRUCTION AND EQUIPPING OF A HEALTH DEPARTMENT FACILITY, TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE AUTHORITY'S REVENUE BONDS IN A PRINCIPAL AMOUNT NOT TO EXCEED $12,000,000 TO FINANCE AN EXPANSION OFTHE PUEBLO CONVENTION CENTERAND RELATED IMPROVEMENTS AFTER ENCUMBERING ALL TAX ALLOCATION REVENUES OF THE AUTHORITY TO THE PAYMENT OF SUCH BONDS, AND /OR TO THE REIMBURSEMENT OF RETAILERS FOR THEIR COSTS INCURRED IN COLLECTING AND REMITTING THE SALES AND USE TAX REVENUES TO THE CITY; CREATING A SPECIAL FUND FOR THE DEPOSIT OF SUCH REVENUES; FINDING AND DETERMINING THAT THE EXPENDITURE OF SUCH REVENUES FOR SUCH PURPOSES IS A PUBLIC PURPOSE AND MUNICIPAL FUNCTION; AND PROVIDING OTHER MATTERS RELATING THERETO BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: (Brackets indicate matter deleted; underscoring indicates matter added) SECTION 1 Chapter 4, Title XIV of the Pueblo Municipal Code (a portion of Ordinance No. 2189 approved by a vote of the People on November 8, 1955, as amended by Ordinance Nos. 3160, 3474, 4235, 5170, 5314, 5668 and 5810 ) is hereby amended to read as follows: Sec. 14 -4 -17. Collection fees. Notwithstanding Sections 14 -4 -1 and 14 -4 -85 of this Chapter, three and three - tenths percent (3.3 %) of the revenues derived from the taxes imposed by this Chapter shall be deposited and placed in a special fund hereby created pursuant to Section 7 -21 of the Charter of the City to be known as the "Collection Fee Fund ". The moneys in the Collection Fee Fund shall be used solely for one or more of the following purposes in such amounts and proportions as the City Council shall determine: [(1) paying the operation and maintenance expenses of a civic center and hotel complex within the Urban Renewal Authority of the City; (2) paying the principal of, premium, if any, and interest on revenue bonds of the Urban Renewal Authority of the City issued to finance the civic center and hotel complex and other improvements, or any bonds issued to refinance such bonds; and /or (3) reimbursing retailers for their costs incurred in collecting and remitting the sales and use tax revenues to the City.] (1) paving the principal of premium if any, and interest on the Urban Renewal Authority of Pueblo Colorado ("Authority") revenue bonds in the aggregate principal amount of $9 500 000 issued to finance initial construction of the Pueblo Convention Center and hotel complex, or any bonds issued to refinance such bonds (2) paying the net operating and maintenance expenses of the Pueblo Convention Center, (3) financing the acquisition and construction of parking facilities (4) assist in the financing acquisition construction and equipping of a health department facility, (5) paying the principal of premium if any, and interest on the Authority's revenue bonds in a principal amount not to exceed $12,000,000 to be issued to finance an expansion of the Pueblo Convention Center and related improvements after encumbering all tax allocation revenues of the Authority to the payment of such bonds or any bonds issued to refinance such bonds. and /or (6) reimbursing retailers for their costs incurred in collecting and remitting the sales and use tax revenues to the City The City Council is authorized to pledge irrevocably all or any part of the moneys in the Collection Fee Fund for [the] any and all of the purposes set forth in clauses [(1) and /or (2)] (1), (2). (3), (4) and (5) above. SECTION 2 The People of Pueblo do hereby find, determine and declare that the expenditures of revenues from the three and three - tenths percent of the City's sales and use tax revenues deposited to the Collection Fee Fund established pursuant to Section 14 -4 -17 of Chapter 4, Title XIV of the Pueblo Municipal Code (Ordinance No. 2189 approved by a vote of the People on November 8, 1955, as amended by Ordinance Nos. 3160, 3474, 4734, 5170, 5314, 5668, 5810 and 7181) will promote the public peace, health, safety and -2- welfare and the expenditure of such revenues for the purposes set forth in said Section 14- 4-17 is a public purpose and municipal function notwithstanding such expenditure may, directly or indirectly, aid, assist or benefit private persons, corporations or other entities. SECTION 3 All ordinances relating to sales and use taxes heretofore adopted, amended or implemented shall remain in full force and effect except as the same have been previously amended or repealed or as same may be amended by this Ordinance. SECTION 4 All ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent of such inconsistency. This repealer shall not be construed to revive any ordinance, or part thereof, heretofore repealed. SECTION 5 If any section, subsection, paragraph, clause or other provision of this Ordinance for any reason is invalid or unenforceable, the invalidity or unenforceability of such section, subsection, paragraph, clause or other provision shall not affect any of the remaining provisions of this Ordinance. SECTION 6 This Ordinance shall become effective upon majority vote in favor thereof by the registered electors of Pueblo voting thereon at the Special Municipal Election to be held Tuesday, November 2, 2004. -3-