City Council Study Session Agenda and Packet 2012 02 13

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COUNCIL COMMUNICATION TO: MAYOR AND CITY COUNCIL FROM: MALCOLM FLEMING CITY MANAGER DATE: FEBRUARY 13, 2012 SUBJECT: DISCUSSION — BUSINESS ASSISTANCE PROGRAM ORIGINATING DEPARTMENT: ECONOMIC DEVELOPMENT SUMMARY: In January 2007, the City Council approved an ordinance establishing a business assistance program (BAP). This program was developed by the City Council's Business Retention and Development Committee. Because there have been some changes to the City Council membership since 2007, staff wanted to have an opportunity to present the program to the City Council and take questions. Background: Chapter 3.24 of the Louisville Municipal Code, enacted in 2007, describes the purpose of the BAP program as: The purpose of the BAP created by this chapter is to encourage the recruitment, retention, establishment and. /or substantial expansion of sales tax generating businesses and employers within the city, thereby stimulate the economy of and within the city, providing employment for residents of the city and others, further expanding the goods and services available for purchase and consumption by businesses and residents of the city, and further increasing the sales taxes and fees collected by the city, which increased sales tax and fee collections will enable the city to provide expanded and improved municipal services to and for the benefit of the residents of the city, while at the same time providing public or public - related improvements at no cost, or at deferred cost, to the city and its taxpayers and residents. Since 2007, 32 agreements have been approved by the City Council (see attachment). To date, the projected incentives total $1,196,300 to secure capital investment from companies totaling $38,878,530. Thus, it appears that on average each $1.00 of City incentive has secured $32.50 in capital investment from the private sector and in total the City's incentives have secured 1,456 jobs. The general philosophy behind incentives is that they are provided to encourage a certain desired action. Two important factors are: o They are not a reward for action already taken or a decision already made. o There has to be an underlying belief that without the incentive, the action would lj SUBJECT AGENDA ITEM DISCUSSION — BUSINESS ASSISTANCE PROGRAM IV 17