Business Retention and Development Committee Agenda and Packet 2016 02 01

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SUBJECT: DATE: BAP PROGRAM REVIEW FEBRUARY 1, 2016 PAGE2OF4 • Rebates of the City's Building permit fees on improvements to property. Typical agreements include a 50% rebate of fees. • Rebates of the City's general 3% construction use tax on materials related to improving property. Typical agreements include a 50% rebate of these taxes. • Rebates of the City's general 3% consumer use tax levied on equipment purchases related to the expansion /creation of the business that have a useful life greater than 3 years. Typical agreements include a 50% rebate of these taxes. DISCUSSION: Staff develops annually a report on the inputs and outputs of assistance agreements approved and implemented throughout the program's history. Attached is the most recent report from August 2015. Below is the summary chart within that report. Retail Commercial Total Incentives Paid Retained Jobs Created Jobs Total Jobs Total Annual Wages Average Wage /Salary Annual Sales Tax Permit Fees Paid Construction Cost $ 801,573 $ 27 257 284 $ 5,349,240 $ $ 18,835 $ $ 671,204 $ 321,737 $ $ 11,313,354 $ Incentives per Job $ 2,822 Annual Sales Tax $ per Incentive $ $ 0.84 Construction $ per Incentive $ $ 487,053 1,057 1,306 2,363 209,013,336 88,453 N/A 1,465,466 42,472,402 N/A 14.11 $ 206 $ 1,288,627 1,084 1,563 2,647 $ 214,362,576 $ 80,916 $ 671,204 $ 1,787,203 $ 53,785,756 $ 487 N/A 87.20 $ 41.74 Suggested clarifications and changes to the Municipal Code In the attached redline version of the BAP ordinance, staff has proposed changes to: • Reflect the implementation of Consumer Use Tax rebates o The Ordinance had not been adapted to incorporate the Consumer Use Tax creation in 2010. Expanding businesses can make significant purchases that the Consumer Use Tax is imposed. • Clarify the expansion of existing employers as a qualifying project o Language doesn't exist to explicitly state that expansion of existing employers is a qualifying project. Encouraging existing employers that have already chosen Louisville to expand is critical to the City's business retention activities. • Modify qualifying project timeframes from the first year to an expansion period. o Some projects have significant expansion plans that cannot be completed in one year. Ramping up production and its related equipment purchases CITY COUNCIL COMMUNICATION 9