Business Retention and Development Committee Agenda and Packet 2019 05 06

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SUBJECT: BUSINESS ASSISTANCE PROGRAM REVIEW AND ANALYSIS DATE: MAY 6, 2019 PAGE 3 OF 5 market conditions change and there are increases in the vacancy rate of commercial and industrial properties, it will be re-evaluated. Retail Assistance Packages Retail businesses in Louisville collect sales taxes for the City and is a significant portion of the City's revenues (2018 estimate is 54.5% of all tax revenue). The BAP program encourages retailers to locate or expand in town that will increase sales tax revenues for the City. Projects that tend to be recommended to City Council for approval are: 1) Existing Louisville retailers expanding their operations to facilitate greater sales at the location 2) New retailers looking to locate in Louisville within new retail buildings being constructed in town or in properties having been vacant for a significant period of time. Retail assistance packages typically offer the following incentives: • 50% rebate of the City's Building Permit fees • 50% rebate of the City's Construction Use Taxes levied on the project • 40% rebate of the City's general 3% sales tax levied on new sales delivered through the project. This incentive is usually a two-year incentive, but could be more depending on the level of investment and potential revenue for the City. BAP Program Performance Since 2007, the City Council has approved 72 assistance packages. Of this total, 54 are on -going or completed. Eighteen of these agreements either did not result in the business or project coming to Louisville or the business or project did not meet the requirements to receive the assistance (i.e. didn't occur in the timeframe specified in the agreement). Staff analyzed several sources of data to evaluate the effect the Business Assistance Program has had on the Louisville economy: • Permit fees paid and construction values were obtained from Building Services department files. These values include construction costs of new buildings (if applicable) and any tenant finishes which were directly related to project incented by the Business Assistance Package. This includes projects that have paid their permits and fees, but have not been rebated. • The amount of incentives paid out from Assistance Agreements through April 2019. • Jobs and wage data obtained from the State of Colorado's Quarterly Census of Employment and Wages (QCEW) data from year 2018. This information is confidential at the business level, but can be provided in aggregate to prevent distribution of information about a particular business. Some businesses that are in operation have not hit the database as of the end of 2017. Those businesses will likely show up in next year's reporting. CITY COUNCIL COMMUNICATION