Economic Vitality Committee Agenda and Packet 2024 06 21

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SUBJECT: DEVELOPMENT UPDATES DATE: JUNE 21, 2024 PAGE 7 OF 9 Incentive Impact Businesses have a lot of factors and inputs to consider when making location and expansion decisions. Businesses want to be in a place that is sustainable in both the short and long term and provides them the ability to attract and retain talent and grow as needed to meet demand and company goals. Some vital inputs include availability of labor, availability of land/building, construction timeframe, business -friendliness of the community and cost of the project. One way for Louisville to impact the competitive nature of our available site opportunities is to impact the cost of the project through available incentives. All things comparable, a location decision will come down to cost and ability to get a project completed in a timely manner. Not all costs are related to City policy or can be influenced by the City but the City having a clear and easy to engage with incentive policy is crucial for economic vitality success. Some of the costs associated with business operations include salaries, overhead, property taxes, sales taxes, use taxes, insurances, unemployment insurance, marketing, operational costs, building and tenant finish costs, permit fees, additional employee costs (health insurance), and local, county, state and federal fees/taxes. In order to be competitive, Louisville should work to positively influence the costs that are within their jurisdiction and control. The State of Colorado is consistently evaluating their business costs and incentives to ensure compatibility with state goals and competitiveness within the nation and world. Through this, they continue to make amendments to their policies to keep up with industry needs and economy trends. The State of Colorado has exempted sales/use tax on property used in space flight and manufacturing equipment to remain competitive with other states. Sales and use taxes are essential for City finances but can add up very quickly for the business operator, sometimes at an unsustainable level for software and machinery, especially specialized equipment. In some cases, businesses are paying costs that they would not have to pay elsewhere in Colorado or in the nation, making us no longer a competitive location for businesses. Louisville needs to be competitive within the state but also across the nation to continue to attract, expand and support a robust and diverse economy. Below are some examples of current sales and use tax exemptions. Entity Exemption State of Colorado Property used in space flight and manufacturing equipment Boulder County Purchases of machinery or machine tools for manufacturing Lafayette, CO Manufacturing/wholesale purchases Broomfield, CO Property used ins ace flight Centennial, CO Manufacturing equipment Lakewood, CO Manufacturing equipment Ft. Collins, CO Tiered rebate for manufacturing a ui ment