Economic Vitality Committee Agenda and Packet 2024 08 16

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LCityof Louisville ECONOMIC VITALITY COMMITTEE COLORADO • SINCE 1878 SUBJECT: INCENTIVE IMPACTS DATE: AUGUST 16, 2024 PRESENTED BY: VANESSA ZARATE, CECD, ECONOMIC VITALITY MANAGER SUMMARY: The Economic Vitality team, through City Council, provides the business community with various incentives through the Business Assistance Program. In addition, the Louisville Revitalization Commission provides various incentives to businesses and property owners within the urban renewal boundaries. Incentives provided by the City of Louisville are performance and rebate based, providing positive direct and indirect impacts to the City of Louisville. Direct Impacts For this conversation, direct impacts are going to be the things we can draw directly from the new project from incentives provided by the Louisville City Council through the Economic Vitality team. This includes sales tax, construction and use tax, permit fees, new jobs and blight mitigation and vacancy reduction. Taxes are often the most direct impact that can be quantified through a new project. Depending on the project, these taxes can include sales tax, construction use tax and consumer use tax. These taxes are paid to the City by the private sector project and used by the City for various operations and functions. Sales tax is collected by the business on every transaction that has sales tax eligible products sold at their store. These sales taxes are then paid to the City to use as the general fund for operations. Similarly, use taxes are paid by the private sector to the City on items for the project that did not pay sales tax at the time of purchase or on services that may not have charged a sales tax. These taxes are used in various operations for the City of Louisville. Both sales and use taxes are eligible for rebate through the Business Assistance Program on a performance and rebate basis, meaning the company has to perform and then a rebate is provided based on true cost of the taxes generated by the private project. The amount of the rebate can vary, usually around 50%, meaning there is a sharing of the new taxes between the City. There is no up -front incentive provided by the City for the project and no lost revenue, as all incentives are paid out from the new money generated from a project. This set-up provides an opportunity for the City of Louisville to support new projects coming in while retaining some of the net new revenue provided by the new project.