Consideration and Adoption of Resolution No. 2020-43:  A resolution of the Flagstaff City Council adopting a Flagstaff Automotive Sales Tax Rebate Program to further the City's climate action goals and to support local automotive dealers (Flagstaff Automotive Sales Tax Rebate Program)

Consideration and Adoption of Resolution No. 2020-44:  A resolution of the Flagstaff City Council adopting a Flagstaff Business Attraction Job Creation Incentive Program to assist in attracting new businesses that will provide high wage jobs in specific industry sectors (Flagstaff Business Attraction Job Creation Incentive Program)
 
Consideration and Adoption of Resolution No. 2020-45:  A resolution of the Flagstaff City Council adopting a Development Reinvestment Incentive Program to assist in attracting new businesses that will provide high wage jobs in targeted industry sectors (Flagstaff Business Attraction Development Reinvestment Incentive Program)

Sustainable Automotive Sales Tax Rebate: This incentive offers purchasers of a new or used fuel efficient vehicle a rebate on a portion of the City local transaction privilege (sales) tax or use tax rate, which is currently 2.281%. The rebate would be:

• All Electric Vehicle: 2% local tax rate for any new or used vehicle purchased within the City of Flagstaff. (Effective local tax rate of .281%)
• Hybrid / Plug-in Electric Hybrid Vehicle: 1.5% local tax rate for any new or used vehicle purchased within the City of Flagstaff with a city fuel economy of 40 MPG or higher. (Effective local tax rate of .781%)
• Fuel Efficient Vehicle: 0.5% local tax rate for any new or used vehicle purchased within the City of Flagstaff with a city fuel economy of 35 MPG or higher.  (Effective local tax rate of 1.781%)
• Income Based: For individuals earning less than $50,000 per year, the rebate will be up to $250, but not to exceed the local tax rate of 2.281% applicable to the purchase. (Effective tax rate will vary based on purchase price of vehicle)

Job Creation Incentive: Businesses that are locating to Flagstaff may be eligible for up to $15,000 in reimbursement funds. These businesses must meet the specified criteria; business locating within Flagstaff City limits, will create ten (10) new full-time permanent jobs, and have a higher median salary/hourly rate for those new positions within the target sector. If these criteria are met, the business may apply for the available funds to use for relocation expenses, work related training, and other work force development uses. 

Development Reinvestment Incentive: Businesses that are locating to Flagstaff that meet the necessary criteria; i.e. business locating within Flagstaff City limits, will create ten (10) new full-time permanent jobs, and have a higher median salary/hourly rate for those new positions within the target sector. This incentive would allow new businesses to request reimbursement for development that provides a public benefit. The funds for this incentive would be generated by the city's construction sales tax, and a portion would be made available for reimbursement to businesses that complete public improvements while developing their new site. Some possible uses are, beautification improvements, public roadways and lighting, stormwater infrastructure, etc. that benefit the public.

Auto Sales Tax Rebate: Budgeted in the FY-21 budget with $20,000 available. Funds are in the BBB-Economic Development budget for economic development purposes. 

Job Creation Incentive: Budgeted in the FY-21 budget with $75,000 available. Funds are in the BBB-Economic Development budget for economic development purposes. 

Development Reinvestment Incentive: Would allocate a portion of the City's construction sales tax revenue (0.5% sales tax rate), if approved, to be used for qualifying improvements that create public benefit.  

Three new policies are being proposed. 

The Automotive Sales Tax Rebate is a revamp of a former policy that was adopted in 2009. 

Council Goals: 

ECONOMIC DEVELOPMENT - Grow and strengthen a more equitable and resilient economy.

CLIMATE CHANGE - Take meaningful climate change action.
 
City of Flagstaff Strategic Priorities:
 
Foster a resilient and economically prosperous city

1. Approve resolutions. 

2. Amend resolutions then approve. 

3. Do not approve. 

Sustainable Automotive Sales Tax Rebate: This program has been funded in the FY-2020-21 budget and has $20,000 available to use towards this incentive. The City of Flagstaff will rebate part of the local tax paid for purchases of fuel-efficient automotive vehicles. The current local transaction privilege (sales) tax rate on purchase of vehicles is 2.281%.  This policy is a revamp of a former policy that was implemented in 2010. The increased availability of electric and sustainable vehicles, coupled with an increased awareness and want to mitigate climate change from our community, is partially why staff is giving reinvigorating this policy. Additionally, there have been several discussions over the last year where this idea was discussed by stakeholders, such as, Economic Collaborative of Northern Arizona (ECoNA), the Flagstaff Auto Park Owner's Association, the Flagstaff Chamber of Commerce, and several Council members. This policy helps to further advance the Climate Action Adaptation Plan (CAAP) and will also help our local automotive dealers, by incentivizing vehicle purchases that occur in Flagstaff city limits. 

Job Creation Incentive: This program has been funded in the FY-2020-21 budget and has $75,000 available to use towards this incentive. This incentive was reviewed, and staff received feedback from multiple community partners and stakeholders. The purpose of this incentive is to give Flagstaff an edge when recruiting new businesses to our community. This incentive coupled with incentives from the Arizona Commerce Authority (ACA), Coconino County, and other economic development tools will help give flagstaff an edge when recruiting business from key industry sectors. This incentive is designed to help attract business in the bio medical, manufacturing, healthcare, software development and other similar key sectors. This incentive is not designed for the retail or lodging sectors as these businesses normally tend to follow when there is an increase in the economic base of a city. The maximum reimbursement one business may receive is $15,000.

Development Reinvestment Incentive:

Option 1: This program will be funded using a percentage of the City’s unrestricted (general fund) construction sales tax associated with new development. Qualifying businesses that meet the minimum criteria may apply for reimbursements associated with project improvements. These improvements must be directly tied to development that creates added public benefit. Examples of some improvements could be beautification projects, public roadways and lighting, stormwater infrastructure, etc. The currently proposed funding mechanism would allocate 0.5% of the unrestricted construction sales tax for these uses. This incentive is designed to help attract business in the bio medical, manufacturing, healthcare, software development and other similar key sectors. This incentive is not designed for the retail or lodging sectors as these businesses normally tend to follow when there is an increase in the economic base of a city.

Ex) A business is constructing a $1,000,000 project. This would generate $5,000 in available funds that could be utilized for qualified improvements. For projects this size, $5,000 may not appear to be a large sum of money, but there have been instances when a business has been asked to add minor elements to their design. Such as landscaping components, entryways to our Flagstaff Urban Trail System, dark sky lighting, etc. 

Option 2: Qualifying businesses that meet the minimum criteria may apply for reimbursements associated with the job creation incentive. This option would allow for additional monies to be made available for business that exceed the $15,000 limit for reimbursement. The funding mechanism is the same and would be generated from a portion of the City’s construction sales tax (0.5%).

Consult: Staff received feedback and input from several community stakeholders regarding these policies including; the Auto Park Owner's Association, Economic Collaborative of Northern Arizona (ECoNA), and the Flagstaff Chamber of Commerce.