Seek Council comment and direction on the three business attraction policies. Any edits/suggestions will be incorporated into the policies and brought back to Council during the meeting on July 7, 2020. 

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's sales tax (TPT). 

• All Electric Vehicle: 2% rebate of the city transaction privilege tax (TPT) for any new or used vehicle purchased within the City of Flagstaff.
• Hybrid / Plug-in Electric Hybrid Vehicle: 1.5% rebate of the city TPT for any new or used vehicle purchased within the City of Flagstaff with a city fuel economy of 40 MPG or higher. 
• Fuel Efficient Vehicle: 0.5% rebate of the city TPT for any new or used vehicle purchased within the City of Flagstaff with a city fuel economy of 35 MPG or higher.
• Income Based: An additional $250 may be made available to use towards the City's TPT for individuals that make less than $50,000 per year.

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. 

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, $5000 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%).