Consideration and Adoption of Resolution No. 2021-19:  A resolution of the Flagstaff City Council amending the 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. 2021-20:  A resolution of the Flagstaff City Council amending the 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)

Staff is bringing forward minor changes to the three business attraction incentives based on program analysis and stakeholder/ community feedback received since the inception of these incentives in July 2020. The recommended proposals outlined in the attached incentive policies will make these programs more effective and efficient while staff pursues the City's economic development goals and objectives. Additions are shown in UNDERLINED CAPITAL TEXT, and deletions are shown as stricken. The main alterations are also called out directly in the key consideration section of this agenda item.

***The revised Policies will be included in the final agenda packet***

The amendments will have no financial impact directly, but may lead to enhanced use of the incentives. Financial impacts of the incentives themselves, with the amendments or as currently existing, are outlined below:

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: Allocates a portion of the City's construction sales tax revenue (0.5% sales tax rate) to be used for qualifying improvements that create public benefit.

Minor revisions to the policies are proposed. These revisions come from staff analysis and community/stakeholder input. 

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

Council unanimously approved these original incentive policies via resolution at the July 7, 2020 Council meeting. 

1. Approve resolutions. 
2. Amend resolutions then approve. 
3. Do not approve. 

Council originally approved these incentives on July 7, 2020. 

Job Creation Incentive: This program has been funded in the FY-2020-21 budget with $75,000 and has $60,000 remaining for use after successfully supporting the recruitment of a company focused on satellites. 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 gives Flagstaff an additional option to use in 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, or available, 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 main proposed alteration within this particular incentive is to change the maximum reimbursement one business may receive from $15,000 to $25,000. Additionally, there have been supplemental tracking requirements for successful applicants, to confirm community benefits from the incentive program.  

Development Reinvestment Incentive: This program is funded using a percentage of the City’s unrestricted (general fund) construction sales tax associated from the new development itself. 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 or available 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 main proposed alterations to this incentive are to add supplemental tracking requirements for successful applicants, to confirm community benefits from the incentive program. Additionally, the amendments expand the time frame for when a new business may use this incentive after relocating to Flagstaff.

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), the Flagstaff Chamber of Commerce and various businesses/applicants that used these programs over the last ten months.