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HomeMy WebLinkAboutResolution - 3669 - Adopt Plan - Special Sales Tax Elction - Property Tax Reduction, & ED Sales Tax - 07_25_1991Resolution No. 3669 July 25, 1991 Item #18 JCR:da RESOLUTION A RESOLUTION DIRECTING THE CITY STAFF TO UNDERTAKE ALL NECESSARY STEPS TO PREPARE FOR AN ELECTION TO BE HELD ON JANUARY 18, 1992, WHICH ELECTION SHALL SUBMIT TO THE VOTERS A PROPOSITION TO INCREASE THE CITY SALES TAX BY ONE -EIGHTH (1/8) CENT DEDICATED TO PROPERTY TAX REDUCTION; A PROPOSITION TO INCREASE THE CITY SALES TAX BY THREE -EIGHTH (3/8) CENT DEDICATED TO ECONOMIC DEVELOPMENT; A PROPOSITION TO AMEND THE CITY CHARTER BY REPEALING CHAPTER 3, ARTICLE 1 OF SAID CHARTER, WHICH ARTICLE ESTABLISHES THE BOARD OF CITY DEVELOPMENT; AND ADOPTING AN ECONOMIC DEVELOPMENT PLAN, AS PROPOSED BY THE MAYOR AS A GUIDELINE FOR EXPENDITURE OF SALES TAX REVENUES FOR ECONOMIC DEVELOPMENT AND PROVIDING FOR PROPERTY TAX RELIEF. WHEREAS, during City Council work session held on July 11, 1991, the Mayor initiated discussion concerning the future economic development and growth of the City of Lubbock; and WHEREAS, the Mayor recognized Mr. Joe Newman, a local government specialist employed by the Office of the Texas State Comptroller; and WHEREAS, Mr. Joe Newman made a presentation to the City Council outlining the benefits to be derived to a city by having a local economic development corporation created in accordance with Art. 5190.6, Section 4A and implementing a sales tax for the support of such corporation; and WHEREAS, the Mayor indicated to the City Council that if the voters are.requested to approve any additional sales tax as provided by the above referenced statute, that it is incumbent upon the City to have a detailed plan in place outlining the use of such funds for economic development; and WHEREAS, the Mayor did outline a comprehensive plan to the City Council for the use of additional sales tax as authorized by the above statute together with specific provisions to reduce property taxes and to repeal Chapter 3, Article 1 of the Charter of the City of Lubbock, which Chapter establishes the Board of City Development; and WHEREAS, the Mayor emphasized that in order for Lubbock to grow, to provide new jobs, to bolster the economy and to compete with other Texas cities in the field of economic development, it was necessary to consider new approaches to the City's economic development activities; and WHEREAS, the Mayor indicated to the City Council that the citizens of the City of Lubbock were looking to the City Council for leadership on this important issue; and WHEREAS, the Mayor stressed that such leadership required a unified action by the City Council in adopting new approaches to local economic development; and WHEREAS, the Mayor asked for the support of the City Council for his plan to expand local economic development; NOW THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: SECTION 1. That the City staff take all necessary steps to prepare for an election on January 18, 1992 with the following proposition to be placed on the ballot for voter's consideration in accordance with the Texas Election Code: a) whether to increase the city sales tax by one -eighth (1/8) cent with a mandatory reduction in property tax rate by four cents per 100 assessed valuation; b) whether to increase the city sales tax by three -eighth (3/8) cent with proceeds dedicated to economic development and an associated reduction in the property tax of three cents per 100 assessed evaluation if this proposition gains citizen approval (this is the amount currently being spent on economic development); and c) whether to amend the City Charter to delete Chapter 3, Article 1, specifically the Article creating the Board of City Development, which has been in the City Charter since 1925. SECTION 2. That the City Council hereby adopt the Mayor's plan for economic development under the provisions of Art. 5190.6, Section 4A, V.T.C.S., which plan is as follows: a) Date for the Sales Tax Election - it is recommended that City Council call the sales tax election for Saturday, January 18, 1992. At the present time, it appears that the January date is the best choice because there will be a number of constitutional amendments for Tuesday, November 5 and it has been Council's wishes to hold this election on a date clear of other issues. Based on the best available information to us at this time, the January date is open. If the citizens approve, the tax on January 18, then merchants would begin the new rate on July 1, 1992 and the city would begin receiving money on September 10, 1992. b) Amount of Sales Tax - It is recommended that Council call a sales tax election for one -eighth (1/8) cent, which would be dedicated to reduction in the current ad valorem rate. One - eighth (1/8) cent would yield approximately $2 million annually, which could be used to reduce the current ad valorerr rate by a minimum of four cents. In addition, it is recommended that the citizens be asked to approve three -eighth - 2 - (3/8) cent sales tax to be used for economic development. This three -eighth (3/8) cent will yield approximately $6 million annually. This overall plan calls for a reduction in the ad valorem property tax rate of seven (7) cents. Under this plan, voters can be assured of a four cent reduction in the ad valorem rate, if the one -eighth (1/8) cent for property tax reduction is approved and the City Council will be able to reduce the ad valorem rate by an additional three (3) cents, which is currently being used to fund economic development programs in the City of Lubbock, if the voters approve the three -eighth (3/8) cent for economic development purposes. The total impact of implementing a one -eighth (1/8) cent sales tax for property tax reduction and a three -eighth (3/8) cent sales tax for economic development will be $6 million available to Lubbock for economic development and a seven cent reduction in property taxes for Lubbock citizens. c) The following are the recommended uses for the three -eighth (3/8) cent economic development sales tax: 1. Facilities - Lubbock has an opportunity to attract additional regional and statewide governmental facilities which offer growth and economic stability for our community. Specifically, the plan allocates $425,000 for attraction of large state facility for FY 1991-92 with an anticipated employment of 600 - 850. Annual estimated cost of incentives: $425,000. 2. Establish a Technical Training Program - It is recommended that Lubbock establish a technical training program to convey to existing and targeted industries that Lubbock can provide a highly skilled and productive labor force. Many groups in Lubbock have urged Council to make technical training the top priority if the sales tax election is successful. When fully implemented, this important Council goal can satisfy an urgent community need to strengthen and expand the skills of Lubbock's labor force by providing much needed financial support for technical training. Council may desire to provide a long-term commitment to South Plains College to carry out the technical training programs. 3. Estimated annual cost: $800,000 to $900,000 Lubbock Competitive - It is recommended that Lubbock establish a variety of economic development incentives and financing options which meet or exceed those offered - 3 - by our competitor cities. Well -planned and properly managed financing programs must be put into place for our community to remain competitive and create new jobs. The plan includes: A program for acquisition of land, buildings and equipment for industrial projects. $350,000 estimated annual investment A small business revolving loan program, a basic financing plan to encourage start-up of small and minority owned businesses. Estimated annual investment $300,000 A venture capital financing program Estimated annual investment $300,000 A capital financing program to assist established local businesses expand and add new employees. Estimated annual investment $500,000 A loan guarantee program and payment of loan points to encourage and stimulate growth. Estimated annual investment $500,000 An aggressive industrial recruitment program. Estimated annual cost $125,000 Estimated annual cost of economic development financing incentive packages is $2.075 million d) Marketing Lubbock's Strengths - The plan includes a strong program to strengthen Lubbock's marketing and improve Lubbock's image, thus enhancing our job creation capabilities. Estimated annual cost: $400,000 e) Industrial/Research Park Development - Our City needs to evaluate the need and feasibility of a research industrial park. It is recommended that we build this industrial park if it is shown to be feasible. Estimated cost: $450,000 annual debt service to construct research park - 4 - f) Creation of Opportunity Fund - This plan includes establishing reserve incentive funds for future industrial projects that retain existing businesses or create new jobs in our community. These funds to be used for public improvements and infrastructure incidental to industrial project development. Estimated annual cost: $1 million to $1.4 million annually g) Operation Plan - It is proposed that a 10lo cap on costs for implementing and monitoring the corporation's economic development activities which include small business development, business retention and expansion, technical training, acquisition of land, buildings and equipments for industrial projects, venture capital financing, business and industrial recruitment, capital financing, research park development and setting up reserves and managing reserve funds for future opportunities. Annual cost: $450,000 to $500,000 h) Board of City Development Considerations - Establishment of a development corporation to administer the sales tax for economic development will result in duplication of efforts and funding if the current role of the BCD remains unchanged. In addition, this type structure could result in confusion and lack of coordination for our economic development initiatives. For this reason, it is recommended that the Council proceed with a plan to have an election to repeal the BCD provision of the City Charter at the same time as the local option sales tax election. It is time to ask the citizens for clarification of the BCD's role in economic development. It is recommended that the only Charter item to be placed on the ballot at this time would be an item to maintain or repeal the BCD charter provision. It is important to be positive about BCD accomplishments and make plans to continue those programs that are successful and eliminate those programs that have not proven to be successful. SECTION 3. The City Attorney is hereby directed to prepare the necessary election orders and seek the necessary Justice Department approvals to place these three items on the ballot for voter consideration on Saturday, January 18, 1992. - 5 - Passed by the City Council this 25th ATTEST: ecrextary APPROVE S TO CONTENT: 7�V(*.. -Rod-Ellis, Business Liaison Officer APPROVED AS TO FORM: J n C. Ross, Jr. City Attorney