Item No: 5D.

Meeting Date: June 25, 2012

From: Ken Thomas, Economic Development and Housing Director

Subject: Ordinance calling for a referendum to determine whether Commission should be authorized to grant economic development Ad Valorem (Property Tax exemptions to new businesses, and expansion of existing businesses, to encourage economic development and establish new jobs.

Staff Recommendation:

Staff recommends approval of the ordinance calling for a referendum be placed on the November 2012 Presidential General Election to determine whether the City of Leesburg Commission should be authorized to grant economic development Ad Valorem (Property) Tax Exemptions to new and existing businesses to encourage economic development and establish new jobs

Analysis:

For ten years, the City of Leesburg offered tax abatement incentives to new and existing companies for job creation. However, in 2008 the tax abatement incentive expired. As a result of uncertain economic times, the need to diversify our business base and encourage industries that offer higher than average salaries to locate in Leesburg and to help existing businesses to expand is imperative. The proposed incentive could encourage existing businesses to expand, purchase new equipment, save jobs and create new jobs.

Frequently Asked Questions:

What is the proposed tax exemption for economic development?

The ad valorem tax exemption for economic development is a proposed economic incentive program designed to encourage new businesses to locate in Leesburg while assisting existing local businesses to expand and create new job opportunities. If approved, the program will authorize the City of Leesburg to grant qualifying businesses a temporary City property tax exemption of up to 100% for up to 10 years.

When will the incentive program take effect in Leesburg?

A voter referendum asking whether the City of Leesburg City Commissioners should be authorized to grant economic development ad valorem tax exemptions to qualifying businesses will appear on the November 2012 Presidential General Election ballot. The application process could begin upon passage of the referendum.

What taxes will be eligible for exemption?

City of Leesburg property taxes on qualifying buildings and equipment will be eligible.

Will school or county taxes be affected?

No. The exemption will apply only to the citywide ad valorem tax levied by the City of Leesburg and will not apply to school taxes, county taxes, or the taxes of any other entity.

Why would the City want to have this program in its tool box?

The economic development ad valorem tax exemption program is designed to diverse the City’s business base by encouraging higher paying jobs, and the program will enable Leesburg to more effectively attract new businesses.

How will it be administered and what are the costs?

Existing Housing & Economic Development Staff will administer the program.

Are companies that apply automatically granted an exemption?

No. Companies must first meet the threshold criteria required by state law. If all criteria are met, an application will be considered by the Leesburg City Commission at a public hearing where public input is taken. The Commission will have discretion to grant or deny exemption applications and to determine the percentage and duration of the exemption. Each exemption is granted on a case by case basis.

What are the threshold criteria?

For existing businesses or organizations

• A business or organization that manufactures, processes, compounds, fabricates, or produces products at a fixed location and creates 10 or more full time jobs that are above the average wage in the area; or
• A business or organization that is a qualified target industry and creates 10 or more full-time jobs that are above the average wage in the area; or
• A business or organization that creates 25 or more full-time jobs and sells 50% or more of its goods outside the State for each year the exemption is claimed; provided that the business increases operations on a site co-located with a commercial or industrial operation owned by the same business, resulting in a net increase in employment of at least 10% or an increase in productive output of at least 10%; or
• A business or organization located in an Enterprise Zone or Brownfield Area that increases operations on a site located within the same zone or area located co-located with a commercial or industrial operation owned by the same business or organization.

Are existing buildings and equipment eligible for exemption?

No. Only new buildings and new equipment built or purchased by a qualifying business after the application for exemption is filed are eligible. Land is not eligible. Equipment purchased to replace existing equipment is not eligible. If the property has been taxed before, it is not eligible, regardless of any ownership change.

Can the exemption be applied retroactively?

No. It applies only to new construction and new equipment constructed or purchased after the application for exemption has been filed.

What happens if a business that has been granted an ad valorem tax exemption fails to comply with the job creation requirements of the ad valorem tax exemption program?

A business or organization which does not achieve the performance requirements specified in the individual authorizing ordinance could/would have the ad valorem tax exemption revoked in whole or in part.

Options:

1. Approve the ordinance calling for a referendum for tax exemption for economic development or;

2. Such alternative action as the Commission may deem appropriate

Fiscal Impact:

At the present millage rate of 4.3179 per $1,000 valuation, a building with a value of $100,000 would receive a tax exemption of $431.79 per year.

Submission Date and Time: 6/22/2012 2:29 PM____

Department: ______________________ Prepared by: ______________________ Attachments: Yes____ No ______ Advertised: ____Not Required ______ Dates: __________________________ Attorney Review : Yes___ No ____ _________________________________ Revised 6/10/04

Reviewed by: Dept. Head ________ Finance Dept. __________________ Deputy C.M. ___________________ Submitted by: City Manager ___________________

Account No. _________________ Project No. ___________________ WF No. ______________________ Budget ______________________ Available _____________________

ORDINANCE NO. _____________

AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA, CALLING A REFERENDUM IN THE CITY OF LEESBURG TO BE HELD IN CONJUNCTION WITH THE PRESIDENTIAL GENERAL ELECTION OF NOVEMBER 6, 2012 TO DETERMINE WHETHER THE CITY COMMISSION SHOULD BE AUTHORIZED TO GRANT ECONOMIC DEVELOPMENT AD VALOREM (PROPERTY) TAX EXEMPTIONS TO NEW BUSINESSES, AND EXPANSION OF EXISTING BUSINESSES, PURSUANT TO ARTICLE VII, SECTION 3 OF THE FLORIDA CONSTITUTION, TO ENCOURAGE ECONOMIC DEVELOPMENT AND ESTABLISH NEW JOBS; PROVIDING FOR SEVERABILITY; PROVIDING AN EFFECTIVE DATE.

BE IT RESOLVED BY THE PEOPLE OF THE CITY OF LEESBURG, FLORIDA:

WHEREAS, pursuant to Article VII, Section 3 of the Florida Constitution and Section 196.1995, Florida Statutes, the City Commission is authorized to call a referendum within its jurisdiction to determine whether the City Commission may grant economic development ad valorem (property) tax exemptions to qualifying new businesses and expansions of qualifying existing businesses; and

WHEREAS, granting such exemptions to qualifying businesses will provide the City of Leesburg with an additional economic development incentive which will enhance the desirability of the City of Leesburg as a location for new business and expansion of existing businesses; and

WHEREAS, the City Commission desires to call a referendum to determine whether it should be authorized to grant such economic development ad valorem (property) tax exemptions to encourage economic development and establish new jobs, which action is in the best interest of City of Leesburg and serves both a municipal and public purpose; and

WHEREAS, this Ordinance is adopted pursuant to Article VII, Section 3 of the Florida Constitution, Section 196.1995, Florida Statures, Chapter 166, Florida Statutes, and other applicable provision of law:

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA, that:

Section 1. Recitals. The recitals set forth above are adopted by the City Commission as the finding of the City and are incorporated herein.

Section 2. Referendum. A referendum is hereby called in City of Leesburg to be held in conjunction with the presidential general election of November 6, 2012, to determine whether the City Commission should be authorized to grant economic development ad valorem (property) tax exemptions to new businesses and expansion of existing businesses, pursuant to Article VII, Section 3 of the Florida Constitution, and as provided in Section 196.1995, Fla. Stat. (2012) to encourage economic development and establish new jobs.

Section 3. Ballot Title and Question. The ballot title and question for the referendum shall be in the following form:

CITY OF LEESBURG ECONOMIC DEVELOPMENT PROPERTY TAX EXEMPTIONS FOR NEW BUSINESSES AND EXPANSIONS OF EXISTING BUSINESSES

Shall the City Commission of the City of Leesburg be authorized to grant, pursuant to Section 3, Article VII of the State Constitution, property tax exemptions to new businesses and expansion of existing businesses to encourage economic development and establish new jobs?

______ Yes - For authority to grant exemptions

______ No - Against authority to grant exemptions

Section 4. Notice of Referendum. Notice of the referendum shall be published in a newspaper of general circulation in the City of Leesburg, at least twice, once in the fifth week and once in the third week prior to the week in which the referendum is held, the date of the first publication in said newspaper to be at least thirty (30) days before said referendum, in the manner provided in Section 100.342, Florida Statutes.

Section 5. Severability. It is declared to be the intent of the City Commission that if any section, sentence, clause or provision of the Ordinance is held invalid by a court of competent jurisdiction, it shall in no way affect the validity of the remaining portions of this Ordinance.

Section 6. Effective Date. This Ordinance shall be effective immediately upon its adoption. Immediately upon adoption, the City Clerk is directed to provide a copy of this Ordinance to the Lake County Supervisor of Elections.

PASSED AND ADOPTED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA, this _______day of July, 2012.

Sanna Henderson

Mayor

ATTEST:

________________________ _______________

Betty M.Richardson

City Clerk