2004/03/10 Council Agenda Packet

• EVERETT CITY COUNCIL AGENDA ITEM COVER SHEET 19 PROJECT TITLE: Ordinance Repealing Section 8 of Consent COUNCIL BILL# 0309-06- 1D- Ordinance 30 - 1DOrdinance No. 2582-02, adding a Action Originating Department Legal Findings and Purpose Section, and 3/10/04 First Reading Contact Person Ned Johnston Amending Section 5 of Ordinance 3/17/04 Second Phone Number 257-8727 No. 2582-02 relating to Business Reading and Occupation Tax effective 3/24/04 Third Reading FOR AGENDA OF 3/10/04 January 1, 2006. Public Hearing Initialed by: Department Head _._�., CAA Council President e Location Preceding Action Attachments Department(s)Approval Ordinance No. 2582-02 Council approval of this agenda item authorizes a budget revision in the additional amount requested. Expenditure Required $ -0- Account Number(s): Amount Budgeted $ -0- Additional Required $ -0- DETAILED SUMMARY STATEMENT: The revisions to the Business and Occupation Tax ordinance, effective January 1, 2006, will eliminate the option under the existing ordinance which allows manufactures who manufacture both within and without the City of Everett to rely on formulas obtained by City Clerk's ruling to calculate gross proceeds. The new"Findings and Purpose Section" states that the ordinance amendment will implement the 7E7 aircraft "Project Olympus Master Site Development and Location Agreement"with The Boeing Company, the City of Everett, State of Washington, and the Port of Everett, dated December 19, 2003. The Agreement is to assist Boeing in obtaining a suitable site for the location of the final assembly of the 7E7. As a result of these negotiations, the City of Everett and The Boeing Co. have agreed to a Business and Occupation tax reduction for calandar years 2006 though 2023. During such period,the City agrees not to suspend, revoke or require repayment of such reduction,provided that final assembly of the 7E7 Aircraft begins by December 31, 2007. The rate reduction by the City of Everett creates an estimated net present value reduction of approximately$35 million over a 20-year period. This amount is calcuated using a six percent(6%)discount rate over 20 years based on current estimated aircraft production and sales. This amendment provides for a rate reduction from .001 to .00025 on the gross proceeds of the value of product by a manufacturer on amounts more than $6 billion for the years 2006 through 2009, more than $7 billion for the years 2010 through 2015 and more than $8 billion for 2016 through 2023. Thereafter,the rate returns to .001 percent regardless of the amount of gross proceeds. RECOMMENDATION (Exact action requested of Council): Pass the Ordinance Repealing Section 8 of Ordinance No. 2582-02, adding a Findings and Purpose Section, and Amending Section 5 of Ordinance No. 2582-02 relating to Business and Occupation Tax, effective January 1, 2006. 148