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HomeMy WebLinkAbout02-51 ® TOWN OF TAOS RESOLUTION NO. 2002-51 WHEREAS the Town of Taos has adopted its operating budget for the fiscal year ending June 30, 2003, and WHEREAS the governing body of the Town of Taos, meeting in Regular Session this 17th day of Jaiy, 2002 wishes to adjust its operating budget for the fiscal year ending June 30, 2003. 's-d e.— NOW, THEREFORE be it resolved that the governing body of the Town of Taos, meeting in Regular Session this 17th day of�W X1002, adopts this budget adjustment and respectfully requests approval from the Local Government Division of the Department of Finance and Administration to effect this budget adjustment. Amount General Fund Revenues and Other Sources: Unreserved Fund Balance $ 50,000.00 ® Expenditures and other Financing Uses: Utility Plant in Service $ 50,000.00 (To adjust the General Fund, This budget,adjustment will use Funds from the unreserved fund balance for the Town of Taos participation in economic development projects,Penncro Call Center Project.) Capital Projects Fund Expenditures and other Financing Uses: Operating Expenses: Building/Utility Plant in Service Supplies &Maintenance $ 2,500.00 Capital Outlay: Utility Plant in Service $ ( 2,500.00) (To adjust the Capital Projects Fund, this budget adjustment will transfer funds from Capital ® Outlay to Operating Expenses to install sprinkler/irrigation system at Town Hall.) TOWN OF TAOS RESOLUTION NO. 2002-51 TOWN OF TAOS Frederick A. Peralta, Mayor ATTEST: orraine Gallegos, Town Clerk COST-BENEFIT ANALYSIS PENNCRO CALL CENTER PROJECT This cost-benefit analysis was prepared to provide the Town Council with information they will need in determining whether or not the Town of Taos should participate in the provision of financial incentives for the recruitment of a call center in Taos. In preparing the cost-benefit analysis, we used data from a study prepare by Robert 0. Coppedge, PhD, Extension Economist,New Mexico State University Extension Service. Dr. Coopedge's study was used by the City of Silver City in their Silver City Stream Project for economic development purposes. The study was designed to show the financial impact that 100 base jobs have on a community. Base jobs or basic jobs are those jobs which attract base dollars or "new" dollars. Base dollars come from outside the community when a business sells a product or service to businesses/individuals in other towns. Non-base jobs or non-basic jobs are those jobs which attract non-basic dollars. These dollars come from within the community when a local person deposits basic dollars, then purchases goods and services within the community. Method of Analysis. The study prepared by Dr. Coppedge was used to estimate the spending projections that will happen in the Town of Taos when Penncro Associates, Inc.'s payroll impacts the local econom;y. The study is based on 100 base jobs being created in our community that pays approximately $7.00 per hour and having an employment multiplier of.74. That is, for every base job that is created another .74 non- base job is created. Spending projections in the study are used using a multiple that is applicable. Thus Year 1 projections use 1.0, since 100 jobs are expected to be created in Year 1; Year 2 uses 1.5 corresponding to 150 jobs being created; and Years 3-10 uses 2.0 corresponding to 200 potential jobs. The new payroll creates additional sales in the Town of Taos and thereby creates additional revenues to the community in gross receipts taxes. It is assumed that approximately 85% of the new sales will be spent in the Town of Taos. This assumption is based on the fact that Taos is the retail center in Taos County Evidence of Conservative Approach. The above mentioned analysis is very conservative in that it does not include the following in the spending projections: 1. All non-management employees (200) are considered to be "Tier 1" employees at the minimum salary of only$7.00 per hour for all ten years of the analysis. 2. No bonuses are included. 3. No' construction phase jobs are considered because the facility will be constructed by Kit Carson Electric prior to the start of this project. Use of Franchise Fees. Staff is recommending the use of Franchise Fees as the source of the matching funds because these revenues come directly from the private sector (utility companies) as payment to the Town for the use of the Town's rights of way. The private sector pays these fees to expand and maintain their utilities, which in turn contribute to the economic development of our community. It seems appropriate, that the Town Council consider the use of these revenues for economic development purposes. Penncro Associates,Inc. -First year of Operation. 100 employees @$7.00 per hour $1,456,000.00 10 management @$30.000 annually 300.000.00 110 jobs-total payroll 1St year $1,756,000.00 Additional annual payroll created by base jobs: .74 additional jobs created in the economy=74 74 additional jobs @ minimum wage$5.15 792,688.00 Total estimated 1St year increase in payroll $2,548,688.00 Penncro Associates,Inc. - Second Y ear of Operation. 150 employees @$7.00 per hour $2,184,000.00 18 mans ement(g)$30.000 annually 540.000.00 168 jobs-total payroll 2"d year $2,724,000.00 Additional annual payroll created by base jobs: .74 additional jobs created in the economy= 111 111 additional jobs @ minimum wage$5.15 1,1890,032.00 Total estimated 2°a year increase in payroll $3,913,032.00 Penncro Associates,Inc. -Years 3-10 of Operation. 200 employees @$7.00 per hour $2,912,000.00 20 management @a,$30.000 annually 600.000.00 210 jobs-total payroll years 3-10 $3,512,000.00 Additional annual payroll created by base jobs: .74 additional jobs created in the economy= 148 148 additional jobs @ minimum wage$5.15 1,585,376.00 Total estimated increase in payroll-years 3-10 $5,097,376.00 i I NET PRESENT VALUE ANALYSIS Town of Taos Other entities Total Est. GRT Year Amt. Invested Amt. Invested Amt. Invested Collected 1 $50,000 $50,000 $100,000 $40,229 2 $50,000 $50,000 $100,000 $80,458 3 $50,000 $50,000 $100,000 $120,687 4 $50,000 $50,000 $100,000 $120,687 5 $50,000 $50,000 $100,000 $120,687• 6 $120,687 8 $1.20,687 9 $120,687 10 $120,687 250,000 250,000 500,000 $965,496 PAYBACK PERIOD=5 YEARS Addt'1. GRT Net cash flow Year Amt. Invested Collected _ Accumulated 1 $100,000 $40,229 (59,771) 2 $100,000 $80,458 (79,242) 3 $100,000 $120,687 (58,555) 4 $100,000 $120,687 (37,868) 5 $100,000 $120,687 (17,181) 6 $120,687 104,506 8 $120,687 225,193 9 $120,687 345,880 10 $120,687 466,567 500,000 $9651496 ASSUMPTIONS: - 1. 85%-of retail trade in Taos County occurs in the Town of Taos. 2. Spending projections and employment multiplier based on NMSU study. 3. Penncro's initial capital expenditure of$1,047,730 (see attached) 4. The Town's share of gross sales/new taxes is approximately 42%. 5. Additional gross sales on year one is estimated at $1,767,634, which equates to $112,687 in new taxes,which equates to $40,229 in GRT for the Town. 6. Additonal gross sales on year two is estimated at $3,535,266, which equates to $225,373 in new taxes, which equates to $80,458 in GRT for the Town. 7. Additonal gross sales on year 3-10 is estimated at $5 million, which equates to $345,622 in new taxes,which equates to$120,687 in GRT for the Town. ® ADDITIONAL BENEFITS: 1. Penncro will spend approximately$1,047,730 in equipment costs. 2. Penncro will provide medical,dental,401K benefits for its employees. 3. Penncro will spend money on motel nights during training phase of employees. 4. Construction costs of fiber optic lines-Investment by Quest Communications. 5. Increased home sales in our community,and in the county. 6. Unemployment rate in our county will be reduced. 7. La Jicarita Enterprise community will be served and supported by this project. I ® TOWN OF TAOS RESOLUTION NO. 2002-51 WHEREAS the Town of Taos has adopted its operating budget for the fiscal year ending June 30, 2003, and WHEREAS the governing body of the Town of Taos, meeting in Regular Session this 17th day of Jaiy, 2002 wishes to adjust its operating budget for the fiscal year ending June 30, 2003. 's-d e.— NOW, THEREFORE be it resolved that the governing body of the Town of Taos, meeting in Regular Session this 17th day of�W X1002, adopts this budget adjustment and respectfully requests approval from the Local Government Division of the Department of Finance and Administration to effect this budget adjustment. Amount General Fund Revenues and Other Sources: Unreserved Fund Balance $ 50,000.00 ® Expenditures and other Financing Uses: Utility Plant in Service $ 50,000.00 (To adjust the General Fund, This budget,adjustment will use Funds from the unreserved fund balance for the Town of Taos participation in economic development projects,Penncro Call Center Project.) Capital Projects Fund Expenditures and other Financing Uses: Operating Expenses: Building/Utility Plant in Service Supplies &Maintenance $ 2,500.00 Capital Outlay: Utility Plant in Service $ ( 2,500.00) (To adjust the Capital Projects Fund, this budget adjustment will transfer funds from Capital ® Outlay to Operating Expenses to install sprinkler/irrigation system at Town Hall.) TOWN OF TAOS RESOLUTION NO. 2002-51 TOWN OF TAOS Frederick A. Peralta, Mayor ATTEST: orraine Gallegos, Town Clerk COST-BENEFIT ANALYSIS PENNCRO CALL CENTER PROJECT This cost-benefit analysis was prepared to provide the Town Council with information they will need in determining whether or not the Town of Taos should participate in the provision of financial incentives for the recruitment of a call center in Taos. In preparing the cost-benefit analysis, we used data from a study prepare by Robert 0. Coppedge, PhD, Extension Economist,New Mexico State University Extension Service. Dr. Coopedge's study was used by the City of Silver City in their Silver City Stream Project for economic development purposes. The study was designed to show the financial impact that 100 base jobs have on a community. Base jobs or basic jobs are those jobs which attract base dollars or "new" dollars. Base dollars come from outside the community when a business sells a product or service to businesses/individuals in other towns. Non-base jobs or non-basic jobs are those jobs which attract non-basic dollars. These dollars come from within the community when a local person deposits basic dollars, then purchases goods and services within the community. Method of Analysis. The study prepared by Dr. Coppedge was used to estimate the spending projections that will happen in the Town of Taos when Penncro Associates, Inc.'s payroll impacts the local econom;y. The study is based on 100 base jobs being created in our community that pays approximately $7.00 per hour and having an employment multiplier of.74. That is, for every base job that is created another .74 non- base job is created. Spending projections in the study are used using a multiple that is applicable. Thus Year 1 projections use 1.0, since 100 jobs are expected to be created in Year 1; Year 2 uses 1.5 corresponding to 150 jobs being created; and Years 3-10 uses 2.0 corresponding to 200 potential jobs. The new payroll creates additional sales in the Town of Taos and thereby creates additional revenues to the community in gross receipts taxes. It is assumed that approximately 85% of the new sales will be spent in the Town of Taos. This assumption is based on the fact that Taos is the retail center in Taos County Evidence of Conservative Approach. The above mentioned analysis is very conservative in that it does not include the following in the spending projections: 1. All non-management employees (200) are considered to be "Tier 1" employees at the minimum salary of only$7.00 per hour for all ten years of the analysis. 2. No bonuses are included. 3. No' construction phase jobs are considered because the facility will be constructed by Kit Carson Electric prior to the start of this project. Use of Franchise Fees. Staff is recommending the use of Franchise Fees as the source of the matching funds because these revenues come directly from the private sector (utility companies) as payment to the Town for the use of the Town's rights of way. The private sector pays these fees to expand and maintain their utilities, which in turn contribute to the economic development of our community. It seems appropriate, that the Town Council consider the use of these revenues for economic development purposes. Penncro Associates,Inc. -First year of Operation. 100 employees @$7.00 per hour $1,456,000.00 10 management @$30.000 annually 300.000.00 110 jobs-total payroll 1St year $1,756,000.00 Additional annual payroll created by base jobs: .74 additional jobs created in the economy=74 74 additional jobs @ minimum wage$5.15 792,688.00 Total estimated 1St year increase in payroll $2,548,688.00 Penncro Associates,Inc. - Second Y ear of Operation. 150 employees @$7.00 per hour $2,184,000.00 18 mans ement(g)$30.000 annually 540.000.00 168 jobs-total payroll 2"d year $2,724,000.00 Additional annual payroll created by base jobs: .74 additional jobs created in the economy= 111 111 additional jobs @ minimum wage$5.15 1,1890,032.00 Total estimated 2°a year increase in payroll $3,913,032.00 Penncro Associates,Inc. -Years 3-10 of Operation. 200 employees @$7.00 per hour $2,912,000.00 20 management @a,$30.000 annually 600.000.00 210 jobs-total payroll years 3-10 $3,512,000.00 Additional annual payroll created by base jobs: .74 additional jobs created in the economy= 148 148 additional jobs @ minimum wage$5.15 1,585,376.00 Total estimated increase in payroll-years 3-10 $5,097,376.00 i I NET PRESENT VALUE ANALYSIS Town of Taos Other entities Total Est. GRT Year Amt. Invested Amt. Invested Amt. Invested Collected 1 $50,000 $50,000 $100,000 $40,229 2 $50,000 $50,000 $100,000 $80,458 3 $50,000 $50,000 $100,000 $120,687 4 $50,000 $50,000 $100,000 $120,687 5 $50,000 $50,000 $100,000 $120,687• 6 $120,687 8 $1.20,687 9 $120,687 10 $120,687 250,000 250,000 500,000 $965,496 PAYBACK PERIOD=5 YEARS Addt'1. GRT Net cash flow Year Amt. Invested Collected _ Accumulated 1 $100,000 $40,229 (59,771) 2 $100,000 $80,458 (79,242) 3 $100,000 $120,687 (58,555) 4 $100,000 $120,687 (37,868) 5 $100,000 $120,687 (17,181) 6 $120,687 104,506 8 $120,687 225,193 9 $120,687 345,880 10 $120,687 466,567 500,000 $9651496 ASSUMPTIONS: - 1. 85%-of retail trade in Taos County occurs in the Town of Taos. 2. Spending projections and employment multiplier based on NMSU study. 3. Penncro's initial capital expenditure of$1,047,730 (see attached) 4. The Town's share of gross sales/new taxes is approximately 42%. 5. Additional gross sales on year one is estimated at $1,767,634, which equates to $112,687 in new taxes,which equates to $40,229 in GRT for the Town. 6. Additonal gross sales on year two is estimated at $3,535,266, which equates to $225,373 in new taxes, which equates to $80,458 in GRT for the Town. 7. Additonal gross sales on year 3-10 is estimated at $5 million, which equates to $345,622 in new taxes,which equates to$120,687 in GRT for the Town. ® ADDITIONAL BENEFITS: 1. Penncro will spend approximately$1,047,730 in equipment costs. 2. Penncro will provide medical,dental,401K benefits for its employees. 3. Penncro will spend money on motel nights during training phase of employees. 4. Construction costs of fiber optic lines-Investment by Quest Communications. 5. Increased home sales in our community,and in the county. 6. Unemployment rate in our county will be reduced. 7. La Jicarita Enterprise community will be served and supported by this project. I