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2011_03_08_O005 Arts and Cultural DistrictThe Town of Leesburg, Virginia ORDINANCE NO. AN ORDINANCE: The Council of the Town of Leesburg in Virginia hereby ordains: PRESENTED: March 8, 2011 2011 -0 -005 ADOPTED: March 8, 2011 CREATING A NEW CHAPTER 7 OF THE LEESBURG TOWN CODE TO ESTABLISH AN ARTS AND CULTURAL DISTRICT WITHIN THE TOWN OF LEESBURG SECTION I. That a new Chapter 7 of the Leesburg Town Code is created to add the following Sections: Sec. 7.1. Arts and Cultural District: Purpose. The Leesburg Town Council finds that the continued development and success of its arts and cultural venues requires incentives, and determines that the most appropriate method of offering incentives for the area described in section 7.2 below is to create an Arts and Cultural District as authorized by Section 15.2- 1129.1 of the Code of Virginia of 1950, as amended. The Town Council believes that the establishment of an Arts and Cultural District will improve the economic conditions of this geographic area located in the central portion of the Town which could, in turn, benefit the welfare of the citizens of Leesburg. Sec. 7.2. District Boundaries and Date Established. The boundaries of the Leesburg Arts and Culture District are set forth on the map entitled "Leesburg Arts and Cultural District dated March 8, 2011, as maintained in the Town Manager's Office, the provisions of which map are incorporated fully herein by reference. The designation of the area as an Arts and Cultural District (hereinafter referred to as "District shall not in any respect override any applicable Town Code regulatory requirements including, but not limited to zoning regulations, fire code, nuisance, and building and property maintenance codes, unless specifically set forth in this ordinance. Sec.7.3. Definitions. For the purposes of this chapter, and unless otherwise indicated to the contrary, the following term(s) shall have the following meaning(s): Qualified Arts Organization: The term "Qualified Arts Organization" shall mean a business for profit or not for profit organization physically located within the District which, by the determination of the Administrator, positively contributes to the spectrum of arts and cultural activities and venues available to the public by presenting live performances of theatre, dance, music, or other imaginative work and/or producing or exhibiting physical works created by, or under the direction of one or more artists, which are intended for unique production or limited reproduction. Museums or historic sites, the primary mission of which is education, history, or historic preservation, may also qualify as Qualified Arts Organizations. Theaters, including movie theaters, art galleries, dance studios, music venues, performance spaces, art schools and academies, including culinary arts schools and academies, are examples of Qualified Arts Organizations. In no case shall a restaurant, hair or nail salon, or an office use such as an architect, advertising agency, bank, real estate office, medical office, attorney's office or any other general office use 2 AN ORDINANCE: CREATING A NEW CHAPTER 7 OF THE LEESBURG TOWN CODE TO ESTABLISH AN ARTS AND CULTURAL DISTRICT WITHIN THE TOWN OF LEESBURG qualify as a Qualified Arts Organization for the purposes of this chapter. Additionally, in no case shall a retail shop qualify as a Qualified Arts Organization for the purposes of this chapter unless the retail shop creates or exhibits some visual or performing art such as painting, sculpture, textiles, dance, photography or music which is intended for unique production or limited reproduction, and the retail shop derives 50% or more of its income from these creative activities. When applying for any benefit afforded under this chapter, the applicant shall have the burden of proving qualification as a Qualified Arts Organization. The incentives in this chapter shall not extend beyond the time limits set forth in this chapter unless the District Administrator determines that a successor organization or assignee to an original Qualified Arts Organization is owned and operated by a wholly separate and different entity from the original Qualified Arts Organization. In such case, the new entity shall submit a separate application under this chapter. District Administrator: The Town Manager, or another employee of the Town of Leesburg as designated by the Town Manager, shall serve as the District Administrator for the District. Redevelopment: Any expansion, addition, facade change or other physical improvement to a property that increases the assessed value of the property housing a Qualified Arts Organization. Sec. 7.4 Administration. The Town Manager or the District Administrator if one is so designated by the Town Manager, shall be responsible for administration of this chapter and shall determine the procedures for applying for and obtaining the incentives provided herein. Sec. 7.5. Eligibility Requirements. The economic incentives and fee exemption contained in this ordinance will be made available to any existing for profit business or not -for profit organization physically located within the District which applies no later than six (6) months after the enactment of this ordinance and which carries on at least one of the activities described in Sec. 7.3 above and to the satisfaction of the District Administrator meets the criteria set forth below or any new for profit business or not for profit organization physically located in the District which carries on at least one of the activities described in Sec. 7.3 above and to the satisfaction of the District Administrator, meets the criteria set forth below. New businesses or organizations shall apply to the District Administrator for qualification no later than six (6) months from the initial commencement of operations. The District Administrator shall apply the following criteria: (a) The business or organization must advance the Town's strategic goals identified in the Town's most recently adopted Economic Development Strategic Map and its current Comprehensive Plan. 3 AN ORDINANCE: CREATING A NEW CHAPTER 7 OF THE LEESBURG TOWN CODE TO ESTABLISH AN ARTS AND CULTURAL DISTRICT WITHIN THE TOWN OF LEESBURG (b) The business or organization must enter into a written Arts and Cultural District Agreement "Agreement that, among other things, provides a description of the principal business activities to be carried on in the District; a description of the location of said business within the District and whether such location is owned by the applicant business or organization or leased, and if leased, the name of the landlord and the length of the lease term; details regarding the structure of the business or organization (i.e. type of entity and if other than a sole proprietorship, the names and addresses of all principals of the business); a narrative description of the current and past activities of the business or organization, and in the case of an already operating business or organization, information regarding current and past locations of the business or organization; and a five -year business plan including pro forma. The Agreement shall be subject to review and approval by the Town Attorney. The business or organization must at all times comply with all applicable federal, state and Town laws and regulations. Section 7.6. Compliance. Failure of a Qualified Arts Organization to pay taxes when due or to comply with the requirements of this chapter shall result in loss or revocation of qualification as follows: (a) If the Qualified Arts Organization, has entered into an Agreement as provided in Sec. 7.5(b) above, and fails to pay in full, any tax imposed by the Town by the date the tax becomes due, the Qualified Arts Organization shall lose its qualification for the year of such tax and its entitlement to any incentive afforded under this chapter during such year. (b) A Qualified Arts Organization receiving incentives under this chapter that fails to, at all times, comply with all applicable federal, state, county and town laws and regulations or fails to comply with the terms of the Agreement entered into as provided in Sec. 7.5(b) above shall, in the case of a first offense, lose its qualification for the remainder of the current fiscal year and in the case of any subsequent failure, the Qualified Arts Organization qualification shall be revoked. (c) A Qualified Arts Organization that loses its qualification or where a qualification has been revoked under 7.6 (a) or (b) above, shall reimburse the Town the full amount of all monies that it has received as incentives under this chapter during the calendar year of the period of non compliance; such reimbursement to be paid to the Town in full within thirty (30) days of the loss or revocation of qualification. Sec. 7.7. Available Incentives. Upon approval by the District Administrator and having entered into an Agreement as provided in Sec. 7.5(a) above a Qualified Arts Organization shall be entitled to receive the incentives provided in Sections 7.8 through 7.10 below. If a business or organization ceases to be a Qualified Arts Organization during a year in which rebates, payments or exemptions apply, they shall be prorated for the months the business or organization was a Qualified Arts Organization. The Qualified Arts Organization shall establish its qualification(s) 4 AN ORDINANCE: CREATING A NEW CHAPTER 7 OF THE LEESBURG TOWN CODE TO ESTABLISH AN ARTS AND CULTURAL DISTRICT WITHIN THE TOWN OF LEESBURG to receive the incentives on an annual basis. Sec. 7.8. BPOL Tax Rebate. A Qualified Arts Organization upon entering into an Agreement as provided in Sec. 7.5(a) above shall be entitled to a rebate of Business, Professional and Occupational license taxes ("BPOL") paid to the Town and imposed by chapter 20, Article IX of the Town Code over a period of ten (10) calendar years as follows: (a) Year one (1) is the first full calendar year in which a business or organization operates as a Qualified Arts Organization. However, if in its first calendar year of doing business in the district, a business or organization operates as a Qualified Arts Organization for a period of less than six (6) months, such qualified business or organization may elect to designate the following calendar year as year one (1) for purposes of obtaining the BPOL tax rebate. The rebate shall apply for a period of up to ten (10) calendar years or until such time that the business or organization no longer meets the definition of a Qualified Arts Organization, whichever is the first to occur. If a business or organization ceases to be a Qualified Arts Organization or removes its operation from the District during a year in which the rebate applies, the business or organization shall not be qualified or receive the rebate for that year. (b) A Qualified Arts Organization must establish its qualification for the incentives on an annual basis and the percentage of rebate for each year shall be: one hundred (100) percent rebate in year one (1); ninety (90) percent rebate in year two (2); eighty percent rebate in year three (3); seventy (70) percent rebate in year four (4); sixty (60) percent rebate in year five (5); fifty(50) percent rebate in year six (6); forty C40) percent rebate in year seven (7); thirty (30) percent rebate in year eight (8); twenty (20) percent rebate in year nine (9) and ten (10) percent rebate in year ten (10). The business or organization or shall have the burden of demonstrating, to the satisfaction of the District Administrator, that it meets the definition of a Qualified Arts Organization and that it meets all applicable criteria for a BPOL rebate. The Qualified Arts Organization shall also file an annual BPOL application with the Department of Finance for the Town of Leesburg and shall provide the Director of Finance, or his or her designee, with certification from the District Administrator that the business or organization qualifies as a Qualified Arts Organization. The Qualified Arts Organization shall certify that no local taxes or fees are outstanding at the time of application for the BPOL rebate. If fifty percent (50 or more of the gross receipts of a Qualified Arts Organization are derived from an activity that qualifies the business or organization, the BPOL tax assessed on all gross receipts of such activity shall be subject to the rebates described above. If less than fifty percent (50 of the gross receipts of a particular activity of a Qualified Arts Organization is derived from qualifying operations, the graduated rebates shall be applied only to the amount of tax 5 AN ORDINANCE: CREATING A NEW CHAPTER 7 OF THE LEESBURG TOWN CODE TO ESTABLISH AN ARTS AND CULTURAL DISTRICT WITHIN THE TOWN OF LEESBURG attributable to the gross receipts earned from the qualifying activity. The determinations required by this subsection shall be performed by the Director of Finance, or his or her designee, and the Qualified Arts Organization must submit business and financial records sufficient for the Director of Finance, or his or her designee, to make said determination, within a reasonable time, and upon the request of the District Administrator. All BPOL tax rebates are subject to adjustment by the Commonwealth of Virginia Commissioner of Revenue based on actual gross receipts earned from Qualifying Arts Organization activities. Any additional BPOL tax assessed due to such adjustments, or due to revocation of the tax rebate, shall be subject to collection and delinquency provisions set out in Chapter 20 of the Town Code. Sec. 7.9 Real Estate Tax Rebate. A Qualified Arts Organization upon entering into an Agreement as provided in Sec. 7.5(a) above shall be entitled to a rebate of real estate taxes that are paid to the Town and imposed by chapter 20, Article II of the Town Code over a period of ten (10) calendar years as follows: (a) Year one (1) is the first full calendar year in which a building has been redeveloped for at least 50% use by a Qualified Arts Organization and an updated assessment value has been calculated as determined by the Loudoun County Assessor's Office. However, if in its first calendar year of doing business in the district, a business or organization operates as a qualified arts organization for a period of less than six (6) months, such qualified business or organization may elect to designate the following calendar year as year one (1) for purposes of obtaining the real estate tax rebate. The rebate shall apply for a period of ten (10) calendar years or until such time that the business or organization no longer meets the definition of a Qualified Arts Organization, whichever is the first to occur. If a business or organization ceases to be a Qualified Arts Organization or removes its operation from the District during a year in which the rebate applies, the business or organization shall not be qualified or receive the rebate for that year. (b) A Qualified Arts Organization must establish its qualification to receive the incentives on an annual basis and the percentage of rebate for the first year shall be one hundred (100) percent of the difference in the building's assessment amount before redevelopment and the first assessment recalculation by the Loudoun County Assessor's Office after redevelopment. Following the first year, the rebate shall be ninety (90) percent rebate in year two (2); eighty percent rebate in year three (3); seventy (70) percent rebate in year four (4); sixty (60) percent rebate in year five (5); fifty(50) percent rebate in year six (6); forty (40) percent rebate in year seven (7); thirty (30) percent rebate in year eight (8); twenty (20) percent rebate in year nine (9) and ten (10) percent rebate in year ten (10). 6 AN ORDINANCE: CREATING A NEW CHAPTER 7 OF THE LEESBURG TOWN CODE TO ESTABLISH AN ARTS AND CULTURAL DISTRICT WITHIN THE TOWN OF LEESBURG To qualify for a real estate tax rebate under this article, during the first twelve (12) months of operation within the District, a Qualified Arts Organization must apply to the District Administrator, who will determine if the business or organization qualifies as a Qualified Arts Organization. The business or organization shall have the burden of demonstrating, to the satisfaction of the District Administrator, that it meets the definition of a Qualified Arts Organization and that it meets all applicable criteria for a real estate tax rebate. The Qualified Arts Organization shall also file an annual real estate tax rebate application with the Department of Finance for the Town of Leesburg and shall provide the Director of Finance, or his or her designee, with certification from the District Administrator that the business or organization qualifies as a Qualified Arts Organization. The Qualified Arts Organization shall also provide the Director of Finance, or his or her designee, with proof that no local taxes or fees are outstanding at the time of application for the real estate tax rebate. If fifty percent (50 or more of the gross floor area of a Qualified Arts Organization is derived from an activity that qualifies the business or organization, the real estate tax assessed on the entire real property shall be subject to the rebates described in this section. If less than fifty percent (50 of the gross floor area of a particular activity of a Qualified Arts Organization is derived from qualifying operations, the rebates shall be applied only to the amount of tax attributable to the gross floor area earned from the qualifying activity. The determinations required by this subsection shall be performed by the Director of Finance, or his or her designee and the Qualified Arts Organization must submit business and financial records sufficient for the Director of Finance, or his or her designee, to make said determination, within a reasonable time, and upon the request of the District Administrator. All real estate tax rebates are subject to adjustment by the Loudoun County Assessor's Office. Any additional real estate tax assessed due to such adjustments, or due to revocation of the tax rebate, shall be subject to the collection and delinquency provisions set forth in Chapter 20 of the Town Code. The real estate tax rebate shall apply only to the amount of real estate tax due which is attributable to the increase in a building's assessed value as determined by the Loudoun County Assessor's Office as a result of the redevelopment of the property for Qualified Arts Organization use. Sec. 7.10 Zoning Fee Exemption. For a period of up to one hundred and twenty (120) months from qualifying as a Qualified Arts Organization and for so long as such qualification continues during such period, such Qualified Arts Organization shall be exempt from the Zoning Fee that would otherwise be imposed on such Qualified Arts Organization under Section 3.7.2 of the Town of Leesburg Zoning Ordinance. This exemption shall apply to the record owner of the property where the Qualified Arts Organization is located and only to a business or organization AN ORDINANCE: CREATING A NEW CHAPTER 7 OF THE LEESBURG TOWN CODE TO ESTABLISH AN ARTS AND CULTURAL DISTRICT WITHIN THE TOWN OF LEESBURG that is in the process of redevelopment as defined in Section 7.3. SECTION II. All prior ordinances in conflict herewith are hereby repealed. SECTION III. Severability. If a court of competent jurisdiction declares any provision of this ordinance invalid, the decision shall not affect the validity of the ordinance as a whole or any remaining provisions of the Leesburg Town Code. SECTION IV. This ordinance shall be effective July 1, 2011. PASSED this 8 day of March, 2011. P: \Ordinances\2011 \0308 Arts and Cultural District.docx 7 Um tattd, Mayor Town of Leesburg