Cottonwood has moved forward with a plan to adopt a use tax on vehicles and equipment used or stored in the city.
On Nov. 7, City Council moved to issue a notice of intent to adopt the relevant sections of the Arizona Model City Tax Code, allowing it to assess a tax of up to 3 percent on “certain tangible property, including vehicles and equipment used or stored in the city by individuals and businesses.”
According to Deputy City Manager Rudy Rodriguez, the tax will only be “assessed in cases where, and to the extent that a local sales, transaction privilege or other similar tax in the same amount has not been already paid to another jurisdiction” — effectively, according to Rodriguez, recovering sales tax money to the city that is lost due to varying sales tax rates in other municipalities.
Rodriguez said many cities already assess a use tax according to the Arizona Model City Tax Code, adding that the tax applies to big-ticket items and will not impact the majority of people in the city.
“Basically, what the city is trying to do is recoup lost revenue,” Rodriguez said. “Most of our citizens will not be paying any additional taxes.”
According to Rodriguez, the benefits include: An estimated $75,000 annual increase in funds to the city used to support current and future community needs, leveling the “playing field” for local businesses with big-ticket items and helping “reduce tax leakage to other communities” with lower sales tax rates. The changes will come about with no additional expense to the city and minimal impact to the average citizen.
Assessment of the use tax may be waived for the following exceptions: Use of tangible property for restaurant meals provided to employees, donations made to and received by a qualified charitable organizations and tangible personal property used or stored by the city itself.
The first public hearing on the proposed changes will take place Tuesday, Jan. 2, at 6 p.m. at the City Council chambers, 826 N. Main St., Cottonwood. The first reading of a proposed ordinance to approve the use tax may occur on this date.
The second public hearing and possible adoption of the ordinance will take place Jan. 16 at 6 p.m. at the City Council chambers.
The Cottonwood Municipal Tax Code is part of the Arizona Model City Code. The city’s tax code is available at cottonwoodaz.gov. The Arizona Model City Tax Code is maintained by the Arizona Department of Revenue. It can be found at azdor.gov.
Questions may be directed to Rodriguez at 340-2710. Old Town Entertainment District City Council also approved a portion of the city as an Arts, Culture and Entertainment District at its meeting. The district follows North Main Street from the boundary with Clarkdale to the intersection of Main Street and State Route 89A, conforming to the Arizona Revised Statutes district minimum width of oneeighth mile and expanding in several areas to cover the commercially zoned property in the area.
The district designation does not change zoning. “It simply has the effect of allowing consideration of waiving, on a case-bycase basis, the separation requirement for certain types of alcohol-selling establishments that are located in an otherwise appropriate commercial location but less than 300 feet from an existing church or school,” Economic Development Director Casey Rooney said.
According to Rooney, an entertainment district must be no more than one square mile in area and must contain entertainment and tourism features such as restaurants, bars, galleries and museums.
Only one such area is allowed for a city the size of Cottonwood. No additional costs are expected in establishing the district.
“I think this is just another step in the right direction,” Mayor Timothy Elinski said. “It’s not just about consuming alcohol. It’s about branding our community.”
CORRECTION: An earlier version of this story misstated that the vote to move forward with the vehicle tax hike was passed unanimously. There was one dissenting vote by Councilwoman Tosca Henry. This version of the story has been updated with the correct information.