Hewlett-Packard donation belies business’ reputation

All too often, citizens are not aware of the impact local business makes on the well-being of our communities. Usually, banner headlines read that growth does not pay its own way.Citizens are left with the conclusion that at its worst, business is really bad – or at the very least, business just doesn’t pay its fair share to government.
Then, the “inexplicable” occurs. On the face of it, no one can understand why it happened. It must be an “aberration.”
On Oct. 16th, during a regular meeting of Fort Collins City Council, a business did the unimaginable. It took advantage of a local ordinance providing for a rebate of development fees paid and, in turn, reinvested its rebate in the local school district.
Hewlett-Packard Co. in Fort Collins is presently expanding at its Harmony Road site, constructing a new 180,000-square-foot office building costing about $17.7 million. Under the city’s standard package of fees associated with development, $232,681 of fees were charged for street oversizing, building permit, plan review, and stormwater charges.
Because the Hewlett-Packard site has been in Fort Collins for almost 20 years, the cost to the city for infrastructure improvement associated with the new building was practically nil. Street and stormwater improvements had been paid previously by Hewlett-Packard.
The City of Fort Collins allows for a development-fee rebate if revenues derived from a project exceed the City’s cost by at least a 2-to-1 margin over a 20-year period. Using a 3 percent annual inflation factor, the City estimates that it will incur $19,500 in street maintenance costs over the 20-year study period.
On the other side of the equation, the City expects to obtain $2.5 million in use and property taxes from HP’s improvement. Discounting this revenue stream at 7 percent over the 20-year time period provides the City with more than $1.2 million in revenue in today’s dollars.
In the complicated world of government, the equation actually had to be studied before any council action could be taken. First, HP would pay fees of almost $233,000. Next, it would be charged use taxes on building materials and for equipment to be installed of $281,000. Staff identified the annual increased street-maintenance costs.
In future years, HP will pay real estate and property taxes, as well as use taxes on new equipment purchases. Even the simplest analysis yields the conclusion that growth and development by business – especially local, established business – pays for all of its costs and provides a handsome profit for local government
Hewlett-Packard is to be commended for its actions. Literally, it was more than entitled – using any standard – to its request for the rebate of development fees. Given the tax environment, who could blame them for seeking this $232,000 reduction in construction costs?
Yet, somewhere the corporate culture at HP took over. HP’s Corporate Objective on Citizenship states “that we must strive to be an economic, social and intellectual asset to the communities in which we live and work.” With education a primary focus of HP’s corporate involvement, a plan to work with the Poudre School District quickly grew to fruition.
The end result is HP’s commitment to reinvest its rebate with Poudre School District in the form of technology grants. Almost $232,000 of technology assets will be provided to Fort Collins area schools.
We are often afraid to compliment business for a job well done. In Northern Colorado, Hewlett-Packard provides more than 6,450 direct jobs in Greeley, Loveland and Fort Collins. Total payroll in the region exceeds $350 million. These direct jobs create an additional 25,000 service-sector jobs. Hewlett-Packard recognizes the importance of education to the communities where its employees live and work. Its intellectual excellence will show up in classrooms for years to come.
HP is no aberration. It is an economic, social and intellectual asset to our region’s communities. Let us broadcast this news, and provide even more examples of how good business is an integral part of our regional well-being.Former Fort Collins mayor John Knezovich is a certified public accountant.