HomeMy WebLinkAbout031413 RES - 04/17/2018 Resolution adopting the revised City's Guidelines and Criteria for
Granting Tax Abatements
WHEREAS, on September 30, 2014, the City Council by Resolution 030296, adopted
the City's Guidelines and Criteria for Granting Tax Abatement;
WHEREAS, the City's Guidelines and Criteria for Granting Tax Abatement, by State
statute, expires two years from date and need to be adopted to make tax abatement
available;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
SECTION 1. The City's Guidelines and Criteria for Granting Tax Abatement are
adopted. A copy of the revised Guidelines and Criteria are attached to and incorporated
into this resolution as Exhibit A.
ATTEST: THE CITY OF CORPUS CHRISTI
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Rebecca Huerta Joe cComb
City Secretary Mayo
Corpus Christi, Texas
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The above resolution was passed by the following vote:
Mayor McComb
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Rudy Garza
�Paulette Guajardo ( /
Michael Hunter
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Ben Molina I
Lucy Rubio I ,�
Greg Smith I '
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Debbie Lindsey-Opel
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ce83504e-e4c6-4f11-892e-a5105977431d 031413
INDEXED
EXHIBIT A
Tax Abatement Guidelines
ce83504e-e4c6-4f11-892e-a5105977431d
CITY OF CORPUS CHRISTI
GUIDELINES AND CRITERIA
FOR GRANTING TAX ABATEMENT
APRIL 17, 2018
WHEREAS, the attraction of long-term Added Value and the establishment of new
permanent full-time jobs in the area would enhance the economic base of area taxing
entities;
WHEREAS, Corpus Christi must compete with other communities across the nation
currently offering tax inducements to attract new plant and modernization projects, and
studies have shown that a favorable local tax climate and start-up tax concessions rank
second on the list of priorities for new plant installations or expansions;
WHEREAS, tax abatement is one of the principal means by which the public sector and
the private sector can forge a partnership to promote real economic growth within a
community;
WHEREAS, any tax incentives offered must be strictly limited in application to those
new and existing industries that bring new wealth to the community in order to avoid
reducing the needed tax revenues of area taxing entities;
WHEREAS, the Property Redevelopment and Tax Abatement Act ("Act"), Chapter 312
of the Texas Tax Code authorizes taxing units to provide property tax abatement for
limited periods of time as an inducement for the development or redevelopment of a
property;
WHEREAS, a Texas Enterprise Zone constitutes designation as a Reinvestment Zone
without further hearing or other procedural requirements under Chapter 312, Texas Tax
Code;
WHEREAS, the Act requires eligible taxing jurisdictions to establish Guidelines and
Criteria ("Guidelines") as to eligibility for tax abatement agreements prior to granting any
future tax abatement, the Guidelines may not be changed for a two-year period unless
amended by a three-fourths vote;
WHEREAS, the City Council by Resolution 030296, on September 30, 2014, last
adopted the City of Corpus Christi tax abatement Guidelines; and
WHEREAS, those Guidelines expired two years after adoption and the City must adopt
new Guidelines prior to granting new tax abatements;
NOW, THEREFORE, BE IT RESOLVED by the City of Corpus Christi that these
Guidelines for granting tax abatement be adopted:
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Section 1. Definitions.
"Abatement" means the temporary, full or partial exemption from ad valorem taxes of
certain added value to real and personal property in a zone designated for economic
development purposes under the Act.
"Added Value" means the increase in the assessed value of an eligible property as a
result of"expansion" or "modernization" of an existing facility or construction of a "new
facility." It does not mean or include "deferred maintenance."
"Agreement" means a contractual agreement between an Owner and the City for the
purposes of tax abatement.
"Base Year Value" means the assessed value of eligible property as of the January 1
preceding the execution of an Agreement, plus the agreed upon value of eligible
property improvements made after January 1 but before the execution of the
Agreement.
"Basic Manufacturing or Service Facility" means buildings and structures, including fixed
machinery and equipment not elsewhere described, used or to be used for the
production of products or services that derive a majority of revenue from points beyond
a 50 mile radius of Nueces County or is a supplier who supplies at least 70% of its non-
retail goods and/or services to local primary employer(s) that are located within a 50
mileradius of the intersection of
Staples Street and Leopard Street.
"Catalyst Area" means an area within a Texas Enterprise Zone and Downtown, Corpus
Christi, or other areas designed as catalyst areas by the City Council.
"City" means the City of Corpus Christi that levies ad valorem taxes upon and provides
services to property located within a proposed or existing zone designated under the
Act.
"Deferred Maintenance" means improvements necessary for continued operations that
do not improve productivity or alter the process technology.
"Economic Life" means the number of years a property improvement is expected to be
in service in a Facility.
"Enterprise Zone Residential Redevelopment Facility" means buildings and structures
used or to be used primarily for residential purposes that is located within a Texas
enterprise zone.
"Expansion" means the addition of buildings, structures, fixed machinery, or equipment
for the purposes of increasing capacity.
"Facility means property improvements completed or in the process of construction that
together compromise an integral whole.
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"Historic Structure" means any structure that has been designated by the Corpus Christi
Landmark Commission as historically significant.
"Locally Owned" means a facility, manufacturer, supplier, contractor, and labor supplier
whose owner resides in or maintains its principal office within a 50 mile radius of
Nueces County.
"Mixed-use facility" means a facility having residential and commercial uses where the
commercial use occupies more than 20% of the structure.
"Multi-family housing" means a facility designed, arranged, or used exclusively for the
use and occupancy of three or more families living independently of each other. The
dwelling structure may include a triplex, apartment, townhouse, condominium,
cooperative, high-rise, etc.
"Modernization" means the replacement and upgrading of existing facilities that
increases the productive input or output, updates the technology, or substantially lowers
the unit cost of the operation, and extends the economic life of the facilities.
Modernization may result from the construction, alteration, or installation of buildings,
structures, fixed machinery, or equipment. "Modernization" does include work done for
the purpose of reconditioning, refurbishing, repairing, or completion of deferred
maintenance to a structure.
"NewFacility" means a property previously undeveloped, which is placed into service by
means other than or in conjunction with an expansion or modernization.
"Owner" means the owner of a Facility subject to abatement. If the Facility is
constructed on a leased property, the Owner is the party that owns the property subject
to tax abatement. The other party to the lease must join in the execution of Agreement,
but may not be obligated to assure performance of the party receiving abatement.
"Permanent full-time job" means a new employment position or full-time equivalent
created by a business that provides a regular work schedule of at least 32 hours per
week or 1,664 hours of employment per year to a Corpus Christi Metropolitan Statistical
Area resident and maintains the employment position during the term of the Agreement.
"Petrochemical Facility" means buildings and structures, including fixed machinery and
equipment, the primary purpose of which is or will be the manufacture or processing of
petrochemicals or fuels by physical or chemical change.
"Regional Distribution Center Facility' means buildings and structures, including fixed
machinery and equipment, used or to be used primarily to receive, store, service, or
distribute goods or materials owned by the Facility operator where a majority of the
goods or services are distributed to points beyond a 50 mile radius of the City.
"Regional Telecommunications/Data Processing Center Facility" means buildings and
structures used or to be used primarily for the provision of telecommunication or data
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processing services by the Facility operator where a majority of the services are
provided to points beyond a 50 mile radius of the City.
"Regional Visitor/Amusement Facility" means buildings and structures used or to be
used primarily as a stadium, arena, amusement park, or similar attraction or sports
venue.
"Rehabilitation" means that the Added Value, as defined, of the project exceeds the
base year of a development property by $250,000.
"Texas Enterprise Zone" means any area designated as an enterprise zone under
Chapter 2303, Texas Government Code.
Section 2. Abatement Authorized.
(a) Authorized Facilities. A Facility may be eligible for abatement if it is one of the
following:
(1) Basic Manufacturing Facility.
(2) Basic Service Facility.
(3) Regional Distribution Center Facility.
(4)-Regional Telecommunications/Data Processing Center Facility.
(5) Regional Visitor/Amusement Facility.
(6) Petrochemical Facility.
(7) Convention Center Hotel.
(8) Historic Structure.
(b)Abatement for New Facilities or Improvements to Existing Facilities. Abatement may
be granted for new facilities and improvements to existing facilities for the purpose of
modernization or expansion.
(c) Creation of New Value. Abatement may only be granted for the additional value of
eligible property improvements made subject to and listed in an Agreement between the
City and the Owner, subject to the limitations as the City requires. The economic life of
the improvements must exceed the term of the Agreement.
(d) Eligible Property. Abatement may be extended to the value of the improvements to
real property, including buildings, structures, fixed machinery and equipment, and site
improvements, plus that office space and related fixed improvements necessary to the
operation and administration of the Facility. Abatement may also be extended for
tangible personal property as defined by the Texas Tax Code.
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(e) Ineligible Property. The following types of property are fully taxable and ineligible for
abatement, unless specifically authorized by the City Council:
(1) Land.
(2) Inventories.
(3) Supplies.
(4) Tools.
(5) Furnishings and other forms of movable personal property.
(6) Vehicles.
(7) Vessels.
(8) Aircraft.
(9) Housing, other than an Enterprise Zone Residential Redevelopment Facility or
Downtown Revitalization Housing Facility.
(10) Hotel accommodations.
(1-1) Deferred maintenance investments.
(12) Property to be rented or leased, except when the Owner is the lessee of the land,
but is the Owner of the Facilities.
(13) Improvements for the generation or transmission of electrical energy not wholly
consumed by a New Facility or expansion.
(14) Any improvements, including those to produce, store, or distribute natural gas,
fluids, or gases that are not integral to the operation of the Facility.
(15) Improvements to real property that have an economic life of less than 15 years.
(16) Property owned or used by the State of Texas or its political subdivisions, or by any
organization owned, operated, or directed by a political subdivision of the State of
Texas.
(17) Property located within the boundaries of a tax increment reinvestment zone, as
defined by Chapter 311 of the Texas Tax Code.
(f) Period of Abatement.
(1) Abatement may be granted effective with the January 1 valuation date immediately
following the date of execution of the Agreement. Abatement may be allowed for a
period of up to ten years, including the period of construction. If the period of
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construction exceeds two years, the Facility is considered completed for purposes of
abatement at the end of two years, and in no case may the total period of abatement,
inclusive of the construction period, exceed ten years.
(2) Abatement for a Downtown Revitalization Housing Facility may be granted effective
with the January 1 valuation date immediately following the date of execution of the
Agreement. Abatement may be allowed for a period of seven years, including the
period of construction. If the period of construction exceeds two years, the Facility is
considered completed for purposes of abatement at the end of two years, and in no
case may the total period of abatement, inclusive of the construction period, exceed
seven years.
(g) Completion of Construction. The completion of construction is deemed to occur
upon the earliest of the following events:
(1) When a certificate of occupancy is issued for the project (if it is located within a city).
(2)When commercial production of a product or provision of a service is achieved at the
Facility.
(3) When the architect or engineer supervising construction issues a certificate of
substantial completion, or some similar instrument.
(4) Two years after the date of the Agreement.
(h) Determination of Completion of Construction. The determination of the completion
of construction is made by the City, in its sole and absolute discretion, based upon the
above criteria and the other factors as the City deems relevant. The determination of
the completion of construction is conclusive, and any judicial review of the determination
must be governed by the substantial evidence rule.
(i) Abatement Percentage. Temporary property tax abatement may be authorized for
the development of a New Facility, Expansion, or Modernization that meets either
qualification criteria of capital investment or a qualification criteria based upon a
combination of the number of new jobs created plus the average salary of all jobs at the
facility.
(1)The capital investment qualification criteria is as follows:
Added Value from Capital Investment 1 Abatement Level
$2,000,000 to $10,000,000 Level 1
$10,000,001 to $50,000,000 Level 2
$50,000,001 to $150,000,000 Level 3
$150,000,001 to $500,000,000 Level 4
Over$500,000,000 Level 5
Note: 1 The qualification for abatement by capital investment is based upon the added
value of Eligible Property as reflected on the tax rolls of the applicable appraisal district.
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(2) The combination of new jobs and salary criteria is as follows:
Number of New Average Salary Up Average Salary Average Salary
Jobs ' to $50,000 $50,001 to $70,000 Over$70,000
20 to 99 New Jobs Level 1 Level 2 Level 3
100 to 199 New Level 2 Level 3 Level 4
Jobs
200 or more New Level 3 Level 4 Level 5
Jobs
Note: 1 Provided that, obtaining temporary tax abatement based solely on the creation
of the new jobs must be further conditioned on the requirement for the improvement or
repair of property in order to meet the minimum requirements of the Act.
(3) The level of any New Facility, Expansion, or Modernization that is located within a
Catalyst Area or that is a Locally-Owned Facility is increased by one level above the
standards set forth in Section 2(i)(1) and (2) above, with a minimum level of 3 for any
the project. Further, if a Facility qualifies under both the capital investment qualification
criteria and the new jobs and salary criteria, the Facility will be increased by one level
above the highest criteria level achieved.
(4) A historically significant structure is a minimum of Tier 3.
(5) Any New Facility, Expansion, or Modernization that utilizes the Leadership in Energy
and Environmental Design (LEED) Green Building Rating System may be increased at
least one level above the qualifying level for abatement.
(6) Abatement for a small business facility providing Added Value of at least $250,000
may be considered within a Catalyst Area or as a Locally-Owned Facility by the City
Council on a case-by-case basis.
(7) Upon compliance with the above criteria, the percentage of tax abated may be under
the following schedule, with 100% abatement in each case during the construction
period of up to two years:
Year Level 1 Level 2 Level 3 Level 4 Level s
Year 1* 100% 100% 100% 100% 100%
Year2* 100% 100% 100% 100% 100%
Year3 100% 100% 100% 100% 100%
Year4 75% 100% 100% 100% 100%
Year5 50% 75% 100% 100% 100%
Year 6 25% 50% 75% 100% 100%
Year 7 25% 50% 75% 100%
Year 8 25% 50% 75%
Year 9 25% 50%
Year 10 25%
*Construction Period
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(8) In the event the Added Value caused by the Project is less than $2.0 million, no
abatement may be granted unless the Facility is a Rehabilitation Project as described in
Section 2(k) or historically significant as described in Section 20).
(9) In order to be counted as a permanent job under these Guidelines, the job must be a
full-time position providing regular work schedules of at least 32 hours per week.
(10) For compliance purposes, the date for determining a permanent full-time job will be
six months from the date of completion. The business must maintain the same level of
employment or increase employment during the term of the agreement.
(j) Living Wage Requirement. In order to count as a permanent full-time job under this tax
abatement program, the job should provide a "living wage"for the employee. The target living
wage under this abatement program is that annual amount equal or greater than poverty level
for a family of three, established by the U.S. Department of Health and Human Services
Poverty Guidelines, divided by 2,080 hours per year for that year. The City has the right to
adjust the living wage target under these Guidelines and insert a specific target in each property
Agreement to govern the abatement offered under that Agreement.
(k) Health Insurance. To qualify for this incentive, an employer shall certify that it has offered a
health insurance program for its employees during the term of the Agreement. The health
insurance program must comply with all applicable federal laws.
(I) Utilization of Local Contractors and Suppliers. To qualify for this incentive, a developer must
agree rn-exercise reasonable efforts in utilizing local contractors and suppliers in the construction
of the Project, except where not reasonably possible to do so without added expense, substantial
inconvenience, or sacrifice in operating efficiency in the normal course of business, with a goal of
50% of the total dollar amount of all construction contracts and supply agreements for elements
that are not owner-provided or owner affiliate-provided being paid to local contractors and
suppliers. For the purposes of this section, the term "local" as used to describe manufacturers,
suppliers, contractors, and labor includes firms, businesses, and persons who reside in or
maintain an office within a 50-mile radius of Nueces County. The Developer agrees, during the
construction of the Project and for four years after Completion, to maintain written records
documenting the efforts of the Developer to comply with the Local Requirement.
(m) Utilization of Disadvantaged Business Enterprises. To qualify for this incentive, a developer
must agree to exercise reasonable efforts in utilizing contractors and suppliers that are
determined to be disadvantaged business enterprises, including minority business enterprises
women-owned business enterprises and historically-underutilized business enterprises, in the
construction of elements of the Project that are not owner-provided or owner affiliate-provided. In
order to qualify as a business enterprise under this provision, the firm must be certified by the
City, the Regional Transportation Authority or another governmental entity in the jurisdiction of
the home office of the business as complying with state or federal standards for qualification as
such an enterprise. The Developer agrees to a goal of 30% of the total dollar amount of all
construction contracts and supply agreements, for elements of the Project that are not owner-
provided or owner affiliate-provided, being paid to disadvantaged business enterprises, with a
priority made for disadvantaged business enterprises which are local. The Developer agrees,
during the construction of the Project and for four years after Completion, to maintain written
records documenting the efforts of the Developer to comply with the DBE Requirement. For the
purposes of this section, the term "local" as used to describe contractors and suppliers that are
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determined to be disadvantaged business enterprises, including minority business enterprises
women-owned business enterprises and historically-underutilized business enterprises includes
firms, businesses, and persons who reside in or maintain an office within a 50-mile radius of
Nueces County.
(n) Rehabilitation Projects. The $2 million minimum Added Value requirement for
abatement does not apply to rehabilitation projects that involve the adaptive reuse of an
existing structure or building for a Facility.
(1) In order to qualify as a rehabilitation project under this provision, the project must
involve a minimum Added Value, as defined, of$250,000. Any rehabilitation project
must involve the adaptive reuse of an existing structure or building currently on the
property tax rolls so that the Base Year Value associated with the project will include
both the value of the land and the existing improvements.
(2) For the rehabilitation projects, all Eligible Property in excess of the Base Year Value
are subject to abatement, plus the value of personal property, such as furniture and
movable equipment that would otherwise be considered Ineligible Property for any other
type of abatement category.
(3) In no event, however, may the total value of personal property subject to abatement
exceed $1 million or the total amount of all property subject to abatement in a
rehabilitation project exceed $5 million.
(o)Historic Structures. The $2 million minimum Added Value requirement for
abatement does not apply to Historic Structures.
(1) In order to qualify as an Historic Structure under this provision, the project must be
designated as historically significant by the CC Landmark Commission.
(2) For the Historic Structures, all Eligible Property in excess of the Base Year Value is
subject to abatement, plus the value of personal property, such as furniture and
movable equipment that would otherwise be considered Ineligible Property for any other
type of abatement category.
(p) Economic Qualification for Non-Residential Development and Mixed-Use Facilities.
(1) In order to be eligible for tax abatement, the planned improvement for a Non-
Residential Development or Mixed-Use Facility may create, no later than the January 1
following the completion of construction, and maintain throughout the remainder of the
term of the Agreement the minimum number of 50 permanent full-time jobs in City.
(2) The planned improvement for a Non-Residential Development or Mixed-Use Facility
may not adversely affect competition in the local market with established local
businesses.
(q) Taxability. From the execution of the Agreement to the end of the abatement period,
taxes will be payable as follows:
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(1) The value of Ineligible Property as provided in Section 2(e) are fully taxable (except
for personal property added in connection with a Rehabilitation Project).
(2) The Base Year Value of existing Eligible Property as determined each year are fully
taxable.
(3) The Added Value of new Eligible Property(and certain personal property added in
connection with a Rehabilitation Project) is taxable, less the authorized abatement
provided in Section 2(i).
Section 3. Application.
(a) Written Application. Any present or potential owner of taxable property may request
tax abatement by filing a written application with the City Manager.
(b) Contents of Application. The application must consist of a completed application
form provided by the City or Corpus Christi Regional Economic Development
Corporation accompanied by the following:
(1) A general description of the new improvements to be undertaken.
(2)A descriptive list of the improvements for which abatement is requested.
(3) A list of the kind, number, and location of all proposed improvements to the property.
(4) A map and metes and bounds property description.
(5)A time schedule for undertaking and completing the proposed improvements.
(6) In the case of a modernization or expansion project, a statement of the assessed
value of the Facility, separately stated for real and personal property, must be given for
the tax year immediately preceding the application.
(c)Additional Information. The City may require additional financial and other
information that the City deems appropriate for evaluating the financial capacity and
other relevant factors of the applicant.
(d) Written Notification to Other Governing Bodies. Upon receipt of a completed
application, the City Manager will forward a copy of the application to the presiding
officer of the governing body of each jurisdiction that has taxing authority over the
property covered by the application.
(e) Feasibility. After receipt of an application for abatement, the City will consider the
feasibility and the impact of the proposed tax abatement. The study of feasibility shall
include, but not be limited to, an estimate of the economic effect of the abatement of
taxes and the benefit to the City and the property to be covered by the abatement.
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(f) No Abatement if the Proposed Project has received building permit. No Agreement
may be approved if the application for the abatement was filed after the proposed
project has received building permits related to the proposed Modernization, Expansion,
or New Facility.
(g) Variance. Requests for variance from the provisions of Section 2 may be made in
written form, provided, however, that no variance may extend the term of abatement
beyond ten years. The requests must include a complete description of the
circumstances explaining why the applicant should be granted a variance. Approval of
a request for variance requires a three-fourths vote of the City Council.
Section 4. Public Hearing and Approval.
(a) Designation of Tax Abatement Reinvestment Zone. An action designating a
reinvestment zone for tax abatement under the Act may not be adopted by the City
Council until a public hearing has been held at which interested persons are entitled to
speak and present evidence for or against the designation. Notice of the hearing must
be provided to the public in the manner required by the Act.
(b) Tax Abatement Reinvestment Zone. Under Chapter 312, Texas Tax Code, a
designated Texas Enterprise Zone constitutes designation as a Reinvestment Zone
without further hearing or other procedural requirements. Under Chapter 2303 of the
Texas Government Code, a federally designated Renewal Community or Census Block
Group with poverty greater than 20% constitutes designation as a Texas Enterprise
Zone.
Section 5. Agreement.
(a) Required Findings. In order to enter into an agreement, the City must find that the
terms of the proposed Agreement meets the requirements of the Act and these
Guidelines.
(b) Reservation of Rights. Nothing in these Guidelines may be construed to limit the
authority of the City to examine each application for tax abatement before it on a case-
by-case basis and determine, in the City's sole and absolute discretion:
(1) Whether the proposed project should be granted temporary tax abatement;
(2) Whether the proposed project complies with these Guidelines;
(3) Whether the proposed project is feasible; or
(4) Whether the proposed temporary abatement of taxes will inure to the long-term
benefit of the City.
(c) Contents of Tax Abatement Agreement. The Agreement with the Owner of the
Facility must include all of the following:
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(1) The estimated value of Facility subject to abatement following the proposed
improvements and the Base Year Value.
(2) The percentage of value to be abated each year as provided in Section 2.
(3) The commencement date and termination date of abatement.
(4)A provision that the term of the Agreement must extend until five (5) years after the
expiration of the period of tax abatement.
(5) The proposed use of the Facility, nature of construction, time schedule, map, metes
and bounds property description, and improvements list as provided in the application.
(6) The contractual obligations in the event of default, delinquent taxes, recapture,
administration, and assignment as provided in these Guidelines, or other provisions that
may be required for uniformity or by state law.
(7) The amount of Added Value and required number of permanent full-time jobs.
(d) Time of Execution. The Agreement will normally be executed within 60 days after
the applicant has provided all necessary information and documentation. Nothing in
these Guidelines shall require the Agreement to be executed by a certain date. There
shall be no requirement that a special or supplementary City Council meeting be held to
accommodate a specific timeline.
(e)Attorney's Fees. In the event any attorneys fees are incurred by the City in the
preparation of an Agreement, the fees must be paid by the applicant upon execution of
the Agreement.
Section 6. Recapture.
(a) Failure to Commence Operation During Term of Agreement.
(1) In the event that the Facility is not completed and does not begin operation with the
required minimum number of permanent full-time jobs by the January 1 following the
completion of construction, no abatement may be given for that tax year, and the full
amount of taxes assessed against the property is due and payable for that tax year.
(2) In the event that the Enterprise Zone Facility is not completed and does not begin
operation with at least one permanent full-time job per$50,000 of Added Value within
six months following the completion of construction, no abatement may be given for that
tax year, and the full amount of taxes assessed against the property are due and
payable for that tax year. In the event that the Owner of such a Facility fails to begin
operation with the required minimum number of permanent full-time jobs by the next
January 1 or for an Enterprise Zone Facility, at least one permanent full-time job per
$50,000 within 1 year following the completion of construction, then the abatement
agreement terminates and all abated taxes during the period of construction must be
recaptured and paid within 60 days of the termination.
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(b) Discontinuance of Operations During Term of Agreement. In the event the Facility is
completed and begins operation with the required number of jobs, but subsequently
discontinues operations and the required number of permanent full-time jobs are not
maintained as required, for any reason, except on a temporary basis due to fire,
explosion, other casualty or accident, or natural disaster, the Agreement may be
terminated by the City, and all taxes previously abated by virtue of the Agreement must
be recaptured and paid within 60 days of the termination.
(c) Delinquent Taxes. In the event that the Owner allows its ad valorem taxes to
become delinquent and fails to timely and properly follow the legal procedures for their
protest and/or contest, the Agreement automatically terminates and there may be no
abatement of the taxes for the tax year of the delinquency. The total taxes assessed
without abatement, for that tax year must be paid within 60 days from the date of
termination.
(d) Notice of Default. Should the City determine that the Owner is in default under the
terms and conditions of its Agreement, the City will notify the Owner in writing at the
address stated in the Agreement that if the default is not cured within 60 days from the
date of the notice ("Cure Period"), then the Agreement will be terminated. In the event
the Owner fails to cure the default during the Cure Period, the Agreement may be
terminated and the taxes abated by virtue of the Agreement will be recaptured and paid
within 60 days.
(e)Actual Capital Investment. Should the City determine that the total level of capital
investment in eligible property is lower than provided in the Agreement, the difference
between the tax abated and the tax that should have been abated based upon the
actual capital investment as determined must be paid to the City within 60 days of
notification to the Owner of the determination.
(f) Reduction in Rollback Tax Rate.
(1) If during any year of the period of abatement with respect to any property any portion
of the abated value that is added to the current total value of the Facility, but is not
treated as "new property value" (as defined in Section 26.012(17) of the Texas Tax
Code) for the purpose of establishing the "effective maintenance rate" in calculating the
"rollback tax rate" under Section 26.04(c)(2), Texas Tax Code, and if the City's budget
calculations indicate that a tax rate in excess of the "rollback tax rate" is required to fund
the operations of the City for the succeeding year, then the City may recapture from the
taxpayer a tax in an amount equal to the lesser of the following:
(A) The amount of the taxes abated for that year by the City with respect to the
taxpayer.
(B)The amount obtained by subtracting the rollback tax rate computed without the
abated property value being treated as new property value from the rollback tax rate
computed with the abated property value being treated as new property value and
multiplying the difference by the total assessed value of the City.
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(2) If the City has granted an abatement of taxes to more than one taxpayer, then the
amount of the recapture, calculated under Section 6(f)(1)(B) above, will be prorated on
the basis of the amount of the abatement with respect to each taxpayer.
(3) All recaptured taxes must be paid within thirty (30) days after notice the recapture
has been given to the affected taxpayer. Penalty and interest may not begin to accrue
upon the sum until the first day of the month following the thirty (30) day notice, at which
time penalty and interest accrues under the laws of the State of Texas.
(g) Continuation of Tax Lien. The amount of tax abated each year under the terms of
these Guidelines and the Agreement must be secured by a first and prior tax lien that
continues in existence from year to year throughout the entire term of the Agreement or
until all taxes, whether assessed or recaptured, are paid in full.
(h)Automatic Termination. The Agreement must automatically terminate on and as of
the date any of the following events occur:
(1) The filing of a petition in bankruptcy by the Owner.
(2) The making by the Owner of an assignment for the benefit of creditors.
(3) Any involuntary petition in bankruptcy or petition for an arrangement under the
federal bankruptcy code is filed against the Owner.
(4) A receiver is appointed for the business of the Owner
(i) Prior Notice of Automatic Termination Not Required. In the event of automatic
termination for any of the reasons in Section 6(h), the prior notice of default provisions
in Section 6(d) do not apply.
Section 7. Administration.
(a)Annual Assessment. The applicable appraisal district shall annually determine an
assessment of the real and personal property subject to an Agreement. Each year, the
Owner shall furnish the Appraisal District with the information as may be necessary for
the abatement. Once value has been established, the Appraisal District may notify the
affected jurisdictions which levy taxes of the amount of the assessment and the
abatement.
(b) Access to Facility. The Agreement must stipulate that employees or designated
representatives of the City will have access to the Facility during the term of the
Agreement to inspect the Facility to determine if the terms and conditions of the
Agreement are being met. All inspections will be made only after giving 24 hours prior
notice and will only be conducted in the manner as to not unreasonably interfere with
the construction or operation of the Facility. All inspections will be made with one or
more representatives of the Owner and under its safety standards.
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(c) Annual Evaluation. Upon completion of construction, the City individually or in
conjunction with other affected jurisdictions, will annually evaluate each Facility
receiving abatement to ensure compliance with the Agreement and report possible
violations of the Agreement.
(d)Annual Reports. The Owner shall certify to the City Council on or before April 1
each year that the Owner is in compliance with each applicable term of the Agreement.
Additionally, during the term of property tax abatement, the Owner shall provide to the
City an annual report covering those items listed on Schedule 1 in order to document its
efforts to acquire goods and services on a local basis. The annual report must be
prepared on a calendar year basis and must be submitted to the City no later than
ninety (90) days following the end of each calendar year. The annual report must be
accompanied by an audit letter prepared by an independent accounting firm which has
reviewed the report.
(e) 'Buy Local"Provision. Each recipient of property tax abatement shall additionally
agree to give preference and priority to local manufacturers, suppliers, contractors, and
labor, except where not reasonably possible to do so without added expense,
substantial inconvenience, or sacrifice in operating efficiency. In any exception
involving purchases over $10,000.00, a justification for the purchase must be included
in the annual report. Each recipient shall further acknowledge that it is a legal and
moral obligation of persons receiving property tax abatements to favor local
manufacturers, suppliers, contractors, and labor, all other factors being equal. For the
purposes of this provision, the term "local" as used to describe manufacturers,
suppliers, contractors, and labor includes firms, businesses, and persons who reside in
or maintain an office in the Corpus Christi Metropolitan Statistical Area. In the event of
a breach of the buy-local provision, the percentage of abatement will be proportionately
reduced equal to the amount the disqualified contract bears to the total construction
cost for the project.
(f) Right to Modify or Cancel. Notwithstanding anything in these Guidelines or in any
agreement to the contrary, the City Council may cancel or modify the Agreement if the
Owner fails to comply with the Agreement.
(g) Transition Rule. For any project which obtained an Agreement within the twelve
months prior to adoption of these Guidelines, the project may, upon the agreement of
the Owner and the City, obtain an amendment to its Agreement to incorporate the terms
and conditions of these Guidelines.
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SCHEDULE 1
"Buy Local" Annual Reports
The following information must be reported to the City on a calendar-year basis during
the first four years of the tax abatement program:
1. Dollar amount spent for materials* (local).
2. Dollar amount spent for materials* (total).
3. Total dollar amount spent for materials since the commencement of construction
4. Dollar amount spent for labor'* (local).
5. Dollar amount spent for labor** (total).
6. Total dollar amount spent for labor since the commencement of construction.
7. Number of jobs created in the construction project(local).
8. Number of jobs created in the construction project (total).
9. Number of jobs created on a permanent basis (local).
10. Number of jobs created on a permanent basis (total).
* "Materials" is defined to include all materials used in excavation, site improvement,
demolition, concrete, structural steel, fire proofing, piping, electrical, instruments,
paintings and scaffolding, insulation, temporary construction facilities, supplies,
equipment rental in construction, small tools and consumables. This term does not
include major items of machinery and equipment not readily-available locally.
** "Labor" is defined to include all labor in connection with the excavation, site
improvement, demolition, concrete construction, structural steel, fire proofing,
equipment placement, piping, electrical, instruments, painting and scaffolding,
insulation, construction services, craft benefits, payroll burdens, and related labor
expenses. This term does not include engineering services in connection with the
project design.
The term "local" as used to describe manufacturers, suppliers, contractors and labor
includes firms, businesses, and persons who reside in or maintain an office in either
Nueces County or San Patricio County.
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