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HomeMy WebLinkAbout020479 RES - 09/27/1988A RESOLUTION AUTHORIZING PARTICIPATION IN TAX ABATEMENT UNDER CHAPTER 312 OF THE TEXAS TAX CODE AND APPROVING GUIDELINES AND CRITERIA FOR TAX ABATEMENT. WHEREAS, the Property Redevelopment and Tax Abatement Act (the "Act"), Chapter 312 of the Texas Tax Code (formerly Article 1066f, Vernon's Annotated Texas Statutes) authorizes counties, cities and school districts to provide property tax abatement for limited periods of time as an inducement for the development or redevelopment of a property; and WHEREAS, the Act further requires that in order to become eligible to participate in tax abatement, a county, city or school district must state its election to do so and adopt guidelines and criteria for property tax abatement agreements; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS: SECTION 1. That the undersigned jurisdiction elects to become eligible to participate in tax abatement in accordance with the provisions of the Property Redevelopment and Tax Abatement Act. SECTION 2. That the Guidelines and Criteria for Tax Abatement attached hereto as Exhibit A are hereby approved in accordance with the Act. ATTEST: City Secretary APPROVED: 7-Z74/DAY OF HAL GEORGE, CITY ATTORNEY By���/ tv tornev ty torney 207HG034.ord THE C Y OF CORPUS CHRISTI, TEXAS 20479 MICROFILMED 9 -22 - GUIDELINES AND CRITERIA FOR GRANTING TAX ABATEMENT WHEREAS, the attraction of long-term investment and the establishment of new jobs in the area would enhance the economic base of area taxing entities; and WHEREAS, the communities within Nueces County 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; and 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; and 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; and WHEREAS, the Property Redevelopment and Tax Abatement Act (the "Act"), Chapter 312 of the Texas Tax Code (formerly Article 1066f, Vernon's Annotated Texas Statutes) authorizes counties, cities and school districts to provide property tax abatement for limited periods of time as an inducement for the development or redevelopment of a property; and WHEREAS, effective September 1, 1987, the Act requires eligible taxing jurisdictions to establish Guidelines and Criteria as to eligibility for tax abatement agreements prior to granting any future tax abatement, said Guidelines and Criteria to be unchanged for a two-year period unless amended by a three-fourths vote; and WHEREAS, to assure a common, coordinated effort to promote our economic development, any such Guidelines and Criteria should be adopted only through the cooperation of Nueces County, the City of Corpus Christi and affected school districts; and WHEREAS, the following Guidelines and Criteria have been circulated among the said taxing jurisdictions for consideration as a common policy for all jurisdictions which choose to participate in tax abatement agreements; NOW, THEREFORE, BE IT RESOLVED by the below -named jurisdictions that these Guidelines and Criteria for granting tax abatement in the area comprising Nueces County be adopted: Section 1. Definitions. (a) "abatement" means the full or partial exemption from ad valorem taxes of certain property in a zone designated for economic development purposes pursuant to the Act. (b) "Agreement" means a contractual agreement between a property owner and/or lessee and an Eligible jurisdiction for the purposes of tax abatement. (c) "Base Year Value" means the assessed value of eligible property as of the January 1 preceding the execution of Agreement plus the agreed upon value of eligible property improvements made after January 1 but before the execution of the Agreement. (d) "deferred maintenance" means improvements necessary for continued operations which do not improve productivity or alter the process technology. (e) "economic life" means the number of years a property improvement is expected to be in service in a facility. (f) 9-22 "Eligible jurisdiction" means Nueces County, the City of Corpus Christi and any municipality or school district, the majority of which is located in Nueces County, that levies ad valorem taxes upon and provides services to property located within the proposed or existing zone designated pursuant to the Act. (g) "expansion" means the addition of buildings, structures, fixed machinery or equipment for the purposes of increasing production capacity. (h) "facility" means property improvements completed or in the process of construction which together compromise an integral whole. "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 which derive a majority of revenue from points beyond a 50 -mile radius of Nueces County. (i) (j ) "modernization" means the replacement and upgrading of existing facilities which 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. It shall not be for the purpose of reconditioning, refurbishing, repairing or completion of deferred maintenance. (k) "new facility" means a property previously undeveloped which is placed into service by means other than or in conjunction with expansion or modernization. (1) "Petrochemical Facility" means buildings and structures, including fixed machinery and equipment, the primary purpose of which is or will be the manufacture or processing petrochemicals by physical or chemical change. (m) "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 Nueces County. Section 2. Abatement Authorized. (a) Authorized Facilities. A facility may be eligible for abatement if it is a Basic Manufacturing or Service Facility, Regional Distribution Center Facility or Petrochemical Facility. Abatement may be granted for new facilities and improvements to existing facilities for the purpose of modernization or expansion. (b) Creation of New Value. Abatement may only be granted for the additional value of eligible property improvements made subject to and listed in an abatement Agreement between the Eligible jurisdiction and the property owner and lessee (if required), subject to such limitations as said jurisdiction may require. The economic life of the improvements must exceed the term of the abatement Agreement. (c) 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. (d) Ineligible Property. The following types of property shall be fully taxable and ineligible for abatement: land; inventories; supplies, tools; furnishings and other forms of movable personal property; vehicles; vessels; aircraft; housing; hotel accommodations; deferred maintenance investments; property to be rented or leased except as provided in Section 2(e); improvements for the generation or transmission of electrical energy not wholly consumed by a new facility or expansion; any improvements, including those to produce, store or distribute natural gas, fluids or gases, which are not integral to the operation of the facility; property which has an economic life of less than 15 years; 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; unless any of the above types of property are specifically authorized by the Eligible jurisdiction. (e) Owned/Leased Facilities. If a leased facility is granted abatement, the Agreement shall be executed with the lessor and the lessee. (f) Period of Abatement. Abatement shall be granted effective with the January 1 valuation date immediately following the date of execution of the Agreement. Abatement shall be allowed for up to two years during the period of construction and for five years thereafter. If the period of construction exceeds two years, the facility shall be considered completed for purposes of abatement and in no case shall the period of abatement, inclusive of the construction period exceed seven years. (g) Abatement Percentage. The percentage of tax abated shall be determined based upon the estimated capital investment in eligible property in the project as follows: Abatement Capital Investment Percent in Eligible Property 0 $0 - 1.99 million 50 $2.0 - 4.99 million 75 $5.0 - 9.99 million 100 over $10.0 million For the purposes of determining the "capital investment" in the eligible property comprising the project, the rules, regulations and definitions utilized pursuant to the Internal Revenue Code of 1986, as amended, shall apply. (h) Properties in Industrial Districts. For . eligible property to be constructed in an area which is covered by an executed industrial district agreement with the City of Corpus Christi then in full force and effect, the method of calculating payments in lieu of property taxes for such eligible property in the industrial district agreement shall be replaced with the method of calculating the abatement described in Section 2(g) above, as provided in a tax abatement Agreement entered into by the City covering such eligible property. The term of abatement for such eligible property shall continue for the term of abatement provided in the tax abatement Agreement, whereupon the level of payments shall revert to the level provided in any industrial district agreement then in effect covering such property, or, if none, to the level of taxation then applicable to such property. Nothing herein shall require the City to grant abatement to any other party to an industrial district agreement which does not specifically comply with the requirements of these Guidelines and Criteria and be approved by the City. (i) Economic Qualification. In order to be eligible for tax abatement, the planned improvement: (1) must create and maintain throughout the term of the Agreement employment for at least 20 people on a permanent basis in Nueces County; (2) must not adversely affect competition in the local market with established local businesses. (j) Taxability. From the execution of the Agreement to the end of the abatement period, taxes shall be payable as follows: (1) The value of ineligible property as provided in Section 2(e) shall be fully taxable; (2) The Base Year Value of existing eligible property as determined each year shall be fully taxable; and (3) The additional value of new eligible property shall be taxable in the manner described in Section 2(g) above. 9-22-o� Section 3. Application. (a) Written Application. Any present or potential owner of taxable property may request tax abatement by filing a written application with: (i) the City Manager of the City of Corpus Christi, if such property is within the city limits, or (ii) the County Judge of Nueces County, if such property is in the unincorporated areas of Nueces County. (b) Contents of Application. The application shall consist of a completed application form accompanied by: a general description .of the new improvements to be undertaken; a descriptive list of the improvements for which abatement is requested; a list of the kind, number and location of all proposed improvements of the property; a map and property description; and a time schedule for undertaking and completing the proposed improvements. 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, shall be given for the tax year immediately preceding the application. The application form may require such financial and other information as the City, County or other Eligible jurisdiction, as applicable, deems appropriate for evaluating the financial capacity and other relevant factors of the applicant. (c) Written Notification to Governing Bodies. Upon receipt of a completed application, the City Manager or County Judge, as the case may be, shall forward a copy of the application to the presiding officer of the governing body of each Eligible jurisdiction having jurisdiction of the property covered by the application. (d) Feasibility. After receipt of an application for abatement, the City or the County, as applicable, shall 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 Eligible jurisdiction and the property to be covered by such abatement. (e) No Abatement if Construction has Commenced. No abatement Agreement shall be approved if the request for the abatement was filed after the commencement of construction, alteration or installation of improvements related to the proposed modernization, expansion or new facility. Variance. Requests for variance from the provisions of Section 2 may be made in written form, provided, however, the total duration of abatement shall in no instance exceed seven years. Such requests shall 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 (3/4) vote of the governing body of each Eligible jurisdiction having jurisdiction of the property. Section 4. Public Hearing and Approval. (a) Designation of Zone. A resolution designating a zone for tax abatement under the Act may not be adopted by the City of Corpus Christi or the County 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 shall be provided to each Eligible jurisdiction and to the public in the manner required by the Act. (b) Required Findings. In order to enter into a tax abatement Agreement, the County, the City and any school district must find that the terms of the proposed Agreement meet these Guidelines and Criteria. Nothing herein shall be construed to limit the authority of the County, the City and the affected school district to examine each application for tax abatement before it on a case-by-case basis and determine whether or not the proposed project complies with these Guidelines and Criteria, which includes a determination that the proposed project is feasible and the proposed temporary abatement of taxes will inure to the long-term benefit of such Eligible jurisdiction. (c) Contingent Approval. In approving a tax abatement Agreement in accordance with these Guidelines and Criteria, the County or the City, as the case may be, may make such approval 9-22-o6 contingent upon the approval by the affected school district of an agreement having identical terms regarding the share of value of the property that is to be abated and the duration of the abatement. Section 5. Agreement. (a) Contents of Tax Abatement Agreement. The tax abatement Agreement with the owner of the facility, and lessee if required, shall include: (1) the estimated value to be subject to abatement and the Base Year Value; (2) the percentage of value to be abated each year as provided in Section 2(g); (3) the commencement date and termination date of abatement; (4) a provision that the term of the Agreement shall 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, property description and improvements list as provided in the application as required under Section 3(b); (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; and (7) the amount of capital investment and minimum number of jobs involved. (b) Time of Execution. The tax abatement Agreement shall normally be executed within 60 days after the applicant has provided all necessary information and documentation. (c) Attorney's Fees. In the event any attorney's fees are incurred by the Eligible jurisdiction in the preparation of a tax abatement Agreement, said fees shall be paid by the applicant upon execution of the Agreement. Section 6. Recapture. (a) Discontinued or Reduced Operation During Term of Agreement. In the event that the facility is completed and begins producing a product or service but subsequently discontinues producing such product or service, or in the event the minimum number of 20 new jobs is not maintained, for any reason except fire, explosion or other casualty or accident or natural disaster for a period of one year during the term of the Agreement, the Agreement may be terminated by the governing body and all taxes previously abated by virtue of the Agreement will be recaptured and paid within 60 days of the termination. (b) Delinquent Taxes. In the event that the company or individual 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 shall terminate and so shall the abatement of the taxes for the calendar year of the delinquency. The total taxes assessed without abatement, for that calendar year shall be paid within 60 days from the date of termination. (c) Notice of Default. Should the governing body determine that the company or individual is in default according to the terms and conditions of its Agreement, it shall notify the company or individual in writing at the address stated in the Agreement that if such is not cured within 60 days from the date of such notice (the "Cure Period"), then the Agreement may be terminated. In the event the company or individual fails to cure said default during the Cure Period, the Agreement may be terminated and the taxes abated by virtue of the Agreement will be recaptured and paid as provided herein. 9-24 , (d) Actual Capital Investment. Should the governing body 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 which should have been abated based upon the actual capital investment as determined shall be paid to the taxing agencies within 60 days of notification to the company or the individual of such determination. Section 7. Administration. (a) Annual Assessment. The Nueces County Appraisal District shall annually determine an assessment of the real property subject to an Agreement. Each year, the company or individual receiving abatement shall furnish the District with such information as may be necessary for the abatement. Once value has been established, the District shall notify the affected jurisdictions which levy taxes of the amount of the assessment and the abatement. • (b) Access to Facility. The Agreement shall stipulate that employees and/or designated representatives of the Eligible jurisdiction 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 such manner as to not unreasonably interfere with the construction and/or operation of the facility. All inspections will be made with one or more representatives of the company or individual and in accordance with its safety standards. (c) Annual Evaluation. Upon completion of construction, the Eligible jurisdiction individually or in conjunction with other affected jurisdictions, shall annually evaluate each facility receiving abatement to ensure compliance with the Agreement and report possible violations of the Agreement. DULY ADOPTED as of the dates set forth below. COUNTY OF NUECES CITY OF CORPUS CHRISTI By: By: Robert N. Barnes, County Judge Betty N. Turner, Mayor Date: Date: CORPUS CHRISTI INDEPENDENT SCHOOL DISTRICT By: T. Theresa Rasco, President Board of Trustees Date: 99.066.01 Corpus Christi, Texas day of The above resolution was passed by the following vote: Betty N. Turner (24-'1 David Berlanga, Sr. JAIL) Leo Guerrero Olaolt Clif Moss atp Bill Pruet (lip Mary Rhodes aip Frank Schwing, Jr. 66.---t) Mary Pat Slavik L'Oi(UI Linda Strong CLV"-} 20479 , 198S