HomeMy WebLinkAbout020528 RES - 11/22/1988A RESOLUTION
AMENDING THE GUIDELINES AND CRITERIA FOR TAX ABATEMENT
ADOPTED BY RESOLUTION 20479; INCLUDING DEFINING "ADDED
VALUE"; ABATEMENT PERCENTAGES; PROVIDING FOR REDUCTION IN
STATE FUNDING, AND ROLL BACK FOR SCHOOL DISTRICT;
CONTINUATION OF TAX LIEN; READOPTING SAID GUIDELINES, AS
AMENDED; AND REAFFIRMING TAX ABATEMENT.
WHEREAS, the City Council on September 22, 1988, adopted
Resolution 20479, which authorized participation in tax abatement and approved
guidelines and criteria for granting tax abatement; and
WHEREAS, the Corpus Christi Independent School District has
subsequently enacted guidelines and criteria for tax abatement which provide for
recapture of taxes by the school district from the taxpayer in the event of
either reduced funding by the state to the school district or budget needs of
the school district which dictate a tax rate in excess of the rollback tax rate;
and
WHEREAS, the City of Corpus Christi has an interest in insuring
uniformity among the taxing entities participating in a tax abatement program;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
SECTION 1. That the Guidelines and Criteria for Tax Abatement adopted
by Resolution 20479 are amended by adding Section 1 (b) defining "added value";
amending Section 2 (g) pertaining to abatement percentage; adding Section 6 (e)
reduction in state funding; adding Section 6 (f) reduction in rollback tax rate;
and adding Section 6 (g) continuation of tax lien, all as set forth at length in
Exhibit A attached hereto, and said Guidelines and Criteria, as amended, are
approved and adopted as found in Exhibit A attached hereto and made a part
hereof.
SECTION 2. That the Guidelines and Criteria for Tax Abatement, as
amended, are hereby approved in accordance with Chapter 312 of the Texas Tax
Code, the Property Redevelopment and Tax Abatement Act.
SECTION 3. That the undersigned jurisdiction reaffirms its election
to become eligible to participate in tax abatement in accordance with the
provisions of the Property Redevelopment and Tax Abatement Act as provided in
Resolution 20479.
ATTEST:
City Secretary
APPROVED: /6,Y'DAY OF
HAL GEORGE, CITY ATTORNEY
City Attorney
207HG080.res
MAYOR
' 19fY THE CITYOFCORPUS CHRISTI, TEXAS
20528 MICROFILMED
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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) "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."
(c) "Agreement" means a contractual agreement between a property owner and/or lessee and an
Eligible jurisdiction for the purposes of tax abatement.
(d) "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.
(e) "deferred maintenance" means improvements necessary for continued operations which do not
improve productivity or alter the process technology.
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(f) "economic life" means the number of years a property improvement is expected to be in
service in a facility.
(g) "Eligible iurisdiction" 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.
(h) "expansion" means the addition of buildings, structures, fixed machinery or equipment for the
purposes of increasing production capacity.
(i) "facility" means property improvements completed or in the process of construction which
together compromise an integral whole.
(j) "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.
(k) "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.
(1) "new facility" means a property previously undeveloped which is placed into service by means
other than or in conjunction with expansion or modernization.
(m) "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.
(n) "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
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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.
Abatement Percentage. The percentage of tax abated shall be determined based .upon the
added value in the project as follows:
(g)
Abatement
Percent Added Value
0 $0 - 1.99 million
50 $2.0 - 4.99 million
75 $5.0 - 9.99 million
100 over $10.0 million
(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 added value of new eligible property shall be taxable in the manner described in
Section 2(g) above.
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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) Feasibilitv. 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.
(f)
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) Reauired 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
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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 added value 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 thecompany 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.
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(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.
(e) Reduction in State Funding. In the event the school district grants an abatement of taxes or
enters into a tax abatement Agreement with respect to any property and the total assessed value
of the property (rather than the value after abatement) is taken into consideration in
determining the level of funding by the State of Texas the result of which is reduced funding
by the State to the school district, then the school district shall recapture from the owner of
such property (the "taxpayer") a tax in an amount equal to the lesser of the following:
(1)
(g)
(1)
The amount of the taxes abated for that year by the school district with respect to such
taxpayer.
(2) The amount obtained by subtracting (a) the amount actually paid by the State to the
school district from (b) the amount which would have been paid by the State to the
school district if there had been no tax abatement.
If the school district has granted an abatement of taxes to more than one taxpayer;. then the
amount of the recapture calculated in accord with subparagraph (2) above shall be prorated on
the basis of the value of the abatement with respect to each taxpayer.
All recaptured taxes must be paid within 30 days after notice thereof has been given to the
affected taxpayer. Penalty and interest shall not begin to accrue upon such sum until the first
day of the month following such thirty (30) day notice, at which time penalty and interest
shall accrue in accord with the laws of the State of Texas.
Reduction in Rollback Tax Rate. If during any year of the period of abatement with respect
to any property any portion of the abated value which is added to the current total value of the
school district 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" in accord with Section 26.04(c)(2) of the Texas Tax Code
and if the school district's budget calculations indicate that a tax rate in excess of the
"rollback tax rate" is required to fund the operations of the school district for the succeeding
year, then the school district shall recapture from the taxpayer a tax in an amount equal to the
lesser of the following:
(�l
The amount of the taxes abated for that year by the school district with respect to such
taxpayer.
(2) 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 school district.
If the school district has granted an abatement of taxes to more than one taxpayer, then the
amount of the recapture calculated in accord with subparagraph (2) above shall be prorated on
the basis of the value of the abatement with respect to each taxpayer.
All recaptured taxes must be paid within thirty (30) days after notice thereof has been given to
the affected taxpayer. Penalty and interest shall not begin to accrue upon such sum until the
first day of the month following such thirty (30) day notice, at which time penalty and interest
shall accrue in accord with the laws of the State of Texas.
Continuation of Tax Lien. The amount of tax abated each year under the terms of these
Guidelines or the Agreement shall be secured by a first and prior lien which shall continue in
existence from year to year until such time as the Agreement between the taxing entities and
owner is fully performed by owner, or until all taxes, whether assessed or recaptured, are paid
in full.
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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.
1114/.BP7
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99.066.01
Corpus Christi, Texas
oZ o. day of lfl.L( rkillA) 198
The above resolution was passed by the following vote:
Betty N. Turner
David Berlanga, Sr.
Leo Guerrero
Clif Moss
Bill Pruet
Mary Rhodes
Frank Schwing, Jr. (11-?/(-}
Mary Pat Slavik
Linda Strong
at -p
(tip
20528