Loading...
HomeMy WebLinkAbout021993 RES - 07/26/1994A RESOLUTION 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, school district or other taxing unit must adopt guidelines and criteria for property tax abatement agreements; and WHEREAS, the City of Corpus Christi (herein the "Governmental Unit") has previously adopted Guidelines and Criteria for Property Tax Abatement in 1988, but said Guidelines and Criteria have lapsed since under the Act they must be renewed after two years; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS: SECTION 1. The Governmental Unit hereby adopts the Guidelines and Criteria attached hereto as Exhibit "A" in accordance with the requirements of the Act. Attest: Cla City ecret�/iP/JZG� , � MAYOR THE CITY OF CORPUS CHRISTI APPROVED: a X. DAY OF YJ JAMES R. BRAY JR., CITY ATTORNEY By ��' y ttorney ord\94057 19 4 l 021993 roJSica1L' Proposed - (Cotpus Christi) 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, Vemon'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; NOW, THEREFORE, BE IT RESOLVED that these Guidelines and Criteria for granting tax abatement in the area comprising the City of Corpus Christi 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 prrress technology. (f) "Economic Life" means the number of years a property improvement is expected to be in service in a facility. (g) Proposed (Corpus Christi) '$licible 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. (h) 'Facility' means property improvements completed or in the process of construction which together compromise an integral whole. (i) "Recional Telecommunications/Data Processing Center Facility" means buildings and structures used or to be used primarily for the provision of telecommunication or data processing services by the facility operator where a majority of the services are provided to points beyond a 50 -mile radius of Nueces County. Section 2. Abatement Authorized. (a) Authorized Facility. A facility may be eligible for abatement if it is a Regional Telecommunications/Data Processing Center Facility. (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, 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. 1 (8) (h) (1) Proposed '(corpw Christi) Abatement Percentage. The percentage of tax abated authorized herein shall be in accordance with the following schedule: Yes Percentage of Abatement Percentage of Abatement (for first 510 million) (over S10 million) Construction Period 100% 0% (not to exceed 2 years) Year 1 100% 0% Year 2 100% 0% Year 3 100% 0% Year 4 100% 0% Year 5 100% 0% In the event the Added Value caused by the Project is less than $2.0 million, no abatement shall be granted. 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 625 people on a permanent basis in Corpus Christi; (2) must not adversely affect competition in the local market with established local businesses. 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. Section 3. Application. Written Application. Any present or potential owner of taxable property may request tax abatement by filing a written application with the City Manager of the City of Corpus Christi. 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. 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 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 shall consider the feasibility and the impact of the proposed tax abatement. The study of feasibility shall include, but not be limited to, an r Proposed (Coypu. Christi) 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) 14o Abatement if Construction has Commenced. No abatement Agreement shall be approved if the request for the abatement was filed after the commencement of construction of improvements related to the proposed new facility. (0 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. Required Findings. In order to enter into a tax abatement Agreement, the County and the City 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 or the City 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 Tong -term benefit of such Eligible jurisdiction. (b) (a) (b) Section 5. Agreement. 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) 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); 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 (5) (6) the amount of added value and minimum number of jobs involved. Time of Execution. The tax abatement Agreement shall normally be executed within 60 days after the applicant has provided all Lb. -es -vary information and documentation. T -4- (a) Proposed - (Corpus Christi) Section 6. Recapture. Discontinued or Reduced Overation During Term of Aereement. 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 625 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. (d) 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 Eligible jurisdiction 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 Eligible jurisdiction's budget calculations indicate that a tax rate in excess of the "rollback tax rate is required to fund the operations of the Eligible jurisdiction for the succeeding year, then the Eligible jurisdiction shall recapture from the taxpayer a tax in an amount equal to the lesser of the following: (1) The amount of the taxes abated for that year by the Eligible jurisdiction 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 Eligible jurisdiction. If the Eligible jurisdiction 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. (e) 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. r Piopo..d (Corpus Christi) 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 a¢cresment and the abatement. (b) Access to Facility. The Agreement shall stipulate that employees and/or designated representatives of the Eligible jurisdiction will have arrecs 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. (d) Annual Reports. During the initial four years of the term of property tax abatement, the company or individual receiving abatement shall provide to the governing body of the Eligible jurisdiction approving the abatement an annual report on the abatement project. The annual report shall cover those items listed on Schedule 1 in order to document the efforts of the recipient of tax abatement to acquire goods and services on a local basis. Such annual report shall be prepared on a calendar year basis and shall be submitted to the governing body of the Eligible jurisdiction no later than ninety (90) days following the end of each such calendar year. The annual report shall 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 such exception cases involving purchases over $10,000.00 a justification for such purchase shall be included in the annual report. Each such 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 shall include firms, businesses, and persons who reside in or maintain an office in either Nueces County or San Patricio County. In the event of a breach of the buy - local provision, the percentage of abatement shall be proportionately reduced equal to the amount the disqualified contract bears to the total construction cost for the project. -6- r Proposed (Coypu. Christi) SCHEDULE 1 "Buy Local" Annual Reports The following information shall be reported to the Governmental Unit 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. Dollar amount spent for labor** (local). 4. Dollar amount spent for labor** (total). 5. Number of jobs created in the construction project (local). 6. Number of jobs created in the construction project (total). 7. Number of jobs created on a permanent basis (local). 8. 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 "1..21" as used to describe manufacturers, suppliers, contractors and labor shall include firms, businesses, and persons who reside in or maintain an office in either Nueces County or San Patricio County. 0:\l l \ABATE\GUIDE.CC-11 T -7- Corpus Christi, Texas 24 day of The above resolution Mary Rhodes Dr. Jack Best Melody Cooper Cezar Galindo Betty Jean Longoria Edward A. Martin Dr. David McNichols David Noyola Clif Moss \forms\066 , 19 CP -1 was passed by the following vote: 61-Plfr 021993 a