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HomeMy WebLinkAbout024753 RES - 01/29/2002RESOLUTION AUTHORIZING THE CITY MANAGER, OR THE CITY MANAGER'S DESIGNEE TO SIGN THE NECESSARY DOCUMENTATION TO ACCEPT U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT'S RENEWAL COMMUNITY DESIGNATION IN CENSUS TRACTS 1, 3, 4, 10, AND 11, WHICH IS DESIGNED TO STIMULATE ECONOMIC DEVELOPMENT IN THESE AREAS. WHEREAS, the 2000 Community Renewal Tax Relief Act authorized the U. S. Department of Housing and Urban Development ("HUD") to designate 40 Renewal Communities and seven new urban Empowerment Zones; WHEREAS, HUD received more than 100 Renewal Community applications from communities around the country; WHEREAS, Urban Renewal Community applicants were ranked according to their 1990 Census rates of poverty, unemployment and Iow-income households; WHEREAS, existing Empowerment Zones and Empowerment Communities also received a preference in rating and ranking; WHEREAS, bonus points were given to communities having Iow crime and communities that were identified by General Accounting Office as being an extremely distressed area; WHEREAS, only the most economically distressed communities were awarded designation as a Renewal Community; WHEREAS, on January 23, 2002, HUD announced that the City of Corpus Christi will be designated a "Renewal Community," eligible to share in an estimated $17 billion in tax incentives to stimulate job growth, promote economic development and create affordable housing; WHEREAS, the 2000 Community Renewal Tax Relief Act established the Renewal Community Initiative that will encourage public-private collaboration to generate economic development in 40 distressed communities around the country; WHEREAS, as a result of this Renewal Community designation, Corpus Christi will receive regulatory relief and tax breaks to help local businesses provide more jobs and promote community revitalization; WHEREAS, A. Cynthia Leon, Regional Director for HUD has stated that "These tax incentives will help businesses grow in some of our country's most challenging communities, by creating the incentives that will promote job growth and economic development, we are joining with the private sector to restore economic vitality and restore whole communities in the process;" WHEREAS, Mayor Loyd Neal has stated that "The City of Corpus Christi has worked hard for this designation and we couldn't be more pleased. These tax cuts bring businesses, jobs, and growth through the rest of the decade. So this is great news for now and for our future;" WHEREAS, Renewal Communities will use the power of public and private partnerships to build a framework of economic revitalization in areas that experience high unemployment and shortages of affordable housing; WHEREAS, an estimated $6 billion in tax incentives are exclusively available for Renewal Communities across the country; WHEREAS, as distressed areas, Renewal Communities will also be eligible to share in an additional $11 billion in Low-Income Housing and New Market Tax Credits; WHEREAS, new Renewal Communities can take advantage of wage credits, tax deductions, capital gains exclusions and bond financing to stimulate economic development and job growth. WHEREAS, each incentive is tailored to meet the particular needs of a business and offers a significant inducement for companies to locate and hire additional workers; WHEREAS, nearly 60 percent of the residents in the City of Corpus Christi's Renewal Community live in poverty and can not afford even basic necessities for their families. WHEREAS, by cutting taxes, improving local services, and reducing crime, Corpus Christi hopes to attract businesses in the area that will make up its Renewal Community; WHEREAS, the new jobs created will help ease the 19 percent unemployment rate found within Renewal Community area; WHEREAS, the Renewal Community designation makes three types of tax credits available to businesses - Wage Credits, Work Opportunity Credits, and Welfare to Work Credits; WHEREAS, Wage Credits are especially attractive to businesses looking to grow, since these businesses are able to hire and retain Renewal Community residents and apply the credits against their federal tax liability; WHEREAS, businesses operating in the new Renewal Community will enjoy up to a $1,500 credit for every newly hired or existing employee who lives and works in the Renewal Community; WHEREAS, Work Opportunity Credits provide businesses in Renewal Communities with up to $2,400 against their Federal tax liability for each employee hired from groups with traditionally high unemployment rates or other special employment needs, including youth who live in the Renewal Community; R24011A1.doc WHEREAS, Welfare to Work Credits offer businesses a credit of up to $3,500 (in the first year of employment) and $5,000 (in the second year) for each newly hired long- term welfare recipient; WHEREAS, the Renewal Community designation also makes three types of tax deductions available to businesses -- Commercial Revitalization Deductions, Section 179 Deductions, and Environmental Cleanup Cost Deductions; WHEREAS, Commercial Revitalization Deductions permit a $12 million deductions per Renewal Community per year, with up to $10 million per project for commercial or industrial buildings developed in the Renewal Communities; WHEREAS, a business can deduct up to $5 million in the year the building is placed in service or deduct the full amount of eligible expenditures pro rata over 10 years; WHEREAS, Section 179 Deductions under the tax code allow a qualified Renewal Community business to expense up to $35,000 of additional qualified property, such as equipment and machinery, acquired each year during the period of the Renewal Community designation (2002 through 2009); WHEREAS, Environmental Cleanup Cost Deductions allow businesses to deduct qualified cleanup costs in Brownfields; WHEREAS, Zero Percent Capital Gains Rate applies to an interest in, or property of, certain businesses operating in a Renewal Community, if the asset is acquired during the period of the Renewal Community designation and held for at least 5 years; WHEREAS, Qualified Zone Academy Bonds allow state and local governments to match no-interest loans with private funding sources to finance public school renovations and programs. WHEREAS, in addition to the incentives described above, HUD will provide technical assistance to these communities to help make businesses fully aware of the many opportunities available to them; WHEREAS, to make certain the Renewal Communities are successful in the initial stages of their designations, HUD will host an Implementation Conference in the spring of 2002, where the newly designated Renewal Communities will meet to hear from experts in the fields of business, taxes and economic development; WHEREAS, like all distressed communities, Renewal Communities will also be able to take advantage of the New Markets Tax Credits that provide investors with a credit against their federal taxes of 5 to 6 percent of the amount invested in a distressed area; and WHEREAS, the Low-Income Housing Tax Credit is also available to Renewal Communities, which provides credit against Federal taxes for owners of newly constructed or renovated rental housing; R24011A1.doc NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS: SECTION 1. The City Manager, or the City Manager's designee, is authorized to sign the necessary documentation to accept U.S. Department Of Housing and Urban Development's Renewal Community Designation in Census Tracts 1, 3, 4, 10, and 11, which is designed to stimulate economic development in these areas of the City. ATTEST:~,~~.r~ THE CITY OF CORPUS CHRISTI Armando Chapa City Secretary Mayor APPROVED: 24th day of January, 2002. James R. Bray Jr. City Attorney R. Ja.y/R¢ing / FirC"As¢istant City Attorney R24011A1.doc Corpus Christi, Texas ~' day of ,/~,qJL~cUt~-~,~_~__ (/ ,2002 The above resolut~n was passed b~the following vote: Samuel L Neal, Jr. Javier D. Colmenero Melody Cooper Henry Garret[ Dr. Arnold Gonzales Rex A. Kinnison Betty Jean Longoria John Longoria Mark Scott R24011A1.doc 0247o3