HomeMy WebLinkAbout025740 RES - 04/27/2004RESOLUTION
ADOPTING GUIDELINES AND CRITERIA FOR AUTHORIZING
TEMPORARY PROPERTY TAX ABATEMENT
Whereas, the Texas Property Redevelopment and Tax Abatement Act (the "Act"),
Texas Tax Code, Chapter 312, as amended, authorizes the City of Corpus Christi (the
"City") to enter into tax abatement agreements for projects meeting the guidelines and
criteria for granting tax abatement, duly adopted by the City; and
Whereas, the City most recently adopted Guidelines and Criteria for Granting Tax
Abatement in Resolution No. 023869 on December 14, 1999 which were effective for
two years as provided in the Act; and
Whereas, the City desires to adopt Guidelines and Criteria for Granting Tax Abatement;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
SECTION 1. The City adopts the Guidelines and Criteria for Granting Temporary Tax
Abatement in the form attached as Exhibit A in accordance with the requirements of the
Act.
City Secretary
APPROVED: April ~' 2-., 2004.
Lisa Aguilar (.)
Assistant City Attorney
for City Attorney
Mayor
April 27 2004 Tax Abatement Guidelines.doc
2a740
CORPUS CHRISTI
April 2004
Cily of
Corpus
Christi
CITY OF CORPUS CHRISTI
GUIDELINES AND CRITERIA
FOR GRANTING TAX ABATEMENT
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;
and
WHEREAS, Corpus Christi must compete with other communities across the nation
currently offering tax inducements to attract new plant and modemization 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 pdvate 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 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 requires eligible taxing jurisdictions to establish Guidelines and
Cdteria 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, a federally designated Renewal Community constitute.~ Jesignation as a
Texas Enterprise Zone under Chapter 2303 of the Texas Govemment Cocle, and designated
Texas Enterprise Zone constitutes designation as a Reinvestment Zone without further hearing
or other procedural requirements under Chapter 312 of the Texas Tax Code, and
WHEREAS, the U.S. Department of Housing and Urban Development designated
Census Tracts 1, 3, 4, 10 and 11 as one of forty Renewal Communities nationwide eligible to
share in $17 billion in tax incentives to stimulate job growth, promote economic development
and create affordable housing, and
WHEREAS, to assure a common, coordinated effort to promote economic development,
these Guidelines and Criteria have been circulated among Nueces County, the City of Corpus
Christi and other governmental entities for consideration as a common policy for all
jurisdictions which choose to participate in tax abatement agreements;
NOW, THEREFORE, BE IT RESOLVED by the City of Corpus Christi that the Renewal
Community is designated as a Reinvestment Zone and these Guidelines and Cdteda for
granting tax abatement be adopted:
CORPUS CHRISTI
A~ 2004
SECTION 1. DEFINITIONS.
a. "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 pursuant to 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."
c. "Agreement" means a contractual agreement between a property owner and/or lessee and
an Eligible jurisdiction 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 which dedve a majodty of revenue from points beyond a 50-mile
radius of Nueces County.
f. "Deferred Maintenance" means improvements necessary for continued operations which
do not improve productivity or alter the process technology.
g. "Economic Life" means the number of years a property improvement is expected to be in
service in a Facility.
h. "Eligible Jurisdiction" means the City of Corpus Chdsti or Nueces County and any
municipality, 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.
"Enterprise Zone Residential Redevelooment Facility" means buildings and structures used
or to be used primarily for residential purposes and which are located within an enterprise
zone.
j. "Expansion" means the addition of buildings, structures, fixed machinery or equipment for
the purposes of increasing capacity.
k. "Facility" means property improvements completed or in the process of construction which
together compromise an integral whole.
I. "Mixed use facility" means a facility having residential and commemial uses where the
commercial use occupies more than 20% of the structure.
m. "Multi-family housinQ" 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 tdplex, apartment, townhouse, condominium, cooperative, high-
dse, etc.
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n. Modemization" means the replacement and upgrading of existing facilities which increase
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. Modemization 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.
o. "New Facility" means a property previously undeveloped which is placed into service by
means other than or in conjunction with an expansion or modemization.
"Owner" means the owner of a Facility subject to abatement. If the Facility is constructed
on a leased property, the owner shall be the party which owns the property subject to tax
abatement. The other party to the lease shall join in the execution of Agreement but shall
not be obligated to assure performance of the party receiving abatement.
"Permanent full-time iob" means a new employment position created by a business that
provides a regular work schedule of at least 35 hours per week or 1820 hours of
employment per year to a Nueces County resident and maintains the employment position
dudng the term of the abatement agreement.
"Petrochemical Facility" means buildings and structures, including fixed machinery and
equipment, the pdmary purpose of which is or will be the manufacture or processing of
petrochemicals or fuels by physical or chemical change.
"Regional Distdbuti0n Center Facility" means buildings and structures, including fixed
machinery and equipment, used or to be used pdmadly 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.
"Regional Telecommunications/Data Precessing 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 majodty of the services are provided
to points beyond a 50-mile radius of Nueces County.
u. "Regional Visitor/Amusement Facility" means buildings and structures used or to be used
pdmadly as a stadium, arena, amusement park or similar attraction or sports venue
"Renewal Community Facility" means a building or structure in the Corpus Chdsti Renewal
Community which includes Census Tracts 1, 3, 4, 10 and 11 to be used for the creation of
a new business or business expansion, but not a relocation of a business.
w. "Rehabili~tion" means that the Added Value, as defined, of the project exceeds the base
year of a development property by $250,000.
'q'ems Enterprise Zone" means any census block group with greater than 20% poverty,
federally designated Renewal Community, or area designated as a Texas Enterprise Zone
prior to 2003.
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(a) Authorized Facilities.
(b)
(c)
(d)
C(JRPUS CHRISTI
April 2004
SECTION 2, ABATEMENT AUTHORIZED.
(e)
1)
Facility may be eligible for abatement if it is a Basic Manufacturing or Service
Facility, Regional Distribution Center Facility, Regional Telecommunications/Data
Processing Center Facility, Regional Visitor/Amusement Facility, Enterprise Zone
Residential Redevelopment Facility, and Petrochemical Facility. Abatement may be
granted for new facilities and improvements to existing facilities for the purpose of
modernization or expansion, or
2)
Renewal Community Facility, as defined, may be considered on a case by case
basis for abatement if it is a Renewal Community Facility and if the building or
structure will be defined as rehabilitation project or is defined as new facility. Projects
that may be considered as Renewal Community Facility include: multi-family housing
facilities, mixed-use facilities, retail facilities, hotel accommodations.
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.
Eliflible 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.
IneliRible Property. The following types of property shall be fully taxable and ineligible for
abatement: land; inventories; supplies; tools; furnishings and othe~ :r~ :~ of movable
pemonal property; vehicles; vessels; aircraft; housing; hotel accomp vJ-~ :~ns; deferred
maintenance investments; property to be rented or leased except as ,~ ~d in Section
2(c); improvements for the generation or transmission of electrical enemy 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; improvements to real property which have 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.
Period of Abatement.
1. 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 a period of five years following the completion of construction. If
the pedod of construction exceeds two years, the Facility shall be considered
completed for purposes of abatement and in no case shall the total pedod of
abatement, inclusive of the construction pedod, exceed seven years.
(f)
CORPUS CHRISTI
April 200~
2. Abatement for Renewal Community Facility shall be granted effective with the
January 1 valuation date immediately following the date of execution of the
Agreement. Abatement shall be allowed for a pedod of two (2) years following the
completion of construction. If the period of construction exceeds two years, the
Facility shall be considered completed for purposes of abatement after the two (2)
year period and in no case shall the total pedod of abatement, inclusive of the
construction period, exceed four years for a new facility and five years for a
rehabilitated facility.
Completion of Construction. The completion of construction shall be deemed to occur
upon the eadiest 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, or
(4) two (2) years after the date of the Agreement.
The above determination shall be made by the Eligible jurisdiction offering the
abatement, in its sole and absolute discretion, based upon the above cdteda and such
other factors as the jurisdiction may deem relevant. The determination of the completion
of construction shall be conclusive, and any judicial review of such determination shall be
govemed by the substantial evidence rule.
(g) Abatement PercentaRe
1 ) Non - Renewal Community Facilities
For a Facility which provides not less than 50 (but not more than 99) new permanent full-
time jobs, the pementage of tax abated shall be in accordance with the following
schedule:
Year Percentage of abatement
Construction Pedods (not to exceed 2 years 100%
Year I 50%
Year 2 50%
Year 3 50%
Year 4 50%
Year 5 ,50%
Provided that, for a Facility which provides not less than 100 (but not more than 199) new
permanent full-time jobs, the percentage of tax abatement shall be in accordance with
the following schedule:
(X~RPUS CHRISTI
April 2004
Year Percentage of Percentage of
Abatement (for the first Abatement (over $10
$10 million in Added million in Added Value)
Value
Construction Pedod (not to exceed 2 100% 100%
years)
Year 1 75% 50%
Year 2 75% 50%
Year 3 75% 50%
Year 4 75% 50%
Year 5 75% 50%
Provided that, for a Facility which provides at least 200 new permanent full-time jobs, the
percentage of tax abatement shall be in accordance with the following schedule:
Year Percentage of Percentage of
Abatement (for the first Abatement (over $10
$10 million in Added million in Added Value)
Value
Construction Pedod (not to exceed 2 100% 100%
years)
Year 1 100% 50%
Year 2 100% 50%
Year 3 100% 50%
Year 4 100% 50%
Year 5 100% 50%
In the event the Added Value caused by the Project is less than $2.0 million, no
abatement shall be granted unless the Facility is a Rehabilitation Project as described in
Section 2 (i).
For compliance purposes, the date for determining a permanent full-time job shall be
January 1 of each year commencing with the January 1 following the date of completion
of construction. The percentage of abatement provided each year under the Agreement
shall be based upon the employment information as of January 1 of such year. As a
result, the actual amount of abatement may vary from year to year based upon
employment levels and property valuations.
For example, Company A has an abatement Agreement entered 5/1/95 and projects to
create 250 permanent full-time jobs. If the actual experience of Company A involves
fluctuating job levels, the actual abatement under the Agreement could follow the
following pattern:
Year Employment Abatement Abatement
(First $10mm) (Over $10mm)
1/1/96* 0 100% 100%
1/1/97' 0 100% 100%
1/1/98 150 75% 75%
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April 2004
1/1/99 250 100% 75%
1/1/00 150 75% 50%
1/1/01 50 50% 50%
1/1/02 250 100% 25%
*Construction Underway
2) Renewal Community Facilities
Provided that, for a Renewal Community Facility which creates one (1) new permanent
full-time job per $50,000 of Added Value to a property following the completion of
construction and maintains the same level of employment for the term of the abatement
agreement, the percentage of tax abated shall be in accordance with the following
schedule:
Year Percentage of Percentage of
Abatement for Projects Abatement for New
Involving Rehabilitation Facilities
Construction Pedod (not to exceed 100% 100%
2 years)
Year I 100% 75%
Year 2 100% .75%
Year 3 100% 0%
(h)
For compliance purposes, the date for determining a permanent full-time job shall be
six months from the date of completion. The business must maintain the same level of
employment or increase employment dudng the term of the agreement.
For example:
Company X is rehabilitating a building in the Renewal Community for a commercial use.
The current value of the building is $250,000 and Company X estim: ~es an added
value of $750,000. The job requirement will be to create and maintain a ninimum of 15
permanent full-time positions during the term of the abatement agreem, ~t. ($750,000 I
$50,000 = 15)
For residential multi-family housing, the job creation requirement will be waived.
For mixed-use facilities, the job requirement will be prorated. For example:
Company Y is constructing a mixed-use facility that is 30% non-residential and the
Added Value is $1,500,000. The job requirement will be to create and maintain a
minimum of 9 permanent full-time jobs during the term of the abatement agreement.
(1,500,000X.30=$450,000, $450,000/$50,000=9).
Livina Waoe Reouirement. 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 shall be that annual amount equal or greater
than poverty level for a family of three, as established by the 2004 U.S. Department of
Health and Human Services Poverty Guidelines, divided by 1820 hours per year, which is
$8.60 per hour. The Governmental Unit shall have the right to adjust the living wage
target under these Guidelines and insert a specific target in each property tax abatement
Agreement to govem the abatement offered under that Agreement.
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0)
0)
(k)
O)
CORPUS CHRISTI
April 2004
Rehabilitation Proiects. The $2 million minimum Added Value requirement for abatement
shall not apply to rehabilitation projects which involve the adaptive reuse of an existing
structure or building for a Facility. 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. For
such rehabilitation projects, all Eligible Property in excess of the Base Year Value shall be
subject to abatement plus the value of personal property such as fumiture and movable
equipment which would otherwise be considered Ineligible Property for any other type of
abatement category. 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.
Estimated Added Value or Added Value Requirement. At the time of execution of the tax
abatement Agreement, the Owner shall reasonably estimate the Added Value upon
completion of construction of any improvements to real property in connection with the
Project. For Renewal Community Facility, the owner shall provide reasonable estimates
of the Added Value to be made to the property in addition to the estimated Added Value.
This "Estimated Added Value" and, for Renewal Community Facility, "Added Value" shall
be stated in the Agreement. In the event that upon completion, of construction of the
improvements, the Added Value, as determined by the Nueces County Appraisal District,
shall at any time thereafter during the term of the abatement Agreement be less than
eight-five percent (85%) of the Estimated Added Value, not due to circumstances beyond
the control of Owner, the Owner agrees to pay an amount equal to the then current tax
rate of each Eligible jurisdiction providing abatement applied to the difference between
the actual Added Value from eighty-five percent (85%) of the Estimated Added Value,
multiplied by 100% minus the net percentage of Abatement provided under the
Agreement. For the purposes of this prevision, the term "circumstances beyond the
control of Owner" shall include casualty losses, national economic factors, shutdowns
due to governmental regulations, stdkes, acts of war, and the like. The formula for
calculating such additional tax is outlined as follows:
[Tax Rate] x [(85% of Est. Added Value - Actual AV) x (100% - Abatement %)] = Additional Tax
Properties in Industrial Districts. For eligible property to be constructed in an area which
is covered by an executed industrial distdct agreement with the City, the method of
calculating payments in lieu of property taxes for such eligible property shall be as set
forth in the industrial distdct agreement. As an altemative to an industrial district
agreement, an eligible property may be covered by a tax abatement agreement, but such
shall constitute an election by the Owner that the land and improvements shall not be
included within any type of industrial district arrangement following the expiration of the
tax abatement agreement.
Economic Qualification for Non-Residential Development and Mixed-Use Facilities. In
order to be eligible for tax abatement, the planned improvement:
(1)
must 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 Nueces County, or
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(2)
for Renewal Community Facility, must create within six months following the
completion of construction one (1) new permanent full-time job per $50,000 of
Added Value to a property and maintain the same level of employment or increase
employment during the term of the abatement agreement. If the project is a mixed-
use facility, the job requirement will apply to the non-residential improvement and
will be prorated as described in Section 2(g)(2);
(3) must not adversely affect competition in the local market with established local
businesses.
(m) 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
(except for personal property added in connection with a Rehabilitation Project);
(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 (and certain personal property added in
connection with a Rehabilitation Project) shall be taxable in the manner described in
Section 2(g) above.
SECTION 3. APPLICATION.
(a)
Written Application. Any present or potential owner of taxable property may request tax
abatement by filing a wdtten application with: (i) the City Manager of the City, 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 Aoolication. 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 apprepdate for evaluating the financial capacity and
other relevant factors of the applicant.
(c)
Wdtten Notification to Goveminfl 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
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(e)
(f)
(a)
(b)
(b)
(c)
(a)
CORPI rs CHRiSTI
April 2004
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.
No Abatement if Construction has commenced. No tax abatement Agreement shall be
approved if the application for the abatement was flied after the commencement of
construction, alteration or installation of improvements related to the proposed
Modernization, Expansion or New Facility.
Variance. Requests for vadance from the provisions of Section 2 of these guidelines may
be made in written form, provided, however, that no vadance may extend the term of
abatement beyond five years after completion of construction. 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 goveming body of each Eligible jurisdiction providing abatement.
SECTION 4. PUBLIC HEARING AND APPROVAL.
DesiRnation of Zone. A resolution designating a zone for tax abatement under the Act
may not be adopted by the City 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 headng shall be provided to each Eligible jurisdiction and to
the public in the manner required by the Act.
Reinvestment Zone. According to Chapter 312 of the Texas Tax Code, a designated
Texas Enterprise Zone constitutes designation as a Reinvestment Zone without further
hearing or other procedural requirements. Under Chapter 2302 of the Texas Govemment
Code, a federally designated Renewal Community or Census Block Group with poverty
greater than 20% constitutes designation as a Texas Enterprise Zone Therefore, the
Renewal Community is a Reinvestment Zone, without further hearing.
Required FindinRs. In order to enter into a tax abatement Agreement, the County or City
must find that the terms of the proposed Agreement meet these Guidelines and Cdteda.
Reservation of RiRhts. Nothing herein shall be construed to limit the authority of the City,
the County or any other jurisdiction to examine each application for tax abatement before
it on a case-by-case basis and determine in its sole and absolute discretion whether or
not the proposed project should be granted temporary tax abatement and whether or not
it complies with these Guidelines and Cdteda, is feasible, and whether or not the
proposed temporary abatement of taxes will inure to the long-term benefit of such Eligible
jurisdiction.
SECTION5. AGREEMENT.
Content~ of Tax Abatement ARreement. The tax abatement Agreement with the Owner
of the Facility shall include:
('1) the estimated value to be subject to abatement and the Base Year Value;
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(b)
(c)
(a)
(b)
(2) the pementage 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 pedod 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;
(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 required number of permanent full-time jobs.
Time of Execution. The tax abatement Agreement shall normally be executed within 60
days after the applicant has provided all necessary information and documentation.
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.
Failure to Commence Operation During Term of Agreement. In the event that the Facility
is not completed and does not begin operation with the minimum number of 50
permanent full-time jobs by January 1 following the completion of construction or for
Renewal Community Facility, at least one permanent full-time job per $50,000 of Added
Value within six months following the completion of construction, no abatement shall be
given for that tax year, and the full amount of taxes assessed against the property shall
be due and payable for that tax year. In the event that the Owner of such a Facility fails
to begin operation with the minimum number of 50 permanent full-time jobs by the next
January 1 or for Renewal Community Facility, at least one permanent full-time job per
$50,000 within 1 year following the completion of construction, then the abatement
Agreement shall terminate and all abated taxes dudng the period of construction shall be
recaptured and paid within 60 days of such termination.
Discontinuance of Operations Dudnfl 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 is not
maintained as required in section § (a), for any reason, except on a temporary basis due
to fire, explosion or other casualty or accident or natural disaster, the Agreement may be
terminated by the Eligible jurisdiction providing abatement, and all taxes previously
abated by virtue of the Agreement shall be recaptured and paid within 60 days of such
termination.
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(c)
(d)
(e)
(f)
(g)
CORPI~S CHR1STI
April 2004
Delinquent Taxes. In the event that the Owner allows its ad valorem taxes to become
delinquent and fails to timely and propedy follows the legal procedures for their protest
and/or contest, the Agreement shall terminate and so shall the abatement of the taxes for
the tax year of the delinquency. The total taxes assessed without abatement, for that tax
year shall be paid within 60 days from the date of termination.
Notice of Default. Should the Eligible jurisdiction providing abatement determine that the
Owner is in default according to the terms and conditions of its Agreement, it shall notify
the Owner in wdting 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 Owner fails to cure said default dudng the Cure Pedod,
the Agreement may be terminated and the taxes abated by virtue of the Agreement will
be recaptured and paid as provided herein.
Actual Capital Investment. Should the Eligible jurisdiction providing abatement 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 Owner of such determination.
Reduction in Rollback Tax Rate. If dudng any year of the pedod 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 judsdiction'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 jufisdi, h' ~n 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 amount 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 and the Agreement shall be secured by a first and pdor tax lien which shall
continue in existence from year to year throughout the entire term of the Agreement or
c:~ym~.,~ ,b,,t,~,~t~AL-gu~,Smix~s200,L ao~ 12
(a)
(b)
(c)
(d)
(e)
CORIAIS CHRISTI
April 2004
until all taxes, whether assessed or recaptured, are paid in full.
SECTION 7. ADMINISTRATION.
Annual Assessment. The Nueces County Appraisal Distdct shall annually determine an
assessment of the real and personal property subject to an Agreement. Each year, the
Owner shall furnish the Appraisal Distdct with such information as may be necessar~ for
the abatement. Once value has been established, the Appraisal Distdct shall notify the
affected jurisdictions which levy taxes of the amount of the assessment and the
abatement.
Access to Facility. The Agreement shall stipulate that employees and/or designated
representatives of the Eligible jurisdiction will have access to the Facility dudng 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 Owner and in accordance with its safety standards.
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.
Annual Reports. The Owner shall certify to the goveming body of the Eligible Jurisdiction
on or before Apdl 1 each year that the Owner is in compliance with each applicable term
of the agreement. Additionally, dudng the initial four years of the term of property tax
abatement, the Owner shall provide to the Eligible Jurisdiction approving the abatement
an annual report covedng those items listed on Schedule I in order to document its
efforts to acquire goods and services on a local basis. Such annua! report shall be
prepared on a calendar year basis and shall be submitted to the Eligible jurisdiction no
later than ninety (90) days following the end of each such calendar ar. The annual
report shall be accompanied by an audit letter prepared by an independent accounting
firm which has reviewed the report.
"Buy Local" Provision. Each recipient of property tax abatement shall additionally agree
to give preference and pdodty to local manufacturers, suppliers, contractors and labor,
except where not reasonably possible to do so without added expense, substantial
inconvenience, or sacdfice 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 descdbe 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.
C:~ydocun~uts~ax alm~era~nt~INAL-~id~Yme~2004.doc 13
CORPUS CttRIST1
April 2004
(f) Right to Modify or Cancel. Notwithstanding anything herein or in any agreement to the
contrary, the governing body of the Eligible Jurisdiction may cancel or modify the
agreement if the Owner fails to comply with the Agreement.
SCHEDULE 1
"Buy Local" Annual Reports
The following information shall be reported to the Governmental Unit on a calendar-year basis
dudng 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 full-time and part-time jobs created on a permanent basis (local) and wages
paid to employees.
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,
demolil~on, concrete construction, structural steel, fire proofing, equipment placement, piping,
electrical, instruments, painting and scaffolding, insulaUon, construction sep/ices, 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 desc~be 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.
c:xmyaoemmat~X~x ~lx~t~m~t, mlqaL-~ia=li~oo4.aoc 14
2
Corpus Christi, Texas
~-r~'' of -/~- i / ,2004
The above resolution was passed by the following vote:
Samuel L. Neal, Jr.
Brent Chesney
Javier D. Colmenero
Melody Cooper
Henry Garrett
Bill Kelly
Rex A. Kinnison
Jesse Noyola
Mark Scott
O-~C
April 27 2004 Tax Abatement Guidelines,doc