HomeMy WebLinkAbout026772 RES - 05/09/2006RESOLUTION
ELECTING TO BE ELIGIBLE TO PARTICIPATE IN TAX ABATEMENT
AND ADOPTING TAX ABATEMENT GUIDELINES AND CRITERIA
WHEREAS, Texas Tax Code, Section 312.002, requires a taxing unit to establish
guidelines and criteria governing tax abatement agreements prior to designating an
area as a reinvestment zone and entering into a tax abatement agreement;
WHEREAS, Section 312.002 requires a taxing unit to adopt a resolution stating that the
taxing unit elects to become eligible to participate in tax abatement;
WHEREAS, tax abatement guidelines and criteria are effective for two years;
WHEREAS, the current tax abatement guidelines were adopted on April 27, 2004 and
amended on November 16, 2004; and
WHEREAS, the City Council desires to continue to be able to offer tax abatement under
the guidelines and criteria adopted hereby;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
SECTION 1. The City Council elects to become eligible to participate in tax abatement
pursuant to Texas Tax Code, Chapter 312.
SECTION 2. The City Council establishes guidelines and criteria governing tax
abatement agreements by the City of Corpus Christi, Texas. A copy of the guidelines
and criteria is attached.
ATTEST:
THE r OF CORPUS CHRISTI
Armando Chapa '' He ry Garr
City Secretary Mayor
APPROVED: May 4. 2006.
By: AL rnt t..
ary . Smith
Assistant City Attorney
for City Attorney
H; LegDirlgws .agenda12006 105 -09\ta xabatem entguideh nes
Corpus Christi, Texas
of
2006
The above resolution was passed by the following vote:
Henry Garrett
Brent Chesney
Melody Cooper
Jerry Garcia
Bill Kelly
Rex A. Kinnison
John E Marez
Jesse Noyola
Mark Scott
:)60509 adopting tax abatement guidelines & criteria
(4) g
2
CORPUS CHRISTI
May 2006
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 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
orivate 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 junior college 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 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. a federally designated Renewal Community constitutes designation as a Texas
Enterprise Zone under Chapter 2303 of the Texas Government Code, 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. 11,, 13, :35. ana 50 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 continues to be designated as a Reinvestment Zone and these Guidelines and
Criteria for granting tax abatement be adopted:
jJ
CORPUS CHRISTI
May 2006
Section 1. Definitions.
"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 tc 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. "
"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 derive a majority of revenue from points beyond a 50 -mile radius
of Nueces County.
ai Busuies . 3 strict tCDB Residential Facility means a Multi- family Housing Facility
co isEructed or renovated in the area encompassed by the Industrial Canal /Ship Channel on
G._risti Bay on the east, Park Street on the south, and on the west as
tivay io Laredo west on Laredo to Staples to 1 -37, east on 1 -37 to State
.rth or State Highway t 8_', to the Industrial Canal /Ship Channel no
floc; area the Falily_ can be utilized for non-h housing
rye:
q) "Deferred Maintenance" means improvements necessary for continued operations which do
not improve productivity or alter the process technology.
"Economic Life" means the number of years a property improvement is expected to be in
service in a Facility.
"Eligible Jurisdiction '' means the City of Corpus Christi 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 Redevelopment Facility" means buildings and structures used
or to be used primarily for residential purposes and which are located within an enterprise
zone
"Expansion "' means the addition of buildings, structures, fixed machinery or equipment for
the purposes of increasing capacity
"Facility" means property improvements completed or in the process of construction which
together compromise an integral whole.
CORPUS CHRISTI
May 2006
"Mixed -use facility" means a facility having residential and commercial uses where the
commercial use occupies more than 20% of the structure.
"Multi- family housing" 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 triplex, apartment, townhouse, condominium, cooperative, high -rise,
etc
"Modernization" 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. 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.
"New Facility" means a property previously undeveloped which is placed into service by
means other than or in conjunction with an expansion or modernization.
"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 lob" 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
during the term of the abatement agreement.
"Petrochemical Facility" means buildings and structures, including fixed machinery and
equipment, the primary purpose of which is or will be the manufacture or processing of
petrochemicals or fuels by physical or chemical change.
"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.
"Regional 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.
"Regional Visitor /Amusement Facility" means buildings and structures used or to be used
primarily as a stadium, arena, amusement park or similar attraction or sports venue.
CORPUS CHRISTI
May 2006
"Renewal Community Facility" means a building or structure in the Corpus Christi Renewal
Community which includes Census Tracts 1. 3, 4, 5, 7 10.11 13, 35, and 50 to be used for
the creation of a new business or business expansion, but not a relocation of a business.
"Rehabilitation" means that the Added Value. as defined, of the project exceeds the base
year of a development property by $250,000.
"Texas 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
Section 2. Abatement Authorized.
(a) Authorized Facilities.
1) A_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, Central Business District (CBD) Residential 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) .A 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: mixed -use facilities, retail facilities,
hotel accommodations.
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.
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.
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(c). 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; 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;
CORPUS CHRISTI
rqy. 2006
unless any of the above types of property are specifically authorized by the Eligible
jurisdiction.
e) 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 period of construction exceeds
two years, the Facility shall be considered completed for purposes of abatement and in no
ease shall the total period of abatement, inclusive of the construction period, exceed seven
years.
2) Abatement for a 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 period 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
period of abatement, inclusive of the construction period. exceed four years for a new
facility and five years for a rehabilitated facility.
3) Abatement tor a ,;entrai 3usir ess District ; ":BBD) Residential 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 period of five years following the
completion of construction. If the period of construction exceeds two years, the Facility
shall be considered completed for purposes of abatement and in no case shall the total
oeriod of abatement, inclusive of the construction period, exceed seven years.
Completion of Construction. The completion of construction shall be deemed to occur upon
the earliest of the following events
(1 when a certificate of occupancy is issued for the project (if it is located within a city),
(2i 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 criteria 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 governed by the
substantial evidence rule.
CORPUS CHRISTI
May_2006
,g) Abatement Percentage.
1) Non — Renewal Community Facility
For a Facility which provides not less than 50 (but not more than 99) new permanent full -
time lobs, the percentage of tax abated shall be in accordance with the following schedule:
Year Percentage of Abatement
Construction Periods (not to exceed 2 years) 100%
Year 1 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:
Year
Percentage of Abatement (for Percentage of Abatement
the first $10 million in Added (over $10 million in Added
Value Value
Construction Period (not 100% 100%
to exceed 2 _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 Abatement (for Percentage of Abatement
the first $10 million in Added (over $10 million in Added
Value Value
Construction Period (not 100% 100%
to exceed 2_years)
Year 1 100% 50%
Year 2 100% 50%
Year 3 100% 50%
Year 4 100% 50%
Years 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 (h).
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
CORPUS CHRISTI
May_2006
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 (First $10mm) Abatement (Over $10mm)
1/1/96*
1/1/97*
1/1/98
1/1/99
1/1/00
1/1/01
1/1/02
0
0
150
250
150
50
250
`Construction Underway
2) Renewal Community Facilities
100%
100%
75%
100%
75%
50%
100%
100%
100%
75%
75%
50%
50%
25%
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
Construction Period (not
to exceed 2_years)
Year 1
Year 2
Year 3
Percentage of Abatement for Percentage of Abatement for
Projects Involving New Facilities
Rehabilitation
100%
100%
100%
100%
100%
75%
75%
0%
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 during 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 estimates an added value of
$750,000. The job requirement will be to create and maintain a minimum of 15 permanent
full -time positions during the term of the abatement agreement. ($750,000 / $50,000 = 15)
For residential multi - family housing, the job creation requirement will be waived. For mixed -
use facilities, the lob requirement will be prorated. For example: Company Y is constructing
CORPUS CHRISTI
M y_ 2006
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 (1,500,000 X .30 = $450,000/$50,000 =9)
3) ,r:- Itrai BD 1 Residential Facilities
Provided that, for a :central Business District LCBD) Residential Facility, the percentage of
tax abated shall be in accordance with the following schedule
Year
Construction Period (not
to exceed 2 years)
Year 1
Year 2
Year 3
Year 4
Year 5
Percentage of Abatement
100%
100%
100%
100%
100%
100%
Since Central Business District j .BD) Residential Facilities are residential multi- family
housing, the job creation requirement is waived.
Living Wage Requirement. 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, 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
govern the abatement offered under that Agreement.
Rehabilitation Projects. 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 furniture 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
(j) 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
CORPUS CHRISTI
I?'ay 2006
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 Tess than eighty -
five percent (85 °ro) 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 ne> percentage of Abatement provided under the Agreement. For the
purposes of this provision, the term "circumstances beyond the control of Owner" shall
include casualty losses, national economic factors, shutdowns due to governmental
regulations. strikes, 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
k) 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, the method of calculating
payments in lieu of property taxes for such eligible property shall be as set forth in the
industrial district agreement. As an alternative 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
(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)(21:
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
The Added Value of new Eligible Property (and certain personal property added in
CORPUS CHRISTI
May 2006
connection with a Rehabilitation Project) 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: (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.
I 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.
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
Feasibility. After receipt of an application for abatement, the City or the County, as
applicable, shall consider the feasibility and the impact of the proposed tax abatement. The
study of feasibility shall include, but not be limited to, an estimate of the economic effect of
the abatement of taxes and the benefit to the Eligible jurisdiction and the property to be
covered by such abatement.
No Abatement if Construction has Commenced. No tax abatement Agreement shall be
approved if the application for the abatement was filed after the commencement of
construction, alteration or installation of improvements related to the proposed
Modernization. Expansion or New Facility.
(f) Variance. Requests for variance from the provisions of Section 2 of these guidelines may be
made in written form provided, however, that no variance 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 governing body
of each Eligible jurisdiction providing abatement.
Section 4. Public Hearing and Approval.
Designation 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.
CORPUS CHRISTI
hy3ay_2006
Notice of the hearing shall be provided to each Eligible jurisdiction and to the public in the
manner required by the Act.
b) 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 Government 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.
c) Required Findings. 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 Criteria.
d) Reservation of Rights. 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 Criteria, is feasible, and whether or not the proposed temporary
abatement of taxes will inure to the long -term benefit of such Eligible jurisdiction.
Section 5. Agreement.
Contents of Tax Abatement Agreement. 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;
(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:
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 i 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 attorneys 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.
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May_2006
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 the 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 during the period of construction shall be recaptured and paid within 60 days of such
termination
Discontinuance of Operations During 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 6(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.
Delinquent Taxes, n the event that the Owner allows its ad valorem taxes to become
delinquent and fails to timely and properly 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.
d) 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 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 Owner 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.
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.
(f) 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
!;g)
b)
CORPUS CHRISTI
May_2006
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.
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 prior tax lien which shall
continue in existence from year to year throughout the entire term of the Agreement or until
all taxes, whether assessed or recaptured, are paid in full.
Section 7. Administration.
Annual Assessment. The Nueces County Appraisal District shall annually determine an
assessment of the real and personal property subject to an Agreement. Each year, the
Owner shall furnish the Appraisal District with such information as may be necessary for the
abatement. Once value has been established, the Appraisal District 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 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 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 governing body of the Eligible Jurisdiction on
or before April 1 each year that the Owner is in compliance with each applicable term of the
agreement. Additionally. during the initial four years of the term of property tax abatement,
CORPUS CHRISTI
April 2006
the Owner shall provide to the Eligible Jurisdiction approving the abatement an annual report
covering those items listed on Schedule 1 in order to document its efforts 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 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.
"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 he proportionately reduced equal to the amount the disqualified contract
bears to the total construction cost for the project.
`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.
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CORPUS CHRISTI
April 2006
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 full -time and part-time jobs created on a permanent basis (local)
and wages paid to employees.
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 "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.
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