HomeMy WebLinkAbout027646 RES - 04/08/2008RESOLUTION
ELECTING TO BE ELIGIBLE TO PARTICIPATE IN TAX ABATEMENT
AND ADOPTING TAX ABATEMENT GUIDELINES AND CRITERIA
IA
WHEREAS, Texas Tax Code, Section 312.002, requires a taxing unit to establish
guidelines and criteria governing tax abatement agreements prior to designating ars
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, EAS, to abatement guidelines and criteria are effective for two years;
WHEREAS, the current tax abatement guidelines were adopted on May 4, 2006; and
WHEREAS, the City Council desires to continue to be able to offer tax abatement under
the guidelines and criteria adopted by this resolution;
NOW, THEREFORE, E, E IT RESOLVED ED 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.
Armando Chapa
City Secretary
APPROVED: ED: April 2-, 2008.
By:
R. Ja Hing 7
First Assistant City Attorney
for City Attorney
Tax Abatement Resolution
THE C OF CORPUS CHRISTI
Henry Garr -tt
Mayor, Cit of Corpus Christi
02'7F46
Corpus Christi, Texas
of
2008
The above resolution was passed by the following vote:
Henry Garrett
Melody Cooper
Larry Elizondo, Sr.4(1A —
Mike Humrn ll
Bill Kelly _A91_
Priscilla G. Leal
John E. Marez /0°5-1411—
Nelda Martinez
Michael McCutchon
Tax Abatement Resolution
C127646 z
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 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 authorizes - = - ' = - , _' ' . - : ` - - ' _ : ' ` . taxing
unitsto provide property tax abatement for limited periods of time as ars 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, S, the U.S. Department of Housing and Urban Development designated
Census Tracts 1, 3, 4, 5, 7, 10, 11, 13, 35, and 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, E S, to assure a common, coordinated effort to promote economic development,
these Guidelines and Criteria have been circulated among Nueces County, the City--Gf
, - � ,s hrist; and other governmental taxing entities with jurisdiction within tJtyjor
consideration as a common policy for all jurisdictions which choose to participate in tax
abatement agreements;
Tax Abatement Guidelines and Criteria -- rjr 04022008a
Corpus Christi
April 2008
NOW, THEREFORE, E, EE 1T RESOLVED LED 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:
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 a Eligible jurisdict;on the City 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 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.
(f) "Central Business District (CDB) Residential Facility" means a Multi -family Housing
Facility constructed or renovated in the area encompassed by the Industrial Canal/Ship
Channel on the north, Corpus Christi Bay on the east, Park Street on the south, and on
the west as follows, Upper Broadway to Laredo, west on Laredo to Staples to 1-37, east
on 1-37 to State Highway 181, and north on State Highway 181 to the Industrial
Canal/Ship Channel, no more than 20% of the gross floor area of the Facility can be
utilized for non -housing purposes.
"Deferred Maintenance" means improvements necessary for continued operations
which do not improve productivity or alter the process technology.
(h) "Economic is Life" means the number of years a property improvement is expected to
be in service in a Facility.
(i) "Eligible Jurisdiction" means the City of Corpus Christi r r lue e C t inty , a
county, any other municipality, . _ .. �. . • . • _ . F . , _ _ .. , school
trio, or special district that levies ad valorem taxes upon and provides services to
property located within the proposed or existing zone designated pursuant to the Act.
2
Tax Abatement Guidelines and Criteria -- dr 04022008a
Corpus Christi
April 2008
(j) "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.
(k) "Expansion" means the addition of buildings, structures, fixed machinery or
equipment for the purposes of increasing capacity.
(1) "Facility" means property improvements completed or in the process of construction
which together compromise an integral whole.
(m) "Mixed-use facility" means a facility having residential and commercial uses where
the commercial use occupies more than 20% of the structure.
(n) "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.
(o) "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 is not be for the purpose of
reconditioning, refurbishing, repairing or completion of deferred maintenance.
(p) "New Facility" means a property previously undeveloped which is placed into service
by means other than or in conjunction with an expansion or modernization.
(q) "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 is not be obligated to assure performance of the party receiving
abatement.
(r) "Permanent full-time job" means a new employment position created by a business
that provides a regular work schedule of at leapt 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.
(s) "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.
(t) "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.
3
Tax Abatement Guidelines and Criteria -- dr 04022008a
Corpus Chrisfi
April 2008
(u) "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.
(v) "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.
(w) "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.
(x) "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- or 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: multi-
famjlv housing facilities, 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 fisted in an abatement agreement
between the Eligible ii isdic ion City 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.
4
Tax Abatement Guidelines and Criteria -- dr 04022008a
Corpus Christi
April 2008
(c) Eligible Property. Abatement may be extended to the value of the improvements to
real property, including buildings, structures, fixed machinery and equipment, and site
improvements, plus that office space and related fixed improvements necessary to the
operation and administration of the Facility.
(d) Ineligible Property. The following types of property 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 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; unless any of the above types of
property are specifically authorized by the City.
(e) Period of Abatement.
(1) Abatement &hall may be granted effective with the January 1 valuation date
immediately following the date of execution of the Agreement. Abatement shall
may be allowed for a period of five years following the completion of construction.
If the period of construction exceeds two years, the Facility &hail will be
considered completed for purposes of abatement and in no case &all may the
total period of abatement, inclusive of the construction period, exceed seven
years.
(2) Abatement for a Renewal Community Facility shall may be granted effective
with the January 1 valuation date immediately following the date of execution of
the Agreement. Abatement shall may 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 will be considered completed for purposes of
abatement after the two (2) year period and in no case shalt may 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 for a Central Business District (CBIS) Residential Facility sh-all may
be granted effective with the January 1 valuation date immediately following the
date of execution of the Agreement. Abatement shall maybe allowed for a
period of five years following the completion of construction. If the period of
construction exceeds two years, the Facility shall will be considered completed
for purposes of abatement and in no case shall may the total period of
abatement, inclusive of the construction period, exceed seven years.
5
Tax Abatement Guidelines and Criteria -- dr 04022008a
Corpus Christi
April 2008
(f) Completion of Construction.
Li ) The completion of construction shall -will be deemed to occur upon the earliest
of the following events:
(-1-)-Awhen 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) C. when the architect or engineer supervising construction issues a
certificate of substantial completion, or some similar instrument, or
(4)atwo (2) years after the date of the Agreement.
(2) The above determination sh-all may be made by the City
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 will be conclusive, and any
judicial review of such determination shallmust be overred by the substantial
evidence rule.
(g) Abatement Percentage.
(1) Non — Renewal Community Facility -Facilities.
A. For a Facility which provides not less than 5O- (but not more than 99)
new permanent full-time jobs, the percentage of tax abated sh-all may be
in accordance with the following schedule:
Year Percentage of Abatement
Construction Periods (not 100%
to exceed 2 years)
Year 1 50%
Year 2 50%
Year 3 50%
Year4 50%
Year 5 50%
B. 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 shal-kmay be in accordance with the following schedule:
6
Tax Abatement Guidelines and Criteria -- rjr 04022008a
Year
Construction
Period (not to
exceed 2 years)
Year 1
Year 2
Year 3
Year 4
Year 5
Percentage of
Abatement (for
the first $1O
million in Added
Value)
100%
75%
75%
75%
75%
75%
Percentage of
Abatement (over
$10 million in
Added Value)
100%
50%
50%
50%
50%
50%
Corpus Christi
April 2008
C. Provided that, for a Facility which provides at least 200 new permanent
full-time jobs, the percentage of tax abatement shall may 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 (for
the first $10
million in Added
Value)
100%
Igo%
100%
100%
100%
100%
Percentage of
Abatement (over
$10 million in
Added Value)
100%
50%
50%
50%
50%
50%
D. Provided that for a Basic Manufaoturin • or Service Facility which
provides at least $150 million in new capital investm n _and at (east 10
net new permanent full time jobs, the percentacie of tax abatement may be
in accordance with_the followinci schedule:
Tax Abatement Guidelines and Criteria -- rjr 04022008a
Year Percentage of
Abatement
Construction Period 1000
(not to exceed 2 years)
Year 1 50%
Year 2 50%
Year3 50%
Year 4 50%
Year 5 50%
Corpus Chris
April 2008
E. Provided that, fora Basic Manufacturing or Service Fa ijjy which
provides at -leapt 500 million in ney capital investment, and at least 20
net new permanent full time lobs, the percentage of tax abatement may be
in accordance with the folioin. schedule:
Year Percentage of
Abatement
Construction Period 100%
(not to exceed 2 vegr§)
Year1 70%
Year 2 70%
Year3 70%
Year 4 70%
Year 5 70°
F. in the event the Added Value caused by the Project is less than $2.0
million, no abatement shall mbe granted unless the Facility is a
Rehabilitation Project as described in Section 2(i).
G. For compliance purposes, the date for determining a permanent full-
time job shall will be January 1 of each year commencing with January 1
following completion of construction. The percentage of abatement
provided each year under the Agreement shall will 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:
Tax Abatement Guidelines and Criteria - dr 04022008a
Corpus Christ
April 2008
Year Employment Abatement Abatement
(First (Over
$lOmm) $lOmm)
1/1/96* 0 100% 100%
1/1/97* 0 100% 100%
1/1/98 150 60% 30%
1/1/99 250 100%
1/1/00 150 60% 30%
1/1/01 50 20% 10%
1/1/02 250 100% 50%
*Construction Underway
(2) Renewal gyral Community Facilities
A. 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 shawill be in accordance with the following schedule:
Year Percentage of Percentage of
Abatement for Abatement for
Projects Involving New Facilities
Rehabilitation
Construction 100% 100%
Period (not to
exceed 2 years)
Year 1 100% 75%
Year 2 100% 75%
Year 8 100% 0%
B. For compliance purposes, the date for determining a permanent full-
time job shall will 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
9
Tax Abatement Guidelines and Criteria -- rjr 04022008a
Corpus Christi
April 2008
permanent full-time positions during the term of the abatement
agreement. ($750,000 / $50,000 = 15)
C. 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. (1,500,000 X .30
$450,000/$50,000=9)
(3) Central Business District (CBD) Residential Facilities
A. Provided that, for a Central Business District (CBD) Residential
Facility, the percentage of tax abated shall will be in accordance with the
following schedule:
Year
Percentage of
Abatement
Construction Period (not 100%
to exceed 2 years)
Year 1 100%
Year 2 100%
Year 3 100%
Year 4 100%
Year 5 100%
B. Since Central Business District (CBD) Residential Facilities are
residential multi -family housing, the job creation requirement is waived.
(h) 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 Trust 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 $&60 per hour. The Governmental Unit has 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.
(i) Rehabilitation Projects. The $2 million minimum Added Value requirement for
abatement shall may not apply to rehabilitation projects which involve the adaptive
10
Tax Abatement Guidelines and Criteria — rjr 04022008a
Corpus Christi
April 2008
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 are 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. uirer ent. 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.
Value. This"Estimated Added Value"
Value2 shall -must 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 becomes at any time thereafter during the term of the
abatement agreement be Less than eighty-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
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 must
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 under
which the tax abatement would become effective upon annexation of the property by the
City, but the execution of the tax abatement t agreement would constitute an
election by the Owner that the land and improvements shall rranot be included within
any type of industrial district arrangement following the expiration of the tax abatement
agreement.
11
Tax Abatement Guidelines and Criteria -- rjr 04022008a
Corpus Christi
April 2008
(1) Economic Qualification
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 of50-perrr anent full-time jobs in the City of
Corpus Christi; or
P-
(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 will be payable as follows:
(1) The value of Ineligible Property as provided in Section 2(d) are
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 are fully taxable; and
(3) The Added Value of new Eligible Property (and certain personal property
added in connection with a Rehabilitation Project) shall Abe taxable in the
manner described in Section 2(g) above.
The Added Value of new property not related to the "New Facility."
(n) and Worker Safet Qualifications. In determining heth r to grant
tax abatement, consideration will be given to compliance with all state and federal laws
designed to protect human health, welfare, and the environment "environmental laws")
that are applicable to facilities in the State of Texas owned or operated by theowner of
the facility or lessee, its parent subsidiaries and, if a joint venture or partnership, every.
member of the joint venture or partnership "applicants". Consideration may also be
given two compliance with- n ironm ntal and worker safet lar licants at other
facilities within the United States.
Section 3. Application.
(a) Written Application. Any present or potential owner of taxable property may request
tax abatement by filing a written application with - 44 the City Manager of the City, if such
12
Tax Abatement Guidelines and criteria -- rjr 04022008a
property is within the city limit
Corpus Christi
April 2008
(b) Contents of Application. The application shall consists of a completed application
form accompanied b : a general description of the new improvements to be undertaken;
pp �
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
must be given for the tax year immediately preceding the application. The application
form may require such financial and other information as the City,
, 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 erth ounty as-
,shall consider the feasibility and the impact of the proposed tax abatement.
The study of feasibility shall must include, but not be limited to, an estimate of the
economic effect of the abatement of taxes and the benefit to the . ' Cit]^
and the property to be covered by such abatement.
(e) No Abatement if Construction has Commenced. No tax abatement agreement shall -
may 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 wriften form, provided, however, that no variance may extend the term
of abatement beyond five years after completion of construction. Such requests shall
must 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.
(a) Designation of Zone. A resolution designating a zone for tax abatement under the
Act may not be adopted by the City r he C unt 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 must be provided to each Eligible Jurisdiction
and to the public in the manner required by the Act.
13
Tax Abatement Guidelines and Criteria -- dr 04022008a
Corpus Christi
April 2008
(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
City must find that the terms of the proposed Agreement meet these Guidelines and
Criteria.
(d) Reservation of Rights. Nothing herein shall may be Construed to limit the authority
of the City, - _ _ - - - ' _ ' _ =' _ ' - 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 jut sdi do gly.
Section 5. Agreement.
(a) Contents of Tax Abatement Agreement. The tax abatement agreement with the
Owner of the Facility shall must 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(e);
(3) the commencement date and termination date of abatement;
(4) a provision that the term of the Agreement shall ma.etend until five (5)
years after the expiration of the period of tax abatement;
(5) the proposed use of the Facility, nature of construction, time schedule, map,
property description and improvements list as provided in the application as
required;
(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
the amount of Added Value and required number of permanent full-time jobs.
requirement that owner shall certify to the City on or 4efore April 1 each year
that the owner isi_ r_co pl ian a with each applicable term of the agreement.
14
Tax Abatement Guidelines and Criteria -- rjr 04022008a
Corpus Christi
April 2008
9 re.uirement that the owner or lessee will a obtain and maintain all re.uired
permits and other authorizations from the United States Environmental Protection
Agency and the TCEQ for the construction and operation of the Facility and for
the stora • a transort and disosal of solid waste. and (b) seek a permit from the
TCEQ for all grandfathered units on the site of the Facility by filing with the
TCEQ. within three years of receiving the abatement, a technically complete
application for such a permit.
al) Time of Execution. The tax abatement agreement shall must normally be executed
within 60 days after the applicant has provided all necessary information and
documentation.
(c) Attorney's Fees. In the event any attorney's fees are incurred by theEligible-
judsd-iGtiGn-City in the preparation of a tax abatement agreement, said fees shall must
be paid by the applicant upon execution of the Agreement.
Section 6. Recapture.
(a) Failure to Commence Operation During Term of Agreement. In the event that the
Facility is not completed and does not begin operation with the re aired rinimum
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 may be given for that tax year, and the full amount of taxes assessed
against the property are due and payable for that tax year. In the event that the
Owner of such a Facility fails to begin operation with the required minimum number of
impermanent 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 must terminate and all abated taxes
during the period of construction shalt may be recaptured and paid within 60 days of
such termination.
(b) 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 minimum number of permanent full-time jobs
is not maintained, as required in section 6(a), during any 4 consecutive weeks duri
the term of this a•reement after the com.letion of construction 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 City providing
abatement, and all taxes previously abated by virtue of the Agreement shall must be
recaptured and paid within 60 days of such termination.
(c) Delinquent Taxes. In 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 must terminate and so shall does the
abatement of the taxes for the tax year of the delinquency. The total taxes assessed
15
Tax Abatement Guidelines and Criteria -- dr 04022008a
Corpus Christi
April 2008
without abatement, for that tax year shaR must be paid within 60 days from the date of
termination.
(d) Notice of Default. Should the Eligible jurisdiction city 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.
(e) Actual Capital Investment. Should the i i city 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 sall
must be paid to the taxing agencies within 60 days of notification to the Owner of such
determination.
(f) Reduction in Rollback Tax Rate.
01 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
ithisdietion-City 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 fax rate" in accord with Section
26.04(0(2) of the Texas Tax Code and if the i i City's budget
calculations indicate that a tax rate in excess of the "rollback tax rate" is required
to fund the operations of the ' i i i pity for the succeeding year, then
the City shall recapture from the taxpayer a fax in an amount
equal to the lesser of the following:
f1 -)-....The amount of the taxes abated for that year by the -Eligible-
jurisdiEtieft Qin with respect to such taxpayer.
B. 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 theEligible jurisdiction City.
j) If the City 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 must 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 Almay not
16
Tax Abatement Guidelines and Criteria -- rjr 04022008a
Corpus Christi
April 2008
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 -accrues in accord
with the laws of the State of Texas.
(g) Continuation of Tax Lien. The amount of tax abated each year under the terms of
these Guidelines and the Agreement shalt must be secured by a first and prior tax lien
which shall continues 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.
(hAutomatk Termination. The Agreement automaticallytermi aces on and as of the
date any f the following events occur: the filing of a petition in b r ru�_pt by t_ h
Owner or the making by the Ownerof an assignment ford the benefit of creditors; or if
any involuntary petition in band ru etc or setition for an arrangement pursuant to the
federal bankruptc tc code is filed a. ainst the Owner; or if a receiver is appointed for the
business of the Owner. In the event of automatic termination for any of the above
reasons, the prior notice of default • rovisions in subsection (d) above does not a ply.
Section 7. Administration.
(a) 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.
(b) Access to Facility. The Agreement shail must stipulate that employees and/or
designated representatives of the Efigible-jwisdietion-ciy 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.
(c) Annual Evaluation. Upon completion of construction, the City,
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. The Owner shall certify to thegoveming-bedy-of-the-E-ligible-
.1-ufisislietien-City Council 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 fax abatement, the Owner shall provide to theEligible-Ju-risdiGtien-
City 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 -must be prepared on a calendar year basis and
17
Tax Abatement Guidelines and Criteria -- rjr 04022008a
Corpus Christi
April 2008
submitted to the gligiblejwisdiGtionCity no later than ninety (90) days following the end
of each such calendar year. The annual report shall must 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 must
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 must 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 wjtbe
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 e • • - City Council may cancel or
modify the agreement if the Owner fails to comply with the Agreement.
(ci) Transition Rule. For any ro•ect which obtained an abatement a. eement within the
twelve months prior to adoption of these Guidelines, such project may, upon the
agreement of the Owner and the Cit obtain an amendment to its tax abatement
a . reement to inco s orate the terms and conditions of these Guidelines.
18
Tax Abatement Guidelines and Criteria --• rjr 04022008a
Corpus Christi
April 2008
SCHEDULE 1
"Buy Local" Annual Reports
The following information shal4 must 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* (Iocal).
2. Dollar amount spent for materials* (total).
3. Dollar amount spent for labor** (local).
4. Dollar amount spent for labor** (total).
5. Number ber of jobs created in the construction project (local).
6. Number ber of jobs created in the construction project (total).
7. Number of full -time -and part-time jobs created on a permanent basis (local)-anci-
wages-paid-te-envieyees.
8. Number of jobs created on a permanent basis (total).
* "Materials" is defined to include all materials used in excavation, site improvement,
ent,
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 includes firms, businesses, and persons who reside in or maintain an office in
either Nueces County or San Patricio County.
19
Tax Abatement Guidelines and Criteria -- rjr 04022008a