HomeMy WebLinkAboutAgenda Packet City Council - 08/29/2014 (SP) Corpus Christi 1201 Leopard Street
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=` Meeting Agenda - Final
City Council
Friday,August 29,2014 9:00 AM Council Chambers
SPECIAL CITY COUNCIL MEETING
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ARE PROHIBITED IN THE CITY COUNCIL CHAMBERS DURING MEETINGS OF THE
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Persons with disabilities who plan to attend this meeting and who may need auxiliary
aids or services are requested to contact the City Secretary's office(at 361-826-3105)
at least 48 hours in advance so that appropriate arrangements can be made.
A. Mayor Nelda Martinez to call the meeting to order.
B. City Secretary Rebecca Huerta to call the roll of the required Charter Officers.
C. EXPLANATION OF COUNCIL ACTION:
For administrative convenience, certain of the agenda items are listed as motions,
resolutions, or ordinances. If deemed appropriate, the City Council will use a different
method of adoption from the one listed;may finally pass an ordinance by adopting it as
an emergency measure rather than a two reading ordinance;or may modify the action
specified. A motion to reconsider may be made at this meeting of a vote at the last
regular, or a subsequent special meeting;such agendas are incorporated herein for
reconsideration and action on any reconsidered item.
D. REGULAR AGENDA:
The following items are motions, resolutions and ordinances that will be considered and
voted on individually.
1. 14-00941 Nominating Valero Refining -Texas, L.P. as a Triple Jumbo Texas
Enterprise Project
Resolution nominating Valero Refining -Texas, L.P. ("Valero") to the
Office of the Governor Economic Development&Tourism ("EDT")
through the Economic Development Bank("Bank") as a triple jumbo
enterprise project pursuant to the Texas Enterprise Zone Act("Act)
Attachments: Agenda Memo-Valero TEZ
CM Report Memo-CCREDC
Resolution-Valero TEZ(2)
Corpus Christi Page 1 Printed on 8/26/2014
City Council Meeting Agenda-Final August 29,2014
2. 14-00849 Nominating M & G Resins USA, LLC as a Double Jumbo Texas
Enterprise Zone Project
Resolution nominating M & G Resins USA, LLC ("M & G") to the Office
of the Governor Economic Development & Tourism ("EDT") through the
Economic Development Bank ("Bank") as a double jumbo enterprise
project pursuant to the Texas Enterprise Zone Act ("Act)
Attachments: Agenda Memo-M &G TEZ
CM Report Memo-CCREDC
Resolution-M &G TEZ
3. 14-00850 Nominating Equistar as a Double Jumbo Texas Enterprise Zone
Project
Resolution nominating Equistar Chemicals, LP ("Equistar") to the Office
of the Governor Economic Development & Tourism ("EDT") through the
Economic Development Bank ("Bank") as a double jumbo enterprise
project pursuant to the Texas Enterprise Zone Act ("Act").
Attachments: Agenda Memo- Equistar TEZ1
CM Report Memo-CCREDC
Resolution-Equistar TEZ
E. ADJOURNMENT
Corpus Christi Page 2 Printed on 8/26/2014
US
0
_ AGENDA MEMORANDUM
Future Item for the City Council Meeting of August 19, 2014
xg Action Item for the City Council Meeting of August 29, 2014
DATE: August 5, 2014
TO: Ronald L. Olson, City Manager
FROM: Mike Culbertson
(361) 882-7448
mculbertson @ccredc.com
Nominating Valero Refining — Texas, L.P. as a Triple Jumbo Texas Enterprise Project
CAPTION:
Approving a resolution nominating Valero Refining —Texas, L.P. ("Valero") to the Office of the
Governor Economic Development & Tourism ("EDT") through the Economic Development Bank
("Bank") as a triple jumbo enterprise project pursuant to the Texas Enterprise Zone Act ("Act)
PURPOSE:
Nominate Valero as a triple jumbo Texas Enterprise Zone project and make them eligible for
State sales tax rebates for investments and the retention of jobs.
BACKGROUND AND FINDINGS:
Under State Law, the Office of the Governor— Economic Development and Tourism Division
through the Texas Economic Development Bank administers the Texas Enterprise Zone (TEZ)
Program. According to the Texas Enterprise Zone Act, Chapter 2303, Texas Government
Code, the purpose of the program is to encourage job creation and retention and capital
investment in areas of economic distress.
The 78th legislature amended the act to increase participation in the program, decrease
paperwork and streamline the process. Under the amended act, communities are no longer
required to submit an application and fee to create an enterprise zone; designation of an
enterprise zone is automatic based on decennial figures. Areas designated as enterprise zones
include census block groups with 20 percent poverty and areas federally designated as
Renewal Communities. Previously designated enterprise zones will be designated until their
expiration, after which the area would need to meet the 20 percent poverty guideline. A project
seeking designation as a Texas Enterprise Zone Project still must seek nomination from the
governing body to the Office of the Governor for consideration and designation.
Communities participating in the Texas Enterprise Zone Program are required to provide
incentives to the project in addition to offering nomination for participation in the Texas
Enterprise Zone Program. At least one of the incentives must be exclusive to the Texas
Enterprise Zone.
A designated project located in the Texas Enterprise Zone must agree to hire at least 25
percent of its employees from the enterprise zone or economically disadvantaged groups and in
return will receive a refund of sales and use tax (SUT) paid to the Office of the Comptroller. If
the project is located outside the zone, the project must agree to hire at least 35 percent of its
new employees from the enterprise zone or economically distressed groups.
The program allows a refund of$2,500 for each job created or retained. If investment levels are
adequate, the local nominating governing body may nominate a project as a Double or Triple
Jumbo Project designation, increasing the value per job created or retained to $5,000 or $7,500,
respectively. Therefore, a double jumbo project can receive a rebate of up to $2.5 million, and a
triple jumbo project can receive a rebate of up to $3.75 million.
State Law allows each participating community with a population less than 250,000 to nominate
up to six projects per biennium and communities with a population more than 250,000 to
nominate up to nine projects per biennium. Since City of Corpus Christi's population exceeds
the 250,000 threshold, up to nine projects can receive designation during this biennium. A
double jumbo project assumes two of the number of projects allowable and a triple assumes
three. Thus far, the City has nominated one business for this biennium. This nomination will
use two of the City's eight remaining nominations of local businesses.
The City of Corpus Christi has nominated a number of projects in the past including the Valero,
Bay Ltd, CITGO, Stripes, and Flint Hills Resources. To date, the designated enterprise zone
projects have resulted in at least$2 billion in investment in Corpus Christi. This local capital
investment represents a significant portion of all of the combined capital investment made in
enterprise zones across the state.
Valero currently owns and operates an integrated refinery in Corpus Christi, known as the Bill
Greehey Complex, which is actually two plants. The West Plant is considered one of the most
complex refineries in the world and specializes in the production of environmentally clean fuels
and products, primarily RFG and ultra-low-sulfur diesel. The East Plant, located less than a
mile from the West Plant, is capable of processing heavy, high-sulfur crude oil into light
products, asphalt and petroleum coke. Combined, the East and West plant facilities have a total
feedstock throughput capacity of about 325,000 BPD.
Over the next five (5) years, Valero anticipates investing approximately $650 million in capital
improvement projects at the Corpus Christi refinery aimed at reaching a higher level of
production capacity and operational efficiency. Included in the capital investment is
approximately $340 million to construct a new crude processing unit capable of processing
approximately 70,000 BPD of light sweet crude. This investment will allow the Corpus Christi
refinery the ability to reduce its purchases of higher-priced intermediate feed stocks from third-
party suppliers in lieu of more favorably priced Eagle Ford crude, from which the refinery can
produce and then process its own intermediates. The planned refinery upgrades come as part
of Valero's plan to continue capitalizing on the benefits of economically attractive and
advantageously located light tight oil (LTO) production from North American shale plays,
specifically the Eagle Ford Shale. As a result of these investments, Valero expects to maintain
the existing level of employment at its Corpus Christi refinery complex. This capital investment
and retention of jobs represent the basis for this triple jumbo enterprise project nomination.
This capital investment and retention of jobs represent the basis for this triple jumbo enterprise
project nomination.
ALTERNATIVES:
Due to State statute no other entity can be the nominating authority. The City can choose not to
nominate the company.
OTHER CONSIDERATIONS:
Not applicable
CONFORMITY TO CITY POLICY:
This conforms to City policy of promoting economic development, attracting primary jobs to the
area, and is regional in scope.
EMERGENCY/ NON-EMERGENCY:
Non-emergency
DEPARTMENTAL CLEARANCES:
Legal
FINANCIAL IMPACT:
❑ Operating ❑ Revenue ❑ Capital Not applicable
Project to Date
Fiscal Year: 2013- Expenditures
2014 (CIP only) Current Year Future Years TOTALS
Line Item Budget
Encumbered /
Expended Amount
This item
BALANCE
Fund:
Comments: This incentive is a rebate of the State's portion of the sales tax and does not affect
the City in anyway.
RECOMMENDATION:
Staff recommends approval of the Resolution to nominate Valero Refining — Texas, L.P.
as a triple jumbo Enterprise Project, as presented.
LIST OF SUPPORTING DOCUMENTS:
Resolution —Valero TEZ
INFORMAL STAFF REPORT
MEMORANDUM
To: Ron L. Olson, City Manager
Thru: Margie Rose, Deputy City Manager
From: Roland Mower, President/CEO
CCREDC
Date: August 25, 2014
Subject: Special Called Meeting
Issue/Problem
Texas Enterprise Zone applicants are required to have a resolution of nomination from the
governing body for which enterprise zone slots are being requested from. This resolution
must accompany the application; submission deadline is September 2, 2014.
Background & Findings
The Texas Enterprise Zone is an economic development incentive tool that allows local
communities to partner with the State to promote job creation and significant private
investment. Approved projects are eligible to apply for state sales and use tax refunds on
qualified expenditures. The level and amount of refunds is related to the capital investment
and jobs created and/or retained at the qualified business site.
The City of Corpus Christi has nine (9) slots per biennium; the current biennium is 2013-2015.
The City has not nominated any projects this biennium and we have received more requests
for slots than are currently available. The Corpus Christi Regional Economic Development
Corporation (CCREDC) convened a meeting of the applicants on August 25, 2014 to discuss
the strategy moving forward. The decision was made to move forward with the three (3)
applicants, Valero, Equistar, and M&G Resins, who have requested a nomination for the
September submission date. The remaining two (2) applicants, Flint Hills Resources and
voestalpine, will request nomination from the City to submit their application to the State
December 1, 2014.
Conclusion
Requesting a special called City Council meeting for August 29, 2014 for approval of Texas
Enterprise Zone nominations for Valero, Equistar, and M&G Resins to be submitted to the
State on September 2, 2014.
Page 1 of 3
Resolution nominating Valero Refining — Texas L.P. ("Valero") to the
Office of the Governor Economic Development & Tourism ("EDT")
through the Economic Development Bank ("Bank") as a triple jumbo
enterprise project pursuant to the Texas Enterprise Zone Act ("Act").
WHEREAS, the City of Corpus Christi ("City") has previously passed on August 26,
2014, Ordinance No. electing to participate in the Texas Enterprise Zone
Program, and the local incentives offered under this Resolution are the same on this
date as were outlined in Ordinance No. ;
WHEREAS, the EDT through the Bank will consider Valero as a triple jumbo enterprise
project pursuant to a nomination and an application made by the City;
WHEREAS, the City desires to pursue the creation of the proper economic and social
environment in order to induce the investment of private resources in productive
business enterprises located in the City and to provide employment to residents of
enterprise zones and to other economically disadvantaged individuals;
WHEREAS, pursuant to the Act, Valero has applied to the City for designation as a
triple jumbo enterprise project; and
WHEREAS, the City finds that Valero meets the criteria for designation as a double
jumbo enterprise project under the Act on the following grounds-
1. Valero is a "qualified business" under Section 2303.402 of the Act since it
will be engaged in the active conduct of a trade or business at a qualified
business site located in an enterprise zone and at least twenty-five
percent (25.0%) of the business' new employees will be residents of an
enterprise zone or economically disadvantaged individuals;
2. There has been and will continue to be a high level of cooperation
between public, private, and neighborhood entities within the area; and
3. The designation of Valero as a triple jumbo enterprise project will
contribute significantly to the achievement of the plans of the City for
development and revitalization of the area;
WHEREAS, the City finds that Valero meets the criteria for tax relief and other
incentives adopted by the City and nominates Valero for triple jumbo enterprise project
status on the grounds that it will be located at a qualified business site and will create a
higher level of employment, economic activity, and stability; and
WHEREAS, the City finds that it is in the best interest of the City to nominate Valero as
a triple jumbo enterprise project pursuant to the Act;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
Page 2 of 3
SECTION 1. That the findings of the City Council and its actions approving this
Resolution taken at the council meeting on August 26, 2014, are hereby approved and
adopted.
SECTION 2. That Valero is a "qualified business" as defined in Section 2303.402 of the
Act and meets the criteria for designation as a triple jumbo enterprise project as set
forth in the Act.
SECTION 3. That the enterprise project shall take effect on the date of designation of
the enterprise project by the EDT and terminate 5 years after the date of designation.
ATTEST: THE CITY OF CORPUS CHRISTI
Rebecca Huerta Nelda Martinez
City Secretary Mayor
Page 3 of 3
Corpus Christi, Texas
of 2014
The above resolution was passed by the following vote:
Nelda Martinez
Kelley Allen
Rudy Garza Jr.
Priscilla G. Leal
David Loeb
Chad Magill
Colleen McIntyre
Lillian Riojas
Mark Scott
US
0
_ AGENDA MEMORANDUM
Future Item for the City Council Meeting of August 19, 2014
xg Action Item for the City Council Meeting of August 29, 2014
DATE: August 5, 2014
TO: Ronald L. Olson, City Manager
FROM: Mike Culbertson
(361) 882-7448
mculbertson @ccredc.com
Nominating M & G Resins USA, LLC as a Double Jumbo Texas Enterprise Zone Project
CAPTION:
Approving a resolution nominating M & G Resins USA, LLC ("M & G") to the Office of the
Governor Economic Development & Tourism ("EDT") through the Economic Development Bank
("Bank") as a double jumbo enterprise project pursuant to the Texas Enterprise Zone Act ("Act)
PURPOSE:
Nominate M & G as a double jumbo Texas Enterprise Zone project and make them eligible for
State sales tax rebates for investments and the creation of jobs.
BACKGROUND AND FINDINGS:
Under State Law, the Office of the Governor - Economic Development and Tourism Division
through the Texas Economic Development Bank administers the Texas Enterprise Zone (TEZ)
Program. According to the Texas Enterprise Zone Act, Chapter 2303, Texas Government
Code, the purpose of the program is to encourage job creation and retention and capital
investment in areas of economic distress.
The 78th legislature amended the act to increase participation in the program, decrease
paperwork and streamline the process. Under the amended act, communities are no longer
required to submit an application and fee to create an enterprise zone; designation of an
enterprise zone is automatic based on decennial figures. Areas designated as enterprise zones
include census block groups with 20 percent poverty and areas federally designated as
Renewal Communities. Previously designated enterprise zones will be designated until their
expiration, after which the area would need to meet the 20 percent poverty guideline. A project
seeking designation as a Texas Enterprise Zone Project still must seek nomination from the
governing body to the Office of the Governor for consideration and designation.
A designated project located in the Texas Enterprise Zone must agree to hire at least 25
percent of its employees from the enterprise zone or economically disadvantaged groups and in
return will receive a refund of sales and use tax (SUT) paid to the Office of the Comptroller.
This project is located within an Enterprise Zone.
The program allows a refund of$2,500 for each job created or retained. If investment levels are
adequate, the local nominating governing body may nominate a project as a Double or Triple
Jumbo Project designation, increasing the value per job created or retained to $5,000 or $7,500,
respectively. Therefore, a double jumbo project can receive a rebate of up to $2.5 million, and a
triple jumbo project can receive a rebate of up to $3.75 million.
The maximum refund that a business may receive is for 500 employees. If a company has
more than 500 employees it can request a designation to receive rebates for those employees
over 500. To do this they must have another investment over and above the original
designation.
State Law allows each participating community with a population less than 250,000 to nominate
up to six projects per biennium and communities with a population more than 250,000 to
nominate up to nine projects per biennium. Since City of Corpus Christi's population exceeds
the 250,000 threshold, up to nine projects can receive designation during this biennium. A
double jumbo project assumes two of the number of projects allowable and a triple assumes
three. This nomination will use two of the City's nine nominations of local businesses.
The City of Corpus Christi has nominated a number of projects in the past including the Valero,
Bay Ltd, CITGO, Stripes, Flint Hills Resources, and TPCO. To date, the designated enterprise
zone projects have resulted in at least$2.278 billion in investment in Corpus Christi. This local
capital investment represents a significant portion of all of the combined capital investment
made in enterprise zones across the state.
M & G Group is a family owned chemical engineering and manufacturing group headquartered
in Tortona, Italy. The company operates in the PET resin industry through its wholly-owned
holding company Mossi & Ghisolfi International S.A. (M&G International). M & G International is
the third largest producer of PET resin for packaging applications in the world, with a production
capacity in 2010 of approximately 1.6 million tons per annum. M & G Group currently has three
plants located in Italy, Brazil, and West Virginia. They are looking to expand their production.
The company will invest approximately $751 million to purchase the land, construct their
facilities, infrastructure, equipment and personal property. Company is projecting a 36 month
construction period following approval of their air permit from TCEQ.
ALTERNATIVES:
Due to State statute only the City can be the nominating authority.
OTHER CONSIDERATIONS:
Corpus Christi has nine designations for the current biennium and has used none.
CONFORMITY TO CITY POLICY:
This conforms to City policy of promoting economic development, attracting primary jobs to the
area, and is regional in scope.
EMERGENCY/ NON-EMERGENCY:
Non-emergency
DEPARTMENTAL CLEARANCES:
None
FINANCIAL IMPACT:
❑ Operating ❑ Revenue ❑ Capital Not applicable
Project to Date
Fiscal Year: 2013- Expenditures
2014 (CIP only) Current Year Future Years TOTALS
Line Item Budget
Encumbered /
Expended Amount
This item
BALANCE
Fund:
RECOMMENDATION:
Staff recommends approval of the resolution to nominate M & G Resins USA, LLC as a double
jumbo Enterprise Project, as presented.
LIST OF SUPPORTING DOCUMENTS:
Resolution — M & G TEZ
INFORMAL STAFF REPORT
MEMORANDUM
To: Ron L. Olson, City Manager
Thru: Margie Rose, Deputy City Manager
From: Roland Mower, President/CEO
CCREDC
Date: August 25, 2014
Subject: Special Called Meeting
Issue/Problem
Texas Enterprise Zone applicants are required to have a resolution of nomination from the
governing body for which enterprise zone slots are being requested from. This resolution
must accompany the application; submission deadline is September 2, 2014.
Background & Findings
The Texas Enterprise Zone is an economic development incentive tool that allows local
communities to partner with the State to promote job creation and significant private
investment. Approved projects are eligible to apply for state sales and use tax refunds on
qualified expenditures. The level and amount of refunds is related to the capital investment
and jobs created and/or retained at the qualified business site.
The City of Corpus Christi has nine (9) slots per biennium; the current biennium is 2013-2015.
The City has not nominated any projects this biennium and we have received more requests
for slots than are currently available. The Corpus Christi Regional Economic Development
Corporation (CCREDC) convened a meeting of the applicants on August 25, 2014 to discuss
the strategy moving forward. The decision was made to move forward with the three (3)
applicants, Valero, Equistar, and M&G Resins, who have requested a nomination for the
September submission date. The remaining two (2) applicants, Flint Hills Resources and
voestalpine, will request nomination from the City to submit their application to the State
December 1, 2014.
Conclusion
Requesting a special called City Council meeting for August 29, 2014 for approval of Texas
Enterprise Zone nominations for Valero, Equistar, and M&G Resins to be submitted to the
State on September 2, 2014.
Page 1 of 3
Resolution nominating M & G Resins USA, LLC ("M & G") to the
Office of the Governor Economic Development & Tourism ("EDT")
through the Economic Development Bank ("Bank") as a double
jumbo enterprise project pursuant to the Texas Enterprise Zone Act
("Act").
WHEREAS, the City of Corpus Christi ("City") has previously passed on August 26,
2014, Ordinance No. electing to participate in the Texas Enterprise Zone
Program, and the local incentives offered under this Resolution are the same on this
date as were outlined in Ordinance No. ;
WHEREAS, the EDT through the Bank will consider M & G as a double jumbo
enterprise project pursuant to a nomination and an application made by the City;
WHEREAS, the City desires to pursue the creation of the proper economic and social
environment in order to induce the investment of private resources in productive
business enterprises located in the City and to provide employment to residents of
enterprise zones and to other economically disadvantaged individuals;
WHEREAS, pursuant to the Act, M & G has applied to the City for designation as a
double jumbo enterprise project; and
WHEREAS, the City finds that M & G, located at 7001 Joe Fulton International Corridor,
Corpus Christi, Texas 78409, meets the criteria for designation as a double jumbo
enterprise project under the Act on the following grounds-
1. M & G is a "qualified business" under Section 2303.402 of the Act since it
will be engaged in the active conduct of a trade or business at a qualified
business site located in an enterprise zone and at least twenty-five
percent (25.0%) of the business' new employees will be residents of an
enterprise zone or economically disadvantaged individuals;
2. M & G is located in an enterprise zone, which is in Census Tract 63, Block
Group 1, as defined by the most recent federal decennial census available
at the time of designation, in which at least 20 percent of the residents of
the block group have an income at or below 100 percent of the federal
poverty level;
3. There has been and will continue to be a high level of cooperation
between public, private, and neighborhood entities within the area; and
4. The designation of M & G as a double jumbo enterprise project will
contribute significantly to the achievement of the plans of the City for
development and revitalization of the area;
WHEREAS, the City finds that M & G meets the criteria for tax relief and other
incentives adopted by the City and nominates M & G for double jumbo enterprise
Page 2 of 3
project status on the grounds that it will be located at a qualified business site and will
create a higher level of employment, economic activity, and stability; and
WHEREAS, the City finds that it is in the best interest of the City to nominate M & G as
a double jumbo enterprise project pursuant to the Act;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
SECTION 1. That the findings of the City Council and its actions approving this
Resolution taken at the council meeting on August 26, 2014, are hereby approved and
adopted.
SECTION 2. That M & G is a "qualified business" as defined in Section 2303.402 of the
Act and meets the criteria for designation as a double jumbo enterprise project as set
forth in the Act.
SECTION 3. That the enterprise project shall take effect on the date of designation of
the enterprise project by the EDT and terminate 5 years after the date of designation.
ATTEST: THE CITY OF CORPUS CHRISTI
Rebecca Huerta Nelda Martinez
City Secretary Mayor
Page 3 of 3
Corpus Christi, Texas
of 2014
The above resolution was passed by the following vote:
Nelda Martinez
Kelley Allen
Rudy Garza Jr.
Priscilla G. Leal
David Loeb
Chad Magill
Colleen McIntyre
Lillian Riojas
Mark Scott
US
0
_ AGENDA MEMORANDUM
Future Item for the City Council Meeting of August 19, 2014
xg Action Item for the City Council Meeting of August 29, 2014
DATE: August 5, 2014
TO: Ronald L. Olson, City Manager
FROM: Mike Culbertson
(361) 882-7448
mculbertson @ccredc.com
Nominating Equistar Chemicals, LP as a Double Jumbo Texas Enterprise Project
CAPTION:
Approving a resolution nominating Equistar Chemicals, LP ("Equistar") to the Office of the
Governor Economic Development & Tourism ("EDT") through the Economic Development Bank
("Bank") as a double jumbo enterprise project pursuant to the Texas Enterprise Zone Act ("Act").
PURPOSE:
Nominate Equistar as a double jumbo Texas Enterprise Zone project and make them eligible for
State sales tax rebates for investments and the creation and retention of jobs.
BACKGROUND AND FINDINGS:
Under State Law, the Office of the Governor— Economic Development and Tourism Division
through the Texas Economic Development Bank administers the Texas Enterprise Zone (TEZ)
Program. According to the Texas Enterprise Zone Act, Chapter 2303, Texas Government
Code, the purpose of the program is to encourage job creation and retention and capital
investment in areas of economic distress.
The 78th legislature amended the act to increase participation in the program, decrease
paperwork and streamline the process. Under the amended act, communities are no longer
required to submit an application and fee to create an enterprise zone; designation of an
enterprise zone is automatic based on decennial figures. Areas designated as enterprise zones
include census block groups with 20 percent poverty and areas federally designated as
Renewal Communities. Previously designated enterprise zones will be designated until their
expiration, after which the area would need to meet the 20 percent poverty guideline. A project
seeking designation as a Texas Enterprise Zone Project still must seek nomination from the
governing body to the Office of the Governor for consideration and designation.
Communities participating in the Texas Enterprise Zone Program are required to provide
incentives to the project in addition to offering nomination for participation in the Texas
Enterprise Zone Program. At least one of the incentives must be exclusive to the Texas
Enterprise Zone.
A designated project located in the Texas Enterprise Zone must agree to hire at least 25
percent of its employees from the enterprise zone or economically disadvantaged groups and in
return will receive a refund of sales and use tax (SUT) paid to the Office of the Comptroller. If
the project is located outside the zone, the project must agree to hire at least 35 percent of its
new employees from the enterprise zone or economically distressed groups.
The program allows a refund of$2,500 for each job created or retained. If investment levels are
adequate, the local nominating governing body may nominate a project as a Double or Triple
Jumbo Project designation, increasing the value per job created or retained to $5,000 or $7,500,
respectively. Therefore, a double jumbo project can receive a rebate of up to $2.5 million, and a
triple jumbo project can receive a rebate of up to $3.75 million.
State Law allows each participating community with a population less than 250,000 to nominate
up to six projects per biennium and communities with a population more than 250,000 to
nominate up to nine projects per biennium. Since City of Corpus Christi's population exceeds
the 250,000 threshold, up to nine projects can receive designation during this biennium. A
double jumbo project assumes two of the number of projects allowable and a triple assumes
three. Thus far, the City has nominated one business for this biennium. This nomination will
use two of the City's eight remaining nominations of local businesses.
The City of Corpus Christi has nominated a number of projects in the past including the Valero,
Bay Ltd, CITGO, Stripes, and Flint Hills Resources. To date, the designated enterprise zone
projects have resulted in at least $2 billion in investment in Corpus Christi. This local capital
investment represents a significant portion of all of the combined capital investment made in
enterprise zones across the state.
The Lyondellbasell Corpus Christi Olefins complex began ethylene production in July 1980 as
the Corpus Christi Petrochemical Company (CCPC), a Joint Venture between ICI, Solvay, and
Champlin (Union Pacific). Originally designed to process liquid hydrocarbons, the plant was
modified in 1982 to allow ethane and propane processing, and the facility's ability to process a
wide range of feedstocks remains a major advantage to this day. The facility received its first
OSHA STAR Certification in 1986 and has maintained that distinction since that time. After a
brief period of ownership by Cain Chemicals, in 1988 the facility was purchased by Occidental
Petroleum and in the next few years the cogeneration facility and new processing capacity was
added. The facility changed ownership again in 1998 with the formation of Equistar Chemicals,
a joint venture that was eventually wholly owned by Lyondell. When Lyondell was purchased by
Basell AF at the end of 2007, the site became part of the newly-formed Lyondellbasell. The
facility still operates under the Equistar Chemicals, LP ("Equistar") legal entity, however.
The Equistar site utilizes 15 "steam cracking" furnaces to react available hydrocarbons,
currently domestically produced, into valuable chemicals ranging from ethylene and propylene,
which are building blocks for plastics, to liquid hydrocarbons that are used as components in
gasoline or for other industrial uses. This project will modify 7 of the furnaces to double their
capacity to process the available ethane from domestic gas, and upgrade all 15 of the furnaces
to reduce emissions per pound to the environment. Processing the additional ethane will
require new distillation columns, modification to existing and new internals in several other
columns, new and modified compressors (some as large as 59,000 hp), new reactors, and
several new pumps, exchangers, drums, and ancillary equipment pieces. The cooling tower
and onsite wastewater treatment capacities will increase as well, with a concurrent increase in
the ability of the site to recycle and reuse any additional wastewater generated. Equistar
expects to spend over $500 million on the project. The project will enable Equistar to retain the
existing 196 jobs while adding approximately 18 new positions/jobs once the project is
complete.
This capital investment, as well as the creation and retention of jobs represent the basis for this
double jumbo enterprise project nomination.
ALTERNATIVES:
Due to State statute no other entity can be the nominating authority. The City can choose not to
nominate the company.
OTHER CONSIDERATIONS:
Not applicable
CONFORMITY TO CITY POLICY:
This conforms to City policy of promoting economic development, attracting primary jobs to the
area, and is regional in scope.
EMERGENCY/ NON-EMERGENCY:
Non-emergency
DEPARTMENTAL CLEARANCES:
Legal
FINANCIAL IMPACT:
❑ Operating ❑ Revenue ❑ Capital Not applicable
Project to Date
Fiscal Year: 2013- Expenditures
2014 (CIP only) Current Year Future Years TOTALS
Line Item Budget
Encumbered /
Expended Amount
This item
BALANCE
Funds:
Comments: This incentive is a rebate of the State's portion of the sales tax and does not affect
the City in anyway.
RECOMMENDATION:
Staff recommends approval of the Resolution to nominate Equistar Chemicals, LP as a double
jumbo Enterprise Project, as presented.
LIST OF SUPPORTING DOCUMENTS:
Resolution — Equistar TEZ
INFORMAL STAFF REPORT
MEMORANDUM
To: Ron L. Olson, City Manager
Thru: Margie Rose, Deputy City Manager
From: Roland Mower, President/CEO
CCREDC
Date: August 25, 2014
Subject: Special Called Meeting
Issue/Problem
Texas Enterprise Zone applicants are required to have a resolution of nomination from the
governing body for which enterprise zone slots are being requested from. This resolution
must accompany the application; submission deadline is September 2, 2014.
Background & Findings
The Texas Enterprise Zone is an economic development incentive tool that allows local
communities to partner with the State to promote job creation and significant private
investment. Approved projects are eligible to apply for state sales and use tax refunds on
qualified expenditures. The level and amount of refunds is related to the capital investment
and jobs created and/or retained at the qualified business site.
The City of Corpus Christi has nine (9) slots per biennium; the current biennium is 2013-2015.
The City has not nominated any projects this biennium and we have received more requests
for slots than are currently available. The Corpus Christi Regional Economic Development
Corporation (CCREDC) convened a meeting of the applicants on August 25, 2014 to discuss
the strategy moving forward. The decision was made to move forward with the three (3)
applicants, Valero, Equistar, and M&G Resins, who have requested a nomination for the
September submission date. The remaining two (2) applicants, Flint Hills Resources and
voestalpine, will request nomination from the City to submit their application to the State
December 1, 2014.
Conclusion
Requesting a special called City Council meeting for August 29, 2014 for approval of Texas
Enterprise Zone nominations for Valero, Equistar, and M&G Resins to be submitted to the
State on September 2, 2014.
Page 1 of 3
Resolution nominating Equistar Chemicals, LP ("Equistar") to the
Office of the Governor Economic Development & Tourism ("EDT")
through the Economic Development Bank ("Bank") as a double
jumbo enterprise project pursuant to the Texas Enterprise Zone Act
("Act").
WHEREAS, the City of Corpus Christi ("City") has previously passed on August 26,
2014, Ordinance No. electing to participate in the Texas Enterprise Zone
Program, and the local incentives offered under this Resolution are the same on this
date as were outlined in Ordinance No. ;
WHEREAS, the EDT through the Bank will consider Equistar as a double jumbo
enterprise project pursuant to a nomination and an application made by the City;
WHEREAS, the City desires to pursue the creation of the proper economic and social
environment in order to induce the investment of private resources in productive
business enterprises located in the City and to provide employment to residents of
enterprise zones and to other economically disadvantaged individuals;
WHEREAS, pursuant to the Act, Equistar has applied to the City for designation as a
double jumbo enterprise project; and
WHEREAS, the City finds that Equistar, located at 1501 McKinzie Road, Corpus Christi,
Texas 78410, meets the criteria for designation as a double jumbo enterprise project
under the Act on the following grounds-
1. Equistar is a "qualified business" under Section 2303.402 of the Act since
it will be engaged in the active conduct of a trade or business at a qualified
business site within the governing body's jurisdiction located outside of an
enterprise zone and at least thirty-five percent (35.0%) of the business'
new employees will be residents of an enterprise zone or economically
disadvantaged individuals; and
2. Equistar is located in Census Tract 36.02, Block Group 2, as defined by
the most recent federal decennial census available at the time of
designation; and
3. There has been and will continue to be a high level of cooperation
between public, private, and neighborhood entities within the area; and
4. The designation of Equistar as a double jumbo enterprise project will
contribute significantly to the achievement of the plans of the City for
development and revitalization of the area;
WHEREAS, the City finds that Equistar meets the criteria for tax relief and other
incentives adopted by the City and nominates Equistar for double jumbo enterprise
project status on the grounds that it will be located at a qualified business site and will
create a higher level of employment, economic activity, and stability; and
Page 2 of 3
WHEREAS, the City finds that it is in the best interest of the City to nominate Equistar
as a double jumbo enterprise project pursuant to the Act;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
SECTION 1. That the findings of the City Council and its actions approving this
Resolution taken at the council meeting on August 19, 2014, are hereby approved and
adopted.
SECTION 2. That Equistar is a "qualified business" as defined in Section 2303.402 of
the Act and meets the criteria for designation as a double jumbo enterprise project as
set forth in the Act.
SECTION 3. That the enterprise project shall take effect on the date of designation of
the enterprise project by the EDT and terminate 5 years after the date of designation.
ATTEST: THE CITY OF CORPUS CHRISTI
Rebecca Huerta Nelda Martinez
City Secretary Mayor
Page 3 of 3
Corpus Christi, Texas
of 2014
The above resolution was passed by the following vote:
Nelda Martinez
Kelley Allen
Rudy Garza Jr.
Priscilla G. Leal
David Loeb
Chad Magill
Colleen McIntyre
Lillian Riojas
Mark Scott