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HomeMy WebLinkAboutAgenda Packet City Council - 08/29/2014 (SP) Corpus Christi 1201 Leopard Street p Corpus Christi,TX 78401 p y y[ cctexas.com t- 6, 4 ice' =` Meeting Agenda - Final City Council Friday,August 29,2014 9:00 AM Council Chambers SPECIAL CITY COUNCIL MEETING Public Notice--THE USE OF CELLULAR PHONES AND SOUND ACTIVATED PAGERS ARE PROHIBITED IN THE CITY COUNCIL CHAMBERS DURING MEETINGS OF THE CITY COUNCIL. Si Usted desea dirigirse al Concilio y cree que su ingles es limitado, habra un interprete ingles-espanol en todas las juntas del Concilio para ayudarle. 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