HomeMy WebLinkAboutC2008-473 - 12/16/2008 - ApprovedTAX ABATEMENT AGREEMENT
THE STATE OF TEXAS
COUNTY OF NUECES
This Tax Abatement Agreement ("Agreement") is made and entered into by and
between the City of Corpus Christi, Texas ("City") and Waterfront Communications,
LLC, a Texas limited liability company ("Owner"), the owner of taxable property in the
City of Corpus Christi, Texas, located at 1024 Leopard Street, Corpus Christi, Nueces
County, Texas ("Property").
I. AUTHORIZATION
This Agreement is authorized by the Texas Property Redevelopment and Tax
Abatement Act, Texas Tax Code, Chapter 312, as amended ("Act"), and is subject to
the laws of the State of Texas and the charter, ordinances, and orders of the City.
II. DEFINITIONS
A. As used in this Agreement, the following terms have the following meanings:
1. "Abatement" means the temporary or partial exemption from ad valorem taxes
of certain added value to real and personal property in a zone designated for
economic development purposes under the Act
2. "Added Value" means the increase In the assessed value of the 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."
3. "Base Year Value" means the assessed value of the Improvements on the
Property as certified by the Nueces County Appraisal District as of the January 1
preceding the execution of this Agreement, plus the agreed upon value of
Improvements made after January 1, but before the execution of this Agreement.
4. "Construction Phase" means the period during which a material and
substantial improvement of the Property occurs which represents a separate and
distinct construction operation undertaken for the purpose of erecting the
Improvements.
(a) The Construction Phase ends upon the earliest to occur of the
following events:
(1) When a certificate of occupancy is issued for the project (if
within City limits).
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(2) When commercial production of a product or provision of a
service is achieved at the facility.
(3) When the architect or engineer supervising construction issues
a certificate of substantial completion, or some similar instrument.
(4) Two (2) years after the date of this Agreement.
(b) The determination of the end of the Construction Phase is made by the
City, in its sole and absolute discretion, based upon the above criteria and
the other factors as the City may deem relevant.
(c) The determination of the end of the Construction Phase by the City is
conclusive, and any judicial review of the determination is governed by the
substantial evidence rule.
5. "Eligible Property" means the buildings, structures, site improvements, and
that office space and certain personal property necessary to the operation and
administration of the Facility to be constructed under this Agreement. A list of the
Eligible Property is set forth in the Project Description, which is attached to this
Agreement as Exhibit A and made a part of this Agreement. During the
Construction Phase of the Eligible Property, the Owner may make the change
orders to the Eligible Property as are reasonably necessary to accomplish its
intended use, provided that no the change order may be made which will change
the qualification of the project as a "Facility" under the Guidelines and Criteria for
Granting Tax Abatement approved by the City.
6. "Facility" means a Renewal Community Facility, approved by the City as set
forth in the Guidelines and Criteria for Granting Tax Abatement adopted by the
City.
7. "Improvements" means the buildings, portions of buildings, and other
improvements, including fixed machinery and equipment, used for commercial or
industrial purposes on the Property.
8. "Ineligible Property" means, 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(e); any improvements, including those
to produce; store or distribute_natural gas, fluids 4r gases, which arenotintegral
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.
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B. The Guidelines and Criteria for Granting Tax Abatement adopted by the City are
incorporated as a part of this Agreement. Except as the guidelines and criteria are
specifically modified by this Agreement, all definitions in the guidelines and criteria are
applicable to this Agreement.
III. PROPERTY
A. The Property is an area within the City of Corpus Christi, Texas, located in whole or
in part within the jurisdiction of the City, and is more fully described in Exhibit B attached
to this Agreement and made a part of this Agreement. The Property is located within a
zone for tax abatement established under Chapter 312 of the Texas Tax Code, as
amended, by the City of Corpus Christi, Texas.
C. The Nueces County Appraisal District has established the following values for the
Property as of the January 1 valuation date prior to the date of execution of this
Agreement.
Account No. R196959
Land $68,750.00
Improvements $119,882.00
C. The City and the Owner agree that the value of any additions to the Improvements
made after January 1 or not otherwise reflected on the above valuation of
Improvements is:
Additionallmprovements: $119,483.34
D. Addition of the above amount to the valuation of the Improvements as of the
January 1 valuation date prior to the date of execution of this Agreement results in a
Base Year Value as follows:
Base Year Value: $239,365.34
IV. TERM OF ABATEMENT AND AGREEMENT
A. The City agrees to abate the ad valorem taxes on the Eligible Property under this
Article and Articles V and VI of this Agreement. The Abatement is effective with the
January 1 valuation date immediately following the date of execution of this Agreement.
~~ ab- et meet c~r~tinaes for up to-two (2) years daring theperiod of the Construction-
Phase and for the next three (3) full tax years after the Construction Phase, expiring as
of December31 of the third tax year. If the period of the Construction Phase exceeds
two (2) years, the Facility is considered completed for purposes of Abatement, and in no
case may the period of Abatement, inclusive of construction and completion exceed five
(5) tax years. The years of Abatement provided in this Agreement in each instance
coincide with the tax year commencing on January 1 and expiring on December 31, and
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in no event may the Abatement extend beyond December 31 of the fifth tax year. This
Abatement also covers as Eligible Property those supplemental improvements to the
Eligible Property that are added or constructed during the post-construction three (3)
year period of Abatement. In no event, however, may the total Abatement period for the
Eligible Property exceed the maximum five (5) year Abatement period for the entire
project as specified in this Agreement.
B. The term of this Agreement continues for a period of five (5) years following
expiration of the abatement period. All terms and conditions imposed upon the Owner
continue in effect during the period. Any default is be subject to the provisions of Article
VIII of this Agreement.
V. TAXABILITY
During the period that the Abatement is effective, taxes is payable as follows:
1. The value of the land comprising the Property is fully taxable.
2. The Base Year Value of existing Improvements comprising the Property is
fully taxable.
3. The value of Ineligible Property is fully taxable.
4. The Added Value of Eligible Property is abated under Article VI of this
Agreement.
VI. AMOUNT OF ABATEMENT
A. The Abatement provided by this Agreement is based upon the City Council waiving
the requirement that a Renewal Community Facility involving rehabilitation create one
(1) new permanent full-time job per $50,000 of Added Value to a property following the
completion of construction and the requirement to maintain the same level of
employment for the term of the abatement agreement.
B. The Abatement provided by this Agreement is based upon a Renewal Community
Facility involving rehabilitation, the percentage of tax abated is under the following
schedule:
Percentage of Abatement
ractiorrPeriod 100%
(not to exceed 2 years)
Yearl 100%
Year 2 100%
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Year 3 100%
C. This project is designated as a "rehabilitation project" under the Guidelines and
Criteria, which involves the adaptive reuse of an existing structure or building for a
Facility. The project must involve a minimum capital expenditure of $250,000. The
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, includes both the value of the land and the existing improvements. 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.
D. At the time of execution of this Agreement, the Owner reasonably estimates and
represents to the City that the Added Value comprising permanent Improvements upon
completion of the Construction Phase is:
$217,225.63 ("Estimated Added Value"), of which $217,225.63 is eligible for tax
abatement.
G. In the event that upon completion of the Construction Phase, the Added Value of
permanent Improvements, as determined by the Appraisal District, is at any time during
the period of Abatement be less than eight-five percent (85%) of the Estimated Added
Value, not due to circumstances beyond the control of Owner, the Owner agrees to pay,
as additional taxes under this Agreement, an amount equal to the then current tax rate
of the City applied to the difference between the Added Value from eighty-five percent
(85%) of the Estimated Added Value, multiplied by 100%, minus the net percentage of
Abatement provided under this Agreement. For the purposes of this provision, the term
"circumstances beyond the control of Owner" includes casualty losses, national
economic factors, shutdowns due to governmental regulations, strikes, acts of war; and
the like.
H. The formula for calculating the additional tax is outlined as follows:
(Tax Rate] x [(85% of Est. Added Value -Actual AV) x (100% -Abatement%)] _
Additional Tax.
~rl. CDNTEMP--LATEDaMP-ROYEMENTS
The contemplated improvements are set forth in the Project Description attached as
Exhibit "A." During the Construction Phase, the Owner may make the change orders to
the project that are reasonably necessary, provided that no the change order may be
made that will change the qualification of the project as a "Facility" under the Guidelines
and Criteria for Granting Tax Abatement approved by the City. All improvements must
be completed under all applicable laws, ordinances, rules or regulations. During the
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term of.this Agreement, use of the Property is limited to operation of the Facility
described in the Project Description consistent with the general purpose of encouraging
development or redevelopment of the zone during the period of this Agreement.
VIII. EVENTS OF DEFAULT AND RECAPTURE
A. Failure to Commence Operation During Term ofAgreement. In the event that the
Facility is not completed and does not begin operation by the January 1 following the
completion of construction, no abatement is given for that tax year, and the full amount
of taxes assessed against the property is due and payable for that tax year. In the
event that the Owner fails to begin operation by the next January 1, then this Abatement
Agreement terminates and all abated taxes during the period of construction are
recaptured and must be paid within 60 days of the termination.
B. Discontinuance of Operations.During Term ofAbatement. In the event the Facility is
completed and begins operation, but subsequently discontinues operations during the
term of the Agreement after the completion of construction, for any reason except on a
temporary basis due to fire, explosion, or other casualty, accident, or natural disaster,
the Agreement may be terminated by the City, and all taxes previously abated by virtue
of this Agreement are recaptured and must paid within 60 days of the termination.
C. Delinquent Taxes. In the event that the Owner allows its ad valorem taxes to
become delinquent or fails to timely and properly follow the legal procedures for their
protest or contest, this Agreement terminates and the abatement of the taxes for the
calendar year of the delinquency also terminates. The total taxes assessed without
abatement for that calendar year must be paid within sixty (60) days from the date of
termination. Penalty and interest do not begin to accrue on the additional amount of
taxes due as the result of recapture under this provision until the first day of the month
following the sixty (60) day notice, at which time penalty and interest accrues under the
laws of the State of Texas. Penalty and interest on the amount of taxes originally levied
based upon the Abatement begin to accrue as of the date the taxes were due under the
laws of the State of Texas.
D. Notice of Default. Should the City determine that the Owner is in default under the
terms and conditions of this Agreement, City must notify the Owner that if the default is
not cured within sixty (60) days from the date of the notice ("Cure Period"), then this
Agreement may be terminated. In the event the Owner fails to cure the default during
the Cure Period, this Agreement may be terminated and the taxes abated by virtue of
the Agreement will be recaptured and must be paid as provided in this Agreement.
E. Actual Added Value. Should the Nueces County Appraisal District determine that
the total level of Added Value during any year of the term of this Agreement after
completion of the Construction Phase is lower than the Estimated Added Value the that
a lower percentage of Abatement is applicable, for each year during which an
Abatement has been granted, the difference betweeri the tax abated and the tax that
should have been abated based upon the actual Added Value is determined by the City
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and must paid within 60 days of notification to the Owner of the determination. Penalty
and interest does not begin to accrue upon the sum until the first day of the month
following the sixty (60) day notice, at which time penalty and interest accrues under the
laws of the State of Texas.
F. Reduction in Rollback Tax Rate.
1. If during any year of the period of Abatement any portion of the abated value
is added to the current total value of the 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 tax
rate" under Section 26.04 (c) (2) of the Texas Tax Code and if the City's budget
calculations indicate that a tax rate in excess of the "rollback tax rate" is required
to fund the operations of the City for the succeeding year, then the City
recaptures from the Owner a tax in an amount equal to the lesser of the
following:
(a) The amount of the taxes abated for that year by the City with respect to
the Property.
(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 the City.
2. If the City has granted an abatement of taxes to more than one taxpayer, then
the amount of the recapture calculated under subparagraph (b) above is prorated
on the basis of the value of the abatement with respect to each taxpayer.
3. This event does not constitute a "default" under this Agreement, and the sixty
(60) day Cure Period provided above does not apply. The recaptured taxes must
be paid within thirty (30) days after notice of the rollback. in tax rate has been
given to the Owner. Penalty and interest do not begin to accrue upon the sum
until the first day of the month following the thirty (30) day notice, at which time
penalty and interest accrue under the laws of the State of Texas.
G. Continuation of Tax Lien.
1. The amount of tax abated each year under the terms of this Agreement is _
Secured by a first and prior tax lien, which continue in existence from year to year
until the time as this Agreement between the City and Owner is fully performed
by Owner, or until all taxes, whether assessed or recaptured, are paid in full.
H. City Council Reserves Right to Terminate of Modify Agreement. In the event of any
default by Owner, the City Council reserves the right to terminate or modify this
Agreement.
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I. Owner's right to appeal.
1. Owner must be afforded written notice of the default and the opportunity to
cure as provided above.
2. If Owner believes the action was improper, Owner may file an appeal in
Nueces County district court within sixty (60) days after written notice of the
action by the City.
3. Owner shall remit to the City, within the 60-day period, any additional or
recaptured taxes levied under the payment provisions of Texas Tax Code §
42.08.
4. If the final determination of the appeal increases Owner's tax liability above
the amount paid, Owner shall remit the additional tax under Tax Code § 42.42
5. If the final determination of the appeal decreases Owner's tax liability, the City
will refund the Owner the difference between the amount of tax paid and the
amount of tax for which Owner is liable under Tax Code § 42.43.
IX. ADMINISTRATION
A. Inspections. The Owner shall allow employees and/or representatives of the City to
have access to the Property during the term of this Agreement to inspect the Facility to
determine compliance with the terms and conditions of this Agreement. All inspections
will be made only after the giving of twenty-four (24) hours prior notice, and conducted
in the manner as to not unreasonably interfere with the construction or operation of the
Facility. All inspections must be made with one or more representatives of the Owner
and under Owner's safety standards.
B. Appraisals.
1. The Chief Appraiser of the Nueces County Appraisal District annually
determines:
(a) The taxable value of the real and personal property comprising the
Property taking into consideration the Abatement provided by this
Agreement.
(b) The full taxable value without Abatement of the real and personal
grope y comprising the Property.
2. The Chief Appraiser records both the abated taxable value and the full taxable
value in the appraisal records.
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3. The full taxable value figure listed in the appraisal records is used to compute
the amount of abated taxes that are required to be recaptured and paid in the
event this Agreement is terminated in a manner that results in recapture.
4. Each year the Owner shall furnish the Chief Appraiser with the information
outlined in Chapter 22, Texas Tax Code, as amended, as may be necessary for
the administration of the Agreement specified in this Agreement.
C. Annual Reports.
1. Owner shall certify to the governing body of the City on or before April 1 each
year that the Owner is in compliance with each applicable term of this
Agreement.
2. Additionally, during the initial four years of the term of property tax abatement,
Owner shall provide to the City an annual report covering those items listed on
Schedule I attached to this Agreement in order to document the efforts of the
Owner to acquire goods and services on a local basis.
3. The annual report is prepared on a calendar year basis and is submitted to
the City no later than ninety (90) days following the end of each the calendar
year.
4. The annual report is accompanied by an audit letter prepared by an
independent accounting firm which has reviewed the report.
D. "Buy Local" Provision.
1. The Owner shall give preference and priority to local manufacturers,
suppliers, contractors, and labor, except where not reasonably possible to do so
without added experise, substantial inconvenience, or sacrifice in operating
efficiency.
2. In the case of an exception involving a purchase over $10,000.00, the
justification for the purchase must be included in the annual report.
3. The Owner further acknowledges 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.
4~ r t e pur~f this provision, the term "local" as used to describe
manufacturers, suppliers, contractors, and labor includes firms, businesses, and
persons who reside in or maintain an office in either Nueces County or San
Patricio County.
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5. In the event of a breach of the buy local provision, the percentage of
abatement is proportionately reduced to the amount the disqualified contract
bears to the total construction cost for the project.
X. ASSIGNMENT
A. The Owner may assign this Agreement to any one or more corporation(s),,50% or
more of the outstanding voting securities of which are owned, directly or indirectly, by
one of the Owners, or any partnership(s) or limited partnership(s) in which an Owner, or
a subsidiary of an Owner, is a general partner.
B. The Owner may assign this Agreement to any other new owner or lessee of the
Facility with the prior written consent of the City, which consent may not be
unreasonably withheld.
C. Any assignment must provide that the assignee shall irrevocably and unconditionally
assume all the duties and obligations of the assignor and become the Owner upon the
same terms and conditions as set out in this Agreement.
D. In the event more than one entity is Owner under this Agreement, the obligations of
the entities is joint and several.
E. Any assignment of this Agreement is to an entity that must provide substantially the
same improvements to the Property, except to the extent the improvements have been
completed.
F. No assignment is approved if the Owner or any assignee is indebted to the City for
ad valorem taxes or other obligations.
XI. NOTICES
A. Any notice required to be given under the provisions of this Agreement must be in
writing and are duly served when deposited, with the proper postage prepaid, and
registered or certified, return receipt requested, with the United States Postal Service,
addressed to the City or Owner at the addresses listed below.
B. If mailed, any notice or communication is deemed to be received three days after the
date of deposit in the United States Mail. Unless otherwise provided in this Agreement,
all notices is delivered to the following addresses:
T~ th~City~ CITY OF CORPUS CHRISTI
1201 Leopard Street
P. 0. Box 9277
Corpus Christi, Texas 78469
Attn: City Manager
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To the Owner: WATERFRONT COMMUNICATIONS, LLC
400 Mann Street, Suite 604
Corpus Christi, Texas 78401
Attn: Manager
PERKES LAW FIRM, P.C.
606 N. Carancahua, Suite 1500
Corpus Christi, Texas 78476
Attn: Gregory T. Perkes, Attorney
C. Either party may designate a different address by giving the other party ten days"
written notice.
This Agreement has been executed by the parties in multiple originals or counterparts,
each having full force and effect.
Executed this ~~day of ~~(~,~, 2008.
ATTEST:
CITY OF CORPUS CHRISTI, TEXAS
r
By: ay: . z~~...
Armando Chapa el R. Escobar
City Secretary Interim City Manager
APPROVED AS TO FORM ONLY:
~~~' ~~ 1~...AUTHORIi~
R. Rei tng
First Assistant City Attorney ~-""""°••
For City Attorney SECRCfARr
OWNER: WATERFRONT COMMUNICATIONS, LLC
By: , ~~j .
^aAene-I~Gr gery - ((~J
Manager
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ACKNOWLEDGMENT
STATE OF TEXAS §
§ KNOW ALL BY THESE PRESENTS
COUNTY OF` cP,e § ~' nn~ ~
This instrument was acknowledged before me on I>,1L~`~~ ~~ , 2008,
by Darlene K. Gregory, Manager, Waterfront Communications, LLC, a Texas limited
liability company, on behalf of the company.
~"'r:"". CAYUE B. HOLLOWAY
cs'u"~4~.'s,
e• P!orry Pubiic, State of Texas
y „; My Commission Expires
`.,;~,a;~,;:~~` March 24, 2010
NO Y PUBLIC, State of Texa
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SCHEDULE 1
"Buy Local" Annual Reports
The following information is reported to the City on a calendar-year basis during the first
four years of the tax abatement program:
1. Dollar amount spent for materials* (local).
2. Dollar amount spent for materials (total).
3. Dollar amount spent for labor** (local).
4. Dollar amount spent for labor** (total).
5. Number of jobs created in the construction. project (local).
6. Number of jobs created in the construction project (total).
7. Number of jobs created on a permanent basis (local).
8. Number of jobs created on a permanent basis (total).
* "Materials" are defined to include all materials used in excavation, site improvement,
demolition, concrete, structural steel, fire proofing, piping, electrical, instruments,
paintings and scaffolding, insulation, temporary construction facilities, supplies,
equipment rental in construction, small tools and consumables. This term does not
include major items of machinery and equipment not readily-available locally.
** "Labor" is defined to include all labor in connection with the excavation, site
improvement, demolition, concrete construction, structural steel, fire proofing,
equipment placement, piping, electrical, instruments, painting and scaffolding,
insulation, construction services, craft benefits, payroll burdens, and related labor
expenses. This term does not include engineering services in connection with the
project design.
The term "local" as used to describe manufacturers, suppliers, contractors and labor
shall include firms, businesses, and persons who reside in or maintain an office in either
Nueces County or San Patricio County.
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Exhibit A
Project Plan
Waterfront Communications, LLC is rehabilitating 1024 Leopard Street, Corpus Christi,
TX 78401, (formerly known as Wolfson Furniture) for commercial use as a professional
office building. The building will house up to 5 tenants, with approximately 3 employees
per suite of 1200 +/- square feet. We intend to market the suites to professionals such
as attorneys, accountants, and other business service-related businesses.
The Central Business District area is a Renewal Community, and Waterfront
Communications, LLC intends to be the leader in the redevelopment of the Leopard
Street area.
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EXHIBIT B
Real Property Description:
1024 Leopard Street, Corpus Christi, Nueces County, Texas 78401, and more
particularly described as follows; to-wit: Lot Ten-A (10-A), Block Thirty-Four (34),
BLUFF PORTION; to the City of Corpus Christi, Nueces County, Texas, according to
the map thereof recorded in Volume 46, Page 238, Map Records, Nueces County,
Texas.
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