HomeMy WebLinkAboutPR 233963: UNIFORM TAX ABATEMENT POLICY P.R. No. 23393
10/11/2023 ht
RESOLUTION NO.
A RESOLUTION CONFIRMING THE UNIFORM TAX
ABATEMENT POLICY FOR A TWO (2) YEAR TERM
PURSUANT TO CHAPTER 312 OF THE TEXAS PROPERTY
CODE
WHEREAS, the Property Tax Abatement Act is delineated in Chapter 312 of the
Texas Property Code and provides that the governing body of a municipality must elect to
become eligible to participate in tax abatement; and,
WHEREAS, a City may not enter into a tax abatement agreement or designate an
area as a reinvestment zone until guidelines and criteria governing tax abatement
agreements have been adopted; and,
WHEREAS, the City must adopt guidelines and criteria governing tax abatement
agreements every two years.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF PORT ARTHUR, TEXAS:
Section 1. That the facts and opinions in the preamble are true and correct.
Section 2. That the City Council hereby confirms the attached Uniform Tax
Abatement Policy pursuant to Chapter 312 of the Texas Property Code for a two (2) year
term, attached hereto in substantially the same as Exhibit "A".
Section 3. That a copy of the caption of this Resolution be spread upon the
Minutes of the City Council.
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READ, ADOPTED AND APPROVED on this day of , A.D.,
2023, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following
vote: AYES:
Mayor:
Councilmembers:
NOES:
Thurman Bill Bartle,
Mayor
ATTEST:
Sherri Bellard,
City Secretary
APPROVED AS TO FORM:
Valecia Tizeno,
City Attorney
APPROVED FOR ADMINISTRATION:
Ronald Burton,
City Manager
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EXHIBIT "A"
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GUIDELINES AND CRITERIA FOR GRANTING
TAX ABATEMENTS IN REINVESTMENT ZONES
IN PORT ARTHUR TEXAS
ADMONITORY PROVISION
The final determination of value to be abated invested with the Jefferson County
Appraisal District (JCAD), an agency autonomous from the City of Port Arthur. The
Procedures used by JCAD are attached as Exhibit"A" and incorporated and adopted in
this Abatement Policy for all purposes. These provisions are illustrative only and shall
not limit the Appraisal District in making determinations in any manner otherwise
allowed by law.
STATEMENT OF PURPOSE
SECTION I
(a) The City Council of the City of Port Arthur, Texas adopts this tax abatement policy to
provide incentives to the owner of real property, who proposes a Project to develop,
redevelop or improve eligible facilities. The incentives will consist of a limited special
exemption from certain taxes provided that the Owner agrees to accept and abide by this
Policy and provided that the real property is located in a lawfully created Reinvestment
Zone.
(b) This policy is intended to improve the quality of life in economically depressed areas by
stimulating business development and job creation within such areas.
DEFINITIONS
SECTION II
(a) Abatement means the full or partial exemption from ad valorem taxes of certain real
property and/or tangible personal property in a reinvestment zone designated by the
City for economic development purposes.
(b) Agreement means a contractual agreement between a property owner and/or lessee
and the City.
(c) "Base Year" means the calendar year in which the abatement contract is
executed (signed).
(d) Base Year Value means the assessed value of eligible property within the entity
on January 1 preceding the execution of the abatement agreement and which
property is owned by the owner, co-owner and/ or its parent companies,
subsidiaries,partner or joint venturers or any entity exercising legal control over
the owner or subject to control by the owner.
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(e) Deferred Maintenance means improvements necessary for continued operation which
do not improve productivity, or alter the process technology, reduce pollution or
conserve resources.
(f) Distribution Center means buildings and structures, including fixed machinery
and equipment, used or to be used primarily to receive, store, service or
distribute goods or materials owned by the Facility operator where a majority of
the goods or services are distributed to points beyond Port Arthur.
(g) Eligible Facilities means new, expanded, or modernized buildings and structures,
tangible personal property as defined in the Texas Tax Code, including fixed
machinery and equipment, which is reasonably likely as a result of granting
abatement to contribute to the retention or expansion of primary employment or
to attract major investment in the reinvestment zone that would be a benefit to
the property and that would contribute to the economic development within the
City,but does not include facilities which are intended primarily to provide goods
or services to residents or existing businesses located in the City. Eligible
facilities may include, but shall not be limited to, industrial buildings and
warehouses.
(h) "Expansion" means the addition of buildings, structures, machinery, tangible personal
property, equipment or payroll for purposes of increasing production capacity.
(i) Modernization means a complete or partial demolition of facilities and the complete or
partial reconstruction or installation of a facility of similar or expanded production
capacity. Modernization may result from the construction, alteration or installation of
buildings, structures, machinery, equipment, pollution control devices or resource
conversation equipment.
(j) Facility means property improvements completed or in the process of construction
which together comprise an integral whole.
(k) New Facility means a property previously undeveloped which is placed into service by
means other than or in conjunction with Expansion or Modernization.
(1) Productive Life means the number of years a property improvement is expected to be
in service in a facility.
(m) Tangible Personal Property means tangible personal property classified as such
under state law,but excluding inventory and/or supplies and tangible personal property
that was located in the investment zone at any time before the period covered by the
agreement with the City.
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(n) Eligible Projects means a project that fits into one of the following categories:
Industrial or Manufacturing. The minimum capital investment and
corresponding abatement percentage required for an industrial project is
specified in Exhibit "B". The minimum capital investment and corresponding
abatement percentage required for a manufacturing project as is specified in
Exhibit"C".
(o) Variance means an exception upon approval of the City Council which will allow
commercial enterprises to participate in the abatement process for projects that
facilitate the purpose of higher education.
ABATEMENT AUTHORIZED
SECTION III
(a)Eligible Facilities. Upon application, Eligible Facilities shall be considered for tax
abatement as hereinafter provided.
(b)Creation of New Value.Abatement may only be granted for the additional value of eligible
improvements made subsequent to and specified in an abatement agreement between the
City and the property owner or lessee, subject to such limitations as the City may require.
Under no circumstances will abatements be considered or granted once
construction on a facility or project has begun.
(c) New and Existing Facilities. Abatement may be granted for new facilities and
improvements to existing facilities for purposes of modernization or expansion.
(d)Eligible Property.Abatement may be extended to the increase in value of buildings,
structures, tangible personal property, fixed machinery and equipment, site
improvements and related fixed improvements necessary to the operation and
administration of the facility.
(e) Ineligible Property. The following types of property shall be fully taxable and
ineligible for tax abatement: land, supplies, inventory, vehicles, vessels, housing,
improvements for the generation or transmission of electrical energy not wholly
consumed by a new facility or expansion; any improvements, including those to
produce, store or distribute natural gas, fluids or gases, which are not integral to
the operation of the facility; deferred maintenance,property to be rented or leased
(except as provided in Section III (f), property which has a productive life of less
than ten years, or any other property for which abatement is not allowed by state
law.
(f) Owned/Leased Facilities. If a leased facility is granted abatement, both the owner/
lessor and the lessee shall be parties to the abatement contract with the City.
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(g)Economic Qualifications. In order for an Eligible Facility to qualify for designation as a
reinvestment zone and receive tax abatement for the planned improvement,the Eligible
Facility:
1) Must be expected to have an increased appraised ad valorem tax value based
upon the Jefferson County Appraisal District's assessment of the Eligible
Property;
2) Must prevent the loss of payroll or retain, increase or create payroll on a
permanent basis in the City.
3) Must not have the effect of displacing workers or transferring employment
from one part of the City to another.
4) Must demonstrate by an independent economic impact analysis that
the local economic benefit to the City of Port Arthur will be
substantially in excess of the amount of anticipated foregone tax
revenues resulting from the abatement.
(h)Factors Considered By City. In Considering Abatement Requests, the following
factors, among others, shall be considered in determining whether to grant tax
abatements for an Eligible Facility and, if so, the percentage of value to be abated
and duration of the tax abatement.
1) Value of land and existing improvements, if any;
2) Type and value of proposed improvements;
3) Productive life of proposed improvements;
4) Number of existing jobs to be retained by proposed improvements;
5) Number of type of new jobs to be created by proposed improvements;
6) The extent to which new jobs to be created will be filled by persons who
are economically disadvantaged, including residents of a Reinvestment
Zone;
7) The extent to which Port Arthur labor and Port Arthur Business
Enterprises will be used in the construction phase of the project;
8) Amount of local taxes to be generated directly;
9) Amount property tax base valuation will be increased during the term
of abatement and after abatement.
10) The costs to be incurred by the City to provide facilities or services
directly resulting from the new improvements;
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11) The amount of ad valorem taxes to be paid to the City during the
abatement period considering (a) the existing values; (b) the
percentage of new value abated; (c) the abatement period; and, (d) the
value after expiration of the abatement period;
12) The population growth of Port Arthur expected to occur directly as a
result of new improvements;
13) The types and values of public improvements, if any to be made by
applicant seeking abatement;
14) Whether the proposed improvements compete with existing businesses
to the detriment of the local economy;
15) The impact on the business opportunities of existing businesses;
16) The attraction of other new businesses to the area as a result of the
project;
17) The overall compatibility with the zoning ordinance and comprehensive
plan for the area;
18) Whether the project is environmentally compatible with no negative
impact on quality of life perceptions; and
19) The extent to which the new employment will reflect the cultural
diversity of the City.
Each application for tax abatement shall be reviewed on its merits utilizing the factors
provided above. After such review, abatement may be denied entirely or may be
granted to the extent deemed appropriate after full evaluation.
(i) Local Employment. For purposes of evaluating Section III (h) (7), local labor is
defined as those laborers or skilled craftsmen who reside in Port Arthur.
(j) Historically Underutilized Businesses/Disadvantaged Business Enterprises.
The City will also strongly consider the extent to which the project will encourage
and promote the utilization of Historically Underutilized Businesses (HUBs) (also
known as Disadvantaged Business Enterprises, or DBEs) by the owner and general
contractor by ensuring that qualified HUB vendors and contractors are given an
opportunity to bid on all contracts.
1) A Historically Underutilized Business (HUB) is a business owned or
controlled by socially and Economically Disadvantaged Individuals as
defined by all applicable federal or state laws and local policies, including
Black Americans, Hispanic Americans, Native Americans, Asian- Pacific
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Americans, Asian- Indian Americans, women and individuals with
disabilities. A HUB is one that is at least 51 percent owned or controlled by
one or more women or Socially and Economically Disadvantaged
Individuals who actively participate in the conduct of the business or, in the
case of a publicly owned business, one in which at least 51 percent of the
stock is controlled by one or more women or Socially and Economically
Disadvantaged Individuals.A business that has been certified as a HUB/DBE
by an agency of the federal government or the State of Texas is presumed to
be a HUB/ DBE for purposes of this policy. Only a HUB/ DBE with its
principal office in Jefferson, Hardin, and Orange, County will be recognized
as a HUB/DBE for purposes of this policy.The City of Port Arthur will supply
a Minority Business Directory to each applicant.
2) The City will require that each abatement contract between itself and any
individual or entity seeking the abatement of ad valorem taxes contain a
provision requiring the owner, on at least a quarterly basis, and at owner's
cost,to allow the full examination by City or its designated representative(s)
of all documents necessary for the City to assure that best efforts have been
used by owner to utilize local labor, subcontractors, vendors, suppliers and
HUB'S/ DBE' s. The City will also require that such contracts contain
provisions binding the engineering/ construction firms utilized as general
contractors on the project to the terms of the abatement agreement.
(k)Denial of Abatement. Neither a reinvestment zone nor abatement agreement shall
be authorized if it is determined that;
1) There would be a substantial adverse effect on the provision of government
service or tax base;
2) The applicant has insufficient financial capacity;
3) Planned or potential use of the property would constitute a hazard to public
health, safety or morals;
4) Violation of state or federal laws; or,
5) Any other reason deemed appropriate by the City.
(1) Taxability. From the execution of the abatement agreement to the end of the
agreement period, taxes shall be payable as follows:
1) The value of ineligible property as provided in Section III (e) shall be fully
taxable; and
2) The base year value of existing eligible property as determined each year
shall be fully taxable.
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The additional value of new Eligible Property shall be fully taxable at the end of the
abatement period.
APPLICATION
SECTION IV
(a)Any owner or his agent of taxable property in the City may request the creation
of a reinvestment zone and tax abatement by filing a written request with the
City Manager.
(b)Any present owner, potential owner or Lessee of taxable property in the City
may request the creation of a reinvestment or enterprise zone and tax
abatement by filing a written request with the City Manager.
(c) The application shall consist of a completed application form which shall
provide detailed information on the items described in Section III (h) hereof; a
map and property description; a time schedule for undertaking and completing
the planned improvements. In the case of modernization, a statement of the
assessed value of the facility separately stated for real and personal property
shall be given for the tax year immediately preceding the application. The
application form may require such financial and other information as may be
deemed appropriate for evaluating the financial capacity and other factors of
the applicant.
(d)The City shall also require a non- refundable application fee in the amount of
$1,000.00 to be submitted with the application.
(e) Prior to the adoption of an ordinance designating a reinvestment zone,the City
shall: (1) give written prior notice to the presiding officer of the governing body
of each taxing unit in which the property to be subject to the agreement is
located not later than the seventh (7th) day before the public hearing; and (2)
publish notice of a public hearing in a newspaper of general circulation within
such taxing jurisdiction not later that the seventh (7th) day before the public
hearing. Before acting upon the application, the City shall, through public
hearing, afford the applicant and the designated representative of any
governing body referenced hereinabove opportunity to show because why the
abatement should or should not be granted.
(f) The City shall make every reasonable effort to either approve or disapprove the
application for tax abatement within forty-five (45) days after receipt of the
application. The City of Port Arthur shall notify the applicant of approval or
disapproval.
(g)The City shall not establish a reinvestment zone for the purpose of abatement if
it finds that the request for the abatement was filed after the commencement of
construction, alteration, or installation of improvements related to a proposed
modernization, expansion or new facility.
(h)Information that is provided to the City in connection with an application or
request for tax abatement and that describes the specific processes or business
activities to be conducted or the equipment or other property to be located on
the property for which a tax abatement agreement is requested is confidential
and not subject to public disclosure pursuant to the Texas Public Information
Act until the tax abatement agreement is executed. That information in the
possession of a taxing unit after the agreement is executed is not confidential
and is subject to disclosure.
AGREEMENT
SECTION V
(a)Not later than the seventh (7th) day before the date on which the City enters
into the abatement agreement, the City shall deliver to the presiding officer of
the governing body of each other taxing unit in which the property is located a
written notice that the City intends to enter into an agreement. The notice shall
include a copy of the prepared agreement.
(b)After approval, the City shall formally pass a resolution and execute an
agreement with the owner of the facility and lessee as required which shall
include at least the following terms;
1) Estimated value to be abated and the base year value;
2) Percent of value to be abated each year;
3) The commencement date and the termination date of abatement;
4) The proposed use of the facility; nature of construction, time
schedule, map, property description and improvement list as
provided in application, Section IV(c);
5) Contractual obligations in the event of default, violation of terms or
conditions, delinquent taxes, recapture, administration or
assignment;
6) Provision for access to and authorization for inspection of the
property by City employees to ensure that the improvements or
repairs are made according to the specifications and conditions of the
agreement;
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7) Limitations on the uses of the property consistent with the general
purpose of encouraging development or redevelopment of the zone
during the period that property tax exemptions are in effect;
8) Provision for recapturing property tax revenue lost as a result of the
agreement if the owner of the property fails to make the
improvements or repairs as provided by the agreement;
9) Provision that all permanent jobs be registered with the Texas
Workforce Commission and that all contractors shall give preference
to and to seek qualified workers through the Texas Workforce
Commission.
10)Contain each and every term agreed to by the owner of the property;
11)Requirement that the owner or lessee of the property certify
annually to the governing body of each taxing unit that the owner or
lessee is in compliance with each applicable term of the agreement;
12)All terms required by Texas Tax Code §312. 205, as amended; and
That the property subject to abatement-is not owned or leased by a
person who is a member of the governing body of the City or a
member of the zoning or planning board or commission of the City.
(c) Quarterly Reports
The Property Owner agrees to submit on a semi- annual basis a report (each, a
"Report") in accordance with the procedures, and providing the information
specified, herein with respect to the hiring of qualified Port Arthur residents by
the Property Owner and its Nested Contractors,and the retention of Port Arthur
LBE' s by the Property Owner, as the same relate to the Affected Area.
The Report due for the six- month period ending on June 30th of each of such
Tax Years shall be submitted on or before the July 31st immediately following
the end of such six- month period, and the Report due for the six-month period
ending on December 31st of each of such Tax Years shall be submitted on or
before the January 31st immediately following the end of such six- month
period; provided, however, that upon the written request of the Property
Owner, the deadline for submitting a Report shall be extended for thirty (30)
days. The six-month period covered by any Report is referred to herein as the
"Report Period."
The Reports shall be sent to the Office of the City Manager and copied to the City
Attorney substantially in the format delineated in Exhibit "B". Each of the
Reports will be reviewed for compliance by the City or its representative as to
the following:
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(i) With respect to the hiring of qualified Port Arthur residents by the Property
Owner at the Facility, such Report shall set forth the following information for
the Report Period covered by such Report:
(A) Total number of employees employed by the Property Owner at
the Facility on the last day of such Report Period who were Port
Arthur residents on such date;
(B) Total number of employees employed by the Property Owner at
the Facility on the last day of such Report Period;
(C) Total number of new hires employed by the Property Owner at
the Facility during such Report Period who were Port Arthur
residents on their first day of employment with the Property
Owner;
(D) Total number of new hires employed by the Property Owner at
the Facility during such Report Period; and
(E) Total number of applicants completing the interview process for
employment with the Property Owner at the Facility during such
Report Period.
(ii) With respect to the hiring of qualified Port Arthur residents by the Property
Owner's Nested Contractors for projects at the Facility, the Property Owner
will use commercially reasonable efforts to obtain the information set forth
below for inclusion in such Report for the Report Period covered thereby:
(A) Total number of employees employed by the Property Owner's
Contractors for projects at the Facility on the last day of such
Report Period who were Port Arthur residents on such date;
(B) Total number of employees employed by the Property Owner's
Contractors for projects at the Facility on the last day of such
Report Period;
(C) Total number of new hires employed by the Property Owner's
Contractors for projects at the Facility during such Report Period
who were Port Arthur residents on their first day of employment
with the Property Owner' s Contractors;
(D) Total number of new hires employed by the Property Owner's
Contractors for projects at the Facility during such Report
Period; and
(E) Total number of applicants completing the interview process for
employment with Property Owner' s Contractors for projects at
the Facility during such Report Period.
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(iii) With respect to the retention of " Designated Port Arthur LBE' s", such
Report shall set forth the following information for the Report Period
covered by such Report:
(A) Total number of Designated Port Arthur LBE' s that:
(i) were on the approved vendor list of the Property Owner
at any time during such Report Period, and/ or
(ii) Were invited by the Property Owner during such Report
Period to bid on contracts for goods and/ or services;
(B) Total number and dollar amount of contracts awarded by the
Property Owner during such Report Period for goods and/ or
services that the Property Owner determines could have
potentially been obtained from Designated LBE' s; and
(C) Total number and dollar amount of the contracts described in
Section 6(c)(iii) (B) immediately above that were awarded to
Designated LBE's during such Report Period.
(d)The information provided by the Property Owner to the City in any Report shall
be held confidential by the City to the fullest extent permitted under applicable
law. If the City receives a request for such information, the City will notify the
Property Owner,and the Property Owner will be afforded an opportunity to file
a brief with the Texas Attorney General setting forth the reasons for exclusion
of all or any portion of such information from the requirement to be released
pursuant to the Texas Public Information Act.Such agreement shall normally be
executed within sixty (60) days after the applicant has forwarded all necessary
information and documentation to the City.
RECAPTURE
SECTION VI
(a)Tax abatement agreements will provide for recapture of abated property taxes
in the event contract terms and requirements are not met. These recapture
provisions will survive any subsequent assignment of the Agreement. In the
event that the company or individual (1) allows its ad valorem taxes owed the
City to become delinquent and fails to timely and properly follow the legal
procedures for their protest and/ or contest; or (2) violates any of the terms
and conditions of the abatement agreement; and fails to cure during the cure
period, the agreement then may be terminated and all taxes previously abated
by virtue of the agreement will be recaptured and paid within thirty (30) days
of the termination.
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(b)Should the City determine that the company or individual is in default according
to the terms and conditions of its agreement, the City shall notify the company
or individual of such default in writing at the address stated in the agreement;
and if such is not cured within thirty (30) days from the date of such notice
("Cure Period"), then the agreement may be terminated.
(c) Milestones: The City will set specific milestones for each company to meet.
These milestones will be incorporated into a tax abatement agreement that will
be approved by the City Council.
(d)Payment in Lieu of Taxes: If,during the period of this abatement,any Federal or
State law provides an additional tax exemption for the property that is already
the subject of this agreement, Applicant agrees to decline that tax exemption
during the period of this abatement. If Applicant is unable to decline that tax
exemption,Applicant agrees to pay the taxes, or payment in lieu of taxes,on the
reduction of property tax revenue to the City that is the result of said exemption.
Any payment in lieu of taxes shall be due on or before November 15 of the year
in which payment is due. By this, it is understood and agreed that if the party
granted this abatement avails itself of a Foreign Trade Zone exemption, the
abated value subject to this contract will be reduced dollar for dollar and taxed.
The following are the sample schedules that show what percentage of taxes abated will
be recaptured (multiply the amount of taxes abated by the percentage in the recapture
period):
Less than 10 Year Abatement Period 10 Year Abatement Period
Termination of Abatement Recaptured Termination of Abatement Recaptured
Taxes Taxes
During Abatement Period During Abatement Period
Year 1 of Recapture Period 100% Year 1 of Recapture Period 100%
Year 2 of Recapture Period 75% Year 2 of Recapture Period 80%
Year 3 of Recapture Period 50% Year 3 of Recapture Period 60%
Year 4 of Recapture Period 25% Year 4 of Recapture Period 40%
Year 5 of Recapture Period 20%
Year 6 of Recapture Period 10%
ADMINISTRATION
SECTION VII
(a)The Chief Appraiser of the Jefferson County Appraisal District will annually
determine an assessment of the real property comprising the reinvestment
zone. Each year, the company or individual receiving abatement shall furnish
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the appraiser with such information as may be necessary for the abatement.
Once value has been established, the Chief Appraiser will notify the City of the
amount of the assessment.
(b)The abatement agreement shall stipulate that employees and/ or designated
representatives of the City will have access to the reinvestment zone during the
term of the abatement to inspect the facility to determine if the terms and
conditions of the agreement are being met. All inspections will be made only
after the giving of twenty-four (24) hours prior notice and will only be
conducted in such manner as to not unreasonably interfere with the
construction and/ or operation of the facility.All inspections will be made with
one or more representatives of the company or individual and in accordance
with its safety standards.
(c) Upon completion of construction,the designated representative of the City shall
annually evaluate each facility receiving abatement to insure compliance with
the agreement, and a formal report shall be made to the City.
(d)The City shall timely file with the Texas Department of Economic Development
and the State Property Tax Board all information required by the Tax Code.
(e) During the course of construction of the Project, Owner and its general
contractor and/ or subcontractors shall, on at least a quarterly basis, meet with
designated City representatives for an onsite inspection to assure compliance
with the terms of the abatement agreement. Owner shall be responsible to City
for the payment of costs associated with such monitoring. In the event it is
determined that Owner or its contractors have failed to comply with the terms
of the abatement agreement,then City may terminate the abatement agreement
or, in City' s discretion, reduce the duration or annual percentages of such
abatement.
(f) During construction, the Applicant shall maintain appropriate records of the
employees affected by this abatement, including but not limited to, proof of
employees' legal residence, proof of immigration- resident status, and, if
applicable, such other documentation that may be required to document
compliance with the Agreement.
(g)The Chief Appraiser of the Jefferson County Appraisal District shall timely file
with the Texas Department of Economic Development and the State Property
Tax Board all information required by the Tax Code.
(h)All requirements of the Abatement Agreement shall, apply to Applicant's
contractors/ subcontractors and Applicant shall ensure that they abide by the
terms of the Agreement.
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ASSIGNMENT
SECTION VI
Abatement may be transferred,assumed and assigned in whole or in part by the holder
to a new owner or lessee of the same facility upon the approval by resolution of the
City Council; subject to the financial capacity of the assignee and provided that all
conditions and obligations in the abatement agreement are guaranteed.No assignment
or transfer shall be approved if the parties to the existing agreement, the new owner
or new lessee are liable to any jurisdiction for outstanding taxes or other obligations.
Approval shall not be unreasonably withheld.As a condition of transfer,an assignment
fee of$10,000.00 may be required,with the maximum fee being$10,000.00.
SUNSET PROVISIONS
SECTION VII
These guidelines and criteria are effective upon the date of their adoption and will
remain in force for two years, unless amended by three-quarters of the City Council at
which time all reinvestment zones and tax abatement agreements created pursuant to
these provisions will be reviewed to determine whether the goals have been achieved.
Based on that review, the guidelines and criteria may be modified, renewed or
eliminated.
DISCRETION OF THE CITY
SECTION VIII
The adoption of these guidelines and criteria by the City does not:
1) Limit the discretion of the City to decide whether or not to enter into a specific
tax abatement agreement.
2) Limit the discretion of the City to delegate to its employees the authority to
determine whether or not the City should consider a particular application or
request for tax abatement; or,
3) Create any property, contract, or other legal rights in any person to have the
City consider or grant a specific application or request for tax abatement.
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QUESTIONS TO BE ANSWERED IN ORDER TO DEVELOP
AN APPLICATION OF ECONOMIC IMPACT STATEMENT
FOR VALUE ADDED TAX ABATEMENTS IN PORT ARTHUR, TEXAS
General:
The City of Port Arthur will provide a representative to assist in preparation and
presentation of all documents and to guide them through the abatement process.
Opening Paragraph:
The application should include a summary statement about the company and its operations.
This information can come from an annual report, corporate 10-K or other document provided
by the company. (Please include this document with this questionnaire).
Answers to Statutory Questions:
1) Present Appraisal District value of land and any EXISTING improvements:
(The City of Port Arthur will answer this question based on Appraisal District records
for the specific site you select.)
Cost of Land (If you are purchasing): $
Number of Acres: or Square Feet
2) Type and value of proposed improvements:
Type of construction:
(Tiltwall, Built-Out of Existing Facility, Etc.)
Value of Construction:
Value of Equipment:
Value of Personal Property:
Value of Inventory&Percent going out-of-state:
Within 175-Day Cycle:
3) Productive life of proposed improvements: years, or term of initial lease:
4) Number of existing jobs to be retained by proposed improvements:
(Answer only if the location is already in Port Arthur and now employs Port Arthur
Residents).
5) Number and types of new jobs to be created by proposed improvements:
6) Amount of local payroll to be create: _ annually.
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7) What percentage and type of jobs to be created will Port Arthur residents have the
opportunity to fill?
8) Amount of local sales taxes to be generated directly:
(Please uses prior year's taxes collected on your taxable sales.)
9) Amount property tax base valuation will be increased during term of abatement and
after abatement:
10)The costs to be incurred by the City of Port Arthur to provide facilities or services
directly resulting from the new improvements:
(Explain any costs for development or depletion of infrastructure the city is being
asked to absorb, if any).
11)The amount of ad valorem taxes to be paid to the city during the abatement period
considering (A) the existing values; (b) the percentage of new value abated; (c) the
abatement period; and (d) the value after expiration of the abatement period.
12)The types and values of public improvements, if any,to be made by applicants
seeking abatement:
(List any facilities from which the public might benefit).
13)Whether the proposed improvements competle with existing businesses to the
detriment of the local economy:
14)The impact on the business opportunities of existing businesses:
Are there possibilities for local businesses to be become suppliers?Any new
retail opportunities?
15)The attraction of other new business to the area:
(Will any of your suppliers, customers, parent, or sister companies relocate because of
your relocation?)
16)The overall compatibility with the zoning ordinances and comprehensive plan for the
area:
17)Maps and Plats. Provide maps, plats, and drawings necessary to establish the
location of improvements and their relationships to the corporate boundaries of
the city, ETJ/Industrial district, and reinvestment or enterprise zone
boundaries.
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18)Questions to be Answered:
1) Is your project within a city limit? Name of City
2) Is your project within an Extraterritorial Jurisdiction/ETJ? Name of City ETJ
3) Is your project within an Enterprise or Reinvestment Zone?Which?
4) Will you own the realty or lease the realty?
5) Present Appraisal District value of land and any EXISTING improvements
owned by the OWNER:
(Answer this question based on Appraisal District records for the specific site you select.)
Cost of land (If you are purchasing): $
Number of Acres: or Square Feet:
6) Type and value of proposed improvements:
Type of construction:
(Tiltwall, Build-Out of Existing Facility, Etc.)
Value of Construction:
Value of Equipment:
7) Productive life of proposed improvements: years, or
term of initial lease
8) Number of existing jobs to be retained by proposed improvements:
(Answer only if the location is already in or near the City of Port Arthur and
now employs Port Arthur residents.)
9) Number and types of new jobs to be created by proposed improvements:
(Include in this answer the number of Port Arthur residents that will be employed.)
10) Amount of Annual local payroll to be created: .
11) What percentage and type of jobs to be created will Port Arthur residents
have the opportunity to fill?
12) Amount property tax base valuation will be increased:
During term of abatement:
After term of abatement:
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13) The costs to be incurred by local government to provide facilities or services
directly resulting from the new improvements:
(Explain any costs for development or depletion of infrastructure the city is
being asked to absorb, if any.)
(Are there possibilities for local businesses to become suppliers?Any new retail
opportunities? If you have previously conducted business within Port Arthur,
please provide a list of any and all local/ non-local HUB/ DBE companies with
whom you have worked and the extent of that work relationship)
14) Describe, including the estimated value, all pollution control devices and other
improvements for which you intend to seek TNRCC exemption from taxation:
NOTE: Failure to accurately disclose exempted property may result in a total default
under the Abatement Contract, resulting in recapture of previously abated taxes and
forfeiture of future abatement.
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EXHIBIT "A"
PROCEDURE FOR CALCULATING ABATEMENTS
Purpose
The purpose of this procedure is to clarify the method used in calculating tax abatement.This
procedure requires calculation of the Current Year Market Value, Base Year Value, and
Taxable Value as these terms are defined below. In accordance with the City of Port Arthur
Uniform Tax Abatement Policy, the Real Property Owner' s Current Taxable Value shall not
be less than the Base Year Value in order for a project to receive the full amount of abatement.
Calculation of"Base Year Value"
Base Year Value" for each taxing entity executing an abatement contract is the Taxable Value
of all industrial realty improvements of a property owner and/ or its affiliates located within
that entity for the tax period defined as the "Base Year". "Base year" is defined as the calendar
year in which the abatement contract is executed (signed).
Calculation of' Current Year Market Value"
Current Year Market Value" for each taxing entity executing an abatement agreement is
determined by calculating for the Current Tax Year the Market Value of all industrial realty
improvements of a property owner and/ or its affiliates that comprise the "Base Year Value."
Calculation of"Taxable Value"
Taxable Value" for each taxing entity executing an abatement agreement is determined by
deducting from the Market Value of all industrial realty improvements of a property owner
and/or its affiliates the amount of any applicable exemptions and abatements granted for that
Tax Year.
Calculation of Abated Value
The following procedures are followed for each project for which a tax abatement contract
has been executed and for each taxing entity granting the abatement.
VALUE POTENTIALLY ELIGIBLE FOR ABATEMENT:
The Base Year Value is subtracted from the Current Year Market Value. If the difference is
greater than zero (0),then the remaining value is the value potentially eligible for abatement.
If the difference is zero (0) or less, then the project is not eligible for an abatement for that
Tax Year.
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VALUE AVAILABLE FOR ABATEMENT:
For each project that remains potentially eligible for abatement, a preliminary calculation of
the abated value of all other projects for the owner and/ or its affiliates, if any, must be made.
This calculation must first be done based on a preliminary abated value for subsequent
projects since the full calculation has yet to be performed. For multiple abated projects, the
calculations of the preliminary abated values are made in chronological order based on the
date the contract was executed.Once the abated value for the subsequent project is calculated,
if the actual abated value differs from the preliminary abated value, this calculation must be
redone in order to reflect the actual abated value.
Once all calculations have been completed, the abated value of other projects for the owner
and/ or its affiliates, if any, is subtracted from the Value Potentially Available for Abatement.
If the difference is greater than zero (0), then the remaining value is the Value Available for
Abatement. If the difference is zero (0) or less,then the project is not eligible for an abatement
for that Tax Year.
VALUE SUBJECT TO ABATEMENT:
The project base value, if applicable, is subtracted from the current year project value, and
the percentage of abatement to be granted is then applied to the net amount to determine the
Value Subject to Abatement.
ABATED VALUE:
Any applicable reductions for Foreign Trade Zone or Pollution Control restrictions are
subtracted from the Value Subject to Abatement. If the difference is less than the Value
Available for Abatement, then this is the Abated Value.
If the difference is greater than the Value Available for Abatement, then the Value Available
for Abatement becomes the Abated Value.
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The City will offer an abatement for a minimum of five and a maximum of ten years, based
upon the total capital investment of a project and/or the creation of jobs. The City will offer
incentives before and after the construction period as follows:
5 year agreement requires a Capital Abatement
investment up to$99 million percentage
Construction Period limited to 1 year 75
Year 1 after Construction Period 40
Year 2 after Construction Period 30
Year 3 after Construction Period 20
Year 4 after Construction Period 10
6 year agreement requires a Capital Abatement
investment of$100 million to$250 million percentage
Construction Period limited to 1 year 75
Year 1 after Construction Period 50
Year 2 after Construction Period 40
Year 3 after Construction Period 30
Year 4 after Construction Period 20
Year 5 after Construction Period 10
7 year agreement requires a Capital Abatement
investment of more than $250 million up to percentage
$500 million
Construction Period limited to 2 years 75
Year 1 after Construction Period 60
Year 2 after Construction Period 50
Year 3 after Construction Period 40
Year 4 after Construction Period 30
Year 5 after Construction Period 20
8 year agreement requires a Capital Abatement
investment of more than$500 million up to percentage
$750 million
Construction Period limited to 3 years 75
Year 1 after Construction Period 70
Year 2 after Construction Period 60
Year 3 after Construction Period 50
Year 4 after Construction Period 40
Year 5 after Construction Period 30
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9 year agreement requires a Capital Abatement
investment of more than$750 million up to percentage
$1 billion
Construction Period limited to 4 years 75
Year 1 after Construction Period 80
Year 2 after Construction Period 70
Year 3 after Construction Period 60
Year 4 after Construction Period 50
Year 5 after Construction Period 40
10 year agreement requires a Capital Abatement
investment of over$1 billion percentage
Construction Period limited to 5 years 75
Year 1 after Construction Period 90
Year 2 after Construction Period 80
Year 3 after Construction Period 70
Year 4 after Construction Period 60
Year 5 after Construction Period 50
At the end of the abatement period,the additional value of the new eligible property shall be fully taxable.
Furthermore,the City will offer Performance Based Incentives which can result in additional discounts to
the abatement percentage. The maximum discount is 100%based on performance during the construction
period and post construction.
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