HomeMy WebLinkAboutPR 15767: ADOPT A UNIFORM TAX ABATEMENT POLICYMemo
To: Steve Fibgibbons and City Council
From: Colleen Russell, Planning Director
Re: Uniform Tax Abatement Policy
Date: March 1'2010
BACKGROUND:
Prior to creating a tax reinvestment zone fortax abatement the Citymust state that it wishes to
participate in tax abatement and-adopt the policy that will be used for those abatements. The
proposed policy is identical to the one previously adopted by City Council pursuant to
Resolution No. 07 274. The policies aze only effective for two years and then must be
readopted.
BUDGETARY/FISCAL EFFECT:
The City will be eligible to participate in the tax abatement process and this would enable the
creation of tax reinvestment zones and the granting of a tax abatement.
STAFFING/EMPLOYEE EFFECT:
None
Si1NIMARY:
I recommend approval of Proposed Resolution No. 15767. The City Council is been asked to
accept this resolution so that the City will be eligible to participate in the tax abatement
process. ,
Respectfully,
Colleen W. Russell, Planning Duector
P.R. No. 15767
03/Ol//10 CWR
RESOLUTION NO.
A RESOLUTION ADOPTING A UNIFORM TAX
ABATEMENT POLICY
WHEREAS, the Property Redevelopment and Tax Abatement Act provides that a City must
state that iYelects to become eligible to participate in tax abatement, and;
WHEREAS, the City may not enter into a tax abatement agreement or designate an azea as a
reinvestment zone until guidelines and criteria governing tax abatement agreements have been
established; and;
WHEREAS; the City must readopt guidelines and criteria governing tax abatements every two
yeazs; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR:
THAT the City Of Port Arthur elects to become eligible to participate in tax abatement; and
THAT the uniform tax abatement policy, as set forth iri Exhibit "A", attached hereto and made a
part hereof is hereby adopted.
READ, ADOPTED AND APPROVED this day of March , A.D., 2010, at a Regular
Meeting. of the City Council of the City of Port Arthur, Texas, by the following vote: AYES:
MAYOR.
COUNCILMEMBERS:
NOES:
P.R N0. 15767 -
03/01/10 "
Page 2 of 2 <
ATTEST:
Mayor
City Secretary
TO FORM:
City Attorney / J v v -
APPROVED FOR ADMINISTRATION:'
^
EXHIBIT "A"
GUIDELINES ANB CRTTERIA FOR GRANTING
TAX ABATEMENTS IN REIlVVESTMENT ZONES
IN PORT ARTHUR TEXAS
STATEMENT OF PURPOSE
SECTION I
(a) The City Couacil of the City of Port Arthur, Texas adopts this tax abatemem 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 Po}icy and provided that the real property is located in a lawfully
created Reinvestment Zone.
(b) This policy. is imended to improve the quality of life in economically depressed areas
by stimulating. businessdevelopment 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 personnel property in a rehrvestmeat zone designated by the
City for economic development purposes.
(b) Agreement means a contractual agreement between a property ownerand/or lessee
and the City.
(c) Base Year Valae means the assessed value of eligible property January 1 preceding
the execution of the agreement plus the agreed upon value of eligible property
improvemems and Tangible Personal Property made after January 1 but before the
execution of the Agreement.
(d) Deferred Maiateaance means improvements necessary for continued operation
which do mot improve productivity, or alter the process technology, reduce pollution
or conserve resources.
(e) Eligible 1Facifities 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 conta'bute to the retention or expansion ofprimary employment onto
attract majorinvestment in the reinvestmem 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 pritnarIly to provide goods or services
to residents or existing businesses located is the City such as, but not limited to,
restaurants and retail sales establishments. Eligible facilities may include, but shall
not be limited to, industrial buildings and warehouses, hotel and office buildings.
Eligible facilities may also include facilities designed to serve a regional population
greater that the City for medical, scientific, recreational or other purposes.
(f) Expansion means the addition of buildings; structures, machinery, tangible personal
<property, equipment or payroll for purposes of increasing production capacity.
(g) Facility means property improvements wmpleted or in the process of wnshuction
which together comprise an integral whole.
(h) Hotel means a commercial structure which provides overnight accommodations to
Travelers and which contains 150 rooms or more.
(i) Modemization 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 equipmern.
(j) .New Facility means a pioperty previously undeveloped which is placed into service
by means other than or in conjunction with Expansion or Modernization.
(k) Office Building means a new office building addition to existing office buildings or
build out of unoccupied space within existing buildings. <
(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 bgfore the period
covered by the agreement with the City.
ABATEMENT AUTHORIZED
SECTION III
(a) Eligible Facilities. Upon application, Eligible Facilities shall be considered for tax
abatemem as hereinafter provided.
(b) Creation of New Value. Abatement may only be granted for the additional value of
eligible impmvemems made subsequent to and specified in an abatement agreement
between the City and. the property owner orlessee, subject to such limitations as the.
City may require.
(c) New and Fasting Facilities. Abatement may be grained for new facilities and
improvements to existing faciities forpurposes of modernization or expansion.
(d) Eligible Property. Abatement may be extended to the value of buildings, structures;
tangible personal property, fixed machinery and equipment, site improvements and
related fixed improvements necessaryto 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, deferred maimenance; property
to be rented or leased (except as provided in Section III(, property which has a
productive life of less than ten years, or any other property for which abatement is not
allowed by state law.
(fl Owned/Leased Facilities.. If a leased facility is granted abatement, the agreement
shall be executed with the lessor and lessee.
(g) Economic Qualifications.. In order far an Eligible Facility to qualify for designation.
as a reinvestment zone and receive tax abatement for tbeplanned improvemenrt.
(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
ProPeity; and
(2J Must be expected to 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. -
(h) Standards for Taa Abatement: The following factors, among others, shall be
considered in determining whether to grant tax abatemettts 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 ofproposed 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 residems of a Reinvestment Zone;
('~ The extent to which local labor and contractors 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 lie incurred by the City to provide facilities or services
directly resulting from the new improvements;
(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 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 improvemerns compete with existing businesses to
the detriment of the local economy;
(15) The impact on the business opportunities of existing businesses;
(1 ~ The attraction of other new businesses to the area as a result of the project;
(I'>7 The overall compah~bility 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.
(19) .The extern to which the new employment will reflect the cuhural diversity
of the City.
Each application for tax abatement shall be reviewed on its merits utilizing tfie factors
provided above. After such review, abatement may be denied ernirely or may be granted
to the extent deemed appropriate after full evaluation.
(i) Local Employment. For purposes of evaluating Section III(h)(~, local labor is
defined as those laborers or sk~7led craftsmen who reside in Jefferson County.
When calculating total laber hours to determine the percentage of construction. jobs filled.
by local labor, hours worked by residents of Port Arthur may be calculated at a rate of 1.5
times actual hours worked. Work performed by residents of Jefferson CountyshaU be
calculated hour for hour.
~~ 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 affect 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, safetyormorals;
(4) Violation of state or federal laws; or;
(5) Any other reason deemed: appropriate by the City.
(k) Taxability. From the execution of the abatement agreement to the end. of the
agreemerrt period, taxes shall be payable as follows:
(1) The value of ineligible property as provided in Section II (e) shall be fully
taxable; and,
(2) The base yeaz value of existing eligible property as determined each year
shall be fully taxable.
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 fling a written request with the City
Manager.
(b) The application shall coasist 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 modenvrdtion, a statement of the assessed value of the
facility,. separately stated far real and personal property, shall be given for the tax year
immediately preceding the application. The app}cation form may require such.
financial and other information as may be deemed appropriate for evaluating the
financial capacity and other factors of the applicant. "
(c} 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 (7s') day before the public heazing, and (2) publish notice of a public
hearing in a newspaper of general circulation within such taxing jurisdiction not later
that the seventh (7`~) day before the public hearing. Before acting upon the
application, the City shall, through public hearing, afford tbe applicant and the
designated representative of any governing body referenced hereingabove opportunity
to show cause why the abatement should or should not be granted.
(d} The City, notmore than forty-five (45) days after receipt of the application, shall by
resolution either approve or disapprove the application for tax abatement. The City
shall notify the applicant of approval or disapproval.
(e) The City shall not establish a reinvestment zone forthe purpose of abatement if it
fords 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. '
AGREEMENT
SECTION V
(a} Not later than the seventh (7'~ 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 irrto 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 agreemer
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 yeaz as provided in Section III(g);
(3) The commencement date and the termination date of abatement;
(4) The proposed use ofthe facility; nature of construction, time schedule, map,
property description and improvemem list as provided in application, Section
pro); {
(5) Contractual obligations in the event of default, violation of leans or
conditions, delinquent taxes, recapture, administration or assignment;
(~ All terms required by Texas Tax Code § 312.205, as amended.
Such agreement shall normally be executed within sixty (60) days after the applicant has
forwazded all necessary information afid documentation io the; City.
RECAPTURE
SECTION VI
(a) 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 followthe legal
procedures for their protestand/or contest; oc (2) violates any of the terms and
conditions of the abatement agreemern; and fails to cure during the cure period, the
agreement then may be terminated and all taxes previously abated by virtue ofthe
agreement will be recaptured and-paid within thirty (30) days of the termination
(b) Should the City determine that the company or individual is in default according to
the teens 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 ("Ctiae Period',
then the agreement may be terminated.
ADMINISTRATION
SECTION VII
(a) The Chief Appraiser of the Jefferson County Appraisal District willannually -
deternvne an assessment of the real property comprising the reinvestment zone. Each
yeaz, the company or individual receiving abatement shall furnish ffie appraiser with
such information as maybe necessary for the abatement. Once value has been
established, the. Chief Appraiser will notify the City ofthe amount of the assessment.
(b} The abatemern agreement shall stipulate that employees and/or designated
representatives of the City will. have access to the reinvestment zone during the teen
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 aRer the giving of
twenty-four (24) hours prior notice and will only be conducted in such manner as to
not unreasonably interfere with the constructiott 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 evah~ate each facility receiving abatement to insure compliance with the
agreement, and a formal report shalt be made to the City. ,
(d) The City shall timely file. with the Texas Departmern of l cononuc Development and
the State Property Tax Boazd all information required by the Tax Code.
.~
AGREEMENT
SECTION VIII
Abatement may be transferred and assigned by the holder to a new owner or lessee of the
same facility upon the approval by resohrtion of the City Council; subject to the financial
capacity of the assignee and provided that all conditions and obligations in the agreement
are guaranteed by the execution ofthe new contractual agreement with the City. .
No assignment or transfer shall be approved if the parties to the existing agreemem, the
new owner or new lessee are liable to the City for outstanding taxes or other obligations:
Approval shall not be unreasonably withheld.
SUNSET PROVISIONS
SECTION ]X
These guidelines and criteria are effective upon the date of their adoption and will remain
in force for two years,-unless amended bythree-quarters ofthe City CounciLat which
time all reinvestment canes 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 X
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 abatemem agreement.
(2) Limit the discretion of the City #o 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 fortax abatement.
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 abatemern process.
O enine Pararranhe
The application should include a summary statement about the company and its .
operations. This information can come from as annual report, corporate l OK or other
document provided by the company. (Please include this document with this
questiannaireJ
Answers to Statutory Oaestions•
(1) Present Appraisal District value of land and a~ 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: ar Square
(2) Type and value ofproposed improvements:
Type of conshvction:
(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 Iife ofproposed improvemerns: _ 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.)
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(5) Number and types of new jobs to be created by proposed improvements:
(6) Amount. of local payroll to be create: annually
('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 yeaz's taxes collected on yow taxable sales.)
{9) Amount property tax base valuation will be increased dwirig term of abatement and.
after abatement:
(10) The costs to be incurred by the City of Port Arthw to provide facilities or services
directly resulting from the new improvements:
(Explain any costs for development or depletion of infrastruciwe the city is being asked.
to absorb, ifany).
(11) The amount of ad valorem taxes to be paid to the city dwing 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 applicant
seeking abatement:
(List any facilities from which the public. might benefit.)
(13) Whether the proposed improvemems compete 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 yow suppliers, customers, parent, or sister companies relocate because of '
your relocations
(l~ The overall compatibility with the zoning ordinances and comprehensive plan for the
area:
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(1'n Compliance with-House Bill 1196 as to notknowingly hire uadocvmented workers. .
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