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HomeMy WebLinkAboutPR 17934: ADOPTING A UNIFORM TAX ABATEMENT P.R. No.17934 02/20/2014 - PDL PAGE 1 OF 13 RESOLUTION NO. A RESOLUTION ADOPTING A UNIFORM TAX ABATEMENT POLICY FOR THE TERM MARCH 9, 2014 THROUGH MARCH 9, 2016 PURSUANT TO CHAPTER 312 OF THE TEXAS PROPERTY TAX CODE WHEREAS, the Property Redevelopment and Tax Abatement Act is delineated in Chapter 312 of the Texas Property Tax Code and provides that the governing body of a municipality must elect to become eligible to participate in tax abatement, and; WHEREAS, the 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; f WHEREAS, the City must adopt guidelines and criteria governing tax abatements every two years; 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. THAT the Uniform Tax Abatement Policy for period of March 9, 2014 to March 9, 2016, as set forth in Exhibit "A ", attached hereto is hereby adopted. READ, ADOPTED AND APPROVED this day of March, A.D., 2014, at a Regular Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: MAYOR COUNCILMEMBERS: P.R. No. 17934 03/01/2012 - PDL PAGE 2 OF 13 NOES: Deloris "Bobbie" Prince, Mayor ATTEST: Sherri Bellard, City Secretary APPROVED AS TO FORM: $(0 ) 314 ' Val Tizeno, 0 City Attorney APPROVED FOR ADMINISTRATION: John A. Comeaux, P.E., Acting City Manager Ronald Burton, Director of Deve opment Services P.R. No. 17934 03/01/2012 - PDL PAGE 3 OF 13 EXHIBIT "A" GUIDELINES AND CRITERIA FOR GRANTING TAX ABATEMENTS IN REINVESTMENT ZONES IN PORT ARTHUR TEXAS 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 Value means the assessed value of eligible property January 1 preceding the execution of the agreement plus the agreed upon value of eligible property improvements and Tangible Personal Property made after January 1 but before the execution of the Agreement. (d) Deferred Maintenance means improvemenits necessary for continued operation which do not improve productivity, or alter the process technology, reduce pollution or conserve resources. (e) 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 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. Expansion means the addition of buildings, structures, machinery, tangible personal property, equipment or payroll for purposes of increasing production capacity. (f) Facility means property improvements completed or in the process of construction which together comprise an integral whole. (g) Hotel means a commercial structure which provides overnight accommodations to travelers and which contains 150 rooms or more. (h) 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. (i) New Facility means a property previously undeveloped which is placed into service by means other than or in conjunction with Expansion or Modernization. (j) Office Building means a new office building addition to existing office buildings or build out of unoccupied space within existing buildings. (k) Productive Life means the number of years a property improvement is expected to be in service in a facility. (1) 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. 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. (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 extendled to the value of buildings, 2 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, 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, the agreement shall be executed with the lessor and lessee. (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. 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; and 2) 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 Tax Abatement. 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 contractors will be used 3 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; 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 lleriod; 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 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. 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. 4 When calculating total labor 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 County shall be calculated hour for hour. (j) 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. (k) 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 II (e) shall be fully taxable; and, 2) The base year 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 filing a written request with the City Manager. (b) The application shall consist of a completed application form which shall provide detailed information on the items described in Section 11I (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. 5 (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 (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 hereingabove opportunity to show cause why the abatement should or should not be granted. (d) The City, not more 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 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. 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 as provided in Section 111(g); 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(b); 5) Contractual obligations in the event of default, violation of terms or conditions, delinquent taxes, recapture, administration or assignment; 6) All terms required by Texas Tax Code§ 312.205, as amended. 6 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) 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 daring 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. (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. 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 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. 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 resolution 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 of the new contractual agreement with the City. No assignment or transfer shall be approved if the parties to the existing agreement, 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 IX 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 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 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. 8 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 10K 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. 9 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 applicant 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: 10