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HomeMy WebLinkAbout91-764 10-08-1991RESOLUTION NO. 91-764 A RESOLUTION ADOPTING GUIDELINES AND CRITERIA FOR GRANTING TAX ABATEMENT IN REINVESTMENT ZONES CREATED IN THE CITY OF EULESS WHEREAS, the future economic viability of the City of Euless depends on the City's ability to attract new investment through the location of new industry and the expansion and modernization of existing businesses; and WHEREAS, the creation and retention of job opportunities that result from new economic development is the highest civic priority; and WHEREAS, the City of Euless must become and remain competitive with other localities across the nation in the expansion of their existing industrial base and the attraction of new commercial and industrial investment; and WHEREAS, any tax incentives offered by the City of Euless should be limited to those companies that create new wealth within the City; and WHEREAS, no tax incentive offered by the City of Euless should adversely affect.the competitive position of existing companies operating in the City; and WHEREAS, effective September 1, 1987, Texas law requires counties and municipalities, which elect to participate in tax abatement programs, to establish guidelines and criteria governing the designation of reinvestment zones and tax abatement program prior to granting any future tax abatement; and WHEREAS, to assure a common, coordinated effort to promote the economic development with the City of Euless, the guidelines and criteria should be adopted in cooperation with the H.E.B. Independent School District and Tarrant Appraisal District; and WHEREAS, the Euless City Council recognizes the importance of maintaining superior public education within the City and the fiscal integrity of the H.E.B. Independent School District; NOW, therefore be it resolved that the Euless City Council does hereby elect to become eligible to participate in tax abatement, and does further hereby adopt the attached "Guidelines and Criteria" for granting tax abatement in reinvestment zones created within the City of Euless, Texas. T.HiII /Resolutn.Chp Page 1 Section 1 DEFINITIONS (a) "Abatement" means the full or partial exemption from ad valorem taxes of certain improvements to real property in a reinvestment zone designated for economic development purposes. (b) "Agreement" means a contractual agreement between a property owner and/or lessee and an eligible jurisdiction for the purposes of tax abatement. (c) "Base Year Value" means the assessed value of eligible property on January 1 preceding the execution of the agreement plus the agreed upon value of eligible property improvements made after January 1 but before the execution of the agreement. (d) "Deferred Maintenance" means improvements necessary for continued operations which do not improve productivity or alter the process technology. (e) "Economic Life" means the number of years a property improvement is expected to be in service in a facility. (1) "Eligible Jurisdiction" means the City of Euless, the H.E.B. Independent School District, Tarrant County, or other special taxing districts that levy ad valorem taxes upon and provide services to property located within a proposed or existing reinvestment zone. (g) "Expansion" means the addition of buildings, structures, fixed machinery or equipment for purposes of increasing production capacity. (h) "Facility" means property improvements completed or in the process of construction which together comprise an integral whole. (i) "Manufacturing Facility" means buildings, structures, fixed machinery or equipment, the primary purpose of which is or will be the manufacture of tangible goods or materials or the processing of such goods or materials by physical or chemical change. (j) "Modernization" means the upgrading of existing facilities which increase the productive input or output, updates the technology or substantially lowers the unit cost of the operation. Modernization may result from the construction, alteration, or installation of buildings, structures, fixed machinery or equipment. It shall not be for the purposes of reconditioning, refurbishing or repairing. (k) "New Facility" means a property previously undeveloped which is placed in service by means other than or in conjunction with expansion or modernization. (1) "Other Basic Industry" means buildings or structures including fixed machinery and equipment not elsewhere described, used or to be used for the production of products or services. (m) "Regional Distribution Center Facility" 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, from which a majority of revenues generated by activity at the facility are derived from outside Tarrant County. (n) "Regional Entertainment/Tourism Facility" means buildings and structures, including fixed machinery and equipment, used or to be used to provide entertainment and/or tourism related services, from which a majority of revenues generated by activity at the facility are derived from outside Tarrant County. T.HiII /Resolutn.Chp Page 2 "Regional Retail Facility" means buildings and structures including fixed machinery and equipment, used or to be used to provide retail services from which a majority of revenues generated by activity at the facility are derived from outside Euless. "Regional Service Facility" means buildings and structures, including fixed machinery and equipment, used or to be used to provide a service, from which a majority of revenues generated by activity at the facility are derived from outside Tarrant County. "Reinvestment Zone - Municipality Designated" means any area which lies within the taxing jurisdiction of the City of Euless and has been designated a reinvestment zone for tax abatement purposes. It is the intent of the Euless City Council to provide tax abatement within municipality designated reinvestment zones as long as the municipality granted tax abatement is in concert with the tax abatement guidelines contained herein. (r) "Research Facility" means buildings and structures, including fixed machinery and equipment, used or to be used primarily for research and experimentation to improve or develop new tangible goods or materials or to improve or develop the production processes thereto. Section2 ABATEMENT AUTHORIZED (a) Authorized Facility. A facility may be eligible for abatement if it is a: - Manufacturing Facility, - Research Facility, - Regional Distribution Center Facility, - Regional Service Facility, - Regional Entertainment/Tourism Facility, - Regional Retail Facility, or - Other Basic Industry. (b) Authorized Date. A facility shall be eligible for tax abatement if it has applied for such abatement prior to the commencement of construction, provided, that such facility meets the criteria granting tax abatement in reinvestment zones created in the City of Euless pursuant to the guidelines and criteria adopted by the City Council. (c) Creation of New Value. Abatement may only be granted for the additional value of eligible property improvements made subsequent to and listed in an abatement agreement between the City of Euless and the property owner and /or lessee, subject to such limitations as the City Council may require. (d) New and Existing Facilities. Abatement may be granted to new facilities and improvements to existing facilities for purposes of modernization and expansion. (e) Eligible Property. Abatement may be extended to the value of buildings, structures, fixed machinery and equipment, site improvements plus that office space and related fixed improvements necessary to the operation and administration of the facility. (1) Ineligible Property. The following classes of property shall be fully taxable and ineligible for abatement: Land, - Inventories, - Supplies, - Furnishings or other forms of movable personal property, - Vehicles, vessels, or aircraft, T.Hill /Resolutn.Chp Page 3 - Deferred maintenance investments, - Residential property, - Property that is associated with any activity that is illegal under federal, state or local law, - Property owned or used by the State of Texas or its political subdivisions, - Property owned by any organization which is owned, operated or directed by a political subdivision of the State of Texas. (g) Leased Facilities. If an authorized facility eligible for tax abatement is leased, the agreement shall be executed with both the lessor and the lessee. (h) Value and Term of Abatement. Abatement shall be granted effective with the January 1 valuation date immediately following the date of execution of the agreement. The value and term of abatement on new eligible property shall be determined as follows: (i) The value of the abatement may not exceed that indicated in Table A, based on the investment by the business in eligible property described in Section 2(e), above. The City Council, or its designated representative, shall work with the applicant, prior to the execution of an abatement agreement, to determine the exact schedule for the abatement. Under no circumstances shall the value of the abatement exceed 100 percent of the value of the eligible property in a single year, and the duration of an abatement agreement shall not exceed 10 years or one -half (1/2) the economic life of the eligible property, whichever is less. Economic Qualification. In order to be eligible to receive tax abatement the applicant must meet the following qualifications. *(1) For a new facility (with the exception of a regional retail facility), be reasonably expected to invest not Tess than one million dollars ($1,000,000) in the facility (including both eligible and ineligible property) within three years from the commencement of construction, and be expected to create employment for not less than 10 persons associated with the production of goods and services at the authorized facility on a full -time, permanent basis in the City of Euless. *(2) For an expanded or modernized facility (excluding regional retail facilities), be reasonably expected to invest not less than one million dollars ($1,000,000) in the facility (including both eligible and ineligible property) within three years from the commencement of construction, and be expected to create or retain employment for not Tess than 10 persons associated with the production of goods and services at the authorized facility on a full -time, permanent basis in the City of Euless. (3) For regional retail facilities, be reasonably expected to invest not less than two million dollars ($2,000,000) in the facility (including both eligible and ineligible property) within three years from the commencement of construction, and be expected to create employment for not Tess than 10 persons associated with the production of goods and services at the authorized facility on a full -time, permanent basis in the City of Euless. (4) Two or more part-time, permanent employees totalling an average of not Tess than 40 hours per week may be considered as one full -time, permanent employee. *(5) Companies seeking to qualify for tax abatement on the basis of job retention shall document that without the creation of a reinvestment zone and /or tax abatement, the company will either reduce or cease operations. (6) The new construction, expansion or modernization shall not primarily have the effect of transferring the facility from one part of the City of Euless to another. T.Hill /Resolutn.Chp Page 4 (j) 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 2(f), above, shall be fully taxable, (2) the base year value of existing eligible property as determined each year shall be fully taxable, (3) and the additional value of new eligible property shall be taxable in the manner described in Section 2(h), above. (k) Conflict of Interest. Property that is in a reinvestment zone and that is owned or leased by a member of the governing body or the planning and zoning commission of the City of Euless shall be excluded from property tax abatement. Section 3 APPLICATION (a) Any present or potential owner of taxable property in Euless may request the creation of a reinvestment zone and tax abatement by filing a written request with the Mayor or his designated representative. (b) The application shall consist of a completed application form accompanied by the following: (1) A general written description of the proposed use and the general nature and extent of the modernization, expansion or new improvements to be undertaken. (2) A descriptive list of the improvements that will be a part of the facility. (3) A map and property description. (4) A time schedule for undertaking and completing the planned improvements. (5) Such financial and other information as deemed appropriate by the City Council for purposes of evaluating the application. (c) Upon receipt of a completed application, the Mayor shall notify, in writing, the presiding officer of the governing body of each affected jurisdiction. Before acting upon the application, the City Council shall, through public hearing, afford the applicant, designated representatives of any affected taxing jurisdiction, and the general public opportunity to show cause why the abatement should or should not be granted. Notice of the public hearing shall be clearly identified on a City Council agenda to be posted in accordance with the Texas Property Redevelopment and Tax Abatement Act and the Texas Open Meetings Act. (d) After receipt of an application for creation of a reinvestment zone and application for tax abatement, the City Council, or its designee, shall prepare a feasibility study setting out the impact of the proposed reinvestment zone and tax abatement. The feasibility study shall include, but not be limited to, an estimate of the economic effect of the creation of the zone and the abatement of taxes and the cost/benefit to the City and other affected jurisdictions. (e) A request for a reinvestment zone for the purpose of tax abatement shall not be granted if the City Council finds that the request for abatement was filed after the commencement of construction, alternation, or installation of improvements related to a proposed expansion, modernization or new facility authorized as eligible under these guidelines. T. Hill /Resolutn.Chp Page 5 (f) Variance. Request for variance from provisions of these guidelines may be made in written form to the Mayor, or his designated representative, provided, however, that the term and value of abatement described in Section 2(h), above, may not be increased. Such request shall include a complete description of the circumstances explaining why the applicant should be granted a variance. Approval of a request for variance requires a three- fourths (3/4) vote of the governing body. Section 4 PUBLIC HEARING (a) Should an affected jurisdiction be able to show cause in the public hearing why the grant of abatement will have a substantial adverse effect on its bonds, tax revenue, service capacity or the provision of services, that showing shall be reason for the City to deny any designation of the reinvestment zone, the granting of abatement, or both. (b) Neither a reinvestment zone nor an abatement agreement shall be authorized if it is determined that: (1) There would be a substantial adverse effect on the provision of government services or tax base, (2) the applicant has insufficient financial capacity, (3) planned or potential use of the property would constitute a hazard to public safety, health or morals, or (4) planned or potential use of the property would violate other codes or laws. Section 5 AGREEMENT (a) After approval, the City shall formally execute an agreement with the owner of the facility and/or lessee, which shall include the following: (1) Estimated value to be abated and the base year value, (2) Percent of value to be abated each year as provided for in Section 2(h), above, (3) The commencement and termination dates of the abatement, (4) The proposed use of the facility, nature of the construction, time schedule for construction and commencement of operations, map, property description, and improvements as listed in the application under Section 3(b), above, (5) Contractual obligations in the event of default, violation of terms and conditions, delinquent taxes, recapture, administration and assignment as provided for in Sections 2(a), 2(g), 2(h), 6, 7 and 8, or other provisions that may be required for uniformity or by state law, and (6) Amount of investment in, and average number of jobs associated with, the facility during the abatement period. T.HiII /Resolutn.Chp Page 6 (b) Such agreement shall normally be executed within 60 days after the applicant has forwarded all necessary information and documentation for evaluation of the application to the City. Section 6 RECAPTURE (a) In the event that the facility is completed and begins producing goods and/or services, but subsequently discontinues such production for any reason excepting fire, explosion or other casualty or accident or natural disaster for a period of one year during the abatement period, then the agreement shall terminate and so shall the abatement of taxes for all prior years, and such recaptured taxes shall be paid to the City within sixty (60) days from the date of termination. (b) Should the City determine that the company or individual is in default according to the terms and conditions of the abatement agreement, the City shall notify the company or individual, in writing, at the address stated in the agreement, and if such non - compliance is not resolved within sixty (60) days from the date of such notice, then the agreement shall be terminated. (c) In the event that the company or individual: (1) Allows its ad valorem taxes owed the City or other affected jurisdiction 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 resolve such violations within sixty (60) days from the date of written notice of such violations, the agreement then may be terminated and all taxes previously abated by virtue of the agreement will be recaptured and paid within sixty (60) days of the termination. Section 7 ADMINISTRATION (a) The Chief Appraiser of the County shall, as a normal consequence of his duties, annually determine an assessment of the real and personal property comprising the reinvestment zone. Each year, the company or individual receiving abatement shall furnish the assessor with such information as may be necessary for the abatement, including the number of new or retained employees associated with the facility. Once the value has been established, the Chief Appraiser shall notify the affected jurisdictions which levy taxes of the amount of the assessment. (b) The agreement shall stipulate that employees and/or designated representatives of the City will have access to the property during the term of the abatement agreement to inspect the facility to determine if the company or individual is in compliance with the terms and conditions of the abatement agreement. All inspections will be made only after notification of not less than twenty four (24) hours and will only be conducted in such manner as not to 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 present and in accordance with the company's safety standards. T.Hill /Resolutn.Chp Page 7 (c) Upon completion of construction, the City shall annually evaluate each facility receiving abatement to ensure compliance with the agreement and report possible violations to the City Council and City Attorney. (d) All proprietary information required by the City for purposes of monitoring compliance by a company with the terms and conditions of an abatement agreement shall be considered confidential. Section 8 ASSIGNMENT (a) Abatement may be transferred and assigned by the holder to a new owner or lessee of the same facility upon the approval 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 by the execution of a new contractual agreement with the City of Euless. (b) The expiration date of the new contractual agreement shall not exceed the termination date of the abatement agreement with the original owner and/or lessee. (c) 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 of Euless or any affected taxing jurisdiction for outstanding taxes or other obligations. Section 9 SEVERABILITY AND LIMITATION In the event that any section, clause, sentence, paragraph or any part of these Guidelines and Criteria shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid such invalidity shall not affect, impair, or invalidate the remainder of these Guidelines and Criteria. Section 10 SUNSET PROVISION (a) The "Guidelines and Criteria" are effective upon the date of their adoption and will remain in force for two years, at which time all reinvestment zones and tax abatement contracts created pursuant to its provisions will be reviewed by the City Council of Euless to determine whether the goals of the abatement program have been achieved. Based upon that review, the "Guidelines and Criteria" may be modified, renewed or eliminated. (b) This policy is mutually exclusive of existing Industrial District Contracts and owners of real property in areas deserving of special attention as agreed by the affected jurisdictions. (c) Prior to the date for review, as defined above, the "Guidelines and Criteria" may be modified by a three - fourths vote of the City Council, as provided for in the Texas Property Redevelopment and Tax Abatement Act. T.Hill /Resolutn.Chp Page 8 TABLE A TERM AND VALUE OF ABATEMENT SCHEDULE Newly Created Value Maximum Tax Abatement over 10 year period $3,000,000+ 50% $2,000,000 - $2,999,999 35% $1,000,000 - $1,999,999 20% If more than $5,000,000 in taxable sales are generated per year the council may authorize an additional property tax abatement percentage to any of the amounts listed above. T.Hill /Resolutn.Chp Page 9 ADOPTED at a regular meeting of the Euless City Council on the 8th day of October ,19 91 , by a vote of 5 ayes, o nays, and o abstentions. APPROVED: :2'‘I-e'L-e4-6$41. /-LAvLX4 Ha old D. Samuels, Mayor ATTEST: Susan Crim CMC, City Secretary T.Hill /Resolutn.Chp Page 10