CC Resolution No. 2786 RESOLUTION NO. 2786
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS, CONSENTING TO THE ASSIGNMENT OF A TAX ABATEMENT
AGREEMENT FROM PORT 10 LOGISTICS TO HS PORT 10 LOGISTICS
INVESTORS, LLC; AND PROVIDING FOR THE PUBLICATION AND
EFFECTIVE DATE THEREOF.
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WHEREAS, Port 10 Logistics, LLC ("Owner") entered into a Tax Abatement Agreement
for Certain Taxable Property Located in the Port 10 Logistics Reinvestment Zone with the City of
Baytown, Texas (the "City") dated March 29, 2019 (the "Tax Abatement Agreement'), attached
hereto as Exhibit"A"; and
WHEREAS, the Owner of the New Facility under the Tax Abatement Agreement has
completed the Improvements contemplated thereunder and is not in default under the terms of the
Tax Abatement Agreement, nor is Owner indebted to the City for delinquent ad valorem taxes or
other obligations; and
WHEREAS, pursuant to Article X of the Tax Abatement Agreement, the Owner may
assign its rights and obligations to a new owner of the New Facility with the prior written consent
of the City Council, which consent shall not be unreasonably withheld; and
WHEREAS, Owner wishes to assign all of its rights, obligations, duties, title, and interest
in, under and to the Tax Abatement Agreement to the new owner, HS PORT 10 LOGISTICS
INVESTORS, LLC ("Assignee"), and Assignee, as the new Owner of the New Facility, wishes to
accept such assignment and irrevocably and unconditionally assume all of the duties and
obligations of the assignor as set in the Tax Abatement Agreement; NOW THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS:
Section 1. That the facts and opinions in the preamble of this Resolution are true
and correct.
Section 2. That the City Council of the City of Baytown, Texas, hereby gives its
written consent to the assignment of the Tax Abatement Agreement to Assignee under the
following conditions:
(1)the Assignee shall irrevocably and unconditionally assume all the duties
and obligations of the Owner upon the same terms and conditions as set out
in the Tax Abatement Agreement; and
(2)the Assignee is not indebted to the City for delinquent ad valorem taxes
or other obligations.
Section 3. That upon execution of the assignment,the Assignee will promptly send
such assignment to the City and include the address of the Assignee pursuant to the notice
provision, Section XI of the Tax Abatement Agreement.
Section 4. That it is hereby found, determined and declared that a sufficient written notice
of the date, hour, place, and subject of this meeting of the City Council was posted at a place
convenient to the public at the City Hall of the City for the time required by law preceding this
meeting, as required by the Open Meetings Act, Chapter 551, Texas Government Code, and that
this meeting has been open to the public as required by law at all times during which this resolution
and the subject matter thereof has been discussed, considered and formally acted upon.
INTRODUCED, READ and PASSED by the affirmative vote of the City Council of the
City of Baytown this the 26th day of May, 2022.
DON CAPETIL O, Mayor
ATTEST: �oF gp,YTodyN rF
o i
e
ANGELA J CKSON, City
APPROVED AS TO FORM:
TREVOR FANNING, Interim City Attorney
R Karen Anderson RESOLUTIONS CITY COUNCIU2022'2022.05.26 Port IOAssignment.docx
2
EXHIBIT "A"
CITY OF BAYTOWN
WTOWN OFFICE OF THE CITY CLERK 2401 Market Street
P.O. Boa 424
Baytown,Texas 77S22 0424
(281)420-6504
March 29, 2019
CM/RRR#""9402 4315 8190 92714
Port 10 Logistics, LLC
Attn: Mr. Alan D. Feinsilver
1885 S. James Place I Suite 1100
Houston, Texas 77056
Re: Tax Abatement Agreement
Dear Mr. Feinsilver:
Pursuant to City of Baytown Ordinance No. 14,038 adopted March 28, 2019 by City Council for the City
of Baytown, enclosed please find copy of the Tax Abatement Agreement for Certain Taxable Property
located in the Port 10 Logistics Reinvestment Zone having been signed by City Manager, Mr. Richard L.
Davis dated March 29,2019.
Should you require anything further do not hesitate in contacting or Legal Department to 281-420-6506.
ossistant/PT
e
City of Baytown
2401 Market Street
Baytown,Texas 77520
281-420-6504
281-420-5891 (fax)
Enclosure
cc: Legal Department
www.baytown.org
1
1
City of Baytown
Tax Abatement Agreement for Certain Taxable Property
located in the
Port 10 Logistics Reinvestment Zone
THE STATE OF "TEXAS ti
COUNTY OF HARRIS
1 his Tax Abatement Agreement ("Agreement") is made and entered into by and between
City of Baytoum. Texas ("City"), and Port 10 Logistics, LLC. a Delaware limited liability
company ("Owner"). the owner of taxable property in Harris County, Texas, located in Port 10
Logistics Reinvestment Zone ("Reinvestment Zone").
I
Authorization
This Agreement is authorized by (i) the Texas Property Rede-velopment and Tax
Abatement Act. (ii) Resolution No. 2570 of the City Council of the City of Baytown, Texas, and
(iii) Ordinance No. 13,709 of the City Council of the City of Baytown, 7 exas, providing for the
designation of the Reinvestment Zone.
I l
I?ef nitic�iis
For the purpose of this Agreement, the definitions set forth in Resolution No. 2570 of the
City Council of the City of Baytown, Texas, which is attached hereto as Exhibit "A" and
incorporated herein for all intents and purposes (the "Guidelines"). shall govern unless it is
apparent from the context that the term as used herein has a different meaning or unless such
word is specifically defined in this article. All other words shall be given their common,
ordinary meanings,as the context may reasonably suggest.
a. Abatement means the full or partial exemption from ad valorem taxes of certain property
in the Reinvestment Zone designated for economic development purposes.
b. Abatement Period means the period of time commencing January 1, 2020. and ending
upon the sooner of(i) the fifth anniversary of the Effective Date of Abatement or(ii) the
termination of this Agreement pursuant to the provisions of Article VII hereof.
Tax Abatement Agreement, Page 1
i
r
C. Application means the Owner's Application for Tax Abatement in Baytown. 1 exas.
which is attached hereto as Exhibit "B" and incorporated herein for all intents and
purposes
d. Base Year Value means the appraised value of the property within the Reinvestment Lone
as certified by the Harris Count) Appraisal District as of January 1, 2019. plus the
agreed-upon value of eligible propert) improvements made after such January 1 but
before the execution of the Agreement
e. Construction Phase means a material and substantial improvement of the property which
represents a separate and distinct construction operation undertaken for the purpose of
erecting the Improvements.
f l ffective Date of Abatement means Januar) 1, 2020
g. Eligible Property means the buildings, structures, fixed machinery, equipment and
process units, site improvements, and that office space and related fixed improvements
necessary to the operation and administration of the New facility as hereinafter defined.
h Improvements means the buildings or portions thereof and other improvements, including
fixed machinery, equipment and process units, used for commercial or industrial
purposes that are erected by the Owner on the property after the execution of this
Agreement.
i. Ineligible Property means that property described in Section 2(e)of the Guidelines.
j. I<e►+ Eligible Property means Eligible Property, the construction of which commences
subsequent to the date of execution of this Agreement. A list of the New Eligible
Property is set forth in the Application. During the Construction Phase of the New
Eligible Property,the Owner may make such change orders to the New Fligible Property
as are reasonably necessary to accomplish its intended use.
k. New Facility has the meaning given to that term in Article VI hereof.
1. Subject Property has the meaning given to that term in Article Ill hereof
Ill
Property
The Reinvestment Zone is an area within Harris County, Texas, more fully described in
Exhibit "C." which is attached hereto and made a part hereof for all intents and purposes. The
property subject to this Agreement (the "Subject Property") is comprised of a tract of land
totaling approximately 246.7988 acres of land, which is located within the Reinvestment Zone,
assigned Hams County Appraisal District Account Numbers 0591430000422 and
0591510050008 and more fully described in the Application,
Tax Abatement Agreement,Page 2
A .
r
The values hereinafter established for tax year 2019 by the Barris County Appraisal
District, plus $0.00 representing the agreed-upon value of Improvements made after
January 1, 2020. but before the execution of this Agreement, shall be the Base Year Values for
purposes of this Agreement.
i IV
Value and Term of Agreement
Abatement on the Improvements shall be permitted only for the value of New Eligible
Property as defined in Article II of this Agreement and as specifically listed in Exhibit "I3." This
Abatement shall be granted effective January 1. 2020 (the "Effective Date of Abatement"). The
I portion of NcA Eligible Property %alue to be abated shall be in accordance �%ith the following
schedule:
2020 100/o 0
2021 100%
2022 ..80%
2023 -
60%
2024 50% _
I he abated value shall be the Nalue of Nest Eligible Property, as adjusted each year.
V
Taxability
During the Abatement Period,taxes shall be payable as follows:
(1) The alue of Ineligible Property shall be fully taxable;
(2) The Base Year Value of Eligible Property existing prior to the execution of this
Agreement, as the same may be adjusted each year, shall be fully taxable; and
(3) The additional value of Nevi• Eligible Property shall be taxable in the manner as
described in Section 2(g) of the Guidelines and in accordance with Article IV of
this Agreement. The estimated value of the New Eligible Property to be abated
pursuant to the Agreement is$4,400.000,
The City shall enter into only one tax abatement agreement for the New Facilitti
described in this Agreement during the existence of the Reinvestment Zone as designated by
Ordinance No. 13,709.
Tax Abatement Agteement Page 3
1 _
V1
Contemplated Improvements
As set forth in the Application, the Owner represents that it will construct a 125.906
square-foot, front-load distribution/warehouse facility, that it reasonably expects will cost
approximately $4,400,000 which shall be used for commercial or industrial purposes ("Ne)A
Facility").
The New Facility,as well as any other Improvements within the Subject Property, shall
be completed in accordance with all applicable laws,ordinances,rules or regulations, including
the City's zoning ordinance. The New Facility is expected to initiate or further the active
conduct of trade or business within the Reinvestment Zone.
The Owner further agrees that construction of the Improvements will begin on or before
June 30, 2019,with completion on or before December 31, 2019.
Vll
Emplo, ment
It is contemplated that this construction project will result in the creation of five (5)jobs
and approximately fifty (50) construction jobs during the Construction Phase of the New
Facility. The project is not expected solely to transfer, or primarily have the effect of
transferring,employment from one part of the City of Baytown to another.
The Owner, on or before March lst of each year of this Agreement, shall submit to the
Harris Count) Appraisal District and the City a January employee count for the New Facility
which corresponds to the employment count reported in the Owner's Employer's Quarterly
Report to the Texas Workforce Commission. The Owner shall also on or before March lst of
each year submit a separate notarized letter certifying the number of jobs created or retained as a
direct result of the abated improvements and the number of employees in other facilities located
within the City. These submissions shall be used to determine abatement eligibility for that year
and shall be subject to audit if requested by the City. The Owner's failure to submit the counts
and notarized letter shall result in the ineligibility to receive an abatement for that year and the
termination of the tax abatement agreement and any abated taxes subject to recapture pursuant to
Article ViII.
VilI
Event of Default
A. In the event the New Facility is completed and begins operations as a service and
distribution facility, but subsequently discontinues such operations for any reason
excepting fire, explosion or other casualty, accident or natural disaster, for a period of
one-year during the Abatement Period, then this Agreement shall be automatically
terminated. In the event of termination pursuant to the provisions of this paragraph, the
Tax Abatement Agreement,Page 4
Abatement of taxes and payments for the calendar year during which the Nea Facility
discontinues operations shall terminate, but there shall be no recapture of prior years'
taxes and payments abated bx virtue of this Agreement. The taxes and payments
I otherwise abated for the calendar)ear during which the New Facility no longer produces
shall be paid to the City prior to the delinquency date for such year or within sixty (60)
days from the date of termination, whichever occurs first. The Owner shall notify the
City at the address in Article XI within ten (10) days of any discontinuation, stating the
reasons for the discontinuation and the projected length of the discontinuation Should
Owner fail to comply with this subsection, this Agreement shall be terminated
immediately and all tares pre%iousl) abated by virtue of this Agreement shall be
recaptured and paid within sixty (60) days of the termination. An) and all recaptured
taxes not paid within the 60-day period prescribed hercinabo"e shall accrue interest and
penalties as set forth in Section B of this Article.
B. If the Owner is in default of an) term or condition of this Agreement or of the Guidelines
during the Abatement Period co�ercd by this Agreement, the Owner must notify the City
in waiting at the address stated in Article XI hereof within ten (10) days from the default
and cure such default within sixty (60) days from the date of such default ("Cure
Period") If the City determines that Owner has failed to comply with this subsection, the
Agreement shall be terminated immediately and all taxes previously abated by virtue of
the Agreement ma) be recaptured together with interest at 6% per annum calculated from
the effective date of the Agreement and paid %within sixty (60)days of the termination. If
the City does not receive full payment within said sixty(60)days, a penalty of 15%of the
total amount abated shall be added.
C In the event that Owner (i) allows its ad valorem taxes owed the City to become
delinquent and fails to timely and properly to follow the legal procedures for their protest
and/or contest or(ii) violates any of the terms and conditions of this Agreement and fails
to cure during the Cure Period. this Agreement will terminate automatically with no
further notice to the Owner or opportunity to cure the default being necessary. If this
Agreement is terminated, all taxes previously abated by virtue of this Agreement will be
recaptured and paid within sixty (60) days of the termination, and penalties and interest
shall be assessed as set forth in Section B of this Article.
IX
Administration
This Agreement shall be administered on behalf of the Cit) b) the City Manager or his
designee pursuant to the direction of the City Council. The Owner shall allow employees and/or
representatives of the City who have been designated by the City Manager to have access to the
New Facility during the term of this Agreement to inspect the New Facility to determine
compliance with the terms and conditions of this Agreement. All inspections required herein
will be made only after giving of twenty-four(24) hours' prior notice and will only be conducted
in such manner as will not unreasonably interfere with the construction and/or operation of the
Tax Abatement A reern-ug,Page 5
i
New Facility. All inspections required herein %rill be made with one or more representatives of
the Owner and in accordance with the Owner's safet) standards.
Upon completion of the contemplated construction, the City Manager or his designee
shall annual!) evaluate the New Facility to ensure compliance with the terms and pro%isions of
this Agreement and shall report possible defaults to the City Council and the City Attorney.
The Chief Appraiser of the Harris Count) Appraisal District shall annually determine (i)
the taxable value after giving effect to the terms of this Agreement of the real and personal
property located on the Subject Property and (ii) the full taxable value without Abatement of the
real and personal property located on the Subject Property. T he Chief Appraiser shall record
both the abated taxable value and the full taxable %alue in the appraisal records. The full taxable
value figure listed in the appraisal records shall be used to compute the amount of abated taxes
that are required to be recaptured and paid in the ex ent this Agreement is terminated in a manner
that results in recapture. Each year the Owner shall furnish the Chief Appraiser with such
information outlined in Chapter 22 of the Texas Tax Code, as may be necessary for the
administration of the Abatement specified herein.
X
Assianment
1 he Owner may assign its rights and obligations under this Agreement to a new owner of
the New Facility with the prior written consent of the City Council, which consent shall not be
unreasonably withheld. Any assignment shall provide that the assignee shall irrevocably and
unconditionally assume all the duties acid obligations of the assignor upon the same terns and
conditions as set out in this Agreement. Any assignment of this Agreement shall be to an entity
that contemplates the same Improvements to the property, except to the extent such
Improvements have been completed. No assignment shall be approved if the assignor or the
assignee is indebted to the City for delinquent ad valorem taxes or other obligations.
X1
Notice
Any notice required to be given under the provisions of this Agreement shall be in
writing and shall be duly served when(i) it is personally delivered or(ii) it is deposited.enclosed
in a wrapper with the proper postage prepaid thereon, and duly registered or certified, return
receipt requested, in a United States post office, addressed to the City or the Owner, as
appropriate, at the following addresses. If mailed,any notice or communication shall be deemed
to be received three days after the date of deposit in the United States mail. Unless otherwise
provided in this Agreement,all notices shall be delivered to the following addresses:
Tax Abatement Aereemen, Page 6
1
t
i
i
Ovwmer: Port 10 Logistics, LLC
1885 S. James Place, Suite 1100
Houston. Texas 77056
Attention: Alan D. Feinsilver
City- City of Baytown
P. U. Box 424
Rayto%km. Texas 77522-0424
Attention: City Manager
Either party may designate a different address by giving the other party ten (10) days'
written notice.
Xll
Non-Waiver
Failure of the City to insist on the strict performance of any of the agreements herein or
to exercise any rights or remedies accruing thereunder upon default or failure of performance
shall not be considered a waiver of the right to insist on, and to enforce by an appropriate
remedy, strict compliance with any other obligation hereunder to exercise any right or remedy
occurring as a result of any future default or failure of performance.
X111
Venue
This Agreement shall in all respects be interpreted and construed in accordance with and
governed by the laws of the State of I eras, regardless of the place of its execution or
performance. The place of making and the place of performance for all purposes shall be
Baytowm, Harris County, Texas,
X1V
Severability
All parties agree that should any provision of this Agreement be determined to be invalid
or unenforceable, such determination shall not affect any other term of this Agreement, which
shall continue in full force and effect-
Iar Abatement Aprecment,Page 7
I
XV
Date of Agreement, Condition to Effectiveness
The Cit) executes this Agreement by and through the City Manager, acting pursuant to
Ordinance No.[40Wof the City of Baytown, and this Agreement shall become effective on the
date this Agreement is signed by the City Manager.
This Agreement has been executed by the parties in multiple originals, each having full
force and effect.
CITY OF BAYTOWN
RICHAR , , City Manager
AMEST
I grim BRYSCH,City Jerk y t`
y 0
7 L
1I0
APPROVED AS I'O FORM:
0 7
e4
0
0000lO000�
ACIO RAMIREZ, SR., ty Attorney
PORT 10 LOGISTICS,LLC,a
Delaware limited liability company
(Signature)
fT 1.- ) b -FFF I P-% ll.m"
(Printed Name)
(Title)
Tax Abatement Agreement.Page 8
i
AI TEST:
{ (Signature) ti
(Printed Name)
(Title)
COI3F501 Legal•Karen Fde,Contracb.Pon 10 Tax Abatement Agreement It TaxAbatementAgeement doex
Tax Abatelncnt Agreement, Page 9
J Exhibit "A"
TAX ABATEMENT GUIDELINES SUMMARY
OBJECTIVES Primary job creation--target industries.
Encourage LEEDS development.
Amount abatement-- minimum to be competitive.
Fair to taxing jurisdictions-- It is a local option.
Fair to existing business-- modernization,expansion.
Regional cooperation --similar abatements.
Flexibility--toughly enforced variance procedure.
TERMS Year 1 100%
Year 2 100%
Year 3 80%
Year 4 60%
Year 5 50%
Year 6 0%
FACILITIES Manufacturing.
THAT QUALIFY Service&distribution.
LEEDO certified office building.
Regional entertainment.
Research and development.
Other basic industry.
Class"A"office.
AUTHORIZED New facilities.
INVESTMENTS Expansion.
Modernization.
ABATED Buildings and structure.
Fixed machinery and equipment.
Site improvements.
Office space to administer plant.
NOT ABAI I'D Land.
Existing improvements.
Construction-in-progress.
Personal property.
Hotels.
Housing.
Pipelines.
Gas and fluid storage.
Electrical generating facilities.
Deferred maintenance.
Property with useful life less than fifteen(15)years.
ECONOMIC Minimum one million dollar($1,000,000) investment.
CRITERIA Retain or create at least five(5)jobs.
No serious adverse affect on jurisdictions.
Tax Abatement Guidelines Summary,Page Solo
GUIDELINES AND CRITERIA
FOR REINVESTMENT ZONES
SECTION 1
DEFINITIONS
(a) "Abatement" means the full or partial exemption from ad valorem taxes of certain real
property in a reinvestment zone designated for economic development purposes.
(b) "Class A office"is characterized as buildings that have excellent location and access,attract
high quality tenants,and are managed professionally.Building materials are high quality and
rents are competitive with other new buildings. Examples are the office buildings that are
found in the heart of the business or financial district with lots of brass and glass fixtures and
huge,expensive lobbies and they are usually steel-framed and tall. They are often occupied
by banks, law firms, investment banking companies,and other high-profile companies.
(c) "Eligible Jurisdiction"means and county,municipality,school district or college district that
levies ad valorem taxes upon and provides services to property located within the proposed
or existing reinvestment zone.
(d) "Agreement"means a contractual agreement between a property owner and/or lessee and an
eligible jurisdiction for the purposes of tax abatement.
(e) "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
made after January I''but before the execution of the Agreement,or the sales price, if the
property was conveyed subsequent to January 1 ', plus the agreed upon value of eligible
property improvements made after January I", whichever is greater.
(f) "Deferred Maintenance"means improvement necessary for continued operations which do
not improve productivity or alter the process technology.
(g) "Economic Life" means the number of years a property improvement is expected to be in
service in a facility.
(h) "Expansion"means the addition of buildings,structures,fixed machinery or equipment for
purposes of increasing production capacity.
(i) "Facility"means property improvements completed or in the process of construction which
together comprise an integral whole.
(j) "Manufacturing Facility" means buildings and structures, including fixed machinery and
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.
Guidelines and Criteria for Reinvestrnent Zones,Page 1
(k) "Modernization"means the replacement and upgrading of existing facilities which increases
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 purpose of
reconditioning,refurbishing or repairing.
(1) "New Facility" means a property previously undeveloped which is placed into service by
means other than or in conjunction with expansion or modernization.
(m) "Other Basic Industry" means buildings and structures, including fixed machinery and
equipment not elsewhere described, used or to be used for the production of products or
services which primarily serve as a market outside the Houston Consolidated Metropolitan
Statistical Area and result in the creation of new permanent jobs and bring new wealth in.
(n) "Distribution Center Facility"means buildings and structures,including fixed machinery and
equipment, used or to be used primarily to receive, store, services or distribute goods or
materials owned by the facility operator.
(o) "Regional Entertainment Facility" means buildings and structures, including fixed
machinery and equipment,used or to be used to provide entertainment through the admission
of the general public.
(p) "Service Facility"means buildings and structure,including fixed machinery and equipment,
used or to be used to service goods.
(q) "Research Facility" means buildings and structures, including fixed machinery and
equipment, used or to be used primarily for research or experimentation to improve or
develop new tangible goods or materials or to improve or develop the production processes
thereto.
(r) "LEEDS" means Leadership in Energy and Environmental Design (LEEDS), which
encourages the use of certifiable systems,materials and practices designed to reduce energy
consumption and utilize recycled material.
SECTION 2
ABATEMENT AUTHORIZED
(a) Authorized Facility. A facility may be eligible for abatement if it is a Manufacturing
Facility, Research Facility, Distribution Center Facility, Class A office, Service Facility,
Regional Entertainment Facility,Research and Development Facility,or LEEDS certified
office building.
(b) Creation of New Value. Abatement may only be granted for
Guidelines and Criteria for Reinvestment Zones,Page 2
l. the additional value of eligible property improvements made subsequent to and listed
in an abatement agreement between the City of Baytown and the property owner and
lessee(if required),or
2. the marginal costs to secure LEEDS®certification for the building,
subject to such limitations as City Council and the property tax code 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 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 or LEEDS
certified building. The value of all property shall be the appraised value for each year, as
finally determined by the applicable appraisal district.
(e) Ineligible Property. The following types of property shall be fully taxable and ineligible for
abatement: land; inventories; supplies; tools; furnishings; and other forms of movable
personal property; vehicles; vessels; aircraft; housing; hotel accommodations; deferred
maintenance investments;property to be rented or leased except as provided in Section 2(f);
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;
property which has an economic life of less than fifteen(15)years;and property owned or
used by the State of Texas or its political subdivision or by any organization owned,operated
or directed by a political subdivision of the State of Texas, or any property exempted by
local,state or federal law. When such exempted property includes manufacturing machinery
and equipment listed in the Investment Schedule(as required in Section 3(b)),then the value
of such property may not be included toward the achievement of the investment or valuation
thresholds set out in the abatement agreement.
{17 Owned/Leased Facilities. If a leased facility is granted abatement, the agreement shall be
executed with the lessor and the lessee.
(g) 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. One hundred
percent(100%)of the value of new eligible properties shall be abated for the first two (2)
years, followed by eighty percent(80%)abatement for the third year, sixty percent(60%)
abatement for the fourth year and fifty percent(50%)for the fifth year. In no case shall the
period of abatement exceed five(5)years.
If a modernization project includes facility replacement,the abated value shall be the value
of the new unit(s) less the value of the old unit(s).
u'dehq riteria fa Reinvestment 7. n s,Page 3
(h) Economic Qualification. In order to be eligible for designation as a reinvestment zone and
receive tax abatement, the planned improvement:
(1) must be reasonably expected to increase the appraised value of the property in the
amount of one million dollars($1,000,000)after the period of abatement has expired;
(2) must be expected to directly create or prevent the loss of permanent full-time
employment, retain or create employment for at least five (5) people reasonably
required in order to operate the facility in an efficient manner, provided that this
employment qualification shall be satisfied on January 1 of the fourth year of the
abatement agreement and continue through the term of the abatement;
(3) must not be expected to solely or primarily have the effect of transferring
employment from one part of the City of Baytown to another. Competitive siting
analysis may satisfy this requirement; and
(4) must be necessary because capacity cannot be provided efficiently utilizing existing
improved property when reasonable allowance is made for necessary improvements.
(i) Taxability. From the execution of the abatement to the end of the agreement period,taxes
shall be payable as follows:
(1) The value of ineligible property as provided in Section 2(e)shall be fully taxable.
(2) The base year value of existing eligible property as determined each year shall be
fully taxable.
(3) The additional value of new eligible property shall be taxable in the manner
described in Section 2(g).
SECTION 3
APPLICATION
(a) Any present or potential owner of taxable property in the City of Baytown may request the
creation of a reinvestment zone or tax abatement by filing a written request with the City of
Baytown.
(b) The application shall consist of a completed application form accompanied by a general
description of the new improvements to be undertaken; a descriptive list of the
improvements for which an abatement is requested,a list of the kind,number and location of
all proposed improvements of the property, including the economic life of each and its
eligibility for a TCEQ exemption(if known);a map and legal description of the property;
Guidelines and Criteria for Rginyestmeni Zones,Page 4
and a time schedule for undertaking and completing the proposed improvements. The
applicant shall also include information pertaining to the reasons the abatement is necessary
in order to have the project undertaken in the City of Baytown. The applicant shall also
include a certification of the current number of permanent fulktime,part-time and contract
employees of the applicant,by category,employed in the City of Baytown at the time of the
application. In the event the project is to be located in a leased facility, the applicant shall
provide with the application the name and address of the lessor and a copy of the lease, if
executed,or option contract. In the case of modernization,a statement of assessed value of
the facilit), separately stated for real and personal property, shall be given for the tax year
immediately proceeding the application. The application form may require such financial
and other information as the City Council deems appropriate for evaluating the financial
capacity and other factors of the applicant.
(c) Upon receipt of a completed application, the City Manager of the City of Baytown or his
designee shall notify in writing the presiding officer of the governing body of each eligible
jurisdiction.
(d) After receipt of an application for creation of a reinvestment zone and application for tax
abatement, the City Council through its designated officer or employee shall determine
whether the application qualifies for an abatement under the terms of these guidelines and
criteria. Such determination may be delegated to an employee or City department. If it is
determined that an application qualifies for abatement,it shall be recommended to the City
Council that the applicant be notified in writing that subject to a public hearing,if applicable,
and approval of a contract by the City Council,the project qualifies for abatement.
(e) The City Council shall not establish a reinvestment zone or enter into an abatement
agreement if it finds that the request of the abatement was filed after the commencement of
earthwork,site preparation,construction,alteration,or installation of improvements related
to a proposed modernization,expansion or new facility.
(f) Variance. Requests for variance from the provisions of Subsections(a), (e)and(g)of
Section 2 may be made in written form to the City Manager, provided, however,the total
duration of an abatement shall in no instance exceed five (5) years. 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(%)vote of
the City Council.
SECTION 4
PUBLIC HEARING AND APPROVAL
(a) The City Council may not adopt an ordinance designating a reinvestment zone until it has
held a public hearing at which interested persons are entitled to speak and present evidence
for or against the designation. Not later than the seventh (7th) day before the date of the
Q_WAc roes and Uiteria for Reinvestment nes,Page 5
hearing notice of the hearing must be published in a newspaper having general circulation in
the municipality; and delivered in writing to the presiding officer of the governing body of
each taxing unit that includes in its boundaries real property that is to be included in the
proposed reinvestment zone.
(b) Prior to entering into a tax abatement agreement, the City Council may, at its own option,
hold a public hearing at which interested persons shall be entitled to speak and present
written materials for or against the approval of the tax abatement agreement.
(c) In order to enter into a tax abatement agreement,the City Council must find that the terms of
the proposed agreement meet these Guidelines and Criteria and that:
(1) there will be no substantial adverse affect on the provision of the jurisdiction's
service or tax base;and
(2) the planned use of the property will not constitute a hazard to public safety,health or
morals.
(d) Any applicant requesting a variance under Section 3(f)shall be approved by a vote of at least
three-fourths(1/4)of the City Council. No application which deviates from the requirements
of these Guidelines and Criteria shall be approved unless accompanied by a request for
variance as provided under Section 3(f).
SECTION 5
AGREEMENT
After approval the City Council shall formally pass an ordinance and execute an agreement
with the owner of the facility and lessee as required which shall include:
(1) the estimated value to be abated and the base year value;
(2) the percent of value to be abated each year as provided in Section 2(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 3(b).
(5) the contractual obligations in the event of default, violation of terms or conditions.
delinquent taxes, recapture, administration and assignment as provided in Section
2(a),2(f),2(g),6,7 and 8,or other provisions that may be required for uniformity or
compliance with state law,and;
Guidelines and Criteria for Reinvestment Zones,Page 6
I
(6) the amount of investment,increase in assessed value and the average number of jobs
involved as provided in Section 2(h)(2), and
(7) a requirement that the applicant annually submit to the appraisal district and the City,
a January employee count for the abated facility which corresponds to employment
counts reported in the facility's Employer's Quarterly Report to the Texas Workforce
Commission,and a separate notarized letter certifying the number of jobs created or
retained as a direct result of the abated improvements and the number of employees
in other facilities located within the City of Baytown. Submission shall be used to
determine abatement eligibility for that year and shall be subject to audit if requested
by the governing body.Failure to submit may result in the ineligibility to receive an
abatement for that year and the termination of the tax abatement agreement and
subject any abated taxes to recapture pursuant to Section 6 hereof.
Such agreement normally shall be executed within sixty (60) days after the application and all
I necessary information and documentation has been forwarded to the City Council.
i
SECTION 6
RECAPTURE
(a) In the event that the facility is completed and begins producing product or service, but
subsequently discontinues producing product or service for any reason excepting fire,
explosion or other casualty or accident or natural disaster of a period of one year during the
abatement period,the agreement shall terminate and so shall the abatement of the taxes for
the calendar year during which the facility no longer produces. The taxes otherwise abated
for that calendar year shall be paid to the City of Baytown within sixty(60)days from the
date of termination.The company or individual shal I notify the City in writing at the address
stated in the agreement within ten(10)days from any discontinuation,stating the reason for
the discontinuation and the projected length of the discontinuation. If the City determines
that this subsection has not been complied with, the agreement may be terminated
immediately and all taxes previously abated by virtue of the agreement may be recaptured
and paid within sixty (60)days of the termination.
(b) If the company or individual is in default according to the terms and conditions of its
agreement,the company or individual shall notify the City in writing at the address stated in
the agreement within ten(10)days from the default and cure such default within sixty(60)
days from the date of such default ("Cure Period"). If the City determines that this
subsection has not been complied with,the agreement may be terminated immediately and
all taxes previously abated by virtue of the agreement may be recaptured, together with
interest at 6%per annum calculated from the effective date of the agreement and paid within
sixty(60)days of the termination. If the City does not receive full payment within said sixt)
(60)days,a penalty may be added, equal to 15%of the total amount abated.
Guidg_lines and Criteria for Reinvestment hones,Page 7
f
(c) I If the company or individual (1)allows its ad valorem taxes owed the City of Baytown 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 ofthe agreement will be recaptured and paid within
sixty(60)days of the termination, and penalties and interest may be assessed as set out in
Section 6(b).
SECTION 7
ADMINISTRATION
(a) The Chief Appraiser of the applicable appraisal district shall annually determine an
assessment of the real and personal property comprising the reinvestment zone. Each year.
the company or individual receiving the abatement shall furnish the assessor with such
information as may be necessary for the abatement. Once value has been established, the
Chief Appraiser shall notify the affected jurisdictions which levy taxes on the amount of the
assessment.
(b) The agreement shall stipulate that employees and/or designated representatives ofthe City of
Baytown 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 the facility's safety
standard.
(c) The City annually shall evaluate each facility receiving abatement to ensure compliance
with the agreement and report possible violations of the contract and agreement to the City
Council.
SECTION 8
ASSIGNMENT
Tax abatement agreements may be assigned to a new owner or lessee of facility with the
written consent of the City Council which consent shall not be unreasonably withheld. Any
assignment shall provide that the assignee shall irrevocably and unconditionally assume all the
duties and obligations of the assignor upon the same terms and conditions as set out in the
agreement. Any assignment of a tax abatement agreement shall be to an entity that contemplated the
same improvements or repairs to the property,except to the extent such improvements or repairs
have been completed. No assignment shal I be approved if the assignor or the assignee is indebted to
the City of Baytown for ad valorem taxes or other obligations.
Guidelines and Criteria for Reinvestment Zones,Page 8
SECTION 9
SUNSET PROVISION
These Guidelines and Criteria are effective March 10, 2011,and will remain in force until
March 9,2013,at which time all reinvestment zones and tax abatement contracts created pursuant to
these provisions will be reviewed by the City to determine whether the goals have been achieved.
Based on that review, the Guidelines and Criteria will be modified, renewed or eliminated.
vCobsn•IU tO KanenTilts•Community Dewlolmtmt Tax Abatement Gwdelmes Gutdelmes4TaxAbatnncntNRcmvesUtxntZone201 t dnc
uid_li lend Criteria for Reinvestme one ,page 9
PONTIKES
DEVELOPMENT
February 7,2019
Mr. Rick Davis
City Manager
City of Baytown
2401 Market Street
Baytown,TX 77520
RE: Application for Tax Abatement on behalf of Port 10 Logistics, LLC as owner of Pon 10 Logistics
Center
Dear Mr- Da%is.
Port 10 Logistics.LLC("Ow nee,) is pleased to submit this formal request to the City of Baytown for
consideration of available tax abatement for the second building on our project at 6430 Thompson Road
in Baytown,TX(the"Port 10 Project"). As previously reported,the Port 10 Project will be constructed in
phases,and the Owner will submit subsequent tax abatement requests as additional qualifying buildings
are planned. Consistent with this second request,we have prepared and completed the attached
Application for Tax Abatement in Baytown,TX as per the Baytown Reinvestment Zone Guidelines. We
have also attached a site plan of the Port 10 Project,on which the subject building of this request is
labeled as Building 7.
Pontikes Development,as the development manager for the Owner,has been performing due diligence
and property development preparation in coordination.with a number of organizations including the City
of Baytown Pontikes Development is an affiliate of Satterfield and Pontikes Construction, Inc.,one of
the largest general contractors in the State of Texas. Pontikes Development has developed real estate
projects including industrial,office,and multifamily throughout Texas. The Developer has hired a
nationally recognized real estate firm,Jones Lang LaSalle,to market this high quality industrial park to
high quality tenants The Port 10 Project is anticipated to bring substantial tax base and jobs to the City
of Baytown; however,the high overlapping tax rate has proven to be detrimental in marketing the Port 10
Project- (See site selection below.) In our marketing efforts and outreach to consultants specializing in
our target tenant's real estate decisions,we have concluded the prevailing tax rates will preclude many
tenants from our development. This is due to the occupancy costs associated with such prevailing tax
rates when compared with developments in other jurisdictions primarily in Harris,Montgomery,and Fort
Bend counties. Therefore our request for tax relief form the City is critical to the successful development
of the Port 10 Project.
The Project and Benefits
'1 he City should receive substantial tax revenues as this site is revitalized through the proposed tax
abatements. Pon 10 Logistics Center is planned to be a multimodat 3,000,000 square foot industrial park
located near Chompson Road and I-10 within the city limits of Baytown. The timeline for the entire
development is to be built over the next 4-5 years%ith construction commencing in the I"quarter of
2018. We plan to develop approximately 1,000,000 square feet of distributionhAarehouse space and
2,000,000 square feet of rail-served distribution/warehouse space adjacent to the Union Pacific Coady
Rail Yard Completed on January 24,2019, the first building, Building I, is 294,323 square feet and has
recent!) entered the market for leasing. Building I is generating a great deal of interest from large
i
industrial tenants, including several multinational petroleum and distribution companies.
The second building, Building 7,will be a 125,906 front-load distribution/warehouse facility fronting
Thompson Road. Construction is anticipated to start earl) 2"quarter 2019 and is scheduled to be
completed in the 4" quarter. 2019
The eight buildings currently planned for the park consist entire!} of institutional grade industrial
buildings with steel-reinforced concrete construction tilt-walls. high grade structural steel supporting
components,and 28'-32'clear heights with TPO roof systems. Thee types of buildings are built to last
through multiple generations of tenancy and will also attract desirable blue chip tenants to Baytown.
Further.the capital investment of approximately$200 million will provide for a future tax base for the
City of Baytown and the project should provide continued momentum for other capital investment in
Baytown.
In addition to the increased tax base,the City should also benefit from increased jobs attributable to the
Port 10 Project. We anticipate the creation of at least 40 FTE's when fully developed of which 5 FTE's
will he attributable to Building 7. Temporary construction jobs for Building 7 will be up to 50 full time
emplo}ees.
Site Selection
While the City is a prime site for industrial development,the Port 10 Project is located within the City
limits and Harris County. Similar developments in the surrounding environs are located within the City's
ETJ and have not been annexed and receive the benefits of an industrial district agreement with
corresponding tax relief. In addition,similar projects are located within Chambers County and are
eligible to receive tax abatement from Chambers County. We do not expect this project would qualify for
tax abatement from Harris County. The Port 10 Project also does not meet the qualifications to be
eligible for a Chapter 313 abatement from Goose Creek ISD. In order to make this site competitive from
a tax rate standpoint to blue chip tenants and attract employers to the area,the Owner is requesting an
abatement per the terms below.
Abatement Request
As the Owner intends to meet the economic criteria of the City's tax abatement guidelines and add
significant value to the City,the Owner is requesting abatement per the City's terms in its guidelines for
Building 7 on the attached site plan. As stated above,the potential availability of tax relief is an
important component to the Owner's marketing efforts. it is the intent of the Owner to request identical
abatements on subsequent eligible and qualifying buildings as the remaining buildings begin construction.
We would also request the Abatement Period as defined in the Guidelines Summary begin January I"
following the issuance of a Certificate of occupancy from the City of Baytown in order to best
incentivize the project by providing the full incentive to prospective employers who will be occupying the
facilit).
Should you or your team have any questions,please don't hesitate to contact me is email at
fria ' nm or via telephone at(713)266-1101.
i
Sincerely,
PORT 10 LOGISTICS, LLC
Alan D. Feinsilver
President
CC:Mr.Ron Bottoms
Mr.B.J. Simon
Page I
APPLICATION FOR AX ABATEMENT IN BA)a WN TEXAS
The filing of this document acknowledges familiarity and conformance with Guidelines
and Criteria for Reinvestment Zones This application will become part of the agreement
and any knowingly false representations will be grounds to void the agreement An
original copy of this request should be submitted to City Manager, P.O. Box 424.
Baytown. Texas 77522-0424, if property is located inside the corporate limits of Baytown.
APPLICANT INFORMATION Date: February 8. 2019
Company Name, Port 10 Logistics, LLC
Address 1885 St. James Place, Suite 1100
City Houston State: TX Zip Code: 77056
Corporation ® Partnership. ❑ Proprietorship: ❑
PROJECT INFORMATION
Type of Facility
See Guidelines ❑ Manufacturing
❑ Class NA" Office Space
❑ LEEDs Certified Office Building
❑ Research & Development
Service & Distribution
❑ Regional Entertainment & Recreation
❑ Other Basic Industry
Proposed Project Location Address and Legal Description:6430 Thompson Rd
Attach map showing proposed site
Jurisdictions:
School District Goose Creek ISD
College District Lee College
City or Town Ba own
Describe Product or Service,
Page 2
Project Description:
Attach statement fully explaining project, describe existing site and improvements and
provide list of improvements and fixed machinery and equipment for which abatement is
requested (Refer to Guidelines. Section 3)
® NEW PLANT ❑ EXPANSION
[]MODERNIZATION
See attached description of the planned industrial park. improvements to include 8
ins�i tiorTj grade industrial biAldin. 'this application to include the construction of one
building Of approximately 125;906 square feet for di tributionlwarehouse purposes.
ECONOMIC INFORMATION
Construction Estimates:
Start Month/Year. 3/2019 Construction Man Years: 15
Completion Date 11/2019 Peak Construction Jobs: 50
If Modernization:
Estimated Economic Life of Existing Plant Years
Added Economic Life from Modernization Years
Permanent Employment Estimates WEE'S!
Current Plant Employment, 0
Number of Plant Jobs: Retained or® Created
At start/opening.5 in year.5
5 years into operation: 5 in year: 5
Estimated Appraised Value on Site
Personal Improvements Land
Value January 1 Preceding 0 0 680,000
Abatement Agreement:
Est. Value of improvements: 850,000 4.000,000 680A00
Est. Value of Abated Properties 935,000 4 00 000 748,000
After Abatement Expires:
Value upon Completion of
Project Personal Property and
Project Improvements Not Subject I
To Abatement, 85Q,000 0 680.000
Page 3
VARIANCE
Is the applicant seeking a variance under Section 3 (f) of the guidelines? ❑ YES
NO
If"YES', attach required supplementary information.
OTHER ABATEMENTS. Has company made application for abatement of this project
by another taxing jurisdiction or nearby counties? ❑YES ®NO. If "YES' please provide
dates of application, hearing dates if held or scheduled, name of jurisdictions and
contacts. and letter of intent.
COMPANY REPRESENTATIVE TO BE CONTACTED:
NAME Alan Feinsilver
Si ature of many Official.
TITLE President 7
) d-a��
Alan D. Feinsilver, President
ADDRESS 1885 St. James Place, Suite 1100
CITY: Houston STATE TX ZIP-CODE: 77056
TELEPHONE: 713 266-1101
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