Ordinance No. 13,879ORDINANCE NO. 13,879
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS, ADOPTING THE INCENTIVE POLICY FOR THE BAYTOWN
REVITALIZATION INCENTIVE ZONE TO EXERCISE CERTAIN
MUNICIPAL POWERS IN SUCH NEIGHBORHOOD EMPOWERMENT
ZONE; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF.
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BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS:
Section 1: That the City Council of the City of Baytown, Texas, hereby adopts the
Incentive Policy for the Baytown Revitalization Incentive Zone to exercise certain municipal
powers in such neighborhood empowerment zone, which policy is attached hereto as Exhibit "A"
and incorporated herein for all intents and purposes.
Section 2: This ordinance shall take effect immediately from and after its passage by
the City Council of the City of Baytown.
INTRODUCED, READ and PASSED by the affirmativete of the City Council of the
City of Baytown, this the 13th day of September, 2018. �
ATT T:
LETICIA BRYSCH, City de&
APPROVED AS TO FORM:
ACIO RAMIREZ, S , City Attorney
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COBFS01\Legal\Karen%Files'.CityCouncil\Ordinances\201 &..September 13\AdoptingNEZlncentivePolicy.docx
Exhibit "A"
BAYTOWN REVITALIZATION INCENTIVE ZONE GUIDELINES SUMMARY
OBJECTIVES Promote an increase in economic development.
Promote the rehabilitation of affordable housing.
PROGRAM 1:
Waiver of construction permit fees.
BASIC INCENTIVES
Waiver of impact fees.
PROGRAM 2:
Refund of municipal ad valorem taxes based upon the following schedule:
TAX REFUND
Year 1 100%
INCENTIVES
Year 2 100%
ECONOMIC CRITERIA
Year 3 80%
FOR PROGRAM 1:
Year 4 60%
NEW STRUCTURES
Year 5 50%
ECONOMIC CRITERIA
Year 6 0%
FOR PROGRAM 2:
and based only upon the incremental value increase of the improvement as determined by
EXISTING
HCAD.
QUALIFYING
All commercial and residential improvements within the Neighborhood Empowerment Zone.
STRUCTURES
$20,000 or more within the first two tax years after completion of the improvement.
AUTHORIZED
INVESTMENTS
SUBJECT TO TAX
REFUND
NOT SUBJECT TO TAX
REFUND
New facilities.
Expansions.
Buildings and structures.
Site improvements.
Land.
Existing Improvements.
Construction -in -progress.
Personal property.
Pipelines.
Deferred maintenance.
ECONOMIC CRITERIA Residential:
FOR PROGRAM 2: ➢ Minimum investment of $65,000.
NEW STRUCTURES ➢ Minimum appraised value of $65,000 within the first two tax years after completion of the
improvement.
➢ Minimum investment of $100,000.
➢ Minimum appraised value of $100,000 within the first two tax years after completion of the
improvement.
Property with an economic life less than fifteen (15) years.
ECONOMIC CRITERIA
FOR PROGRAM 1:
Minimum investment of 20% of the base value for both residential and commercial.
EXISTING
STRUCTURES
ECONOMIC CRITERIA
Residential: Minimum investment of $65,000.
FOR PROGRAM 1:
Commercial: Minimum investment of $100,000.
NEW STRUCTURES
ECONOMIC CRITERIA
Residential:
FOR PROGRAM 2:
➢ Minimum investment of 20% of the appraised value of the improvement value as
EXISTING
determined by HCAD.
STRUCTURES
➢ Residential improvements must increase the appraised value of the improvements by
$20,000 or more within the first two tax years after completion of the improvement.
Commercial:
➢ Minimum investment of 20% of the appraised value of the improvement value as
determined by HCAD.
➢ Commercial improvements must increase the appraised value of the improvements by
$75,000 or more within the first two tax years after completion of the improvement.
ECONOMIC CRITERIA Residential:
FOR PROGRAM 2: ➢ Minimum investment of $65,000.
NEW STRUCTURES ➢ Minimum appraised value of $65,000 within the first two tax years after completion of the
improvement.
➢ Minimum investment of $100,000.
➢ Minimum appraised value of $100,000 within the first two tax years after completion of the
improvement.
INCENTIVE POLICY
FOR THE BAYTOWN REVITALIZATION INCENTIVE
ZONE
SECTION 1
PURPOSE
It is the City of Baytown's goal to promote development within its Neighborhood
Empowerment Zones in an effort to improve the local economy and enhance the quality of life for its
citizens. Insofar as these goals are served by enhancing the value of the local tax base, rehabilitating
affordable housing, and increasing economic opportunities, the City of Baytown will give
consideration to providing the following incentives for development within Neighborhood
Empowerment Zones.
SECTION 2
DEFINITIONS
(a) "Abatement" means the full or partial refund of ad valorem taxes of certain improvements on
eligible properties in a neighborhood enterprise zone designated for economic development
purposes.
(b) "Agreement" means a contractual agreement between a property owner and the City for the
purposes of Program 2 tax refund incentives.
(c) "Base Year Value" means:
(1) either:
a. the assessed value of eligible property on January 1 St preceding the execution
of the agreement as determined by HCAD or
b. the sales price of the eligible property, if the property was conveyed
subsequent to such January 1St,
whichever is greater; or
(2) the appraised value of the eligible property as determined by an appraisal conducted
within one year of an application hereunder by a professional appraiser holding a
license in the State of Texas if the eligible property is owned by a tax-exempt
organization.
(d) "Commercial Improvement" means an improvement that is not a residential improvement.
(e) "Debt" means any delinquent sum of money levied, imposed or assessed by the City against
any applicant or property of the applicant, including, but not limited to, those for ad valorem
taxes on real or personal property located within the boundaries of the City. Such term does
not include those delinquent sums subject to a valid installment agreement executed prior to
the date of the submission of an NEZ incentive application and under which all payments are
current.
Incentive Policy for Neighborhood Empowerment Zone, Page 1
(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.
(h) `Eligible Improvements" means buildings, structures, and site improvements on eligible
properties made subsequent to and listed in an NEZ incentive application and for which a
certificate of occupancy or certificate of completion has been issued by the City's chief
building official. The term does not include pipelines, personal property, those
improvements with an economic life of less than fifteen (15) years, or deferred maintenance
improvements.
(i) `Eligible Properties" means commercial or residential properties within a neighborhood
empowerment zone.
(j) "Existing Structure" means an improvement on real property to which HCAD has assigned
or will assign a value regardless of any improvement, which is the subject of an NEZ
incentive application.
(k) "Expansion" means the addition of buildings and/or structures.
(1) "Facility" means property improvements completed or in the process of construction which
together comprise an integral whole.
(m) "HCAD" means the Harris County Appraisal District or its successor agency.
(n) "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.
(o) "Neighborhood Empowerment Zone" or "NEZ" means an area designated as such for the
purpose of providing economic incentives, including a tax refund, as authorized by the City
of Baytown in accordance with Chapter 378 of the Texas Local Government Code.
(p) "New Construction" means a property previously undeveloped which is placed into service
by means other than an expansion or modernization.
(q) "Owner" means an individual or entity in possession of title for land, building or structure or
individual or entity who possesses a leasehold of ten or more years on land, building or
structure.
Incentive Policy for Neighborhood Empowerment Zone, Page 2
(r) "Real Property" means an area of land defined by legal description as being owned by the
person applying for a tax abatement or permit/impact fee waivers, including any
improvements thereto, which is to be improved and valued for property tax purposes, and
which is included in the Neighborhood Empowerment Zone.
(s) "Residential Improvement" means a structure associated with single-family detached, single-
family attached, and two family duplex uses.
(t) "Tax -Exempt Organization" means an entity that is a nonprofit corporation, nonprofit
association, or other entity that is exempt from the payment of ad valorem taxes pursuant to
the Texas Property Tax Code.
SECTION 3
PROGRAM POLICY
It is the policy of the City of Baytown that consideration will be provided in accordance with the
guidelines, criteria and procedures outlined in this document. This policy applies to the owners of
real property. Project consideration will include the potential impact of each project on the
immediate and surrounding area.
(a) Program Eli 'b ility.
(1) Eligible Property. Neighborhood Empowerment Zone Incentives maybe granted for
both commercial and residential improvements within the Neighborhood
Empowerment Zone, designated by the City Council of the City of Baytown, Texas.
(2) Ineligible Property. Property owned by a tax-exempt organization is not eligible for
Program 2 tax refund incentives.
(3) Eligible Improvements. Neighborhood Empowerment Zone Incentives may only be
granted for eligible improvements, which are built in accordance with all codes and
ordinances of the City, and which are made subsequent to and listed in an NEZ
incentive application, subject to such limitations as City Council may require.
(4) Ineligible le Improvements. Neighborhood Empowerment Zone Incentives shall not be
granted for:
a. improvements to real property owned by a person who owes a debt to the
City;
b. improvements to properties which have received assistance through the City's
Owner -Occupied Housing Rehabilitation Program within five years of the
commencement of the improvement for which an NEZ incentive is sought;
Incentive Policy for Neighborhood Empowerment Zone, Page 3
C. improvements that are subject to a Chapter 380 Economic Development
Agreement with the City;
d. improvements to real property that is subject to a Tax Abatement Agreement
with the City; and
e. improvements to properties which have received assistance through the City's
Facade Program within five years of the commencement of the improvement
for which Program 2 tax refund incentive is sought; unless the value of the
improvement qualifies for the Program 2 tax refund incentive with the
amount paid by the City under such added to the base value.
(b) Program 1: Basic Incentive Program
(1) Economic Qualification for Program.
a. Existing Structures. In order for an existing residential or commercial
improvement to be eligible for the basic incentive program, the construction
cost of the proposed improvement must equal or exceed 20% of the base
value.
b. New Construction. In order for a new construction to be eligible for the basic
incentive program, there must be a minimum investment of $65,000 for a
residential improvement or a minimum investment of $100,000 for a
commercial improvement.
(2) Economic Incentives for Program 1.
a. Waiver of Certain Permit Fees. The following fees may be waived for
eligible improvements in a neighborhood empowerment zone upon
application of the property owner and approval by the Chief Building
Official:
1. building permit fees as enumerated in Section 2-595(2)(a) and (b) of
the Code;
2. electrical permit fees as enumerated in Section 2-595(2)(d) and (e) of
the Code;
3. plumbing permit fees as enumerated in Section 2-595(2)(f) and (g) of
the Code;
4. mechanical permit fees as enumerated in Section 2-595(2)(h) of the
Code;
5. miscellaneous permit fees as enumerated in Section 2-595(2)(1) ofthe
Code; and
6. plan review fees as enumerated in Section 2-595(2)0) of the Code.
Incentive Policy for Neighborhood Empowerment Zone, Page 4
If inspection fails, any re -inspection fee(s) will not be waived and will be the
responsibility of the owner/applicant.
b. Waiver of Impact Fees. Impact fees may be waived in accordance with
Section 114-99(d) of the Code of Ordinances, Baytown, Texas, upon
application of the property owner. The adoption of this incentive policy shall
constitute the city council's approval of such waiver subject to reversal as
stated in such section.
(c) Program 2: Tax Refund Incentive Program.
(1) Economic Qualification for Program 2.
a. Existing Structures.
1. Residential. In order for an improvement to an existing residential
improvement to be eligible for the tax refund incentive program,
➢ the construction cost of the proposed improvement must equal
or exceed 20% of the appraised value of the existing
improvements based upon the most recently certified value by
the chief appraiser of HCAD, and
➢ the eligible improvement must increase the appraised value of
the existing improvements as determined by HCAD by at
least $20,000 within the first two tax years after completion of
the improvements, as evidenced by a certificate of completion
or certificate of occupancy issued by the Chief Building
Official.
2. Commercial. In order for an improvement to an existing commercial
structure to be eligible for the tax refund incentive program,
➢ the construction cost of the proposed improvement must equal
or exceed 20% of the appraised value of the existing
improvements based upon the most recently certified value by
the chief appraiser of HCAD, and
➢ the eligible improvement must increase the appraised value of
the existing improvements as determined by HCAD by at
least $75,000 within the first two tax years after completion of
the improvements, as evidenced by a certificate of completion
or certificate of occupancy issued by the Chief Building
Official.
Incentive Policy for Neighborhood Empowerment Zone, Page 5
b. New Construction.
1. Residential. In order for anew construction residential improvement
to be eligible for the tax refund incentive program,
➢ there must be a minimum investment of $65,000; and
➢ the eligible improvement must increase the appraised value of
the existing improvements as determined by HCAD by at
least $65,000 within the first two tax years after completion of
the improvements, as evidenced by a certificate of completion
or certificate of occupancy issued by the Chief Building
Official.
2. Commercial. In order for new construction commercial
improvement to be eligible for the tax refund incentive program,
➢ there must be a minimum investment of $100,000; and
➢ the eligible improvement must increase the appraised value of
the existing improvements as determined by HCAD by at
least $100,000 within the first two tax years after completion
of the improvements, as evidenced by a certificate of
completion or certificate of occupancy issued by the Chief
Building Official.
(2) Value and Term of Refund. If the owner certifies in writing that no planned or
pending action, which would affect the taxable value of the eligible property, is
pending and none will be sought for the tax year for which a refund is requested, a
refund may be issued in accordance with the tax refund 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).
(3) Taxabili . In order for a property owner to be entitled to a refund, the property
owner must pay all ad valorem taxes due and owing to the City prior to the
delinquency date and submit proof thereof along with a request for a refund in the
subsequent tax year. The refund shall be calculated as follows:
Incentive Policy for Neiehborhood Empowerment Zone, Page 6
(HCAD Improvement Value for Current Year - HCAD Improvement Value for Base Year)
X
Applicable Abatement Percentage
X
City Tax Rate.'$100 valuation
Late refund requests will not be considered.
SECTION 4
APPLICATION
(a) Application Required. Any owner of taxable property in the NEZ may apply for
neighborhood empowerment zone incentives by filing a written application therefor with the
City of Baytown's Community Development Division.
(b) Application Contents. The application shall consist of a completed application form
requesting Program 1 and/or Program 2 incentives accompanied by the following:
➢ address and legal description of the real property;
➢ proof of ownership of the real property;
➢ a general description of the new improvements to be undertaken for which any
incentive is requested;
➢ current assessed value of the improvements for which incentives are requested;
➢ bid documents and construction estimates necessary to determine the construction
cost of the proposed improvements; and
➢ a time schedule for undertaking and completing the proposed improvements.
The application form may require such financial and other information as may be appropriate
for evaluating the project.
(c) Application Consideration. Upon receipt of a completed application, the City Manager of the
City of Baytown or his designee shall consider the requested incentives and may request
additional information as needed. Thereafter, the City Manager or his designee shall
determine whether the application qualifies for incentives under the terms of these guidelines
and criteria.
(1) Program 1. If it is determined that an application qualifies for NEZ incentives for
Program 1, the City Manager or his designee will issue a certification for Program 1,
which will be honored at the City's permit counter to waive the fees subject to such
program.
(2) Program 2. If it is believed that the applicant may qualify for NEZ incentives for
Program 2, the applicant shall sign a statement detailing the procedural processes
necessary in order to obtain Program 2 tax refund incentives at the same time that the
applicant receives the certification under Program 1. If the applicant ultimately meets
the requirements for the tax refund incentives under Program 2, the applicant will be
Incentive Policy for Neighborhood Empowerment Zone, Page 7
required to execute an NEZ Tax Refund Agreement with terms and conditions
consistent with this policy, including:
➢ the base year value of improvements;
➢ the percent of value to be abated each year;
➢ the commencement date and the termination date of the agreement;
➢ the proposed use of the facility/improvements;
➢ the contractual obligations in the event of default, violation of terms or
conditions, delinquent taxes, recapture, administration and assignment; and
➢ other provisions that may be appropriate or required.
The City Manager or his designee shall not grant Program 1 incentives if it finds that
earthwork, site preparation, construction, alteration, or installation of improvements
commenced prior to the submission of NEZ Program 1 incentive application.
SECTION 5
RECAPTURE
If the owner allows his/her ad valorem taxes owed to the City of Baytown to become
delinquent during the term of the tax refund incentive agreement, the City may terminate the
incentive agreement and all previously waived fees and taxes refunded, if any, shall become
immediately due to the City. If not paid within thirty (30) days from the termination of the
agreement, interest at a rate of 6% per annum calculated from the effective date of the agreement
shall be assessed. If the City does not receive full payment within sixty (60) days of the termination
of the agreement, a penalty may be added, equal to 15% of the total amount abated.
SECTION 6
ADMINISTRATION
(a) Inspections. Designated representatives of the City of Baytown will have access to the real
property and improvements thereon subject to a tax refund incentive agreement during the
term of the agreement to inspect the facility to determine if the terms and conditions of the
agreement are being met.
(b) Form 1099. The Director of Finance shall issue a Form 1099 or other form as appropriate to
any person receiving a tax refund incentive under an agreement with the City pursuant to the
terms and conditions hereof.
SECTION 7
SUNSET PROVISION
This policy is effective on September 22, 2018, and will remain in force until Wednesday,
September 21, 2020, at which time all incentives created pursuant to these provisions will be
reviewed by the City to determine whether the goals have been achieved. Based on that review, the
policy will be modified, renewed or eliminated.
MCOM011Lega1\Karen\Fi1es\Community Development\NEZ Guidelines-Guidelines4NEZIncentives2018Final.doc
Incentive Policy for Neighborhood Empowerment Zone, Page 8