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Ordinance No. 5,406El L,-A Cl AN ORDINANCE AUTHORIZING AND DIRECTING THE MAYOR T# EXECUTE AND THE CITY CLERK TO ATTEST TO A TAX ABATEMENT AGREEMENT WITH CHEVRON CHEMICAL COMPANY1 AND PROVIDING FOR TIE EFFECTIVE DATE THEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 2: This ordinance shall take effect immediately from and after its passage by the City Council of the City of Baytown. INTRODUCED, READ City Council of the December, 1989. and PASSED by the affirmative vote of the City of Baytown, this the 14th day of MMETT C® HUTT6, Mayor rAGMAW EILEEN P. L® City Clerk IrM)�NDDALL B. STRONG,'Xty Attorney 5918� 0 CITY OF BAYTOWN TAX ABATEMENT AGREEMENT FOR REAL PROPERTY LOCATED IN THE CHEVRON REINVESTMENT ZONE THE STATE OF TEXAS § COUNTY OF HARRIS 5 This Tax Abatement Agreement (hereinafter referred to as the "Agreement ") is made and entered into by and between the City of Baytown ( "City ") and Chevron Chemical Company ( "Owner "), the owner of taxable real property in Harris County, Texas, located in the Chevron Reinvestment Zone ( "Reinvestment Zone "), which also includes Baytown's Industrial District No. 2 ( "District "). I. AUTHORIZATION This Agreement is authorized by the Texas Property Redevelopment and Tax Abatement Act, TEX.TAX CODE, Chapter 312, and by Ordinance of the City Council of the City of Baytown. The Reinvestment Zone has been created by prior order of the Harris County Commissioners' Court. II. DEFINITIONS • As used in this Agreement, the following terms shall have the meanings set forth below: a. Certified Appraised Value means the January 1, 1989, appraised value of the property within the Reinvestment Zone as certified by the Harris County Appraisal District as of that date. b. 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 January 1, 1989. C. 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. The period of Construction Phase ends when commercial production of "on- specification" product is achieved at the facility, d. Abatement means the full or partial exemption from ad valorem taxes and Industrial District payments of certain property in a reinvestment zone designated for economic development purposes. e. 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 facility. New Eligible Property means Eligible Property construction of which commences subsequent to the date of execution of this Agreement. A list of the New Eligible Property is set forth in Owner's Application for Tax Abatement in the City of Baytown, which is • attached hereof. Eligible orders reasonab use. hereto as Exhibit "A" and made a part During the Construction Phase of the New Property, the Owner may make such change to the New Eligible Property as are ly necessary to accomplish its intended f. Ineligible Property means land, inventories, supplies, tools, furnishings and other forms of movable personal property, vehicles, vessels, aircraft, housing, hotel accommodations, deferred maintenance investments, 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, and property that has an economic life of less than • fifteen (15) years. The Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone created in Baytown or its extraterritorial jurisdiction, adopted by the Baytown City Council on December 14, 1989, are attached hereto as Exhibit "B" and made a part hereof. All definitions set forth therein are applicable to this Agreement. III. SUBJECT PROPERTY The Chevron Reinvestment Zone (the "Reinvestment Zone") is an area within Harris County, Texas, and Baytown Industrial District No. 2, generally described as 12.95 acres out of a 650 acre tract of land in the William Bloodgood League, Abstract 4, and more fully described in Exhibit "C" attached hereto and made a part hereof. The Harris County Appraisal District has established the following values for the subject property as of January 1, 1988: Personal Property Account No. 0314180 $ 16,077,250 Land Account No. 040- 168 -000 -0129 $ 5,777,300 - 2 - • Improvements Account No. 040 - 168 -000 -0129 $297,212,520 IV. VALUE AND TERM OF AGREEMENT This abatement shall be effective with the January lst valuation date immediately following the date of execution of this Agreement. One hundred percent (100 %) of the value of New Eligible Properties shall be abated for up to two (2) years during the period of Construction Phase and for the next five (5) full tax years thereafter. If the period of Construction Phase exceeds two (2) years, the facility shall be considered completed for purposes of abatement, and in no case shall the period of abatement inclusive of construction and completion exceed seven (7) years. This abatement shall also cover as New Eligible Property those supplemental improvements to the New Eligible Property that are added or constructed during the post - construction five (5) year period of abatement. In no event, however, shall the total abatement period for such improvements exceed the seven (7) year abatement period for the entire project as specified herein. At the end. of the abatement period, the New Eligible Property shall be included in the fair market value of Owner's total facility in calculating Owner's Industrial District Payment. • V. TAXABILITY During the period that this abatement is effective, taxes and industrial district payments shall be payable as follows: (1) The value of Ineligible Property and existing Eligible Property shall be subject to all taxes and payments set forth in the Industrial District Agreement between the City and Owner; (2) The full value of New Eligible Property shall be abated as set forth in Part IV herein. VI. CONTEMPLATED IMPROVEMENTS As set forth in the Application attached as Exhibit "A," the Owner represents that it will build an expanded manufacturing facility that it reasonably expects will cost $165,000,000, which shall be used for commercial or industrial purposes ( "New Facility "). During the Construction Phase, the Owner may make such change orders to the project as are reasonably necessary. It is additional expected to employment contemplated construction contemplated that this project will employees to the plant site. The solely or primarily have the effect from one part of Baytown to another. that this project will provide up to jobs for 21 months. - 3 - add at least 70 project is not of transferring It is further a peak of 1200 • All improvements shall be completed in accordance with all applicable laws, ordinances, rules or regulations. The Owner further contemplates that construction of the improvements will begin in April, 1989, with completion estimated in January, 1991. VII. EVENT OF DEFAULT During the abatement period covered by this Agreement, the City may declare a default hereunder by the Owner if the Owner fails to commence construction of the New Facility described in Part VI, above, and the Application attached hereto as Exhibit "A" within two (2) years from March 7, 1989, fails to construct the New Facility described in Part VI, above, or refuses or neglects to comply with any of the terms of this Agreement, or if any representation made by the Owner in this Agreement is false or misleading in any material respect. Should the City determine the Owner to be in default of this Agreement, the City shall notify the Owner in writing prior to the end of the abatement period, and if such default is not cured within sixty (60) days from the date of such notice ( "Cure Period "), then this Agreement may be terminated; provided, however, that in the case of a default that for causes beyond • Owner's reasonable control cannot with due diligence be cured within such sixty--day period, the Cure Period shall be deemed extended if Owner W shall immediately, upon the receipt of such notice, advise the City of Owner's intention to institute all steps necessary to cure such default and (ii) shall institute and thereafter prosecute to completion with reasonable dispatch all steps necessary to cure same. In the event the Owner allows its ad valorem taxes owed the City to become delinquent and fails to timely and properly follow the legal procedures for their protest and /or contest, or if the Owner violates any of the terms and conditions of this Agreement and fails to cure during the Cure Period, this Agreement may then be terminated and all taxes and industrial district payments previously abated by virtue of this Agreement will be recaptured and paid within sixty (60) days of the termination. In the event the facility herein is completed and begins producing product or service, but subsequently discontinues producing product or service 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 terminate. In the event of termination pursuant to the provisions of this paragraph, the abatement of the taxes and payments for the calendar year during which the facility no longer produces shall terminate, but there shall be no recapture of prior years' taxes and payments 'abated by virtue of this Agreement. The taxes and payments otherwise abated for the calendar year during which the facility no longer produces shall - 4 - • be paid to the City prior to the delinquency date for such year; provided, however, that in no event shall Owner be required to pay such taxes and payments within less than sixty (60) days of the termination. VIII. ADMINISTRATION This Agreement shall be administered on behalf of the City by the City Manager pursuant to the direction of the City Council of the City of Baytown. The Owner shall allow employees and /or representatives of the City who have been designated by the City Manager to have access to this Reinvestment Zone during the term of this Agreement to inspect the facility to determine compliance with the terms and conditions of this Agreement. 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 owner and in accordance with Owner's safety standards. Upon completion of the contemplated construction, the City Manager shall annually evaluate the facility to ensure compliance with the terms and provisions of this Agreement and shall report possible defaults to the City Council and the City Attorney. • The Chief Appraiser of the Harris County Appraisal District shall annually determine (i) the taxable value pursuant to the terms of this abatement of the real and personal property comprising this Reinvestment Zone and (ii) the full taxable value without abatement of the real and personal property comprising this Reinvestment Zone. The Chief Appraiser shall record both the abated taxable value and the full taxable value in the appraisal records. The full taxable value figure listed in the appraisal records shall be used to compute the amount of abated taxes and industrial district payments that are required to be recaptured and paid in the event 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, TEX.TAX CODE, as may be necessary for the administration of the abatement specified herein. If the City terminates this Agreement, it shall provide Owner written notice of such termination. If Owner believes that such termination was improper, Owner may file suit in the Harris County District Courts appealing such termination within sixty (60) days after receipt from the City of written notice of the termination. If an appeal suit is filed, Owner shall remit to the City, within sixty (60) days after receipt of the notice of termination, any additional and /or recaptured taxes or payments as may be payable during the pendency of the litigation pursuant to the payment provisions of TEX.TAX CODE § 42.08. If the final determination of the appeal increases owner's liability above the amount of tax and industrial district payments paid, Owner shall - 5 - remit the additional tax and payments to the City pursuant to TEX.TAX CODE 5 42.42. If the final determination of the appeal decreases owner's liability, the City shall refund to Owner the difference between the amount paid and the amount for which Owner is liable pursuant to TEX.TAX CODE S 42.43. IX. ASSIGNMENT IDThe Owner may assign this Agreement to a new owner or lessee of the facility with the written consent of the City Council of the City of Baytown, 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 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 Owner or the assignee are indebted to the City for ad valorem taxes or other obligations. X. NOTICE Any notice required to be given under the provisions of this • Agreement shall be in writing and shall be duly served when it shall have been 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 Owner 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: To the Owner: To the City: i Chevron Chemical Company P. 0. BOX 285 Houston, Texas 77001 Attention: W. M. McClendon Property Tax Representative City of Baytown P. 0. Box 424 Baytown, Texas 77522 Attention: City Manager - 6 - • � 0 Iti XI. DATE This Agreement has been executed by the parties in multiple originals, each having full force and effect. ATTEST: OWNER: CHEVRON CHEMICAL COMPANY By: W. M. McCLENDON, Property Tax Representative ATTEST: By: G. T. SCOTT, Vice President CITY OF BAYTOWN By:_ P By: EILEEN P HALL, City Clerk, METT 0. HUTTO, Mayor S:5:35:1 - 7 - APPLICATION FOR TAX ABATEMENT IN HARRIS COUNTY !'Exhibit This AA" This application should be filed at least 90 days prior to the beginning oi` cons&ction or the installation of equipment. The filing of this document acknowledges familiarity and conformance with Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone Created in Harris ty (attached). This application will become part of the agreement and any knowingly false sentations will be grounds for Barris County to void the agreement. Original copy of this request should be submitted to County Judge Jon Lindsay, Barris County Administration Building, 1001 Preston, Suite 911, Houston, Texas 77002. R Applicant Information Date —QL/M' /M- MUST SUBMIT ANNUAL REPORT. See Instructions. Company Name Chevron Chemical Company Number of Employes .cress Olefins & Derivatives Division Annual Sales(period) 2 billion ( 1987 ) P. O. Box 285, Houston, TX Corporation(}{) Partnership( ) Proprietorship( } Project Information Type of Facility Manufacturing ({) Reg. Distribution Center ( ) Research Facility ( ) See Instructions. Regional Service ( ) Reg. Entertainment Center( ) Other Basic Industry( ) Location Address and Legal Description School District Cioosn Creek C1SD 0y vron Chemical Company -- Cedar Bayou Plant College District Lee Coll _ _ 9500 ZH -10 Fast, Baytown, TX 77521 City or Town gaVtCwn Industrial. District Attach map showing proposed site Describe Product or Service to be provided. Constriction of a new facility for manufacture of Linear Low - Density and high- Density PoiyethylFxie- Plastic Resins. Project Description: Attach statement fully explaining project, describe existing site and improvements, describe all psed improvements and provide list of improvements and equipment for which abatement is r sted. NEW PLANT ( ) EXPANSION (X) MODERNIZATION ( ) Economic Information Construction Estimates start Month /year 4 / 89 Construction Manyears 770 Completion Date 1 / 91 Peak Construction Jobs 1000 -1200 Permanent Employment Estimates (FTE's) Current Plant Employment 738 Number of plant jobs retained ( ) or created (X) at start/opening 70 in year 1990 5 yeaxs into operation 70 in year 1995 IF MODERNIZATION: Estimated Economic Life Of Existing Plant years Added Economic Life from Modernization years Personal Improve - Estimated Appraised value on Site ($ Million) Property ments Land value January 1 preceding abatement agreement ................ lb 297 5.7 Est. value of abated properties after abatement expires...... q -1n 1 40 -1 5 Value-upon completion of project personal property and project improvements not subject to abatement ............. -0- VARIANCE Is the applicant seeking avariance under Section 3(f) of the Guidelines? YES ( } NO (K) "YES" attach required supplementary information. ABATEMENTS. Has company made application for abatement of this project by another taxing j diction or nearby counties? YES { ) NO ( } If "YES" provide dates of application, hearing dates if held or scheduled, name of jurisdictions and contacts, and letters of intent. OVER ComPANY REPRESENTATIVE TO BE CONTACTED- or: W. M. McClendon Title: Property Tax Re Address: P. 0. Box 285, Houston, ` X 77001 Signature of Company Official W P TaY Rep. Name and Title of Company Official Telephone: ( / 13 ) /54-2321 0 INSTRUCTIONS Applicants and projects must meet the requirements established by the Harris County Guidelines and Criteria (attached) in order to receive positive consideration. Section 2 of the Guidelines, for example, sets out regulations governing eligible facilities, eligible and ineligible improvements, terms and economic qualifications. Conformance with all sections, however, is required for eligibility. APPLICANT INFORMATION The taxing unit may consider applicant financial capacity in determining whether to enter into an abatement agreement. Established companies for which public information is available, or the wholly owned businesses of such companies, should include with the application a copy of their latest annual report to stockholders. Other applicants and new companies should attach statement showing when the company was established, business references (name, contact and telephone number of principal bank, accountant and attorney) and may be required to submit an audited financial statement and business plan. PROTECT INFORMATION Only facilities listed in Section 2(a) of the Guidelines may receive abatement without �a tying for a variance. Check guideline definitions in Section 1 to see if project lifies. If project is a Regional Entertainment Facility, Regional Service Facility Regional Distribution Center Facility or Other Basic Industry, the application should include market studies, business plans, agreements or other materials demonstrating that the facility is intended to serve a market the majority of which is outside of the Harris County region. ECONOMIC INFORMATION Permanent Employment Estimates - In estimating the permanent employment, include the total number of jobs retained or created at this site by your firm as well as known permanent jobs of service contractors required for operation. Estimated Appraised Value on Site - The value January 1 preceding abatement should be the value established by the Harris County Appraisal District. If the applicant must estimate value because the taxable value is not known or is combined with other properties under a single tax account, please so state. To qualify, the abated properties must be expected to result in an addition to the tax base of at least five million dollars after the period of abatement expires. Projections of value should be a "best estimate" based on taxability in Texas. The projection of project values not abated should include personal .property and - ineligible project - related improvements such as office space in excess of that used for plant i administration, housing, etc. DO NOT WRITE IN THIS AREA --- FOR PROCESSING PURPOSES ONLY 1. EDC contact Z. Precinct 3. Jurisdictions notified . Initial review completed Review circulated ISD concurrence? 7. College concurrence? e. City concurrence? 9. Letter of Intent 10. Hearing noticed on agenda 11. Public hearing 12. ISD action 13. College action 14. City action 15. Agreement signed i DESCRIPTION OF PROTECT This project includes construction of a new unit to be added to . Chevron Chemical Company's existing Cedar Bayou Chemical Complex. The existing Cedar Bayou Complex consists of facilities for manufacture of the following petrochemicals and plastics products: Ethylene Propylene Polyethylene Mixed Butenes Mixed Pentenes Normal Alpha Olefins Polyalphaolefins Acetylene Black The new unit will produce two types of plastic resins currently not made at Cedar Bayou, i.e., Linear Low Density Polyethylene and High Density Polyethylene. • Total production capacity of the new unit will be approximately 440 million pounds per year. The project will include two parallel reactor lines with associated auxiliary and product finishing equipment. Scope of the project includes a complete plant from raw material receipt through catalyst manufacture, reaction, finishing, storage, and railcar loading. ti ' ' . ' ' '^O | -------'-------------------- � A-100C9 'A x^m:I Snu - o C, 0 '^O | -------'-------------------- � A-100C9 'A x^m:I Snu - U iL b t klq ' - -' -- I _I I. u°w.b 9Y 38f / J °YKce Yn YOIW r / s v 5 f� v 5