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Ordinance No. 8,94420000713 -4 ORDINANCE NO. 8944 ® AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS, GRANTING A VARIANCE FROM THE GUIDELINES AND CRITERIA FOR GRANTING A TAX ABATEMENT IN A REINVESTMENT ZONE CREATED IN HARRIS OR CHAMBERS COUNTY; AUTHORIZING AND DIRECTING THE CITY MANAGER TO EXECUTE AND THE CITY CLERK TO ATTEST TO A TAX ABATEMENT AGREEMENT FOR CERTAIN TAXABLE PROPERTY LOCATED IN THE ENICHEM REINVESTMENT ZONE AND THE ELASTOMERS REINVESTMENT ZONE WITH ELASTOMERS WAREHOUSE, L.P.; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. WHEREAS, Elastomers Warehouse, L.P. ( "Elastomers Warehouse ") has submitted an application for tax abatement in Baytown, Texas; and WHEREAS, in such application, Elastomers Warehouse has requested a variance to Resolution No. 1402, which adopts the guidelines and criteria for granting tax abatement in a reinvestment zone created in Harris or Chambers County (the "Guidelines "); and WHEREAS, the Guidelines provide that the planned improvement must "prevent the loss of employment, retain or create employment for at least fifteen (15) people on a permanent basis and WHEREAS, Elastomers Warehouse's SIX MILLION TWO HUNDRED FIFTY THOUSAND AND NO /100 DOLLARS ($6,250,000.00) improvement project is projected to create between 7 and 11 full-time positions with Elastomers Warehouse and to retain in Baytown between 7 and 9 full-time positions with EniChem Elastomers Americas, Inc. ( "EniChem "); and WHEREAS, the Guidelines additionally provide that a Regional Distribution Facility is eligible for abatement; and WHEREAS, a Regional Distribution Facility is defined as "buildings and structures including fixed machinery and equipment, used or to be used primarily to receive, store, service or distribute goods or material owned by the facility operator where a majority of the goods or services are distributed to other points "; and WHEREAS, in the case at hand, Elastomers Warehouse will be the owner of the improvements during the abatement period, but Katoen Natie Gulf Coast, Inc., is to operate the warehouse pursuant to a warehouse operation agreement and EniChem will retain ownership of the products stored in and distributed from the warehouse; and WHEREAS, the City Council, after considering the variance requests and the Guidelines, believes that the variances requested should be granted and the tax abatement agreement should be approved; NOW THEREFORE, i ® BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: i 20000713 -4a Section 1: The facts and matters set forth in the recitals of this Ordinance are hereby found to be true and correct. Section 2: That the City Council of the City of Baytown, Texas, having reviewed and evaluated the variance requests detailed hereinabove, hereby finds that the terms of the tax abatement agreement, which is attached hereto as Exhibit "A" and incorporated herein for all intents and purposes, further the objectives of the Guidelines and (1) there will be no substantial adverse affect on the provision of the City's service or tax base and (2) the planned use of the property will not constitute a hazard to the public safety, health or morals. As such, the variances requested are hereby granted. Section 3: That the City Council of the City of Baytown, Texas, hereby authorizes and directs the City Manager of the City of Baytown to execute and the City Clerk to attest to a tax abatement agreement for certain taxable property located in the EniChem Reinvestment Zone and the Elastomers Reinvestment Zone with Elastomers Warehouse, L.P. A copy of said contract is attached hereto, marked Exhibit "A," and made a part hereof for all intents and purposes. Section 4: 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 affirmative vote of the City Council of the City of Baytown this the 13`h day of July, 2000. /,f& C PETE C. ALFARO, Mayor ATTE - -,,tL (, G Y W. SMITH, City Clerk APP VED AS TO FORM: ACIO RAMIREZ, W. City Attorney 0 c:kih251 \C ityCoun cil \Ordinances\Elastomers W arehouseTaxAbatementAgreementOrdinance ® City Of Baytown Tax Abatement Agreement for Certain Taxable Property located in the Elastomers Reinvestment Zone and the Enichem Reinvestment Zone THE STATE OF TEXAS § COUNTY OF HARRIS § This Tax Abatement Agreement ( "Agreement "), dated as of July 13, 2000, to be effective as described in Article XIV hereof, is made and entered into by and between City of Baytown, Texas ( "City "), and Elastomers Warehouse, L.P., a Texas limited partnership ( "Owner "), which is currently negotiating to become the owner of, or to obtain an easement interest in, certain taxable property in Harris County, Texas, including property located in Elastomers Reinvestment Zone and the EniChem Reinvestment Zone (collectively, the "Reinvestment Zone "). Authorization This Agreement is authorized by (i) the Texas Property Redevelopment and Tax Abatement Act, (ii) Ordinance No. of the City Council of the City of Baytown, Texas, providing for the designation of the Elastomers Reinvestment Zone, and (iii) Ordinance No. 7872 of the City Council of the City of Baytown, Texas, providing for the designation of the EniChem Reinvestment Zone. Il Definitions For the purpose of this Agreement, the definitions set forth in Resolution No. 1402 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 II. 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. 24399974 b. Abatement Period means the period of time commencing with the effective date of this Agreement and ending upon the sooner of (i) the fourth anniversary of the v Effective Date of Abatement (as defined in Article IV hereof) or (ii) the termination of this Agreement pursuant to the provisions of Article VII hereof. C. Base Year Value means the appraised value of the property within the. Reinvestment Zone as certified by the Harris County Appraisal District as of January 1 preceding . the execution of this Agreement plus the agreed upon value of Improvements made after such January 1 but before the execution of the Agreement. d. 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 upon the -earlier of (i) the corresponding date exactly one year after the Effective Date of the Abatement (as defined in Article IV hereof) or (ii) the date that the New Facility commences operations as a storage and/or distribution warehouse. e. Effective Date ofAbatement has the meaning given to that term in Article IV hereof. f. 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. g. 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. h. 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 Improvements are not integral to the operation of the facility, and property that has an economic life of less than fifteen (15) years, and any property owned or used by the State of Texas or its political subdivisions or any organization owned, operated, or directed by a political subdivision of the State of Texas. New 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 Owner's Application for Tax Abatement in the City of Baytown, which is attached hereto as Exhibit "B" (the "Application ") and incorporated herein for all intents and purposes. During the Construction Phase of the New Eligible Property, the Owner may make such change orders to the New Eligible Property as are reasonably necessary to accomplish its intended use. 24399974 2 Ll j. New Facility has the meaning given to that term in Article VI hereof. k. Subject Property has the meaning given to that term in Article III hereof. III Pro e The Reinvestment Zone is an area within Harris County, Texas, comprised of the Elastomers Reinvestment Zone and the EniChem Reinvestment Zone, each of which is 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 of approximately 12.1795 acres, which is located within the Reinvestment Zone and more fully described in Exhibit "D," attached hereto and made a part hereof. As of the date of execution of this Agreement, the Subject Property is comprised of portions of three existing tracts of land in the records of the Harris County Appraisal District, which are more particularly described as: Tract HCAD Account Number 1 045- 144 -001 -0189 2 045 -144- 001 -0109 3 045 -144- 001 -1086 Total Size Preliminary Value 31.1479 acres $371,900 1.0101 acres $ 18,300 24.9010 acres $390,200 57.079 acres $780,400 The preliminary value per acre of the three above - referenced tracts is $13,672. The parties agree that for purposes of establishing an estimated value of the Subject Property as of January 1, 2000, the Harris County Appraisal District valuation for the constituent tracts shall be prorated based on the preliminary value of $13,672 per acre, as determined above. Thus, the estimated preliminary values for the Subject Property as of January 1, 2000 shall be: Account No. Value Land $166,522 Existing Improvements $ 0 Leasehold Improvements $ 0 The above - referenced values (or, if the certified values hereafter established for tax year 2000, by the Harris County Appraisal District are different, the corresponding per acre value based on such certified values, pro rated by the size of the Subject Property) plus zero dollars ($0.00), representing the agreed upon value of Improvements made after January 1, 2000, but before the execution of this Agreement, shall be the Base Year Values for purposes of this Agreement. 24399974 3 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 `B." This Abatement shall be granted on the property valuation effective on the 1" of January immediately following the date of execution of this Agreement (the "Effective Date of Abatement "). The portion of New Eligible Property value to be abated shall be in accordance with the following schedule: The Construction Phase shall continue (i) for one year or (ii) until the construction of the New Facility is complete and the New Facility commences regular operation of a storage and distribution warehouse, whichever is earlier. If the period of construction extends beyond the Construction Phase, the New Facility shall be considered completed for purposes of the Abatement and in no case shall the Abatement Period inclusive of construction and completion extend past the fourth anniversary of the Effective Date of Abatement. The abated value shall be the value of New Eligible Property less the Base Year Value, as adjusted each year, of any Eligible Property existing upon the date of execution of this Agreement. V Taxability During the Abatement Period, taxes shall be payable as follows: (1) The value of Ineligible Property shall be fully taxable; (2) The Base Year Value of Eligible Property existing prior to the date of execution of this Agreement, as the same may be adjusted each year, shall be fully taxable; and (3) The value of New Eligible Property shall be taxable in the manner 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 Is pursuant to the Agreement is $6,250,000. 24399974 4 The City shall enter into only one tax abatement agreement for the New Facility described ® in this Agreement during the existence of (i) the Elastomers Reinvestment Zone as designated by Ordinance No. or (ii) the EniChem Reinvestment Zone as designated by Ordinance No.7872. VI Contemplated Improvements As set forth in the Application, attached hereto as Exhibit `B," the Owner represents that it will construct a wholesale distribution facility that it reasonably expects will cost approximately $6,250,000, which shall be used for commercial or industrial purposes (the "New Facility "). It is contemplated that this construction project will result in the creation of 7 to 11 jobs and approximately 88,000 man hours of construction employment 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 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 a trade or business within the Reinvestment Zone. The Owner further agrees that construction of the Improvements will begin on or before October 1, 2000, with completion on or before October 1, 2001. 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 (i) fails to commence construction of the New Facility described in Part VI above and the Application attached hereto as Exhibit `B" on or before October 1, 2000, (ii) fails to complete construction on or before October 1; 2001, (iii) fails to construct the New Facility described in Part VI above, (iv) refuses or neglects to comply with any of the terms of this Agreement, or (v) makes any representation pursuant to this Agreement which is false or misleading in any material respect. Should the City determine the Owner to be in default of this Agreement or in any respect, except for the failure to timely commence construction or pay taxes when due, 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 the Cure Period, the Cure Period may be extended, at the sole discretion of the City, if the Owner (i) promptly, upon the receipt of such notice, advises the City of Owner's intention to institute all steps necessary to cure such default and (ii) institutes and thereafter prosecutes to completion with reasonable dispatch all steps necessary to cure such default. 24399974 5 If the default is caused by the Owner's failure to commence the project described in Exhibit "B" within the above - referenced time frame, this Agreement will terminate automatically with no further notice to the Owner or opportunity to cure the default being necessary. If this Agreement is automatically terminated, all taxes previously abated by virtue of this Agreement, if any, will be recaptured and paid within 30. days of the automatic termination. In the event that-Owner allows its ad valorem taxes owed the City to become delinquent and fails timely and properly to 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 .previously abated by virtue of this Agreement will be recaptured and paid within 30 days of the termination. In the event the New Facility is completed and begins operations as a Regional Distribution Center Facility, but subsequently discontinues such operations for any reason excepting fire, explosion or other casualty, accident or actual disaster, for a period of one -year or longer during the Abatement Period, then this Agreement shall be terminated. In the event of termination pursuant to the provisions of this paragraph, the Abatement of taxes and payments for the calendar year during which the New Facility discontinues operations 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 New Facility no longer operates shall be paid to the City prior to the delinquency date for such year. Any and all recaptured taxes not paid within the 30 -day periods prescribed hereinabove shall accrue interest and penalties as set forth in the applicable provisions of the Texas Tax Code as if the same were never subject to Abatement. VIII Administration This Agreement shall be administered on behalf of the City by 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 the 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 New Facility. All inspections required herein will be made with one or more representatives of the Owner and in accordance with the Owner's safety standards. Upon completion of the contemplated construction, the City Manager or his designee shall annually evaluate the New 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 after giving effect to the terms of this Agreement of the real and personal property 24399974 n located on the Subject Property and (ii) the full taxable value without Abatement of the real and ® personal property located on the Subject Property. 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 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 of the Texas Tax Code, as may be necessary for the administration of the Abatement specified herein. .j If the City terminates this Agreement, it shall, when required, 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 as may be payable during the pendency of the litigation pursuant to the payment provisions of Section 42.08 of the Texas Tax Code. If the final determination of the appeal increases Owner's tax liability above the amount of tax paid, Owner shall remit the additional tax to the City pursuant to Section 42.42 of the Texas Tax Code. If the final determination of the appeal decreases Owner's tax liability, the City shall refund to Owner, as appropriate, the difference between the amount of tax paid and the amount of tax for which Owner is liable pursuant to Section 42.43 of the Texas Tax Code. IX Assignment The Owner may assign its rights and obligations under this Agreement to a new owner of the New 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 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. X 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, an y 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: 24399974 7 Owner: Elastomers Warehouse, L.P. 8790 Wallisville Road Houston, TX 77029 Attention: Martine Goegebuer City: City of Baytown P. O. Box 424 Baytown, Texas 77522 -0424 Attention: Monte Mercer, City Manager Either party may designate a different address by giving the other party ten (10) days' written notice. In addition to the foregoing, the Owner and the City agrees that, as an accommodation to EniChem Americas, Inc., and not as an obligation, the Owner and the City, respectively, shall each endeavor to provide EniChem Americas, Inc., at the address indicated below, a copy of each notice that it sends to the other such party: Enichem Americas, Inc. 2000 West Loop South, Suite 2010 Houston, Texas 77,027 Attention: Cosimo Caracciolo XI 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. XIi Venue This Agreement shall in all respects be interpreted and construed in accordance with and .governed by the laws of the State of Texas, regardless of the place of its execution or performance. The place of making and the place of performance for all purposes shall be the City of Baytown, Harris County, Texas. 24399974 8 XIII ® Severability 17-� 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. XIV Date of Agreement; Condition to Effectiveness The City executes this Agreement by and through the City Manager, acting pursuant to Ordinance No. of the City of Baytown and this Agreement shall be dated as of July 13, 2000, which is the date that this Agreement is signed by the City Manager. Notwithstanding the earlier execution and delivery of this Agreement, this Agreement shall not become effective until the City shall have received written notice that the Owner has become the holder of record title of a fee interest (except with respect to that certain portion of the Subject Property comprising a 0.0436 acre tract in which the Owner shall obtain an interest by easement) in the Subject Property. 24399974 9 This Agreement has been executed by the parties in multiple originals, each having full force is and effect. ATTEST: CITY OF BAYTOWN GARY W. SMITH, City Clerk MONTE MERCER, City Manager ATTEST: By: Name: Secretary of Elastomers Associates, Inc., its General Partner 24399974 10 ELASTOMERS WAREHOUSE, L.P. By: Elastomers Associates, Inc., its General Partner By: :; L�� Martine doegebuer, President