CC Resolution No. 1151 RESOLUTION NO. 1151 2079
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS, REVIEWING THE CURRENT GUIDELINES AND CRITERIA FOR
GRANTING TAX ABATEMENT IN A REINVESTMENT ZONE CREATED IN
HARRIS COUNTY OR CHAMBERS COUNTY ; RENEWING SUCH
GUIDELINES AND CRITERIA; AND PROVIDING FOR THE EFFECTIVE
DATE THEREOF.
WHEREAS, the creation and retention of job opportunities
that bring new wealth is a high civil priority of the City of
Baytown; and
WHEREAS , new jobs and investment will benefit the area
economy, provide needed opportunities, strengthen the real estate
market and generate tax revenue to support local services; and
WHEREAS, the communities within Harris and Chambers Counties
must compete with other localities across the nation currently
offering tax inducements to attract new plans and modernization
projects; and
WHEREAS, any tax incentives offered in the City of Baytown
and Harris and Chambers Counties reduce needed tax revenue unless
strictly limited in application to those new and existing
industries that bring new wealth to the community; and
WHEREAS, any tax incentives should not adversely affect the
competitive position of existing companies operating in the City
of Baytown and Harris and Chambers Counties; and
WHEREAS, the abatement of property taxes, when offered to
attract primary jobs in industries which bring in money from
outside a community instead of merely recirculating dollars
within a community, has been shown to be an effective method of
enhancing and diversifying an area's economy; and
WHEREAS, effective September 1, 1987, Texas law requires any
eligible taxing jurisdiction to establish Guidelines and Criteria
as to eligibility for tax abatement agreements prior to granting
of any future tax abatement, said Guidelines and Criteria to be
unchanged for a two year period unless amended by a three-
quarters vote; and
WHEREAS, to assure a common, coordinated effort to promote
our communities' economic development, any such Guidelines and
Criteria should be adopted only through the cooperation of
affected school districts, cities and counties; and
WHEREAS, City Council has determined that the Guidelines and
Criteria as to eligibility for tax abatement agreements should be
changed to conform with the criteria adopted by overlapping
taxing jurisdictions; and
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WHEREAS, the attached guidelines, adopted by City Council in
December of 1989 and amended in July of 1990, have been reviewed
by City Council, and they have determined that progress towards
the goals therein stated has been made as evidenced by the
proposed expansion of the EniChem Elastomers Americas , Inc .
facility; NOW THEREFORE
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS:
Section 1 : That the City of Baytown has reviewed the
current Guidelines and Criteria for granting tax abatement in a
reinvestment zone and determined that the goals stated therein
are still appropriate, and are being met.
Section 2 : That the City of Baytown hereby amends and
renews the Guidelines and Criteria for granting tax abatement in
a reinvestment zone which are attached hereto as Exhibit "A" .
Section 3 : 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 23rd day of July,
1992 .
BOBBY CREDILLE, Mayor
i
ATTEST:
EILEEN P. HALL, City Clerk
elQ ACID RAMIREZ, SR. , JCity Attorney
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TAX ABATEMENT GUIDELINES
SUMMARY
OBJECTIVES PRIMARY JOB CREATION - TARGET INDUSTRIES
AMOUNT ABATED - MINIMUM TO BE COMPETITIVE
FAIR TO JURISDICTIONS - IT IS A LOCAL OPTION
FAIR TO EXISTING BUSINESS - MODERNIZATION, EXPANSION
REGIONAL COOPERATION - SIMILAR ABATEMENTS
FLEXIBILITY - TOUGHLY ENFORCED VARIANCE PROCEDURE
TERMS 100 % DURING CONSTRUCTION NOT TO EXCEED 2 YEARS
100 % 1ST YEAR AFTER CONSTURCTION
75 % 2ND YEAR AFTER CONSTRUCTION
50 % 3RD YEAR AFTER CONSTRUCTION
FACILITIES MANUFACTURING
THAT QUALIFY REGIONAL SERVICE & DISTRIBUTION
REGIONAL ENTERTAINMENT
RESEARCH AND DEVELOPMENT
OTHER BASIC INDUSTRY
AUTHORIZED NEW PLANT
INVESTMENTS EXPANSION
MODERNIZATION
ABATED BUILDINGS AND STRUCTURE
FIXED MACHINERY AND EQUIPMENT
SIZE IMPROVEMENTS
OFFICE SPACE TO ADMINISTER PLANT
NOT ABATED 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 15 YEARS
ECONOMIC MINIMUM $1 MILLION INVESTMENT
CRITERIA RETAIN OR CREATE AT LEAST 15 JOBS
CANNOT REASONABLY USE EXISTING PROPERTY
NO "SERIOUS ADVERSE AFFECT" ON JURISDICTIONS
EXHIBIT A
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DEFINITIONS Section 1.
(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) "Eligible Jurisdiction" means any 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.
(c) "Agreement" means a contractual agreement between a property owner and/or
lessee and an eligible jurisdiction for the purposes of tax abatement.
(d) "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 1 but before the
execution of the agreement.
(e) "Economic Life" means the number of years a property improvement is
expected to be in service in a facility.
(f) "Deferred Maintenance" means improvements necessary for continued operations
which do not improve productivity or alter the process technology.
(g) "Expansion" means the addition of buildings, structures, fixed machinery
or equipment for purposes of increasing production capacity.
(h) "Facility" means property improvements completed or in the process of
construction which together comprise an integral whole.
(i ) "Manufacturing Facility" means buildings 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.
(j) "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.
EXHIBIT A
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(k) "New Facility" means a property previously undeveloped which is placed
into service by means other than or in conjunction with expansion or
modernization.
(1 ) "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 a market
outside the Houston Consolidated Metropolitan Statistical Area (CMSA)
and result in the creation of new permanent jobs and bring new wealth
in.
(m) "Regional Distribution Center Facility" means buildings and structures,
including fixed machinery and equipment, used or to be used primarily
to receive, store, service or distribute goods or materials owned by
the facility operator where a majority of the goods or services are
distributed to other points.
(n) "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.
(o) "Regional Service Facility" means buildings and structures, including
fixed machinery and equipment, used or to be used to service goods where
a majority of the goods being serviced originate at least 100 miles
away.
(p) "Research Facility" means building 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.
ABATEMENT AUTHORIZED Section 2.
(a) Authorized Facility. A facility may be eligible for abatement if it
is a: Manufacturing Facility, Research Facility, Regional Distribution
Center Facility, Regional Service Facility, Regional Entertainment Facility
or Other Basic Industry.
(b) Creation of New Value. Abatement may only be granted for the additional
value of eligible property improvements made subsequent to and listed
in an abatement agreement between the City 'of Baytown and the
property owner and lessee (if required , subject to such limitations
as City Council- may require.
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(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.
(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 15 years; property owned or
used by the State of Texas or its political subdivisions or by any organization
owned, operated or directed by a political subdivision of the State
of Texas.
(f) 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 of the value of new eligible
properties shall be abated for up to two years during the period of
construction, followed by one hundred percent abatement for the first
year after construction, seventy-five percent percent abatement for
the second year after construction and fifty percent abatement for the
third year after construction. If the period of construction exceeds
two 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 five 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) .
(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 $1 million after the period of abatement
has expired;
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(2) must be expected to prevent the loss of employment, retain or create
employment for at least 15 people on a permanent basis;
(3) must not be expected to solely or primarily have the effect of
transferring employment from one part of a county to another; 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; and,
(3) the additional value of new eligible property shall be taxable
in the manner described in Section 2. (g).
APPLICATION Section 3.
(a) Any present or potential owner of taxable property in 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; a map and property description; a time schedule for
undertaking and completing the proposed improvements. In the case of
modernization a statement of 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 Mayor of the City of
Baytown 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 prepare a
feasibility study setting out the impact of the proposed reinvestment
zone and tax abatement. The feasibility study shall include, but not
be limited to, an estimate of the economic effect of the creation of
the zone and the abatement of taxes and the benefit to the eligible
jurisdiction and the property to be included in the zone.
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(e) The City Council shall not establish a reinvestment zone or enter
into an abatement agreement if it finds that the request for the abatement
was filed after the commencement of 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 a designated
member of City Council provided, however, the total duration of
an abatement shall in no instance exceed five 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 (3/4) vote of the City Council
PUBLIC HEARING AND APPROVAL Section 4.
(a) The governing body of a city may not adopt an ordinance, or a county
a resolution, 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. Notice of the hearing shall
be clearly posted or identified on City Council's agenda at least
30 days prior to the hearing. The presiding officers of eligible jurisdictions
shall be notified in writing at least 15 days prior to the hearing.
(b) Prior to entering into a tax abatement agreement the City Council
may, at its option, hold a public hearing at which interested persons
shal.l 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 (3/4) 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) .
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AGREEMENT Section 5.
(a) After approval the City Council shall formally pass a resolution
and execute an agreement with the owner of the facility and lessee as
required which shall include:
(1) estimated value to be abated and the base year value;
(2) 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) contractual obligations in the event of default, violation of terms
or conditions, delinquent taxes, recapture, administration and
assignment as provided in Sections 2. (a) , 2. (f) , 2. (g) , 6. ,
7. and 8. , or other provisions that may be required for uniformity
or state law, and;
(6) amount of investment and average number of jobs involved.
Such agreement shall normally be executed within 60 days after the applicant
has forwarded all necessary information and documentation to the City Council
RECAPTURE Section 6.
(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 for a period of one year during the abatement period,
the 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 days from the date of termination.
(b) Should the City Council determine that the company or individual
is in default according to the terms and conditions of it's agreement,
the Citv Council shall notify the company or individual in writing
at the address stated in the agreement, and if such is not cured within
sixty (60) days from the date of such notice ("Cure Period") , then the
agreement may be terminated.
(c) In the event that 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 of
the agreement will be recaptured and paid within sixty (60) days of
the termination.
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ADMINISTRATION Section 7.
(a) The Chief Appraiser of the County shall annually determine an assessment
of the real and personal property comprising the reinvestment zone.
Each year, the company or individual receiving abatement shall furnish
the assessor with such information as may be necessary for the abatement.
Once value has been established, the Chief Appraiser shall notify the
affected jurisdictions which levies taxes on the amount of the assessment.
(b) The agreement shall stipulate that employees and/or designated representatives
of the 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 its safety standards.
(c) Upon completion of construction the jurisdiction which created the zone
shall annually evaluate each facility receiving abatement to ensure
compliance with the agreement and report possible violations to the
contract and agreement to the City Council and its attorney.
ASSIGNMENT Section 8.
Tax abatement agreements may be assigned to a new owner or lessee of the
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 contemplates
the same improvements or repairs to the property, except to the extent such
improvements or repairs have been completed. No assignment shall be approved
if the assignor or the assignee are indebted to the City of Baytown
for ad valorem taxes or other obligations.