CC Resolution No. 1001 1782
RESOLUTION NO. 1001
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS, APPROVING AND ADOPTING GUIDELINES AND CRITERIA
FOR GRANTING TAX ABATEMENT IN A REINVESTMENT ZONE
CREATED IN HARRIS COUNTY; AND PROVIDING FOR THE
EFFECTIVE DATE HEREOF.
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WHEREAS, the creation and retention of job opportunities
that bring new wealth is the highest civic 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 County must compete
with other localities across the nation currently offering tax
inducements to attract new plant and modernization projects; and
WHEREAS, any tax incentives offered in the City of Baytown
and Harris County 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 County; 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 Harris County; and
WHEREAS, Harris County Commissioners Court has approved the
circulation of the attached Guidelines and Criteria to affected
taxing jurisdictions for consideration as a common policy for all
jurisdiction which choose to participate in tax abatement
agreements; NOW THEREFORE,
1783
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS:
Section 1 : That the City of Baytown does hereby adopt the
Guidelines and Criteria for granting tax abatement in a
reinvestment zone which are attached hereto as Exhibit "A. "
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 affirmative vote of the
City Council of the City of Baytown, this the 12th day of
November , 1987 .
"t_M METT 0. HTTTO, Mayor
ATTEST:
EILEEN P. HALL, City Clerk
ANDALL B. STRONG, Ci ttorney
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1784
EXHIBIT A
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 Harris County and any
municipality, school district or college district, the
majority of which is located in Harris County, 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 tar. 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) "Facilito construction on property means
process f which together comprise an integral
whole.
(i) "Manufacturing Facility" means buildings and structures,
including fixed machinery and 'eauipment, 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.
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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 points at least 100 miles from any part of
Harris County.
(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 where the majority of users
reside at least 100 miles from any part of Harris County.
(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 from any part of
Harris County.
(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 and for five years thereafter. 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 seven 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 $5 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 30 people on
a permanent basis in the City of Baytown;
(3) must not be expected to solely or primarily have the
effect of transferring employment from one part of
Harris 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
(affected jurisdiction) 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
the assessed value of the facility, 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 presiding
officer of a city or town 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
governing body of a city, town or county through its
designated officer or employe shall prepare a feasibility
study setting out the impact of the proposed reinvestment
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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.
(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. An applicant is ineligible for
abatement if a decision to commence a modernization,
expansion or new facility in Harris County has been
formally announced on or before the date of adoption of
these guidelines.
(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 seven 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 shall be entitled to speak and
present written materials for or against the approval of
the tax abatement agreement.
(c) In order 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
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(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) .
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, then
the agreement shall terminate and so shall the abatement of
the taxes for the calendar year during which the facility
nc 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
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conditions of it' s agreement, the City 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.
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 of 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 of Baytown and its attorney.
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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 .
SUNSET PROVISION Section 9 .
(a) These Guidelines and Criteria are effective upon the date
of their adoption and will remain in force for two years,
at which time all reinvestment zones and tax abatement
contracts created pursuant to its provisions will be
reviewed by the City Council to determine whether the
goals have been achieved. Based on that review, the
Guidelines and Criteria will be modified, renewed or
eliminated.
(b) This policy is mutually exclusive of existing Industrial
District Contracts and owners of real property in areas
deserving of special attention as agreed by the affected
jurisdictions.
10-28-87
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