As herein employed, the following words, terms and phrases are defined as follows:
Abatement.
The full or partial exemption from ad valorem taxes of certain properties in a zone designated for economic development purposes pursuant to the act.
Agreement.
A contractual agreement between a property owner and a taxing jurisdiction for the purpose of tax abatement.
Base year value.
The assessed value of eligible property [on] January 1 preceding the execution of the agreement plus the agreed-upon value of eligible property improvements made after January 1 but prior to the execution of the abatement agreement.
Economic life.
The number of years a property improvement is expected to be in service. Provided, however, in no event shall such number of years exceed the depreciation allowance specified in the federal Internal Revenue Service Code.
Expansion.
The addition of buildings, structures, fixed equipment or machinery for the purpose of increasing production capacity.
Facility.
Property improvements completed or in the process of construction which together comprise an integral whole.
Modernization.
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, and extends the economic life of the facility. Modernization may result from the construction, alteration or installation of buildings, structures, fixed machinery and equipment. It shall not be for the purpose of reconditioning, refurbishing, repairing or completion of deferred maintenance.
New facility.
A property previously undeveloped which is placed into service by means other than, or in conjunction with, expansion or modernization.
Reinvestment zone.
Those areas defined as reinvestment zones in chapter 312, Tax Code, Texas Civil Statutes.
(2002 Code, sec. 11.601)
(a) 
Authorized facilities.
A facility may be eligible for tax abatement if it is determined that such a facility will enhance the economic vitality of the community through a combination of new capital investment, increased tax revenues or the creation of additional job opportunities.
(b) 
Creation of new value.
Abatement may only be granted for the additional value of eligible property improvements made subsequent to and specified in an abatement agreement between the city and the property owner and lessee (if required), subject to such limitations as the city council and the city require.
(c) 
Eligible property.
Tax abatement may be extended to the value of improvements to new or existing real property including buildings, structures, fixed machinery and equipment, site improvement, plus that office space and related fixed improvements and tangible personal property necessary to the operation and administration of the facility. The increase in market value for tax purposes of land as a direct result and in conjunction with the new property improvement will also be considered eligible property for abatement.
(d) 
Ineligible property.
The following specific types of property shall be fully taxable and ineligible for abatement: inventories, supplies, personal property and furnishings not necessary to the operation and administration of the facility and land, except as noted above.
(e) 
Leased facilities.
If a leased facility is granted [tax abatement], the lessee shall be furnished a copy of applicable tax abatement agreements.
(f) 
Value and terms of abatement.
Abatement shall be granted, effective with the January 1 evaluation date, immediately following execution of the agreement. If a modernization project includes facility replacement, the basis for abatement shall be the value of the new unit(s) less the value of the old unit(s). The maximum abatement for the value of the eligible property shall be determined by the city council at the time of the agreement, but in no case shall the maximum exceed that amount permitted by chapter 312, Tax Code. The maximum period of abatement shall not exceed ten (10) years. The value and term of the abatement will be determined using the following criteria:
(1) 
Number of jobs created in excess of the minimum required herein.
(2) 
Capital investment in eligible property in excess of the minimum required herein.
(3) 
Capital investment in new taxable property to be included in the project.
(4) 
Sales taxes and all other revenues that would be generated by the project to the benefit of governmental entities.
(5) 
Off-site infrastructure investment by the applicant.
(6) 
Off-site infrastructure investments required by the city in order to serve the project.
(7) 
The project's influence as a catalyst or magnet to attract or retain additional favorable development within the city.
(8) 
The project's influence in serving as an example and catalyst in upgrading development in terms of functional, visual or material quality.
(g) 
Percentage of abatement.
The city council shall have the authority to determine the percentage of tax abatement according to the above criteria in order to:
(1) 
Accomplish the city's economic development goals.
(2) 
Ensure that governmental entities are not hampered in their delivery of services.
(3) 
Ensure that the property tax burden is not shifted to present taxpayers.
(h) 
Economic qualifications.
In order to be eligible for tax abatement, the planned improvement must:
(1) 
Have a minimal capital investment of two hundred fifty thousand dollars ($250,000.00) in eligible property.
(2) 
Create and maintain, for the term of the agreement, employment for at least five (5) people on a permanent basis.
(3) 
Not have a significantly adverse effect upon competition in the local market with established local businesses.
The city council may at its discretion choose to waive either or both the minimal capital investment and employment requirements outlined above if the project otherwise meets the guidelines and criteria for granting tax abatement.
(2002 Code, sec. 11.602)
(a) 
Filing.
Any present or potential owner of taxable property may request tax abatement by filing a written application with the city manager and the chief executive officer of any other taxing jurisdiction as deemed appropriate by the applicant.
(b) 
Contents.
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 abatement is requested; a list of the kind, number and location of all proposed improvements of the property; a map and property description; and a time schedule for undertaking and completing the proposed improvements. In the case of a modernization or expansion project, a statement of the assessed value of the facility separately stated for real and personal property shall be given for the tax year immediately preceding the application. The application form may require such financial and other information as the city deems appropriate for evaluating the financial capacity and other relevant factors of the applicant.
(c) 
Notification to governmental bodies.
Upon receipt of a completed application, the city manager shall forward a copy of the application to the presiding officers of the governmental agencies having jurisdiction of the property covered by the application.
(d) 
Feasibility study.
After receipt of an application for tax abatement, the city shall consider the feasibility and the impact of the proposed tax abatement. The study of feasibility shall include but not be limited to an estimate of the economic effect of the abatement of taxes and the benefit to the governmental jurisdictions and the property to be covered by such abatement.
(e) 
Required findings.
In order to enter into a tax abatement agreement, the city must find that the terms of the proposed agreement meet these guidelines and criteria. Nothing herein shall be construed to limit the authority of the city to examine each application for tax abatement on a case-by-case basis and determine whether or not the proposed project complies with the intent of these guidelines and criteria. Nothing herein shall be construed to require the city council to approve any application for tax abatement. The city council may reject any application for tax abatement without cause.
(2002 Code, sec. 11.603)
The tax abatement agreement with the owners of the facility shall include:
(1) 
The estimated value to be subject to abatement.
(2) 
The percentage of value to be abated each year as provided in section 20.06.002.
(3) 
The commencement date and termination date of the agreement.
(4) 
The proposed use of the facility, nature of construction, time schedule, map, property description and improvements list as provided in the application.
(5) 
The contractual obligations in the event of default, delinquent taxes or recapture, as provided in these guidelines or other provisions that may be required for uniformity or by state law.
(6) 
The amount of capital improvement and minimum number of jobs created by the project.
(7) 
Reporting requirements, including periodic capital investment reports during construction and periodic manpower reports from the applicant's personnel officer confirming the number of additional employees added and retained as a result of the capital investment.
(8) 
The applicant shall warrant that the information provided the taxing jurisdictions is true and correct and that any materially false or misleading information provided on the application or in any periodic report to the taxing jurisdictions may be grounds for the termination of the existing tax abatement and possible liability for recapture of past taxes normally due.
(9) 
Any additional provisions determined by the city council to be instrumental to the economic vitality of the project and not inconsistent with chapter 312, V.T.C.A. Tax Code.
(10) 
The provisions of Ordinance No. 27-89 shall be attached as an annex to any agreement pursuant to this article.
(2002 Code, sec. 11.604)
(a) 
Nonperformance of operation.
In the event that the facility is completed but fails to commence production of product or service for any reason, excepting fire, other casualty, accident or natural disaster, within one (1) year following completion, the agreement shall terminate and so shall the abatement of the taxes for the period following completion that production does not commence. The taxes otherwise abated for that calendar year shall be paid to the city within sixty (60) days from the date of termination.
(b) 
Discontinued operation.
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, other casualty, accident or natural disaster, for a continuous period of one (1) year during the abatement period, then the agreement shall terminate and so shall the abatement of the taxes for the same period during which the facility no longer produces. The taxes otherwise abated for that calendar year shall be paid to the city within sixty (60) days from the date of termination.
(c) 
Notice of default.
Should the city council determine that the company or individual is in default according to the terms and conditions of its agreement, the city 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, then the agreement may be terminated.
(d) 
Delinquent taxes.
In the event that the company or individual: (i) 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 (ii) 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 otherwise abated during the delinquent period will be recaptured and paid within sixty (60) days of termination.
(e) 
Actual capital investment.
Should the governing body determine that the total capital investment in eligible property is lower than provided in the agreement, the difference between the tax abated and the tax that would have been abated based upon the actual capital investment as determined shall be paid to the taxing jurisdiction within sixty (60) days of notification to the company or the individual of such determination.
(2002 Code, sec. 11.605)
(a) 
Access to facility.
The agreement shall stipulate that employees and/or designated representatives of the taxing jurisdictions will have access to the facility during the term of the agreement to inspect the facility to determine if the terms and conditions of the agreement are being met. All inspections shall be conducted in a manner so as to not unreasonably interfere with the construction and/or operation of the facility; provided, however, the city may conduct "spot" inspections requiring no advance notification to the applicant. All inspections will be made with one (1) or more representatives of the company or individual, and in accordance with its safety standards.
(b) 
Annual evaluation.
Upon completion of construction, the eligible jurisdiction individually or in conjunction with other affected jurisdictions shall annually evaluate each facility receiving abatement to ensure compliance with the agreement and report possible violations of the agreement.
(c) 
Transfer or assignment of agreement.
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 is indebted to the city for ad valorem taxes or other obligations.
(2002 Code, sec. 11.606)