The full or partial exemption from ad valorem taxes of certain
real property in a reinvestment zone designated for economic development
purposes.
A contractual agreement between a property owner and/or lessee
and an eligible jurisdiction for the purposes of tax abatement.
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.
Improvements necessary for continued operations which do
not improve productivity or alter the process technology.
The number of years a property improvement is expected to
be in service in a facility.
Harris County or Fort Bend County or Waller County, Texas,
and any school district or college district located in Harris, Fort
Bend or Waller County that levies ad valorem taxes upon and provides
services to property located within the proposed or existing reinvestment
zone.
The addition of buildings, structures, fixed machinery or
equipment for purposes of increasing production capacity.
Property improvements complete or in the process of construction
which together comprise an integral whole.
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.
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.
A property previously undeveloped which is placed into service
by means other than or in conjunction with expansion or modernization.
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 in new wealth.
The number of years a property improvement is expected to
be in service in a facility.
Buildings and structures, including fixed machinery and equipment,
used or to be used primarily to receive, store, service or distribute
where a majority of the goods or services are distributed to points
at least 100 miles from any part of Harris, Fort Bend or Waller County.
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, Fort Bend or Waller County.
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,
Fort Bend or Waller County.
Buildings 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.
(1999 Code, sec. 1.1601)
(a)
Authorized facilities.
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 and the property
owner and lessee (if required), subject to such limitations as the
city council may require.
(c)
New facilities and improvements to existing facilities.
Abatement may be granted for new facilities and improvements to existing
facilities for purposes of modernization or expansion. Expansion and
improvement of existing facilities must meet the $3,000,000.00 test
and other abatement requirements.
(d)
Eligible property.
Abatement may be extended to the
value of buildings, structures, fixed machinery and equipment, and
site improvements plus that office space and related fixed improvements
necessary to the operation and administration of the facility. Eligible
property includes hotels as defined in Texas Tax Code chapter 156,
but is limited to those structures whose use is taxed under such chapter.
(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, residential development, housing, group homes, nursing homes, assisted living facilities, any assisted care facility, deferred maintenance investments, property to be rented or leased except as provided in subsection (f) of this section, 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, and property owned or used by the state or its political subdivisions or by any organization owned, operated or directed by a political subdivision of the state.
(f)
Leased facilities.
If a leased facility is granted abatement,
the agreement shall be executed with the owner, lessor and lessee.
(g)
Value and term of abatement.
(1)
Abatement shall be granted effective with the January 1, valuation
date immediately following the date of execution of the agreement.
The agreement will provide for up to 100% abatement in the first two
years and up to 50% abatement for the remainder of the agreement period.
The number of years of abatement shall not exceed five years plus
two years for 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 seven years.
(2)
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 must:
(1)
Be reasonably expected to increase the appraised value of the property
in the amount of $3,000,000.00 after the period of abatement has expired;
(2)
Be expected to prevent the loss of employment or retain or create
employment on a permanent basis in Harris, Fort Bend or Waller County;
(3)
Not be expected to solely or primarily have the effect of transferring
employment from one part of Harris, Fort Bend or Waller County to
another;
(4)
Be necessary because capacity cannot be provided efficiently utilizing
existing improved property when reasonable allowance is made for necessary
improvements; and
(5)
Not compete with existing businesses nor adversely impact on the
business opportunities of existing businesses.
(i)
Standards for tax abatement.
(1)
The following factors, among others, shall be considered in determining
whether to grant tax abatement and, if so, the percentage of value
to be abated and the duration of the tax abatement:
(A)
Value of land and existing improvements, if any;
(B)
Type and value of proposed improvements;
(C)
Productive life of proposed improvements;
(D)
Number of existing jobs to be retained by proposed improvements;
(E)
Number and type of new jobs to be created by proposed improvements;
(F)
Amount of local payroll to be created;
(G)
Whether the new jobs to be created will be filled by persons residing
or projected to reside within affected taxing jurisdictions;
(H)
Amount of local sales taxes to be generated directly;
(I)
Amount the property tax base valuation will be increased during the
term of abatement and after abatement, which shall include a definitive
commitment that such valuation shall not, in any case, be less than
$3,000,000.00;
(J)
The costs to be incurred by the city to provide facilities or services
directly resulting from the new improvements;
(K)
The amount of ad valorem taxes to be paid the city during the abatement
period considering (i) the existing values, (ii) the percentage of
new value abated, (iii) the abatement period, and (iv) the value after
expiration of the abatement period;
(L)
The population growth of the city that occurs directly as a result
of new improvements;
(M)
The types and values of public improvements, if any, to be made by
the applicant seeking abatement;
(N)
Whether the proposed improvements compete with existing businesses
to the detriment of the local economy;
(O)
The impact on the business opportunities of existing businesses;
(P)
The attraction of other new businesses to the area;
(Q)
The overall compatibility with the zoning ordinances and comprehensive
plan for the area; and
(R)
Whether the project is environmentally compatible, with no negative
impact on quality of life perceptions.
(2)
Each eligible facility shall be reviewed on its merits utilizing
the factors provided above. After such review, abatement may be denied
entirely or may be granted to the extent deemed appropriate after
full evaluation.
(j)
Denial of abatement.
Neither a reinvestment zone nor
abatement agreement shall be authorized if it is determined that:
(1)
There would be a substantial adverse affect on the provision of government
service or the tax base;
(2)
The applicant has insufficient financial capacity;
(3)
Planned or potential use of the property would constitute a hazard
to public safety, health or morals;
(4)
Violation of other codes or laws; or
(5)
Any other reason deemed appropriate by the city council.
(k)
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 this section 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 fully taxable
at the end of the abatement period, howsoever said period shall end.
(l)
Determination of compliance.
Throughout the agreement
period, the city shall be authorized to make scheduled and unscheduled
inspections of the improvements to ensure compliance with the agreement.
(m)
Noncompliance.
Should there be a breach of or noncompliance
with the abatement agreement, the city may cancel or modify the agreement
and shall be entitled to recover taxes for all preceding years of
the agreement period which had been abated.
(1999 Code, sec. 1.1602; Ordinance 2542, sec. I, adopted 8/27/12)
(a)
Any present or potential owner of taxable property in the city may
request the creation of a reinvestment zone or tax abatement by filing
a written request with the office of the mayor.
(b)
The application shall consist of a completed application form designed
by the mayor accompanied by:
(1)
A general description of the new improvements to be undertaken;
(2)
A descriptive list of the improvements for which an abatement is
requested;
(3)
A list of the kind, number and location of all proposed improvements
of the property;
(4)
A map and property description;
(5)
A time schedule for undertaking and completing the proposed improvements;
(6)
In the case of modernization, a statement of the assessed value of
the facility, separately stated for real and personal property, for
the tax year immediately preceding the application; and
(7)
Such financial and other information as the mayor may deem appropriate
for evaluating the financial capacity and other factors of the applicant.
(c)
Within ten (10) days following receipt of a completed application,
the mayor 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 mayor, as designated officer,
shall cause to have prepared a feasibility study setting out:
(1)
The impact of the proposed reinvestment zone and tax abatement;
(2)
An estimate of the economic effect of the creation of the zone on
existing business;
(3)
The impact of the proposed abatement of taxes and the benefit to
the eligible jurisdiction; and
(4)
The property to be included in the zone.
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The feasibility study shall be commenced upon receipt by the
city of a sum equal to 1-1/2 times the estimated cost of such study,
said sum to be donated to the city by the applicant for abatement.
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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. An applicant is ineligible for abatement if a decision
to commence a modernization, expansion or a new facility in Harris,
Fort Bend or Waller County has been formally announced on or before
the date of adoption of these guidelines.
(f)
Requests for variance from the provisions of section 11.04.002(a), (e) and (g) may be made in written form to the mayor; 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.
(g)
The city, not more than 45 days after receipt of the application
and feasibility study, shall by resolution either approve or disapprove
the application for tax abatement. The city shall notify the applicant
of approval or disapproval.
(1999 Code, sec. 1.1603)
(a)
The city council may not adopt an ordinance 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 the
city council's agenda at least thirty (30) days prior to the hearing.
The presiding officers of eligible jurisdictions shall be notified
in writing at least fifteen (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 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:
(d)
Any applicant requesting a variance under section 11.04.003(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 11.04.003(f).
(1999 Code, sec. 1.1604)
(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 11.04.002(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 the application, section 11.04.003(b);
(6)
Amount of investment and average number of jobs involved; and
(7)
Such other provisions as the city shall deem appropriate. (Note:
This provision may require further definition to set ascertainable
standard.)
(b)
Such agreement shall normally be executed within sixty (60) days
after the applicant has forwarded all necessary information and documentation
to the city council.
(1999 Code, sec. 1.1605)
(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 except 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 no longer produces. The taxes otherwise abated for that calendar
year shall be paid to the city within thirty (30) 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 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 thirty
(30) days from the date of such notice (“cure period”),
then the agreement may be terminated.
(c)
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 previously abated by virtue of the agreement
will be recaptured and paid within thirty (30) days of the termination.
(1999 Code, sec. 1.1606)
(a)
The chief appraiser of the Waller County Appraisal District 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 appraiser with such information
as may be necessary for the abatement. Once value has been established,
the chief appraiser shall notify the city of the amount of the assessment.
(b)
The abatement shall stipulate that employees and/or designated representatives
of the city will have access to the reinvestment zone during the term
of the agreement [to ensure that the terms of the agreement] are being
met. All inspections 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 city shall annually evaluate
each facility receiving abatement to ensure compliance with the abatement
[agreement] and report possible violations of the contract and agreement
to the city council regarding the findings of each evaluation.
(1999 Code, sec. 1.1607)
(a)
Tax abatement agreements may be assigned to a new owner or lessee
of the facility upon the approval by resolution of the city subject
to the financial capacity of the assignee and provided that all conditions
and obligations in the abatement agreement are guaranteed by the execution
of a new contractual agreement with the city, 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.
(b)
Any tax certificates issued on property subject to abatement shall
state that the property is subject to a rollback in the event of default.
(1999 Code, sec. 1.1608)
(a)
These guidelines and criteria are effective upon the date of their
adoption and will remain in force for two (2) 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 may 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.
(1999 Code, sec. 1.1609)
