(a) The growth, sustainability and diversity of a regional economy are
goals that are critical to the long-term prosperity of a community
and its citizens. Communities must strategically plan and implement
policies and incentive programs to achieve these goals.
(b) These tax abatement guidelines (“guidelines”) demonstrate
an effort by the city to help attract, retain and expand targeted
industries, increase employment and wages, expand the tax base, and
create long-term capital investment and new wealth opportunities in
the community.
(c) The city council has adopted these guidelines and will utilize them
to ensure that any abatement of property taxes achieves the community’s
economic development goals.
(d) Chapter 312 of the Texas Tax Code authorizes local governments to
abate ad valorem property taxes on the value of new improvements to
the property, including real property, tangible personal property,
and inventory and supplies. Taxing jurisdictions (e.g., the city and
the county) are required by this statute to develop and review guidelines
at least every two years for the eligibility and award of this tax
incentive.
(e) State law further requires that each taxing jurisdiction enter into
a tax abatement agreement with each owner of property or the owner
of a leasehold interest in real property receiving an abatement or
portion thereof. These agreements are binding legal documents between
all parties involved. Additional provisions and requirements are included
in those agreements.
(f) The city council has nominated land within the city and its extraterritorial
jurisdiction as an enterprise zone (see enterprise zone map, attached
to Resolution 4586 as exhibit A). The official enterprise zone, by
such designation, is automatically a reinvestment zone. These guidelines
apply to property located in the city’s enterprise zone and
persons or entities seeking tax abatement on property owned in the
enterprise zone should be aware that state law requires the governing
bodies of all taxing jurisdictions in an enterprise zone to approve
a city tax abatement agreement on property located therein before
the agreement can take effect.
(g) Within the city’s enterprise zone, the city council has designated
two revitalization areas (see exhibit A attached to Resolution 4586)
for particular attention: (1) Kurth Drive Revitalization Area and
(2) Downtown Revitalization Area. As incentives to invest in the revitalization
of these areas, the minimum threshold eligibility requirements for
tax abatement require a smaller capital investment and fewer full-time
jobs.
(Resolution 4502 adopted 2/5/2013; Resolution 4586 adopted 5/6/2014)
(a) Reinvestment zone.
To be eligible for tax abatement
the owner must own taxable real property that is the subject of the
tax abatement within the city’s enterprise zone and must enter
into a written agreement with the city, wherein the owner agrees to
make specified improvements or repairs to the property in conformity
with the city’s comprehensive plan.
(b) Authorized facility.
A facility may be eligible for
tax abatement if it is a manufacturing facility, research facility,
distribution center, service facility, or retail facility located
in a designated revitalization area.
(c) Creation of new value.
Tax abatement may only be granted
for the additional value of eligible property improvements made subsequent
to and specified in a tax abatement agreement between the city and
the property owner, subject to such limitations as the city may require.
The productive life of the improvements must exceed 10 years.
(d) New and existing facilities.
Tax abatement may be granted
for new facility and improvements to existing facility for purposes
of modernization or expansion.
(Resolution 4502, sec. I, adopted 2/5/2013; Resolution 4586, sec. I, adopted 5/6/2014)
Under these guidelines, to be eligible for consideration for
a tax abatement, a company or project must meet and/or exceed all
of the criteria, as described below:
(1) Eligible property.
Tax abatement may only be granted
to the owners of real property improvements, personal property improvements,
and taxable leasehold interests in tax-exempt real property located
in a reinvestment zone to the extent allowed by state law. Real property
improvements include the construction of a new facility and the expansion/modernization
of an existing facility. If a leased facility is granted tax abatement,
the agreement shall be executed by both the lessor and the lessee.
(2) Ineligible property.
Any property that is not specifically
identified in the tax abatement agreement will not receive tax abatement.
Inventory, supplies, and/or office equipment are not eligible for
tax abatement. Personal property that was located on the real property
at any time before the execution of the abatement agreement will not
be eligible for abatement. Any property that is in a tax increment
financing zone will not be eligible for abatement.
(3) Abatement periods.
Eligible real and/or personal property
improvements may qualify for abatement periods lasting between 2 to
10 years. The economic life of the eligible property must exceed the
abatement period.
(4) Exceptional cases.
Where the applicant’s investment
in real and/or personal property improvements substantially exceeds
the eligibility thresholds, the city council may consider terms and/or
percentages that exceed these guidelines. However, the maximum period
for any tax abatement agreement is limited to 10 years in accordance
with state law.
(5) Local hire requirement.
Any project seeking a tax abatement
must hire a minimum of 25% of its new full-time employees at the project
location from residents of the county, regardless of project size.
Residents, for the purpose of this policy, are those employees who
reside in the county, whether through relocation or existing residency.
(6) Employee health care benefits.
The applicant seeking
a tax abatement under these guidelines must offer a health benefit
plan to its full-time employees at a rate that is reasonable to the
majority of its employees and which allows access to the plan by the
employees’ dependents. For additional consideration, the company
may provide information on other employee benefits provided, such
as retirement/pension programs and subsidies for education, job-training,
transportation assistance and child/elderly care.
(7) Wage requirements.
In order to be eligible for a tax
abatement, all (100%) of the company’s new and existing employees
at the project location must earn no less than 101% of the county
average salary for the type of industry throughout the full term of
the tax abatement agreement.
(8) Companies and projects not eligible for tax abatement.
These guidelines do not apply to companies that sell products and/or
services to the final consumer such as: restaurants, retail stores,
malls, hotels, motels, professional services, and similar facilities,
unless located in a designated revitalization area.
(9) Timing.
In order to be eligible for consideration, the
applicant must submit an application prior to commencement of the
project. No tax abatement for a proposed project will take effect
until a final negotiated agreement has been approved and fully executed.
The timing and acquisition of personal property related to this project
will impact its eligibility for abatement.
(10) Additional terms and conditions.
The applicant will
enter into separate tax abatement agreements with the city and the
county and these agreements will require separate approval by each
governing authority. Consequently, each jurisdiction reserves the
right to negotiate additional terms and conditions on a case-by-case
basis.
(11) Recapture of abated taxes.
Tax abatement agreements
will provide for recapture of abated property taxes in the event contract
terms and requirements are not met. These recapture provisions will
survive any subsequent assignment of the agreement.
(Resolution 4502, sec. II, adopted 2/5/2013; Resolution 4586, sec. II, adopted 5/6/2014)
(a) General enterprise zone schedule.
To qualify for real
and personal property tax abatement, the project must meet one or
more of the following minimum threshold eligibility requirements in
regard to capital investment (new construction or the value of the
improvements as valued by the county appraisal district) or new job
creation.
Minimum Threshold Eligibility Requirements
|
---|
Capital Investment
|
New Full-Time Jobs Created
|
Abatement Schedule
|
---|
$1 - 5 million
|
21 - 50
|
Year 1: 100% (construction)
Year 2: 100%
Year 3: 80%
Year 4: 60%
Year 5:40%
Year 6: 20%
|
$5 - 10 million
|
51 - 100
|
As above, but allowed one additional year at 100% abatement
during construction
|
$10 million +
|
101 +
|
Up to 100% for up to 10 years, at the discretion of the city
council
|
(b) Retention of existing business schedule.
To qualify
for real and personal property tax abatement, the project must meet
one or more of the following minimum threshold eligibility requirements
in regard to capital investment (new construction or the value of
the improvements as valued by the county appraisal district) or new
job creation.
Minimum Threshold Eligibility Requirements Existing Businesses
|
---|
Capital Investment
|
New Full-Time Jobs Created
|
Abatement Schedule
|
---|
$750,000 - $3.75 million
|
16 - 38
|
Year 1: 100% (construction)
Year 2: 100%
Year 3: 80%
Year 4: 60%
Year 5: 40%
Year 6: 20%
|
$3.75 million - $7.5 million
|
39 - 75
|
As above, but allowed one additional year at 100% abatement
during construction
|
$7.5 million +
|
76+
|
Up to 100% for up to 10 years, at the discretion of the city
council
|
(c) Revitalization areas schedule.
To qualify for real and
personal property tax abatement in either of the revitalization areas,
the project must meet both of the following minimum threshold eligibility
requirements in regard to capital investment (new construction or
the value of the improvements as valued by the county appraisal district)
and new job creation.
Minimum Threshold Eligibility Requirements for Kurth Drive Revitalization
and Downtown Revitalization Areas
|
---|
Capital Investment
|
New Full-Time Jobs Created
|
Abatement Schedule
|
---|
$50,000 - $100,000
|
5 - 10
|
Year 1: 100% (construction)
Year 2: 100%
Year 3: 80%
Year 4: 60%
Year 5: 40%
Year 6: 20%
|
$100,000 - $500,000
|
11 - 15
|
As above, but allowed one additional year at 100% abatement
during construction
|
$500,000 +
|
16 - 20
|
Up to 100% for up to 10 years, at the discretion of the city
council
|
(Resolution 4502, sec. III, adopted 2/5/2013; Resolution 4586, sec. III, adopted 5/6/2014)
(a) Application submission.
Applicants for tax abatement
must submit a completed application for tax abatement with the economic
development corporation office. Incomplete applications will not be
considered. The economic development staff will review/verify the
applicant’s financial statements and request additional information
in determining the economic feasibility and long-term benefit of the
overall project. Following this review, the economic development corporation
board will evaluate the application on the merit and value of the
proposed project. Based on the outcome of the evaluation, the economic
development corporation may present the application to the city council
for consideration. Certain information provided by a property owner
regarding a request for tax abatement is considered confidential for
a limited time period. The confidentiality of the information continues
until the tax abatement agreement is executed. This confidentiality
may be waived by the mutual consent of both the taxing unit and the
property owner.
(b) City council consideration.
All the projects brought
to city council for consideration will be presented at meetings conducted
pursuant to the Open Meetings and Property Redevelopment and Tax Abatement
Acts. A public hearing must be held before the city council will approve
an investment zone for tax abatement. If the subject property is in
an existing reinvestment zone, no public hearing is necessary. The
city council retains sole authority to approve or deny any tax abatement
agreement and is under no obligation to approve any tax abatement
agreement.
(Resolution 4502, sec. IV, adopted 2/5/2013; Resolution 4586, sec. IV, adopted 5/6/2014)
(a) Certificate of compliance.
After the initial requirements
of the agreement have been completed (i.e. construction/installation
of improvements), the owner must submit an executed certificate of
compliance to the city.
(b) City staff inspection.
After receipt of an executed
certificate of compliance, city staff shall make an inspection to
verify that all initial contract requirements are complete. Upon verification
the city manager will approve the certificate of compliance, authorize
the commencement of the tax abatement, and notify the county appraisal
district.
(c) Annual certification.
The owner must submit a statement,
per the tax abatement agreement, that provides information about the
project’s achievement during the prior year regarding the improvements
and/or job creation covered by the tax abatement agreement. The following
items must be included in the statement:
(1) The added square footage and/or improvement value made;
(2) The value of the construction/installation (most recent value by
the county appraisal district);
(3) The total number of jobs created (full-time), to date;
(4) The amount of property taxes paid on the facility during the prior
year; and
(5) Any tax protests that have been filed regarding ad valorem taxes
and a description of the reasons for the tax protest.
(Resolution 4502, sec. V, adopted 2/5/2013; Resolution 4586, sec. V, adopted 5/6/2014)
Abatement agreements may be assigned to a new owner or lessee
of the improvements with the written consent of the city authorizing
the new assignment. Any new assignment shall provide that the assignee
shall irrevocably and unconditionally assume all duties and obligations
of the assignor as set out in the agreement. No assignment shall be
approved if the assignor or assignee are indebted for ad valorem taxes
or other obligations.
(Resolution 4502, sec. VI, adopted 2/5/2013; Resolution 4586, sec. VI, adopted 5/6/2014)
Should the city determine that an applicant is in default with
regard to the items specified in the abatement agreement, the city
may declare a default and may terminate the abatement agreement.
(Resolution 4502, sec. VII, adopted 2/5/2013; Resolution 4586, sec. VII, adopted 5/6/2014)
This amendment of the guidelines for tax abatement approved
by the city’s Resolution 4502 shall not affect any tax abatement
previously approved by the city council.
(Resolution 4502, sec. VIII, adopted 2/5/2013; Resolution 4586, sec. VIII, adopted 5/6/2014)