The city, pursuant to chapter 312 of the Texas Tax Code, as
amended, may authorize property tax abatements up to 100% to encourage
the creation of jobs and economic growth of quality development that
is desirable and improves the quality of life for its citizens. The
purpose of this policy is to establish guidelines and criteria that
guide the city’s use of tax abatements as an economic development
tool.
(Ordinance O-2021-069 adopted 12/2/21)
The partial or full exemption of property from ad valorem
taxes of certain real property and/or tangible personal property in
a reinvestment zone designated by the city for economic development
purposes.
The period during which all or a portion of the value of
real property or tangible personal property that is subject to a tax
abatement agreement is exempt from taxation. The abatement period
shall not exceed ten (10) years.
A contractual agreement between a property owner and the
city for abatement of taxes.
The owner/developer of the proposed economic development
project.
The Williamson County Appraisal District.
The assessed value of property within the reinvestment zone
on January preceding the execution of the agreement plus the agreed
upon value of the eligible property improvements and tangible personal
property made after January 1st but before the execution of the agreement.
The City of Hutto, Texas.
Real and tangible personal property for both new facilities
and structures, and for the expansion or modernization of existing
facilities and structures which are reasonably likely as a result
of being granted abatement to contribute to the retention or expansion
of primary employment or to attract major investment in the reinvestment
zone that would be a benefit to the property and that would contribute
to the economic development within the city.
That addition of buildings, structure, machinery, equipment,
tangible personal property, or payroll for purposes of increasing
production capacity.
Property improvements completed or in the process of construction
which together comprise an integral whole.
The exemption of personal property consisting of inventory
and goods that will be assembled, stored, manufactured, processed,
or fabricated locally that will be transported out of the state within
175 days of acquisition.
The facilities or structures classified as real property
improvements by the appraisal district.
Land, existing improvements, and real property used primarily
to provide services to the public, real property used for residential
purposes, real property with a productive life of less than 10 years,
tangible personal property that the appraisal district classifies
as inventory or supplies, real or tangible personal property located
in the reinvestment zone prior to the effective date of the tax abatement
agreement, or any other property for which abatement is not allowed
by law.
Complete or partial demolition of facilities and the complete
or partial reconstruction or installation of a facility of similar
or expanded production capacity. Modernization may result from the
construction, alteration, or installation of buildings, structures,
machinery, equipment, pollution control devices, or resource conservation
equipment.
A property previously undeveloped which is placed into service
by means other than or in conjunction with expansion or modernization.
The owner of the real property to which the abatement applies.
The property classified as personal property by the appraisal
district.
The number of years a property improvement is expected to
be in service in a facility.
The land, or an improvement or other property classified
as such pursuant to state law.
A geographic area which meets the criteria of section 312.202
of the Texas Tax Code.
Tangible personal property classified as such pursuant to
state law but excluding inventory and/or supplies and tangible personal
property that was located in the reinvestment zone at any time before
the period covered by the agreement with the city.
Refers to industries and businesses that the city council
has identified as being best suited for the city.
(Ordinance O-2021-069 adopted 12/2/21)
(a)
Creation of new value.
Abatement may only be granted
for the additional value of eligible property improvements made after,
and specified, in an abatement agreement between the city and the
property owner, subject to such limitations as the city may require.
(b)
New and existing facilities.
Abatement may be granted
for new facilities and improvements to existing facilities for purposes
of modernization or expansion.
(c)
Eligible property.
Abatement may be extended to the value of eligible property, as defined in section 20.04.002 above.
(d)
Ineligible property.
Ineligible property, as defined in section 20.04.002 above, shall be fully taxable and ineligible for tax abatement.
(e)
Economic qualification.
To be eligible for designation
as a reinvestment zone and receive tax abatement, the planned improvement:
(1)
Must be expected to have an increased appraised ad valorem tax value
of at least $5,000,000.00 based upon the county central appraisal
district’s assessment of the eligible property.
(2)
Must be expected to prevent the loss of payroll or retain, increase,
or create a payroll on a permanent basis in the city.
(Ordinance O-2021-069 adopted 12/2/21)
The following factors among others should 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:
(1)
Value of land and existing improvements, if any;
(2)
Type and value of proposed improvements;
(3)
Productive life of proposed improvements;
(4)
Number and type of new jobs to be created by proposed improvements;
(5)
Amount of local payroll to be created;
(6)
Whether persons residing or projected to reside within the city will
have the opportunity to fill the new jobs being created;
(7)
Amount of local taxes to be generated directly;
(8)
Amount of property tax base valuation which will be increased during
term of abatement and after abatement, which shall include a definitive
commitment that such valuation, shall not, in any case, be less than
$5,000,000.00;
(9)
The costs to be incurred by the city to provide facilities or services
directly resulting from the new improvements;
(11)
The population growth of the city that occurs directly as a result
of new improvements;
(12)
The types of public improvements, if any, to be made by the applicant
seeking abatement;
(13)
Whether the proposed improvements compete with existing businesses
to the detriment of the local economy;
(14)
The impact on the business opportunities of existing businesses;
(15)
The attraction of other new businesses to the area;
(16)
The overall compatibility with the zoning ordinances and comprehensive
plan for the area; and
(17)
Whether the project is environmentally compatible with no negative
impact on quality-of-life perceptions.
(Ordinance O-2021-069 adopted 12/2/21)
Requests for abatement will not be considered if it is determined
that:
(1)
There would be substantial adverse effect on the provision of government
service or 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;
(5)
Prior to the submission of an application, the project is already
substantially underway or completed. A project will be substantially
underway if actions such as, but not limited to, the following have
occurred:
(A)
Site preparation (other than demolition or the clearing of land)
or the installation of new infrastructure has begun;
(B)
A building permit has been issued for construction not associated
with mitigating an environmental hazard;
(C)
Construction (including renovations or tenant finish-out) has begun;
or
(D)
Equipment, inventory, or employees have been relocated to the new
site.
(E)
Execution of a lease, the mitigation of environmental problems, the
purchase of land, the completion of an environmental assessment, or
the preparation of architectural and engineering plans do not constitute
a project being substantially underway.
(6)
Any other reason deemed appropriate by the city council.
(Ordinance O-2021-069 adopted 12/2/21)
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 shall be fully taxable; and
(2)
The base year value of property in the reinvestment zone as determined
each year shall be fully taxable. The additional value of new eligible
property shall be fully taxable at the end of the abatement period.
(Ordinance O-2021-069 adopted 12/2/21)
(a)
Submission of application.
All requests for tax abatement
in the city, shall be made by filing a written application with the
city economic development corporation type B. The application shall
include:
(1)
A completed application form accompanied by a general description
of the project to be undertaken;
(2)
A map and a legal description of the property (metes and bounds);
(3)
A list of the kind, number, and location of all improvements on the
property;
(4)
A descriptive list of the proposed improvements for which tax abatement
is requested;
(5)
A time schedule for undertaking and completing the proposed improvements;
(6)
In the case of a modernization or expansion project, a statement
of the assessed value of the property, separately stated for real
and tangible personal property, shall be given for the tax year immediately
preceding the application; and
(7)
Such financial and other information, as the city deems appropriate
for evaluating the financial capacity and other relevant factors of
the applicant.
(b)
Application review and evaluation.
(1)
The economic development corporation’s executive director or
his designee shall accept and review all applications for accuracy
and completeness. No request for tax abatement shall be considered
until it is determined that a complete application has been received
as determined by the economic development corporation’s executive
director.
(2)
The Hutto Economic Development Corporation (HEDC) will review the
application to ensure the request complies with state law, board and
city policy. The HEDC shall make a recommendation to the city council
regarding the treatment of the application.
(3)
The city council shall confer on the project in executive session
and, if warranted, direct the city economic development corporation
type B to develop, negotiate and establish a tax abatement and economic
development agreement with the applicant and approved by the applicant
for consideration by the city council for approval.
(4)
The agreement shall contain the following:
(A)
List the kind, number, and location of all proposed improvements
of the property;
(B)
Provide access to and authorize inspection of the property by city
employees to ensure that the improvements or repairs are made according
to the specifications and conditions of the agreement;
(C)
Limit the uses of the property consistent with the general purpose
of encouraging development or redevelopment of the zone during the
period that property tax exemptions are in effect;
(D)
Provide for recapturing property tax revenue lost as a result of
the agreement if the owner of the property fails to make the improvements
or repairs as provided by the agreement;
(E)
Contain each term agreed to by the owner of the property;
(F)
Require the owner of the property to certify annually to the governing body of each taxing unit that the owner is in compliance with each applicable term of the agreement (see section 20.04.016, attachment 1);
(G)
Contain the number of years the agreement is in effect;
(H)
Provide that the governing body of the municipality may cancel or
modify the agreement if the property owner fails to comply with the
agreement;
(I)
The recapture of all, or a portion of property tax revenue lost as
a result of the agreement if the owner of the property fails to create
all of a portion of the number of new jobs provided by the agreement,
if the appraised value of the property subject to the agreement does
not attain a value specified in the agreement, or if the owner fails
to meet any other performance criteria provided by the agreement;
(J)
Notice of a proposed abatement shall be given to other taxing jurisdictions
in accordance with state law;
(K)
Approval of an abatement agreement must be approved by an affirmative
vote of a majority of the city council at a meeting conducted in compliance
with the Texas Open Meetings Act.
(Ordinance O-2021-069 adopted 12/2/21)
(a)
The city council may not approve an ordinance designating a reinvestment
zone until it has held a public hearing at which interested parties
are entitled to speak and present evidence for or against its designation.
Notice of the hearing shall be published in a general circulation
publication at least seven 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 parties
shall be entitled to speak and present written materials for or against
the approval of the tax abatement agreement.
(Ordinance O-2021-069 adopted 12/2/21)
(a)
Not later than the seventh day before the date on which the city
enters into the abatement agreement, the city shall deliver to the
presiding officer of the governing body of each other taxing unit
in which the property is located a written notice that the city intends
to enter into the agreement. The notice shall include a copy of the
prepared agreement.
(b)
Approval of an agreement shall be by formal adoption of a resolution
and execution of the agreement with the owner of the facility. The
agreement shall, but not be limited to the following:
(1)
Include a list of the kind, number, and location of all proposed
improvements to the property;
(2)
Provide access to and authorize inspection of the property by the
city to ensure compliance with the agreement;
(3)
Limit the use of the property consistent with the city’s development
goals;
(4)
Provide for recapturing property tax revenues that are lost if the
property owner fails to make the improvements as provided by the agreement;
(5)
Include each term that was agreed upon with the property owner;
(6)
Require the owner to comply with the reporting requirements set forth in section 20.04.010, below; and
(7)
Allow the city to cancel or modify the agreement at any time if the
property owner fails to comply with the terms of the agreement.
(Ordinance O-2021-069 adopted 12/2/21)
(a)
Bi-annual status reports.
The owner shall provide to
the city copies of the “reimbursing employer’s quarterly
report” (or similar report by whatever name) required to be
filed with the state workforce commission (or successor agency) for
purposes of administering the Texas Unemployment Compensation Act.
(Tex. Labor Code, chapter 201 et. seq.); and report to the city its
employment level, distributed by wage brackets, and the addition or
deletion of capital assets in excess of $250,000.00, and any other
pertinent information requested by the city that would affect the
ability of the local operation to maintain its status as a going concern.
The reports shall be prepared on a bi-annual basis (January 1st and
July 1st) and shall be submitted to the city manager or his designee
no later than 30 days following the end of each six-month calendar
period.
(b)
Annual compliance certification.
In addition, on an
annual basis, the owner shall certify its compliance with each applicable
term of the agreement. Such annual report shall be prepared on a calendar
year basis and shall be submitted to the city manager or his designee
in the form in section 24.04.016 as attachment 1, no later than ninety
(90) days following the end of each such calendar year. It will be
the responsibility of the owner to provide the reports as requested;
the city is not obligated to request said reports and will not certify
the owner’s eligibility to receive any tax abatement without
the reports. Failure to provide these required reports in a timely
manner shall constitute grounds for termination of the agreement.
Annual certificates of compliance shall be filed with the city secretary.
(Ordinance O-2021-069 adopted 12/2/21)
Subject to the provisions and limitations of chapter 552 of
the Texas Government Code, information provided to the city in connection
with an application for a tax abatement or request for the creation
of a reinvestment zone for the purposes of tax abatement in accordance
with these guidelines and criteria, and which describes the specific
process or business activities to be conducted or equipment or other
property to be located on the property for which the tax abatement
is sought, is confidential and not subject to public disclosure until
the tax abatement agreement is executed, Texas Tax Code sec. 312.003.
The information in the custody of the city after, the agreement is
executed, will be treated as confidential to the extent allowed by
law.
(Ordinance O-2021-069 adopted 12/2/21)
(a)
Annual assessment.
The county central appraisal district
annually determines an assessment of the real and personal property
subject to a tax abatement agreement. Each year, the owner shall timely
file renditions of value and annual applications for abatement with
the appraisal district as may be necessary for the abatement.
(b)
Annual evaluation.
Upon completion of construction,
the city manager or a chosen designee selected by the city manager,
individually or in conjunction with the city economic development
corporation type B and other taxing entities which may be participating
in an abatement, shall annually evaluate each facility receiving tax
abatement to ensure compliance with the agreement and prepare a written
report to the city council illustrating compliance or identified violations
of the agreement.
(Ordinance O-2021-069 adopted 12/2/21)
Tax abatement agreements will provide for recapture of abated
property taxes if the company or individual:
(1)
Allows its ad valorem taxes owed to the city 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 agreement.
(Ordinance O-2021-069 adopted 12/2/21)
These guidelines and criteria are effective upon the date of
their adoption and will remain in force for two years, unless amended
or readopted by three-quarters vote of the city council, at which
time all reinvestment zone and tax abatement agreements created pursuant
to these provisions will be reviewed to determine whether the goals
have been achieved. Based on that review, the guidelines and criteria
may be modified, renewed, or eliminated.
(Ordinance O-2021-069 adopted 12/2/21)
The adoption of the guidelines and criteria by the city do not:
(1)
Limit the discretion of the city council to decide whether to enter
into a specific tax abatement agreement;
(2)
Limit the discretion of the city council to delegate to its staff
the authority to recommend whether the city council should consider
a request for tax abatement;
(3)
Create any property, contract, or other legal right in any person
to have the city council consider or grant a specific request for
tax abatement; or
(4)
Limit the ability to deviate from these guidelines and criteria for
good cause and as may be allowed by law.
(Ordinance O-2021-069 adopted 12/2/21)
The following form is adopted for use in the process of obtaining
proof of compliance by an agreement recipient:
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(Ordinance O-2021-069 adopted 12/2/21)
