The full or partial exemption from ad valorem taxes of certain
real property in a reinvestment zone designated by city or other affected
jurisdictions for economic development purposes.
The city, McCulloch County, Hickory Underground Water District
No. 1, and McCulloch County Hospital District, the majority of which
is located in the city, that levies ad valorem taxes upon and provides
services to property located within a reinvestment zone designated
by the city.
A contractual agreement between a property owner and/or lessee
and any affected jurisdiction for the purpose of tax abatement as
called for in Texas Tax Code Ann. section 312.402 (Vernon 1992).
The assessed value of eligible property on January 1 of the
year preceding the execution of the agreement, plus the agreed-upon
value of eligible property improvements made after January 1 of the
year of the execution of the agreement, but before the execution of
the agreement.
Improvements necessary for continued operations which do
not improve productivity or alter the process technology.
The buildings and structures, including machinery and equipment,
used or to be used primarily to receive, store, service or distribute
goods or materials owned by the facility operator.
The addition of buildings, structures, machinery, equipment,
or payroll for purposes of increasing production capacity.
Property improvements completed or in the process of construction
which together comprise an integral whole.
Buildings and structures, including 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.
A new employment position created by a business that has
provided employment to a qualified employee of at least 1,040 hours
annually and intended to be an employment position retained during
the period the business is receiving tax abatement.
A new office building to be occupied at least 50% by one
owner or one tenant.
Buildings and structures including fixed machinery and equipment
not elsewhere described, used or to be used for the production of
products or services which serve a market primarily outside the city
and result in the creation of new permanent jobs and create new wealth
into the city.
The number of years a property improvement is expected to
be in service.
Buildings and structures, including machinery and equipment,
used or to be used to provide entertainment through the admission
of the general public where the majority of users reside outside the
city.
Buildings and structures, including machinery and equipment,
used or to be used to service goods.
Buildings and structures, including 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.
A permanent job that would have been lost but for the expansion
of modernization of the authorized facility.
(Ordinance 900 adopted 2/20/02; 2004 Code, sec. 11.301; Ordinance adopting 2019 Code)
(a)
Authorized facility.
A facility may be eligible for
abatement if it is a manufacturing facility, research facility, distribution
center facility, office building, or 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 specified in an abatement agreement between an affected jurisdiction
and the property owner or lessee, subject to such limitations as such
entity may require.
(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, and that office space and those 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, retail facilities, deferred maintenance investments, property to be rented or leased except as provided in subsection (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 that are not integral to the operation of the facility, 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, and property which has a productive life of less than 10 years.
(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.
An abatement shall go into
effect on the January 1 valuation date immediately following the date
of execution of the agreement. Unless otherwise agreed to by the affected
jurisdiction, the value of new eligible properties shall be abated
as provided below:
|
Tier 1: $100,000 Improvements or Creation of 5 Jobs or More
|
Tier 2: $500,000 Improvements or Creation of 10 Jobs or More
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Tier 3: $1,000,000 Improvements or Creation of 25 Jobs or More
|
|---|---|---|
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Year 1 - 100% abatement
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Year 1 - 100% abatement
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Year 1 - 100% abatement
|
|
Year 2 - 80% abatement
|
Year 2 - 100% abatement
|
Year 2 - 100% abatement
|
|
Year 3 - 60% abatement
|
Year 3 - 100% abatement
|
Year 3 - 100% abatement
|
|
Year 4 - 40% abatement
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Year 4 - 75% abatement
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Year 4 - 100% abatement
|
|
Year 5 - 20% abatement
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Year 5 - 50% abatement
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Year 5 - 100% abatement
|
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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).
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(h)
Other economic qualifications.
In order to be eligible
for tax abatement, the planned improvement must be located within
a reinvestment zone designated by the city; and
(1)
For a Tier 1 applicant, must be expected to retain or create permanent
jobs for at least 5 people on a permanent basis in the city (or the
affected jurisdiction) or have a total value of eligible improvements
of at least $100,000.00;
(2)
For a Tier 2 applicant, must be expected to retain or create permanent
jobs for at least 10 people on a permanent basis in the city (or the
affected jurisdiction) or have a total value of eligible improvements
of at least $500,000.00;
(3)
For a Tier 3 applicant, must be expected to retain or create permanent
jobs for at least 25 people on a permanent basis in the city (or the
affected jurisdiction) or have a total value of eligible improvements
of at least $1,000,000.00;
(4)
Must not be expected to solely or primarily have the effect of transferring
employment from one part of the city (or the affected jurisdiction)
to another;
(5)
Must be expected to prevent the loss of payroll or retain, increase,
or create payroll on a permanent basis in the city (or the affected
jurisdiction); and
(6)
Must be necessary because capacity cannot be provided efficiently
utilizing existing improved property.
(i)
Taxability.
Unless otherwise agreed to by the affected
jurisdiction, from the execution of the abatement agreement to the
end of the agreement period, taxes shall be payable as follows:
(2)
The base year value of existing eligible property as determined each
year shall be fully taxable; and
(j)
The adoption of these guidelines and criteria by the affected jurisdictions
does not:
(1)
Limit the discretion of any affected jurisdiction to decide whether
to enter into a specific tax abatement agreement;
(2)
Limit the discretion of any affected jurisdiction to delegate to
its employees the authority to determine whether or not the governing
body should consider a particular application for tax abatement; or
(3)
Create any property, contract, or other legal right in any person
to have the governing body consider or approve a specific application
for tax abatement.
(Ordinance 900 adopted 2/20/02; 2004 Code, sec. 11.302)
(a)
Any present or potential owner of taxable property within a reinvestment
zone designated by the city council may request consideration for
tax abatement by filing a written request and application with the
city. A sample application form is appended to Ordinance 900 as exhibit
A and is on file in the office of the city secretary.
(b)
The application shall consist of a completed application form accompanied
by or including a general description of the proposed use and the
general nature and extent of the modernization, expansion, or new
improvements to be undertaken; a descriptive list of the improvements
which will be a part of the facility; a map and property description;
and a time completing schedule for undertaking and completing the
planned improvements. In the case of modernizing, 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 deemed appropriate for evaluating the financial capacity
and other factors of the applicant. The application form appended
to Ordinance 900 as exhibit A, and maintained on file in the office
of the city secretary, may be amended from time to time as necessary.
(c)
Upon receipt of a completed application, the city manager shall notify
in writing the presiding officer of the governing body of each affected
jurisdiction.
(d)
A request for consideration for tax abatement shall not be granted
if 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.
(e)
Requests for variance from the provisions of section 11.06.002(a) may be made in written form to the city council; provided, however, the total duration of an abatement shall in no instance exceed five years. Such request shall include a complete description of the circumstances and explain why the applicant should be granted a variance. Approval of a request for variance requests [requires] a unanimous vote of the governing body of the affected jurisdiction. No other subsection shall be waived by the governing body of the affected jurisdiction.
(f)
No more than 45 days after receipt of the application, the affected
jurisdiction shall by resolution either approve or disapprove the
application for tax abatement and notify the applicant of the approval
or disapproval.
(Ordinance 900 adopted 2/20/02; 2004 Code, sec. 11.303)
(a)
After receipt of an application for consideration for tax abatement,
a feasibility study shall be prepared setting out the impact of any
proposed reinvestment zone and the proposed tax abatement. The feasibility
study may be prepared by an affected jurisdiction and 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 affected
jurisdiction and the property to be included in the zone.
(b)
A reinvestment zone or tax abatement agreement shall not be authorized
if it is determined that:
(1)
There would be a substantial adverse effect on the provision of governmental
service or tax base;
(2)
The applicant has insufficient financial capacity;
(3)
The planned or potential use of the property would constitute a hazard
to public safety, health, or morals; or
(4)
Other codes or laws are violated.
(c)
Before acting upon the application, the city council shall consult
with the governing bodies or designated representatives of the other
affected jurisdictions. If the city council approves an application
for tax abatement, it must, at least seven days before entering into
a tax abatement agreement, send written notice to the other affected
jurisdictions. The notice must include a copy of the proposed agreement.
Failure to deliver the notice does not affect the validity of the
agreement.
(d)
The governing body of an affected jurisdiction may enter into a tax
abatement agreement by taking one of the following actions:
(1)
Executing a written agreement with the owner of the property not
later than the 90th day after the date the city’s agreement
is executed; or
(2)
At any time before the execution of the city’s agreement, expressing
an intent to enter into an agreement with the owner of the property,
or to be bound by the terms of the city’s agreement.
Nothing contained herein shall deprive an affected jurisdiction
of the right to approve or disapprove a tax abatement.
(e)
Tax abatement agreements entered into pursuant to subsection (c) shall contain terms identical to those contained in the city agreement providing for the portion of the property that is to be exempt from taxation, the duration of the agreement, and the terms included pursuant to Texas Tax Code Ann. section 312.205 (Vernon 1992).
(Ordinance 900 adopted 2/20/02; 2004 Code, sec. 11.304)
(a)
Each affected jurisdiction which approves an application for tax
abatement shall formally pass an order or resolution and shall independently
or jointly execute an agreement with the owner of the facility and
any lessee. Such agreement 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 11.06.002(g) and (h), or as otherwise agreed to by the affected jurisdiction;
(3)
The commencement date and the termination date of the abatement;
(4)
The proposed use of the facility, nature of construction, time schedule, map, property description and improvement list as provided in section 11.06.003(b);
(5)
Limitations on 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;
(6)
Contractual obligations in the event of default, violation of terms
or conditions, delinquent taxes, recapture, administration and assignment;
(7)
Size of investment [and] average number of jobs involved for the
period of the abatement;
(8)
Any other terms required by the act, or permitted by the act at the
option of the affected jurisdiction, or deemed appropriate by the
governing body of the affected jurisdiction;
(9)
A finding that the terms of the agreement and the property subject
to the agreement meet these guidelines and criteria;
(10)
A provision requiring that the company or individual receiving the
tax abatement shall make all hiring decisions in compliance with the
Civil Rights Act of 1964 and the Americans with Disabilities Act of
1990;
(11)
A provision requiring that the company or individual receiving the
tax abatement shall not discriminate against any employee or applicant
for employment on the basis of race, religion, color, sex, national
origin, age, or handicap;
(12)
A provision stating that all applicable county and city codes and
ordinances must be met;
(13)
A provision stating that, within the city, the company or individual
shall not violate any federal, state, or local environmental laws;
(14)
A provision whereby the company or individual agrees to work with
the affected jurisdictions as reasonably requested to effectuate all
of the terms and conditions of the agreement and these guidelines
and criteria, and to provide all reports reasonably requested by any
affected jurisdiction; and
(15)
A provision whereby the company or individual acknowledges that information
provided to the affected jurisdictions in connection with an application
for tax abatement that describes the specific processes or business
activities to be conducted or the equipment or other property to be
located on the property for which tax abatement is sought is confidential
and not subject to public disclosure until the tax abatement agreement
is executed, at which time that information in the custody of the
affected jurisdictions is no longer confidential.
(b)
To be in effect, a tax abatement agreement must be approved by the
affirmative vote of a majority of the members of the governing body
of an affected jurisdiction at a regularly scheduled meeting of the
governing body. On approval of the governing body, an agreement may
be executed in the same manner as other contracts made by the affected
jurisdiction.
(Ordinance 900 adopted 2/20/02; 2004 Code, sec. 11.305)
(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 (1) year during
the abatement period, then the agreement shall terminate and so shall
the abatement of taxes for the calendar year during which the facility
no longer produces. The taxes previously abated for that calendar
year shall be paid to each affected jurisdiction within city within
sixty days from the date of termination.
(b)
In the event the company or individual, during the duration of the
tax abatement time period, decides to relocate the company to a place
outside the designated reinvestment zone area, an affected jurisdiction
shall have the right to recapture all or a portion of the abated taxes,
depending upon which the relocation occurs.
(c)
Should an affected jurisdiction determine that the company or individual
is in default according to the terms and conditions of its agreement,
its governing body 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. The parties may agree to extend
the cure period.
(d)
In the event that the company or individual: (i) allows its ad valorem
taxes owed any affected jurisdiction 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,
then the agreement 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.
(e)
If an affected jurisdiction and the company or individual mutually
agree that the development or use of facilities is no longer appropriate
or feasible, or that a higher or better use is preferable, the parties
may agree in writing to terminate the agreement with no recapture,
reimbursement, or further rights or obligations.
(Ordinance 900 adopted 2/20/02; 2004 Code, sec. 11.306)
(a)
The chief appraiser of the county shall annually determine an assessment
of the real and personal property comprising a reinvestment zone.
Each year, the company or individual receiving abatement shall furnish
the assessor with such information as may be necessary for abatement.
Once value has been established, the chief appraiser shall notify
the affected jurisdictions which levy taxes on the amount of the assessment.
(b)
The agreement shall stipulate the employees and/or designated representatives
of any affected jurisdiction will have access to property which has
received tax abatement during the term of the abatement agreement
to inspect the facility to determine if the terms and conditions of
the agreement are being met. All inspections will be made only after
giving 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 shall
be conducted in a manner as to not unreasonably interfere with the
construction and/or operation of the facility; provided, however,
an affected jurisdiction may conduct “spot” inspections
requiring no advance notice to the applicant. 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 chief appraiser of the county
shall annually evaluate each facility and report possible violations
to the contract and agreement to the city council and its attorney.
(d)
Each affected jurisdiction that designates a reinvestment zone or
executes a tax abatement agreement under this article shall deliver
to the state department of commerce and to the comptroller of the
state before April 1 of the year following the year in which the zone
is designated or the agreement is executed a report providing the
following information:
(1)
For a reinvestment zone, a general description of the zone, including
its size, the types of property located in it, and its duration; and
(2)
For a tax abatement agreement, the parties to the agreement, a general
description of the property, the improvements or repairs to be made
under the agreement, the portion of the property to be exempted, and
the duration of the agreement.
(Ordinance 900 adopted 2/20/02; 2004 Code, sec. 11.307)
Abatement may be transferred and assigned by the holder to a
new owner or lessee of the same facility upon the approval by resolution
of the affected jurisdiction 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 affected jurisdiction. No assignment or transfer
shall be approved if the parties to the existing agreement, the new
owner or the new lessee are liable to any affected jurisdiction for
outstanding taxes or other obligations. Approval shall not be unreasonably
withheld.
(Ordinance 900 adopted 2/20/02; 2004 Code, sec. 11.308)
(a)
At any time before the expiration of a tax abatement agreement, the
agreement may be modified by the parties to include other provisions
that could have been included in the original agreement or to delete
provisions that were not necessary to the original agreement. The
modification must be made by the same procedure by which the original
agreement was approved and executed. The original agreement may not
be modified to extend beyond 10 years from the date of the original
agreement.
(b)
A tax abatement agreement may be terminated by mutual consent of
the parties in the same manner that the agreement was approved and
executed.
(Ordinance 900 adopted 2/20/02; 2004 Code, sec. 11.309)
These guidelines and criteria are effective upon the date of
the adoption and will remain in force for two (2) years, unless amended
by a three-quarter vote of the governing body of the affected jurisdiction,
at which time all reinvestment zones and tax abatement agreements
created pursuant to these provisions will be reviewed by the affected
jurisdictions to determine whether the goals have been achieved. Based
on that review, the guidelines and criteria will be modified, renewed,
or eliminated by action of the governing bodies of the affected jurisdictions,
in accordance with ch. 312 of the Texas Tax Code. Such actions shall
not affect existing tax abatement agreements or reinvestment zones.
(Ordinance 900 adopted 2/20/02; 2004 Code, sec. 11.310)
