94-T-33 Tax Abatement
..
ORDINANCE NO. 9Lf-P33
AN ORDINANCE
BY THE CITY COUNCIL OF THE CITY OF SCHERTZ,
TEXAS, ADOPTING GUIDELINES AND CRITERIA FOR
TAX ABATEMENT AND RE-INVESTMENT ZONES
WHEREAS, the Texas Property Tax Code, Section 312,
allows governing units to provide ad valorem tax abatements in
the interests of economic development; and
WHEREAS, the City Council desires to support the
establishment of re-investment zones and provide tax abatements
in the interests of economic development; NOW THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS:
THAT the City Council adopts the City of Schertz
Guidelines and Criteria for Tax Abatement and Re-Investment
Zones, attached as Exhibit 1 and made a part hereof.
THAT this ordinance
1995, replaces Ordinance No.
be in effect for two years.
becomes effective on 1 January,
92-T-24 in its entirety, and will
. -
Approved on first reading the~day of
PASSED, APPROVED AND ADOPTED this the
/Yo {/P 41.be:=> Fe 1994
J)pc p/tf ~19 9 4
Mayor, City of Schertz, Texas
ATTEST
(SEAL OF CITY)
CITY OF SCHERTZ GUIDELINES AND CRITERIA FOR
TAX ABATEMENT AND REINVESTMENT ZONES
1. Introduction
a. Under the Authority of the Property Redevelopment and
Tax Abatement Act (Section 312 et. seq. Texas Property Tax
Code), the City of Schertz hereby establishes Guidelines and
Criteria for Tax Abatements and Reinvestment Zones.
b. The intent of this abatement program is to provide an
incentive to current and future commercial property owners to
invest in the City of Schertz. These guidelines are but a
part of the overall incentive program of the City of Schertz.
Abatements granted under this program must take into account
any other incentives provided by the City in order to assure
the overall incentive package is in the best interests of the
citizens of Schertz.
c. Nothing in this policy shall imply or suggest
the City of Schertz is under any obligation to provide
incentive to any applicant. All such applications for
abatement and other economic development incentives shall
considered on an individual basis. The City Council of
City of Schertz has final approval or disapproval on
application, at its discretion.
that
any
tax
be
the
any
2. Definitions
a. "Abatement" means the full or partial exemption from
ad valorem taxes of certain real property in a reinvestment
zone designated for economic development purposes.
b. "Reinvestment Zone" is an area where the City has
decided to influence development patterns and attract major
investments that will contribute to the development of the
City through the use of tax abatement.
c. "Modernization" means the replacement and upgrading
of existing facilities which increases the productive input or
output, updates the technology or substantially lowers the
cost of 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.
d. "Base Year Value" means
eligible property on the 1st of
execution of the agreement.
the assessed value of
January preceding the
-1-
e. "Other City Revenue" means revenue to the City of
Schertz from any other source excepting ad valorem taxes.
3. Criteria for Reinvestment Zones
To be designated a reinvestment zone, an area must meet
one of the criteria per Sub-Chapter B of the Property
Redevelopment and Tax Abatement Act. The fundamental criteria
is based on City Council intent to create reinvestment zones
where creation of such a zone would be reasonably likely to
contribute to the retention or expansion of primary
emploYment, attract investment into the zone, generally be a
benefit to the property, and contribute to the economic
development of the City of Schertz.
4. Impact of Municipal Tax Abatement on Other Taxing Units.
a. The benefits of tax abatements may vary among taxing
entities depending on whether or not the taxing jurisdiction
receives benefits from an increase in business activity.
These Guidelines and Criteria take into account these
potential differences.
b. However, Section 312.206 of the State Property Tax
Code also recognizes the need for consistency in application
of tax abatements among the various taxing jurisdictions.
Paragraph 6 below, outlines the basic tax abatement to be
provided for capital improvements.
c. Paragraphs 7 and 8 are optional
. provisions. Other taxing entities
including or not including these
agreements made with landowners.
and special abatement
have the option of
provisions in their
5. General Abatement Criteria
a. Creation of New Value. Abatement may be granted for
the additional value of eligible real property improvements
subject to such limitations as the City of Schertz may
require, and;.
(1) must be reasonably expected to increase the
appraised value of the improved property;
(2) must be expected to promote increased emploYment
based on the number of permanent jobs created and
sustained in each year of the abatement;
-2-
(3) should not have the effect of merely
transferring existing emploYment from one part of the
City of Schertz to another without demonstration of
increased future investment (Dollars or Jobs) or unusual
circumstances whereby without such a move emploYment is
likely to be reduced.
b.
if, the
Abatement
expansion
The City shall not enter into an abatement agreement
City Council finds that the Application for Tax
was filed after the commencement of construction,
or modernization.
c. No abatement will be approved that exceeds 90% of new
appraised value or that will reduce current ad valorem
revenues. If the computed percentage from a standard
abatement in Table 1, and any additive percentage as defined
below, exceeds 90% of appraised new value, an extension of the
abatement term beyond 6 years may be considered, up to a
maximum of 10 years.
6. Standard Abatement
a. The standard tax abatement is for a period of 6 years
and is based solely on capital improvements to real property.
Table 1 below establishes the level of capital improvements
required and the percentages to be allowed.
Table 1
STANDARD SIX-YEAR ABATEMENT
Percent Abatement
Capital Cost of the
Projected Improvements
0%
o - Less than double
the current assessed value
5%
Double the assessed value
10%
$75,000 of approved
capital improvements.
1%
For each additional $50,000
of approved Capital
Improvements.
-3-
b. No abatements under this table will exceed 90% of new
appraised value. To accommodate larger capital investments or
optional additives outlined below, abatement terms may be
extended an additional 1 to 4 years, but no longer than a
total of ten years.
7. Optional Abatement Additives
a. Optional Criteria. The following optional abatements
may also be considered with each abatement request. These
optional abatements are to be considered separate and apart
from the standard abatement above, and may be added by the
City or other taxing entities at their discretion.
(1) Jobs. Job creation has always been an
underlying goal of economic development activity. The
impact of jobs however, varies from community to
community. The City of Schertz also considers jobs to be
an important part of this program and will consider lower
dollar value assessments in recognition of new emploYment
growth. For each $25,000.00 of additional payroll in
facilities based in Schertz, 1% will be added to the
standard abatement as derived from Table 1. Subject to
paragraph 5c, a maximum of 25% may by added based on this
criteria.
(2) Other Revenues. Other revenues, as defined
above, that inure to a taxing entity should also be
considered during the incentive process. These include
sales taxes, hotel/motel taxes, and any other source of
revenue apart from ad valorem. Those businesses that
make a substantial contribution to the "other revenue"
stream may also request additive abatement percentages
based on those revenues. Subject to paragraph 5c, for
each $1,000 of added "other revenues" received by the
City, an additional 2% will be added to the percentage
established by the standard abatement in Table 1, up to a
maximum of 20%.
(3) Business Retention. Current Business Retention
and Growth is a key to the continued stability of the
commercial tax base. Some provision to acknowledge the
contribution of existing businesses should also be
considered. Subject to paragraph 5c, an additional 15%
will be added to the percentage established by the
standard abatement in Table 1, will be included for those
businesses currently based in the City of Schertz.
-4-
b. In all cases, in order to be considered for the
optional abatement, the applicant must meet the initial
$75,000.00 capital improvement criteria of the standard
abatement as outlined in Table 1. In addition, the period of
the abatement of each of the optional additives will run
concurrently with the approved rate from the standard criteria
in Table 1, subject to paragraph 6b.
terms
that,
these
c. These optional abatements will be included in the
of the abatement agreement. The agreement will provide
other taxing entities mayor may not choose to allow
abatements, in the same amounts.
8. Special Abatements
a. Research has indicated the City of Schertz has
special qualifications for certain industries, as well as
needs for certain industries. These industries are those we
believe to be critical to our future development and as such
should receive special consideration. The underlying
philosophy is to diversify/expand the commercial tax base.
(1) Hotel/Motel Operations. With the
of Retama Park, the city would derive
additional revenues in several areas. The
of a hotel/motel complex would also upgrade
the city.
development
considerable
development
the image of
(2) Industries in a Foreign Trade Zone. With the
approval of the Tri-County business park as a Foreign
Trade Zone, consideration should be given to increase
incentives for companies that deal in international
trade.
(3) Recycling Industries. Recycling is considered
by many to be an industry of the future. Providing
incentives to develop such an industry in Schertz is a
prudent course. Such industry however, should not in
and of itself cause pollution beyond that of the light
industry category outlined in current zoning
regulations.
(4) Enterprise Zones. Companies that locate in
approved Enterprise Zones, that meet the requirements of
a "qualified business" as defined in the Enterprise Zone
Act, may qualify for the special abatement criteria as
defined below.
-5-
b. For companies in the broad categories above, Table 1
criteria is modified as follows: After achieving the initial
$75,000 investment, and subject to paragraph 5c, a 1%
abatement may be granted for each additional $25,000 of
capital investment.
terms
that,
these
c. These special abatements will be included in the
of the abatement agreement. The agreement will provide
other taxing entities mayor may not choose to allow
abatements, in the same amounts.
9. Variances
a. As with the creation of any definitive document, all
possible circumstances are not likely to be addressed. The
General Criteria established throughout this document
establishes minimum criteria. If the requested abatement
deviates in any substantive way from the criteria established
herein, a variance is required.
b. A variance is requested by adding a letter to the
basic application, identifying and justifying the adjustments
requested. Approval of a variance request requires a
three-fourths vote of City Council. In no cases shall
variances be approved that exceed an abatement of 90% of new
appraised value, or the term exceed 10 years.
10. Application Procedures
a. Applicability and Eligibility. These abatement
guidelines and criteria apply to any present or potential
owner of taxable commercial property in the City of Schertz.
b. The application shall consist of a letter requesting
a tax abatement, including optional or special abatements,
accompanied by:
(1) a general description of the new improvements to
be undertaken, including overall project costs;
(2) a descriptive list of the improvements for which
an abatement is requested, including individual
improvement costs;
(3) a map or plat with a property description;
(4) a copy of the most recent appraisal or the prior
year tax receipt which includes the tax number of the
property. (A copy of the prior year tax assessment is
available from the City Tax Assessor).
-6-
(5) If a variance is requested, a letter providing
full description and justification of the variance will
also be attached.
(6) Under what criteria the abatement is requested
and the percentage requested.
d. The completed application will be presented to the
City's Economic Development Department. A copy of the
application will be provided to the City Manager.
e. The application may be forwarded to appropriate City
departments (Planning and Zoning, Building Inspections, Fire,
Public Works, Police, etc.) for staff review and comments.
f. After staff review, the City's Economic Development
Commission will review the application for policy
implications, and make a recommendation to the City Council
(through the City Manager) to approve, modify, or disapprove
the requested abatement. The Economic Development Commission
may also return the application to the Economic Development
Department for additional information without action.
g. If the Economic Development Commission recommends
approval, the City's Economic Development Department shall
notify in writing the presiding officer of the governing body
of each taxing jurisdiction.
h. One major policy function during this review is the
creation of new re-investment zones and the size of such a
zone as a result of the application, unless the property is
already in a re-investment zone. (See para 11)
i. The City Manager will forward the application to City
Council with comments and/or recommendations. The City
Manager may also return the application to staff or the
Commission for additional information if necessary.
j. City Council will consider the application and all
comments and recommendations. If the City Council concludes
that the application has merit, the City Council will approve
the original or modified application for abatement by
ordinance and authorize the City Manager to enter into an
abatement agreement within the guidelines established within
the ordinance. If a variance was requested, City Council must
adopt the ordnance by a three-fourths vote of the entire
council.
k. In order to enter
City Council of Schertz
proposed agreement meet
that:
into a tax abatement agreement, the
must find that the terms of the
these Guidelines and Criteria and
-7-
( 1)
effect
base;
there
on the
and
will be no substantial long-term
provision of the City's service
adverse
or tax
(2) the planned use of the property will not
constitute a hazard to public safety, health or morals.
1. If City Council does not believe the application has
merit, a motion to disapprove the application shall be
considered and acted upon.
m. The City Council explicitly states that tax abatement
is not applicable to projects wherein the primary purpose of
the business is serving alcoholic beverages or where nudity is
involved.
11. Public Hearings
a. By State law, the governing body of a city 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 such hearing shall be published in a
local newspaper having general circulation within the City of
Schertz, at least 7 days prior to the public hearing. The
presiding officers of other taxing jurisdictions shall be
notified in writing at least 7 days prior to the public
hearing.
b. After the public hearing, City Council may pass an
Ordinance approving the Re-Investment Zone, or, pass a motion
to disapprove.
12. Tax Abatement Agreement
a. After approval of an ordinance by City Council, the
City Manager shall enter into an agreement with the applicant
which may include:
(1) estimated new value to be abated and the base
year value;
(2) the commencement date and the termination date
of abatement;
(3) the proposed use of the facility, the proposed
construction/modernization time schedule;
-8-
(4) a map or approved plat of the property and a,
property description;
(5)
violation
recapture,
provisions
law;
contractual obligations in the event of default,
of terms or conditions, delinquent taxes,
administration and assignment, or other
that may be required for uniformity or state
(6) amount of investment and average number of jobs
involved;
(7) percent to be abated as provided by paragraphs
5, 6, and 7.
the
other
met.
(8) City Council may approve the Tax Abatement
abatement agreement in a single ordinance if
statutory and evaluation requirements have
and
all
been
b. The agreement shall stipulate the employees and/or
designated representatives of the City of Schertz will have
access to the applicants property/reinvestment zone during the
term of the abatement 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 of 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.
c. The agreement shall also include, within the terms of
the agreement, those portions of the abatement amounts that
are optional for other taxing entities.
13. Default and Recapture
a. In the event that the facility is completed and
begins producing products or services, but subsequently
discontinues producing products or services for any reason
excepting 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 taxes for the calendar year during which the
facility no longer produces.
b. Should
or individuals
conditions of
terminate the
year in which
the City of Schertz determine
are in default according to
it's agreement, the City
agreement. Taxes will be due
the agreement is terminated.
that the company
the terms and
of Schertz may
in full for the
-9-
c. In the event that the company or individuals:
(1) allows it's ad valorem taxes owed the City of
Schertz, or other taxing entities who are a party to the
abatement, 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
abatement; or,
(3)
program,
is
the
in default with any other City sponsored
agreement then may be terminated;
d. Taxes will be due in full for the year in which the
agreement was terminated in Section 13c(1), (2), or (3) above.
e. In the event that the company, during the abatement
period, decides to relocate the company to a location outside
of the designated reinvestment zone, or the City of Schertz,
and remains in business, the City of Schertz by an Ordinance
adopted by City Council shall have the right to recapture
taxes abated in all previous years.
14. General Administration
a. The Chief Appraiser of the Comal, Bexar or Guadalupe
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 Chief Appraiser with such
information as may be necessary. Once value has been
established, the Chief Appraiser shall notify the affected
jurisdiction in the normal fashion.
b. Each year the City Tax Assessor will review all
approved abatements and determine the adjustment to ad valorem
taxes based on the abatement agreement.
c. The Economic Development Department shall retain
administrative responsibility and control over all abatement
agreements, and their administration.
15. Assignment.
Tax abatement agreements may be assignable to a new owner
only with City Council approval.
-10-
16. Sunset Provision.
a. These Guidelines and Criteria are effective upon the
date of their adoption and will remain in force for two years,
at which time all reinvestment zones and tax abatement
contracts pursuant to it's provisions will be reviewed by the
City of Schertz to determine whether the goals of Guidelines
and Criteria have been achieved and Guidelines and Criteria
have been followed. Based on that review, the Guidelines will
be modified, renewed or eliminated as necessary.
b. During the two year period, the
Criteria may be amended or repealed only
three-fourths of the City Council.
Guidelines
by a vote
and
of
..,.~ .
-11-
.'
PUBLISHER'S AFFIDAVIT
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THE STATE OF TEXAS,
County of Guadalupe
Before me, the undersigned authority, on this date personally appear~ ~~nown
to me, who, being by me duly sworn, on his oath deposes and says that he is the Publisher of The Seguin
Gazette-Enterprise, a newspaper published in said county; that a copy of the within and foregoing
1e1-tu
was published in said newspaper '3 times before the return day named therein, such
publications being on t~e following ~ates:
~ c3{) r;;)d-
and a newspaper copy of which is hereto attached.
.~~
daYOf~ A.D..19~'
Sworn to and subscribed before me, this.A-[)
i-~~,
3:\ ,......,.. <'1('"
(~*::\(l\ CHERYL SOSA
,* I 1) NolaryPublC.SlIleolTexas
\~~~.......,,<~~. My Commission Expires F'9b. a, 1998 :
""~~~
Notary Public, Guadalupe County, Texas
ORDINANCE NO. 94- T -33
AN ORDINANCE BY THE
CITY COUNCIL OF THE
CITY OF SCHERTZ,
TEXAS, ADOPTING
GUIDELINES AND CRI-
TERIA FOR TAX ABA TE-
MENT AND REINVEST-
MENT ZONES.
Passed, approved and
adopted the 6th day of De-
cember 1994~
June G. Krause,
City Secretary
()RDINANCE NO. 94-T-33
AN ORDINANCE BY THE
CITY COUNCIL m THE
CITY OF SCHERTZ
TEXAS, ADOPTING
GUIDELINES AND CRI-
TERIA FOR TAX ABATE-
MENT AND REINVEST-
MENT ZONES.
Passed, approved and
adopted the ,6th day of De-
cember 1994.
June G. Krause
City Secretary ,
\, '.."
'''''
PUBLISHER'S AFFIDAVIT
/s / r
THE STATE OF TEXAS,
County of Guadalupe
Before me, the undersigned authority, on this date personally appear~~"", r::J2/{J2:\.."'5.
known
to me, who, being by me duly sworn, on his oath deposes and says that he is the Publisher of The Seguin
Gazette-Enterprise, a newspaper published in said county; that a copy of the within and foregoing
N~\'~ was published in said newspaper ~ times before the return day named therein, such
publications being on the following dates:
Ai {);,~~ ~ dcJ
../
/qC;c;'
and a newspaper copy of which is hereto attached.
~~ .
dayofil~ A.D., 19 q;!
Sworn to and subscribed before me, thisr::9j
....~
~~
~~~v~;1~"
,,,""'..............0<1,,
f~/*".~'\ CHERYL SOSA
H Yt; H Notary I'ulllic, S~te ofTexas
~ \. fi/ .I; My CommlSSlOl1 ElqJ,res Feb. 3, 1998
~,ll'''''''. ../ O,J~
't~1 ,.e..OF"~~1-"(- ~
\\",~...........~
""-"""------
Notary Public, Guadalupe County, Texas
III
11 0 :"'2ga: Notices
VESTMENT ZONES.
First reading approved on
the 15th day of November,
1~94.
June G. Krause,
City Secretary
v1i' ' AN ORDINANCE
Y THE CITY COUNCIL
OF SCHERTZ, TEXAS,
.. ADOPTING GUIDELINES
AND CRITERIA FOR TAX
ABATEMENT AND RE-IN-
1\- ~Y
~'9'"T
VESTMENTZON!:S.
First reading approved
the 15th day of Noven;l r,
1~94.
June G. Krause,
City Secretary
\
AN ORDINANCE
BY 'THE CITY COtlN.C.IL
,. OF SCHERTZ, TEXAS,
ADOPTING GUIDELINES
AND CRITERIA FOR TAX
ABATEMENT AND RE-IN-
'.
~
:...
III
11 0 legal Notices
"-d
11 0 '. L~gal Notices
AN ORDINANCE
BY THE CITY COUNCIL
OF SCHERT~_~$.
ADOPTING ~
At IJiJ 1"'. FOR TAX
ABATEMENT AND RE-IN-
VESTMENT ZONES.
First reading approved 0"
the 15th day of November?
1994. .~
June G. Krause, ,
City Secretary "
.,,1
onto on next page. ~