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1991T14- ROBERT VALLANCE SR. , ORDINANCE NO. 9/- T - ;Lf AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS, APPROVING A TAX ABATEMENT AND A TAX ABATEMENT AGREEMENT FOR AND WITH ROBERT VALLANCE SR., A PROPERTY OWNER IN THE CITY OF SCHERTZ. WHEREAS, Section 312 of the Texas Property Tax Code allows municipalities to abate ad valorem taxes under specific Guidelines and Criteria, and the City of Schertz has adopted specific Guidelines and Criteria under these provisions; and WHEREAS, the City Council finds that Robert Vallance Sr's application for abatement of ad valorem taxes meets those Guidelines and Criteria, and further finds the terms of the tax abatement agreement listed at Exhibit 1 are acceptable; and WHEREAS, the property owned by Robert Vallance Sr., and Rose F. Vallance, described as Lot 30, Block 1, Volume 4, Page 336, in the Plat records of Gua1a1upe County, Texas, is within a Reinvestment Zone as defined by the Texas Property Tax Code and as established by the City Council; and WHEREAS, a public hearing was held on 1 October,1991, to hear public comment; and WHEREAS, the terms of the tax abatement agreement will cause no substantial long term adverse effect on the provision of the City's services or tax base, and the planned use of the property will not constitute a hazard to public safety, health or morals; NOW THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS: THAT, the request for abatement of ad valorem taxes by Robert Vallance Sr. is approved; and THAT, agreement, and Rose the City Manager is authorized to enter into an shown as Exhibit 1, with Robert Vallance, Sr., F. Vallance. PASSED, APPROVED AND ADOPTED this the ~day of 1991 o c..+obr'1'i' o c -f () h(<> fC.. ,1991. Approved on first reading the--L-day of , ATTEST: (SEAL OF CITY) FIN A L D R AFT Exhibit 1 Tax Abatement Agreement 1. PARTIES This agreement, is City of Schertz, Robert L. Vallance called the Owners. made and entered into by and between the Texas, hereinafter called the City, and Sr. and Rose F. Vallance, hereinafter 2. AUTHORIZATION AND FINDINGS a. This agreement is entered into pursuant to: (1). Section 312 of the Texas Property Tax Code. (2). City establishes Criteria for of the Tax Schertz Ordinance 90-T-2, which City of Schertz Guidelines and Abatement and Reinvestment Zones. (3). City Ordinance '1/ --T - ) 3 establishing a Reinvestment Zone which encompasses the property described below. (4). City Ordinance approves the tax abatement c; /- 7 - / 'i ,which and this agreement. b. The City of Schertz, by approval of this agreement, hereby finds the terms of this agreement and the property subject to it, to meet the "Guidelines and Criteria" as adopted, and further finds there will be (a) no substantial long-term adverse affect on the provision of City services or tax base; and (b) the planned use of the property will not constitute a hazard to public safety, health, or morals. 3. PROPERTY a. The property is described as follows: Lot 30, Block 1, 2.218 acres out of Schertz Business Park as recorded in Volume 4, page 336, Plat records of Guadalupe County, Texas, hereinafter called the Property. The street address is 3 Commercial Place. b. Abatements approved will be based on the rolls of the Guadalupe County Appraisal District for the Property each year of the abatement. c. The tax account of the property is IG2805-0001-03000. -1- 4. Owners' Representations a. The Owners represent they are owners in fee simple of the Property. b. The Owners represent they are the owners of Vallance Security Systems and Agood Answering Services. c. The Owners represent their companies will employ approximately 29 people in the City of Schertz. d. The Owners represent they have or will provide the required documentation to the appropriate taxing entities of the state and county by 1 December 1991 and thereafter as required, to insure the City of Schertz is the recipient of all Sales and Use Taxes to which it is entitled. 5. Terms of the Agreement a. The owners will employ not less than 21 people in the City of Schertz at or in connection with the businesses operated at the property, for the period of the abatement, provided that employment of fewer than 21 people is not caused by fire, explosion, or other casualty, accident, or natural disaster. b. The Sales and Use Tax receipts to the City of Schertz from Vallance Security Systems and Agood Answering Services will not fall below $7500.00 each year for the period of the abatement, provided no changes occur in existing tax law that would alter receipt of such taxes by the City. c. The Owners agree to maintain currency of ad valorem tax payments to all local taxing entities. d. The OWners agree to maintain the property in good repair and condition during the abatement period. e. The Owners agree to provide the City an annual report, in a form acceptable to the City, certifying the average number of employees in Vallance Security Systems and Agood Answering Services for each calendar year of the abatement period. f. The Owners agree to provide the City report, in a form acceptable to the City, Sales and Use Tax data reported for the year. an annual certifying -2- g. The Guadalupe necessary Owners agree to furnish the Chief Assessor of County with such information as may be for the abatement and for appraisal purposes. 6. Tax Abatement. a. If the Owners comply with the terms of Part 5 of this agreement for the period of the abatement, the Owners shall be entitled to a 30% abatement of Cities ad valorem taxes based on Section 2(f) of the City of Schertz Tax Abatement Guidelines and Criteria for the tax abatement period. b. The period of the abatement will be ten years based on Section 2(f)(2) of the City of Schertz Tax Abatement Guidelines and Criteria. The period shall begin on 1 January, 1992, and continue until 31 December, 2001. 7. Default and Recapture a. In the event the Owners no longer employ an average of 21 or more persons in the conduct of their businesses for any reason excepting fire, explosion or other casualty or accident or natural disaster, for a period of one year during the abatement period, this agreement may be terminated by the city, and so shall the abatement of taxes for the calendar year during which the average number of employees falls below 21. However, there shall be no recapture of prior years' taxes abated by virtue of this agreement. b. In the event Sales and Use Tax receipts to the City of Schertz from Vallance Security Systems and Agood Answering Services combined fall below the amount of $7500.00 for any calendar year of the abatement period for any reason excepting changes in the state law that governs the Sales and Use Tax, this agreement may be terminated by the city and so shall the abatement of taxes for the calendar year in which Sales and Use Tax receipts are below $7500.00. However, there shall be no recapture of prior years' taxes by virtue of this agreement. c. If the Owners refuse or neglect to comply with any of the terms of this agreement or, if any representation made by the Owners in the Application for Tax Abatement is false or misleading in any material respect this agreement may be terminated by the city. -3- d. In the event the Owners allow ad valorem taxes on the Property to become delinquent and fail to timely and properly follow the legal procedures for their protest and/or contest this agreement may be terminated by the city. e. In the event the City determines the Owners to be in default this agreement, the City will notify the Owners in writing at the address stated in Section 8 of this agreement, and if such is not cured within sixty days from the date of such notice (the Cure Period), then this agreement may be terminated upon written notice to the Owners. If this agreement is terminated by the city, taxes without abatement will be due for the year in which termination occurred and shall accrue without abatement for all tax years thereafter. However, there shall be no recapture of prior years' taxes abated by virtue of this agreement. f. In the event the Owners decide to relocate Vallance Security Systems or Agood Answering Services, during the abatement period, the City shall by an Ordinance adopted by City Council have the right to recapture 100% of taxes abated in prior years and the year in which relocation occurs. A total bill will be sent to the Owners and the Owners agree to pay the total amount within sixty days after receipt. Penalty and Interest will not begin to accrue until the Owners have failed to pay any of the amount placed back on the tax roll within sixty days after receipt of the bill, unless arrangements satisfactory to the City and the Guadalupe County Assessor have been made. -4- 8. Notice All notices shall be in writing, addressed to the Owners or the City at the following addresses. If mailed, any notice or communication shall be deemed to be received three days after the date of deposit in the United States Mail. Unless otherwise provided in this agreement, all notices shall be delivered to the following address: To the Owners: -If mailed or personally delivered: Robert L. Vallance Sr. and Rose F. Vallance (address) (With required copy to:) To the City: -If mailed or personally delivered City of Schertz Attn: City Manager P.O. Drawer I Schertz, Texas 78154 9. Condition This agreement is conditioned entirely upon the approval of the City of Schertz City Council by the affirmative vote of a majority of members at a regularly scheduled meeting. 10. Assignment This agreement may be assignable to a new owner only City Council approval as reflected in a duly adopted Ordinance. with City -5- 11. Date This agreement Origina&~h day of . has been executed having full force 1991. by the parties in multi~~e and effect on this the ~ OWNERS: ~2/ 0~.,;Z7~ State of Texas ( County of GLtD~ ~ T~:~~trument was acknowledged before me on Jll ~~ , 1991, by Robert Vallance Sr. ~PJ~~~trument was acknowledged before me on Il) ~~ , 1991, by Rose F. Vallance. -6- CITY OF SCHERTZ, TEXAS STATE OF TEXAS I I COUNTIES OF GUADALUPE, BEXAR I AND COMAL I I CITY OF SCHERTZ I This instrument was acknowledged before me on 0&. ifS- 1991, by Kerry R. Sweatt, City Manager of the City of Schertz, Texas, a Texas Municipal Corporation, on behalf of such municipal corporation. JUNE G. KRAUSE Notary PllbllC. SIII8 01 Texas ___1lI1G/91 i...o.",.:.,::..,~~,,~;~:"i;.:!';~,..."....::""-h";"~;/.~';..';"':~ June G. Krause My Commission expires: /1- 5(! -9 I September 27, 1991 TO: Kerry R. Sweatt, C~ty Manager Mark Marquez 1Jt'(f-:--:t. FROM SUBJECT: Tax Abatement On 25 pm. I Marcos. September,1991, a Mr. Judson called my office at 4:20 was out of the office on the return trip from San I returned Mr. Judson's call at 5:15pm Mr. Judson seemed quite agitated. He asked a number of questions about the abatement process all of which I answered. He then proceeded to ask questions about the abatement for Mr. Vallance. He asked me how much Mr. Vallance paid for the property, to which I responded I didn't know. He asked how much of an abatement Mr. Vallance would get, and I told him the current Guidelines and Criteria would allow 30%. He didn't believe abatements were the right thing to do, and I explained that it was being used as an incentive to try and bring new businesses into our city. He agreed that new businesses would be helpful provided the city did not place current businesses at a competitive dis-advantage. I pointed out the city of Schertz currently has no ~larm company nor an answering service, to which he claimed a company called Universal Alarm was in cur city. This was news to me since the company was not registered with our Police department nor on our tax rolls. Some further investigation into this is warranted. He asked repeatedly whether or not Mr. Vallance was going to use both buildings on the property or whether he would be leasing one. I said I didn't know nor was it any of my business. I explained that what Mr. Vallance does with his property is not a concern of the city excepting that he violates no laws. Mr. Judson then explained his primary concern was that the abatement to Mr. Vallance would put him at a competitive dis-advantage should Mr. Vallance decide to lease one of the buildings. I pointed out the abatement was not based on the property or improvements, rather it was based solely on the number of jobs created. Mr. Judson seemed to understand that point, but nonetheless continued to argue he would be at a dis-advantage because of city policies. He asked if that kind of problem was considered 'and it was, but that we looked at the case in terms of alarm businesses, not based on whether or not Mr. would be leasing one of the buildings. I said yes competing Vallance Judson Memo Page 2 I pointed out that the logical extension of his argument would allow a measure of control by the city over what property owners did to or with their property to the extent of requiring Mr. Vallance not lease his property at a rate lower than surrounding properties. I explained that I believed that to be improper I concluded the conversation by inviting Mr. Judson to attend the public hearing as that is the reason we have them, so that his comments could be heard. Mr. Judson had alluded early on that if the policy on abatements was not changed he would consider suing the city. I made no response to that comment. ORDINANCE NO. AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS, ESTABLISHING THE SCHERTZ BUSINESS PARK AS A REINVESTMENT ZONE WHEREAS, the Texas Property Tax Code, Section 312, allows the creation of Reinvestment Zones; and WHEREAS, the property described as Schertz Business Park in Volume 4, page 336, Plat records of Guadalupe County, Texas, is currently zoned for General Business; and WHEREAS, it is the belief of the City Council that establishing Schertz Business Park as a Reinvestment Zone is reasonably likely to contribute to the retention or expansion of primary employment or to attract major investment in the zone that would benefit the property and would contribute to the economic development of the property; and WHEREAS, it has been the stated policy of this Council to support and promote the economic development of this community; and WHEREAS, a Public Hearing was held to hear comments from the public on 1 October, 1991; NOW THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS: THAT the City Council hereby establishes the Schertz Business Park as a Reinvestment Zone under the provisions of Section 312 of the Texas Property Tax Code. Approved on first reading the day of , 1991. PASSED, APPROVED AND ,1991 ADOPTED this the day of Mayor, City of Schertz, Texas ATTEST: City Secretary, City of Schertz (SEAL OF CITY) ORDINANCE NO. AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS, APPROVING A TAX ABATEMENT AND A TAX ABATEMENT AGREEMENT FOR AND WITH ROBERT VALLANCE SR., A PROPERTY OWNER IN THE CITY OF SCHERTZ. WHEREAS, Section 312 of the Texas Property Tax Code allows municipalities to abate ad valorem taxes under specific Guidelines and Criteria, and the City of Schertz has adopted specific Guidelines and Criteria under these provisions; and WHEREAS, the City Council finds that Robert Vallance Sr's application for abatelfient of ad valorem taxes meets those Guidelines and Criteria, and further finds the terms of the tax abatement agreement listed at Exhibit 1 are acceptable; and WHEREAS, the property owned by Robert Vallanr.e Sr., and Rose F. Vallance, described as Lot 30, Block 1, Volume 4, Page 336, in the Plat records of Gualalupe County, Texas, is within a Reinvestment Zone as defined by the Texas Property Tax Code and as established by the City Council; and WHEREAS, a public hearing was held on 1 October,1991, to hear public comment; and WHEREAS, the terms of the tax abatement agreement will cause no substantial long term adverse effect on the provision of the City's services or tax base, and the planned use of the property will not constitute a hazard to public safety, health or morals; NOW THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS: THAT, the request for abatement of ad valorem taxes by Robert Vallance Sr. is approved; and THAT, agreement, and Rose the City Manager is authorized to enter into an shown as Exhibit 1, with Robert Vallance, Sr., F. Vallance. Approved on first reading the____day of ,1991. PASSED, APPROVED AND ADOPTED this the ___day of 1991 , Mayor, City of Schertz, Texas ATTEST: City secretary, City of Schertz (SEAL OF CITY) FIN A L D R AFT . Exhibit 1 Tax Abatement Agreement 1. PARTIES This agreement, is City of Schertz, Robert L. Vallance called the Owners. made and entered into by and between the Texas, hereinafter called the City, and Sr. and Rose F. Vallance, hereinafter 2. AUTHORIZATION AND FINDINGS a. This agreement is entered into pursuant to: (1). Section 312 of the Texas Property Tax Code. (2). City establishes Criteria for of the Tax Schertz Ordinance 90-T-2, which City of Schertz Guidelines and Abatement and Reinvestment Zones. (3). City Ordinance establishing a Reinvestment Zone which encompasses tha property described below. (4). City Ordinance which approves the tax abatement and this agreement. b. The City of Schertz, by approval of this agreement, hereby finds the terms of this agreement and the property subject to it, to meet the "Guidelines and Criteria" as adopted, and further finds there will be (a) no substantial long-term adverse affect on the provision of City services or tax base; and (b) the planned use of the property will not constitute a hazard to public safety, health, or morals. 3. PROPERTY a. The property is described as follows: Lot 30, Block 1, 2.218 acres out of Schertz Business Park as recorded in Volume 4, page 336, Plat records of Guadalupe County, Texas, hereinafter called the Property. The street address is 3 Commercial Place. b. Abatements approved will be based on the rolls of the Guadalupe County Appraisal District for the Property each year of the abatement. c. The tax account of the property is IG2805-0001-03000. -1- 4. Owners' Representations a. The Owners represent they are owners in fee simple of the Property. b. The Owners represent they are the owners of Vallance security Systems and Agood Answering Services. c. The Owners represent their companies will employ approximately 29 people in the City of Schertz. d. The Owners represent they have or will provide the required documentation to the appropriate taxing entities of the state and county by 1 December 1991 and thereafter as required, to insure the City of Schertz is the recipient of all Sales and Use Taxes to which it is entitled. 5. Terms of the Agreement a. The owners will employ not less than 21 people in the City of Schertz at or in connection with the businesses operated at the property, for the period of the abatement, provided that employment of fewer than 21 people is not caused by fire, explosion, or other casualty, accident, or natural disaster. b. The Sales and Use Tax receipts to the City of Schertz from Vallance Security Systems and Agood Answering Services will not fall below $7500.00 each year for the period of the abatement, provided no changes occur in existing tax law that would alter receipt of such taxes by the City. c. The Owners agree to maintain currency of ad valorem tax payments to all local taxing entities. d. The Owners agree to maintain the property in good repair and condition during the abatement period. e. The Owners agree to provide the City an annual report, in a form acceptable to the City, certifying the average number of employees in Vallance Security Systems and Agood Answering Services for each calendar year of the abatement period. f. The Owners agree to provide the City report, in a form acceptable to the City, Sales and Use Tax data reported for the year. an annual certifying -2- g. The Guadalupe necessary Owners agree to furnish the Chief Assessor of County with such information as may be for the abatement and for appraisal purposes. 6. Tax Abatement. a. If the Owners comply with the terms of Part 5 of this agreement for the period of the abatement, the Owners shall be entitled to a 30% abatement of Cities ad valorem taxes based on Section 2(f) of the City of Schertz Tax Abatement Guidelines and Criteria for the tax abatement period. b. The period of the abatement will be ten years based on Section 2(f)(2) of the City of Schertz Tax Abatement Guidelines and Criteria. The period shall begin on 1 January, 1992, and continue until 31 Decenilier, 2001. 7. Default and Recapture a. In the event the Owners no longer employ an average of 21 or more persons in the conduct of their businesses for any reason excepting fire, explosion or other casualty or accident or natural disaster, for a period of one year during the abatement period, this agreement may be terminated by the city, and so shall the abat~ment of taxes for the calendar year during which the average number of employees falls below 21. However, there shall be no recapture of prior years' taxes abated by virtue of this agreement. b. In the event Sales and Use Tax receipts to the City of Schertz from Vallance Security Systems and Agood Answering Services combined fall below the amount of $7500.00 for any calendar year of the abatement period for any reason excepting changes in the state law that governs the Sales and Use Tax, this agreement may be terminated by the city and so shall the abatement of taxes for the calendar year in which Sales and Use Tax receipts are below $7500.00. However, there shall be no recapture of prior years' taxes by virtue of this agreement. c. If the Owners refuse or neglect to comply with any of the terms of this agreement or, if any representation made by the Owners in the Application for Tax Abatement is false or misleading in any material respect this agreement may be terminated by the city. -3- d. In the event the Owners allow ad valorem taxes on the Property to become delinquent and fail to timely and properly follow the legal procedures for their protest and/or contest this agreement may be terminated by the city. e. In the event the City determines the Owners to be in default this agreement, the City will notify the Owners in writing at the address stated in Section 8 of this agreement, and if such is not cured within sixty days from the date of such notice (the Cure Period), then this agreement may be terminated upon written notice to the Owners. If this agreement is terminated by the city, taxes without abatement will be due for the year in which termination occurred and shall accrue without abatement for all tax years thereafter. However, there shall be no recapture of prior years' taxes abated by virtue of this agreement. f. In the event the Owners decide to relocate Vallance Security Systems or Agood Answering Services, during the abatement period, the City shall by an Ordinance adopted by City Council have the right to recapture 100% of taxes abated in prior years and the year in which relocation occurs. A total bill will be sent to the Owners and the Owners agree to pay the total amount within sixty days after receipt. Penalty and Interest will not begin to accrue until the Owners have failed to pay any of the amount placed back on the tax roll within sixty days after receipt of the bill, unless arrangements satisfactory to the City and the Guadalupe County Assessor have been made. -4- 8. Notice All notices shall be in writing, addressed to the Owners or the City at the following addresses. If mailed, any notice or communication shall be deemed to be received three days after the date of deposit in the United States Mail. Unless otherwise provided in this agreement, all notices shall be delivered to the following address: To the Owners: -If mailed or personally delivered: Robert L. Vallance Sr. and Rose F. Vallance (address) (With required copy to:) To the City: -If mailed or personally delivered City of Schertz Attn: City Manager P.O. Drawer I Schertz, Texas 78154 9. Condition This agreement is conditioned entirely upon the approval of the City of Schertz City Council by the affirmative vote of a majority of members at a regularly scheduled meeting. 10. AS3ignment This agreement may be assignable to a new owner only City Council approval as reflected in a duly adopted Ordinance. with City -5- 11. Date This agreement originals, each day of has been executed by the parties in multiple having full force and effect on this the 1991. OWNER: BY: Robert L. Vallance Sr. Rose F. Vallance Name: Title: ATTEST: Name: Title: CITY OF SCHERTZ Kerry R. Sweatt City Manager ATTEST: June Krause City Secretary -6- September 20, 1991 TO Mayor and City Council FROM Kerry R. Sweatt, City Manager y~ SUBJECT: Tax Abatement Request from Mr. Vallance. Mr. Robert Vallance Sr. has requested a tax abatement for the property he intends to purchase at Commercial Place and FM 1518. Mr. Vallance owns two businesses currently located in San Antonio; Vallance Security Systems and Agood Answering Service. Both businesses will relocate to Schertz. Mr. Vallance's application meets the basic criteria established in our Tax Abatement and Reinvestment Zone Guidelines and Criteria ordinance passed in Jan 1990. The criteria in that ordinance would allow an abatement of 30%, based on the creation of 29 jobs in our city. We do not anticipate any meaningful capital improvements to the buildings or property. The application was r0vievled by the Economic Development Task Force on 5 September, 1991, and was unanimously recommended for approval. Some monitoring activity will be done by the Economic Development Department to insure compliance with any agreement that is reached. We are negotiating with Mr. Vallance on the tax abatement agreement, including specific recommendations made by the Task Force. The proposed agreement in a draft form is attached for your review. In order to approve the tax abatement, several steps and actions are required. Before a tax abatement agreement can be approved a Reinvestment Zone must be in place. Enclosed is a proposed ordinance establishing the Schertz Business Park as a Reinvestment Zone. The creation of the Reinvestment Zone in and of itself has no consequences to the City or property owners. The net effect of a Reinvestment Zone is the ability to do other ~things, in this case, allow a tax abatement on one or more of the properties in the zone. In addition, in order to establish a Reinvestment Zone, a public hearing is required. In anticipation of this requirement, we have tentatively scheduled a public hearing on 1 October, 1991. Having approved the Reinvestment Zone, we can now deal with Mr. Vallance's application for tax abatement, which will also require a public hearing. We have scheduled this public hearing for 1 October also. After the public hearing, the abatement process consisting of three steps should be considered. First, we must conclude that Mr. Vallance's application meets the criteria in our ordinance. Second we must approve the application allowing a 30% abatement. Finally, we must approve the formal Tax Abatement Agreement. Attached is a proposed ordinance which accomplishes all three actions. The Tax Abatement Agreement is an Exhibit to the ordinance. While this process appears somewhat cumbersome, we are bound by legal requirements in the property tax code to take these steps. The fundamental issue is whether we are willing to give a tax abatement to businesses locating or relocating in our city. If so, approval of these two ordinances will accomplish that end (after the public hearings). As a side note, the fact that we have a tax abatement policy in effect is a tacit approval of abatements. The question then is whether the request meets the criteria we have established. As to the Tax Abatement, many people have valid concerns over the reduction of ad valorem taxes solely for the purpose of enticing a business to relocate. This is also true for many of the other economic development incentives. The reality is that in order to compete, incentives such as tax abatements, are a necessity. In this particular case, the city is expected to receive additional sales tax revenues estimated at $10,000.00 annually, making the tax abatement much more palatable. In terms of actual dollar values, the estimated cost of this abatement is about $3000.00 to $4000.00 over the life of the abatement, about $400.00 per year for ten years. This equates to about $1.15 per job per month. If we consider indirect revenues as a result of 29 new jobs the actual cost is close to zero dollars. For example, the two business are to be operated on a 24 hour a day basis. This means as much as $500.00 dollars a month in electricity bills. Thus Electric Franchise revenues to the city would equate to about $120.00 per year. The two business will be water users. The minimum charges will equate to about $23.12 per month or about $277.44 annually. These 29 employees are very likely to spend at least $30.00 a month each in the local economy, which equates to an annual sales tax revenue of about $105.00. Finally, no consideration was given in this example to the impact of potential new'Schertz residents. If only one of these employees decides to move to our city, the city receives a net gain in revenue regardless of any gains in direct sales tax revenue. An intangible that is not obvious but most important, is that this new business is non-competitive. By this I mean we have no similar businesses located in our city. This is a subtle nuance that should not be overlooked in this and future abatement applications. We have furnished information to both Guadalupe County and SCUC-ISD and expect those groups will consider action, however, I cannot predict the outcomes. This information was furnished out of courtesy and legal requirements. While the County can expect direct sales tax income as a result of their 1/2 cent tax, the school is more in a position of considering what indirect benefits can accrue and taking such action so as to be "a part of the team" in the overall economic development effort. We expect negotiations between the applicant and the school might include some incentives by the applicant such as in kind services, scholarships, etc. D R AFT Exhibit 1 Tax Abatement Agreement 1. PARTIES This agreement, is made and entered into by and between the City of Schertz, Texas, hereinafter called the City, and Robert Vallance Sr., hereinafter called the Owner. 2. AUTHORIZATION AND FINDINGS a. This agreement is entered into pursuant to: (l). Section 312 of the Texas Property Tax Code. (2). City establishes Criteria for of the Tax Schertz Ordinance 90-T-2, which City of Schertz Guidelines and Abatement and Reinvestment Zones. ( 3) . Ci ty establishing the property Ordinance an Enterprise Zone described below. which , encompasses (4). City Ordinance , which approves the tax abatement and this agreement. b. The City of Schertz, by approval of this agreement, hereby finds the terms of this agreement and the property subject to it, to meet the "Guidelines and Criteria" as adopted, and further finds there will be (a) no substantial long-term adverse affect on the provision of City services or tax base; and (b) the planned use of the property will not constitute a hazard to public safety, health, or morals. 3. PROPERTY a. The property is described as follows: Lot 30, Block 1, 2.218 acres out of Schertz Business Park as recorded in Volume 4, page 336, Plat records of Guadalupe County, Texas, hereinafter called the Property. The street address is 3 Commercial Place. b. Abatements approved will be based on the rolls of the Guadalupe County Appraisal District for the Property each year of the abatement. c. The tax account of the property is IG2805-0001-03000_ 4. Owner's Representations a. The Owner represents he is owner in fee simple of the Property. b. The Owner represents he is the owner of Valance Security Systems and Agood Answering Services. c. The OWner represents his companies will employ 29 people in the City of Schertz. d. The Owner represents he has or will provide the required documentation to the appropriate taxing entities of the state and county by 1 December 1991 to insure the City of Schertz is the reCipient of all Sales and Use Taxes to which it is entitled. 5. Terms of the Agreement a. The owner will employ not less than 21 people in the City of Schertz for the period of the abatement, provided that employment of fewer than 21 people are not caused by fire, explosion, or other casualty, accident, or natural disaster. b. The Sales and Use Tax receipts to the City of Schertz from Vallance Security Systems and Agood Answering Services will not fall below $7500.00 for the period of the abatement, provided no changes occur in existing tax law that would alter receipt of such taxes by the City. c. The OWner agrees to maintain currency of ad valorem tax payments to all local taxing entities. d. The Owner agrees to maintain the property in good repair and condition during the abatement period. e. The Owner agrees to provide the City an annual report, in a form acceptable to the City, certifying the average number of employees in Vallance Security Systems and Agood Answering Services for each abatement year. f. The Owner agrees to provide the report, in a form acceptable to the Sales and Use Tax data for the year. City City, an annual certifying g. The Guadalupe necessary Owner agrees to furnish the Chief Assessor of County with such information as may be for the abatement and for appraisal purposes. 6. Tax Abatement. a. If the Owner maintains the employment of 21 or more people in the City of Schertz for the period of the abatement, the Owner shall be entitled to a 30% abatement of Cities ad valorem taxes based on Section 2(f) of the City of Schertz Tax Abatement Guidelines and Criteria for the tax abatement period. b. The period of the abatement will be ten years based on Section 2(f)(2) of the City of Schertz Tax Abatement Guidelines and Criteria. The period shall begin on 1 January, 1992, and continue until 31 December, 2001. 7. Default and Recapture a. In the event the Owner no longer employs an average of 21 or more persons in the conduct of his businesses for any reason excepting fire, explosion or other casualty or accident or natural disaster, for a period of one year during the abatement period, this agreement may be terminated, and so shall the abatement of taxes for the calendar year during which the average number of employees falls below 21. However, there shall be no recapture of prior years' taxes abated by virtue of this agreement. b. In the event Sales and Use Tax receipts to the City of Schertz from Vallance Security Systems and Agood Answering Services combined fall below the amount of $7500.00 for the calendar year for any reason excepting changes in the tax law that governs the Sales and Use Tax, this agreement may be terminated and so shall the abatement of taxes for the calendar year in which Sales and Use Tax receipts are below $7500.00. However, there shall be no recapture of prior years' taxes by virtue of this agreement. c. If the Owner refuses or neglects to comply with any of the terms of this agreement or, if any representation made by the Owner in the Application for Tax Abatement is false or misleading in any material respect this agreement may be terminated. d. In the event the Owner allows ad valorem taxes on the Property to become delinquent and fails to timely and properly follow the legal procedures for their protest and/or contest this agreement may be terminated. e. In the event the City determines the Owner to be in default this agreement, the City will notify the Owner in writing at the address stated in Section 8 of this agreement, and if such is not cured within sixty days from the date of such notice (the Cure Period), then the agreement may be terminated upon written notice to the Owner. If the agreement is terminated, taxes without abatement will be due for the year in which termination occurred and shall accrue without abatement for all tax years thereafter. However, there shall be no recapture of prior years' taxes abated by virtue of this agreement. f. In the event the Owner decides to relocate Vallance Security Systems or Agood Answering Services, during the abatement period or for a period of ten (10) years after the abatement period, the City shall by an Ordinance adopted by City Council shall have the right to recapture a percentage of abated taxes based on the following table: Tax Year of Relocation Total Taxes Previously Abated Shall be Multiplied by: 1992-2001 100% 2002 2003 2004 2005 2006 2007 2008 2009 2020 90% 80% 70% 60% 50% 40% 30% 20% 10% Formula: abated in percentage recaptured. The recapture formula shall be: Total taxes each abatement year times the applicable from the above table = the Amount to be The City will calculate the amount of taxes for recapture pertaining to each year using the above formula. A total bill will be sent to the Owner and the Owner will pay the total amount within sixty days after receipt. Penalty and Interest does not start until the Owner has failed to pay any of the amount placed back on the tax roll within sixty days after receipt of the bilY unless arrangements satisfactory to the City and the Guadalupe Appraisal District have been made. 8. Notice All notices shall be in writing, addressed to the Owner or the City at the following addresses. If mailed, any notice or communication shall be deemed to be received three days after the date of deposit in the United States Mail. Unless otherwise provided in this agreement, all notices shall be delivered to the following address: To the Owner: -If mailed or personally delivered: Mr. Robert Vallance Sr. (address) (With required copy to:) To the City: -If mailed or personally delivered City of Schertz Attn: City Manager P.O. Drawer I Schertz, Texas 78154 9. Condition This agreement is conditioned entirely upon the approval of the City of Schertz City Council by the affirmative vote of a majority of members at a regularly scheduled meeting. 10. Assignment This agreement may be assignable to a new owner only City Council approval as reflected in a duly adopted Ordinance. with City ll. Date This agreement originals, each day of has been executed by the parties in multiple having full force and effect on this the 1991. OWNER: CITY OF SCHERTZ BY: Mr. Robert Vallance Sr. Name: Title: ATTEST: Name: Title: Kerry R. Sweatt City Manager ATTEST: June Krause City Secretary