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98-T-36 Tax Abatement ORDINANCE NO. 9J~/~3h 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 goveming 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, as attached and made a part hereof. THAT this ordinance replaces Ordinance No. 97-T-4 in its entirety and will be effective on 1 January 1999, and will expire on 31 December, 2000, a period of two years. Approved on first reading the 15/ day of :JJG!E/rILJC /L 1998 PASSED, APPROVED AND ADOPTED this the 151M ay of 7JcifjJlJ3Ef!- 1998 Mayor, City of Schertz, Texas ATIEST Y=hvr//X-pL/ 12tz4~ City Secretary, City of Schertz (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 that the City of Schertz is under any obligation to provide any incentive to any applicant. All such applications for tax abatement and other economic development incentives shall be considered on an individual basis. The City Council of the City of Schertz has final approval or disapproval on any application, at its discretion. 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 pattems and attract major investments that will contribute to the development of the City through the use of tax abatement. c. "Modemization" 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. Modemization 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 the assessed value of eligible property on the 1st of January preceding the execution of the agreement. -1- (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. The City shall not enter into an abatement agreement if, the City Council finds that the Application for Tax Abatement was filed after the commencement of construction, expansion, or modernization. c. No abatement will be approved that exceeds 90% of new appraised value of capital improvements or that will reduce current ad valorem revenues. If the computed percentage from a standard abatement in Table 1, and any additive percentage from the optional or special categories, as defined below, exceeds 90% of appraised new value, an extension of the abatement term beyond 5 years may be considered, up to a maximum of 10 years. 6. Standard Abatement a. The standard tax abatement is for a period of 5 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 FIVE-YEAR ABATEMENT Percent Abatement Capital Cost of the Projected Improvements 5% Approved Capital Improvements Under $75,000 that double the Assessed Valuation 10% $75,000 of approved Capital Improvements. 1% For each additional $50,000 of approved Capital Improvements. (Note: The above percentages are not cumulative except "For each additional $50,000 of Approved Capital Improvements over the $75,000 threshold). b. The provisions of paragraph 5c above apply. -3- 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/Retail Operations. To qualify for this special abatement, companies must have a minimum capital investment of $500,000.00. (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 (3) 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. (4) Manufacturing and Assembly Operations. Those companies that meet the definition of paragraph 2e above may qualify for the special abatement criteria as defined below. b. For companies in the broad categories above, Table 1 criteria is modified as follows: Mter achieving the initial $75,000 capital investment, ($500,000.00 for Hotel/Motel/Retail) and subject to paragraph 5c, a 1% abatement may be granted for each additional $25,000 of capital investment. c. These special abatements will be included in the terms of the abatement agreement. The agreement will provide that, other taxing entities mayor may not choose to allow these 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. -5- 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. Mter 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 retum 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 goveming body of each taxing jurisdiction. h. The City Manager will forward the application to City Council with comments and/or recommendations. The City Manager may also retum the application to staff or the Commission for additional information if necessary. i. 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 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. j. In order to enter into a tax abatement agreement, the City Council of Schertz must find that the terms of the proposed agreement meet these Guidelines and Criteria and that: (1) There will be no substantial long-term adverse effect on the provision of the City's service or tax base; and (2) The planned use of the property will not constitute a hazard to public safety, health, or morals. -7- (6) Amount of investment and average number of jobs involved; (7) Percent to be abated as provided by paragraphs 5, 6, and 7 of the Tax Abatement Guidelines and Criteria. (8) City Council may approve the Tax Abatement and the abatement agreement in a single ordinance if all other statutory and evaluation requirements have been met. b. The agreement shall stipulate the employees and/or designated representatives of the City .()f Schertz will have access to the applicant's 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. d. The agreement shall also include a statement by the company, that on or prior to January 15th of each year during the term of the abatement, they will provide the Economic Development Department a letter certifying the company meets or exceeds the criteria upon which the abatement was approved. Failure to do may constitute default by the company, and cause termination of the agreement. 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 the City of Schertz determine that the company or individuals are in default according to the terms and conditions of its agreement, the City of Schertz may terminate the agreement. Taxes will be due in full for the year in which the agreement is terminated. -9- 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 Guidelines and Criteria may be amended or repealed only by a vote of three-fourths of the City Council.( -11- PUBLISHER,'S'AFFfoAVIT (), ..' . / J'" .fA\ . ,. (/' '0'~': ..... I .' J . L~ .' . ' /ffI ./: ;;/; . .A/'(.l/.0 ./)1 ." /i.L/iry ....".AI./ / Y;C~'{ /~G /,7 V- I q' 'i..' ./' .t' tv. / <,,!) -{ , ',\ . "\~) I' , " ,,v \\ ~)/ 1// .1.-1/) \!..; . .'. ..... IV L/ '{ic, '.; . ....'---..... ) i . ).'. / i I L/ [UL/ /l. ~'" ,.A/ '~ , ,!/V(! . . i'Y County of Guadalupe: /'".1 (~ .,,!- J) J:j, t jL.L /0: "v c ..fivY-' )ff3C:C{ Before me, the undersigned authority. on this date personally appeared4. R~NOiDS known / , .' . . THE STATE OF TEXAS, to me, who, being by me duly sworn, on his oath deposes and says that he is the Advertising Director or Tne Seguin Gazette-Enterprise, a newspaper published in said county; that a copy of the within and fore- going AD was published in said newspaper . 1 times before the return day named therein, such publications being on the following dates: DEe E ME E R 2 7, 1 9 9 8 and a newspaper copy of which is hereto attached. Sworn to and subscribed before me, this 29 t h day of TIP. r.P.MR FR A.D., 19 9 S ., <t':' '." '"c. "',. -. ;, ."' .".I".,,,,,.:,,;,I4,,,,..~,,,,..~:f": ~.. _ ~ ~, ~. { t . ~. { ( (.~";'~~"'''''''~''~'; SARAH MeDRANO No\!l~ ~,Stare of T~ fv-1y GtIIWI1i@s1on 5l<piros 07-22.2001 ~~ Notary Public,. Guadalupe County, Texas .. ORDINANCE NO. 98- T-36 BY THE CITY QOUNCIL OF T~CITY OF SCHERTZ, TEXAS ADOPTING GUIDELINES AND CRITERIA FOR TAX ABATEMENT AND RE-IN- VESTMENT ZONES. Passed, Approved and Adopted the. 15th day of De- cember,1998. Norma Althouse, City Sec- retary . " .. ORDINANCE NO~ 98- T-36 BY TKE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS, ADOPTING GUIDELINES AND CRITERIA FOR TAX ABATEMENT AND RE-IN- VESTMENT ZONES. Passed, Approved and Adopted the 15th day of De- 'camber, 19~8. Norma Althouse, City Sec- retary . ..- PUBLISHER'S AFFIDAVIT ) iv/ ~ tl y , /), ). z/0! -lvlf/.i'-~' , '1; ~.~1L ~ Cuy, A!;lL I-..y 1.f1. b l' h~h {5J + j :,; ,i"J ;0") l- ' ,1-' '\ \. L~ [;)"" I ~~, ,0 i}i/;1i~d- ~ ,..Iv _ }. L/~..A k ~ 'j vI, I v <t,t/'VV ~ {I \}, ,I "II) .:'\i ~I\)./ .~~, I ill) D ' "'YJ J:ui'#~ "TY.1' ~ -tv ,(J/..Y . C r~'-1'-' L.A. YNOLDS " . , THE STATE OF TEXAS, County of Guadalupe Before me, the undersigned authority, on this date personally appeared known to me, who, being by me duly sworn, on his oath deposes and says that he is the Advertising Director of The Seguin Gazette-Enterprise, a newspaper published in said county; that a copy of the within and fore- going AD was published in said newspaper. 2 times before the return day named therein, such publications being on the following dates: DE C E MB E R 1 7, 19 9 8 S G E DECEMBER 17, 1998 PS and a newspaper copy of which is hereto attached. Sworn to and subscribed before me, this 28th day of DECEMBER A.D., 19 98. .!) L~"';~1'~~~jllf', ~~. l ~/~~', 1\;.,'<;' '\ SA~AH MeD~ANO ~ . :,c; .(y ); ~ Notafy ~blic, Stal~ of Texas ";' ;- " ,\ oj J My Commission Expires 07-22-2001 . \~~~~';?"oF'i'~~':/ .\'\"""...............- Notary Public:r Guadalupe ~unty, Texas '.. 10 11 O,~Notjces BY AN ORDINANCE OF T~~i'TY COUNCIL SCHERTZ CITY OF ~~~PcT~~G GU/D~~~~~ ABAtEM~B,I~lfqFil 'TAX VESTMENT Tr:6Z~(RE-JN- .. Approved on fi71st reaO-m): .>.' . ... . 1st d f olng the N ay 0 December 1998 orma Althouse City' S . retary. ' ec- ~.~ AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS, ADOPTING GUIDELINES AND CRITERIA FOR TAX ABATEMENT AND RE-IN- VESTMENT ZONES. Approved on first reading the 1stday of December, 1998. Norma Althouse, City Sec- retary.