O-2010-3245 adopting new Guidelines and Criteria Governing Tax Abatement Agreements

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REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: April 26, 2010 Requested By: Stacey Osborne Department: CMO Report: _ Resolution: _ Ordinance: x Exhibits: Tax Abatement Guidelines & Criteria -2010B Exhibits: Exhibits: Appropriation Source of Funds: SOURCE Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YES NO SUMMARY & RECOMMENDATION We have given three presentations and had three discussions regarding tax abatements. These were workshop items in the City Council meetings on February 8 and February 22 and at the Council Retreat on April 10. The tax abatement proposal that we last discussed targets three specific categories of business: (1) Rail -served Regional and Service Distribution Facilities; (2) Manufacturing Facilities and Other Basic Industry; and (3) Retail, Commercial Office, and Regional Entertainment Facilities. Each of those facilities is defined in the Tax Abatement Guidelines and Criteria -2010, which is based on the Tax Abatement Guidelines and Criteria that were previously in place for the City of La Porte. An amended Guidelines and Criteria, with strike -through, is presented for your reference. We propose to offer incentives at rates that will heavily favor businesses in the retail, office, and regional entertainment industries. To qualify for tax abatements, businesses in all three categories must provide a minimum capital investment of $3 million (amended from $5 million in our earlier proposal) and be located within the limits of the City of La Porte. The abatements for all three categories would be applied to property taxes, and would be averaged over five years. They would also require a job commitment of at least 10 jobs. The rebates for the different categories would be as follows: Warehouse/transportation: 10% for rail -served facilities only. (NOTE: Per our discussion at the February 22 workshop we took out the Warehouse /transportation category, but we added rail -served facilities back into consideration after the Council Retreat on April 10.) Manufacturing: 10% Retail/Office: 10% - 50%, depending upon the square footage of the building space. (NOTE: Per the discussion at our February 22 discussion we added an additional category for retail with 0 — 50k square footage.) The next steps for offering tax abatements begin with the City adopting a resolution and adopting tax abatement guidelines and criteria. Then, once a property has requested a tax abatement, the City will hold a public hearing and designate an area as a "reinvestment zone" (which is not the same thing as a TIRZ). Written notice of the intent to enter into a tax abatement agreement will be submitted to all other taxing entities (e.g. the County), and the City