10-14-13 Regular Meeting of La Porte City Council

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REQUEST FOR THE CITY COUNCILAGENDA ITEM Budget Agenda Date Requested:14October2013 Source of Funds: Requested By:Scott D. Livingston Account Number: Department: Administration/Economic Development Amount Budgeted: Report: Resolution:Ordinance: Amount Requested: Exhibits:Draft Resolution Budgeted Item:YESNO Exhibits: Previous Resolution #2013-15 Exhibits SUMMARY & RECOMMENDATION Equistar Chemicals, LP (Equistar), a subsidiary of Lyondell Chemical Company, is requesting that the City Council nominate the company as a doublejumbo Texas Enterprise Project (EP) for the company’s investment and activity related to its plant in La Porte. The Texas EZ program does not allow Equistar plans to expand its La Porte plant located at 1515 Miller Cut-Off by de- bottlenecking the ethane cracker. Twonew cracking furnaces will be added to supply the de- bottlenecked facility with increased volumes of cracked gas. The project objective is to produce 850 million lbs/year of incremental ethylene from ethane. The previous resolution passed by the council on August 26, 2013 nominatingEquistar as a triple jumbo EP needs to be replaced.In order to be eligible for a triple jumbo EP a company must create or retain at least 500 jobs. This was never the case for Equistar. However, the company’s consultantmisinterpreted the program guidelines. So, the nomination should have beenfor a double jumbo, not a triple jumbo EP. The Texas Enterprise Zone (EZ) programis a state incentive program that offers a state sales/use tax refund to companies that retain and/or create jobs and make capital investment at a qualified business site(no City taxes are forfeited by the City). Applicants must be nominated by the local jurisdiction, make application to the Governor’s Office for EZ Project (EP) designation and make annual refund applications to the Texas Comptroller. Council has previouslyestablished an EZ ordinance (#2010-3248), as well as nominated companies such as INEOS as an EP. Having established the EZ ordinance, Council is now allowed to nominate subsequent EPs simply by passing a resolution (see attached). If nominated by the City and approved by the state as a doublejumbo EP, and in exchange for making capital investment of at least $250 million and retaining and/or creating jobs, Equistar is state eligible for sales/use tax refunds of $5,000 per retained job. Equistar will make application to the Texas Comptroller each year to receive this annual refundfor five (5) years. Companies approved as EPs must also annually certify to the Texas Comptroller the number of jobs it has retained and/or created. The company has estimated it will spend up to $350 million for the project, retain approximately 374 current jobs, and add approximately 32 new jobs.The project