10-10-11 Regular Meeting of La Porte City Council

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REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested October 10, 2011 Requested By Michael Dolby Department: Finance Report Resolution: Ordinance XX Exhibits: Texas Property Tax Law Changes Sec 11.253 Exhibits: Ordinance Exhibits: Letter from Robert Mott of Perdue Brandon Appropriation Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YES NO SUMMARY & RECOMMENDATION The governing body of each taxing unit in the state may act to tax goods -in- transit. Before acting to tax the exempt property, the governing body must conduct a public hearing as required by the Texas Constitution, Article VIII, Section 1 -n(d). Goods -in- transit made subject to taxation by a taxing unit remain so by that taxing unit until the unit by official action rescinds or repeals it previous action to tax the property. In 2007 the City passed Ordinance 2007 -3023 to tax goods in transit. Section 11.253 was originally passed with HB 621 and in the 2011 session, the Texas Legislature passed SB 1, which amended Texas Property Tax Code section 11.253 (a)(2) to modify the definition of "goods -in- transit' to mean tangible personal property stored under a contract of bailment by a public warehouse operator at one or more public warehouses that are not in any way owned or controlled by the owner of the personal property, rather than prohibiting direct or indirect ownership interest. If no action is taken these goods will first become exempt in 2012; if the City of La Porte chooses to continue to tax these types of goods; the City of La Porte must adopt an ordinance to tax such "goods -in- transit'. Staff recommends that they City Council pass an ordinance authorizing the City to continue to tax "goods -in- transit'. Action Required by Council: 1) Call Public Hearing to discuss "Goods -in- transit' 2) Approve an ordinance allowing the City of La Porte to continue to tax "Goods -in- transit."