1998-09-14 Regular Meeting and Public Hearing of City Council

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'QUEST FOR CITY COUNCIL AGEND'TEM AGENDA DATE September 14.1998 REQUESTED BY Jeff Litchfield. Finance Director/ACM _ REPORT; _ RESOLUTION; .lQL ORDINANCE; , Attachments The City of La Porte has been approached by PPG regarding the creation of a reinvestment zone on land near the corner of Fairmont Parkway and Sixteenth Street, utilizing a portion of PPG's existing plant site. The creation of the zone is necessary for them to enter into a tax abatement agreement with Harris County. The City has created zones such as this in the past. Most recently in 1990 for International Cargo Network. In conjunction with their request for the reinvestment zone, PPG also asked the City to consider providing tax abatement to their project. City staff reviewed this request very closely because we normally do not provide abatement for projects within our City limits. Because of the magnitude of the project, we believe abatement might be warranted and have proceeded in that direction. The project as proposed by PPG, is for a pharmaceutical unit, to be built in three stages, which, when completed, is estimated to add $55 million in taxable value to the tax roll. The project will also add 57 permanent ful~ time jobs. After reviewing several alternatives, and taking into consideration the City and County have to work together in providing abatement in a reinvestment zone, we have arrived at a concept where the City would provide abatement of 50% of the value of the project for a specific seven year period. In addition, to assist the County in their abatement, we have further limited the abatement amount to $750,000 per job created. Since this concept is intended to apply to major improvements, we have also added a floor of $21 million. So in other words, we are proposing the City offer PPG a tax abatement on their project, for a seven year period (from January 2000 to December 2006) for the value of the additions ~o their property, as long as the additions exceed $21,000,000, and are further limited to a maximum of $42,750,000. A projection of the amount of the improvements, the total City taxes and the amount of those taxes abated is shown on the next page. Staff is recommending the City Council approve the offer of a reinvestment zone to PPG and that the City participate with certain constraints, including no abatement for the first year, 50% abatement for the next seven years, and a minimum and maximum eligible value of $21 million and $42,750,000. If Council is in agreement with this approach, the first step they need to take is to approve this ordinance establishing guidelines and criteria governing tax abatement agreements. Staff would then entertain PPG's application and come back at the next meeting with a public hearing and final approval of the "PPG Industries Reinvestment Zone" and agreement. ACTION REQUIRED BY COUNCIL: Approve ordinance establishing guidelines and criteria governing tax abatement agreements by the City of La Porte and authorizing consideration of an application for designation of the "PPG Industries Reinvestment Zone", and set a Public Hearing for September 28, 1998. FUND N/A ACCT NUM: FUNDS AVAILABLE: APPROVED FOR CITY COUNCIL AGENDA 'S<~~ ROBERT T. HERRERA, CITY MANAGER q-\O-qQj DATE