HomeMy WebLinkAboutO-1998-2279
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ORDINANCE NO. 98-2279
AN ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA
PORTE BY ADDING ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX
ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, ADDING SECTIONS 66-
140 THROUGH 66-152 INCLUSIVE; AUTHORIZING CONSIDERATION OF AN
APPLICATION FOR DESIGNATION OF THE I'PPG INDUSTRIES REINVESTMENT
ZONE"; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING
AN EFFECTIVE DATE HEREOF.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE:
Section 1. The City Council of the City of La Porte hereby
amends the Code of Ordinances of the City of La Porte by adding
Article V. "Guidelines and criteria Governing Tax Abatement
Agreements by the City of La Porte", and adding Sections 66-140
through 66-152 inclusive, as follows, to-wit:
ARTICLE V. GUIDELINES AND CRITERIA
GOVERNING TAX ABATEMENT AGREEMENTS
Sec. 66-140. Reinvestment zones.
(a) Tax abatement shall only be allowed in a reinvestment
zone.
(b) Reinvestment zones in the city for this purpose will be
considered for designation by city council upon the recommendation
of the director. The city council may approve the creation of
these reinvestment zones on a zone-by-zone basis after a public
hearing before the city council. Following the public hearing the
city council may consider the ordinance creating a new reinvestment
zone in the proposed area.
(c) The city council may not adopt an ordinance designating a
reinvestment zone until it has held a public hearing at which
interested persons are entitled to speak and present evidence for
or against the designation. Notice of the hearing shall be given
at least seven days prior to the hearing. The presiding officers
of eligible jurisdictions shall be notified in writing at least
seven days prior to the hearing.
A notice of the public hearing shall be given to other
affected taxing jurisdictions, published in the legal classified
section of the local daily newspaper having general circulation,
and posted in other places as deemed appropriate, including notice
to civic associations in the area surrounding the proposed zone, at
least seven days prior to the hearing. The notice shall contain
the location, time, and place of the public hearing and a
description of the proposed boundaries of the reinvestment zone.
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(d) The designation of such a zone by ordinance shall
constitute an affirmative finding by the city council that the
improvements sought to be constructed or repairs to be made within
the zone are feasible and practical and would be of benefit to the
land to be included within a zone and to the city.
(e) In determining whether an area qualifies as a reinvestment
zone for the property tax abatement program, the city council shall
use anyone or more of the following criteria as guidelines:
(1) The area substantially impairs or arrests the sound
growth of the city; retards the provision of housing
accommodations, or consti tutes an economic or social
liability and is a menace to the public health, safety,
morals, or welfare in its present condition and use by
reasons of the presence of substantial number of
substandard, slum, deteriorated, or deteriorating
structures, predominance of defective or inadequate
sidewalks or street layout; faulty lot layout in relation
to size, accessibility, or usefulness, unsanitary or
unsafe conditions; deterioration of site or other
improvements; tax or special assessment delinquency
exceeds the fair value of the land; defective or unusual
conditions of title; the existence of conditions that
endanger life or property by fire or other cause; or any
combination of these factors or conditions.
(2) The area is predominantly open and, because of obsolete
platting or deterioration of structures or site
improvements or other factors, substantially impairs or
arrests the sound growth of the city.
(3) The area has been designated a local or state-federal
enterprise zone under the Texas Enterprise Zone Act.
(4) The area is located wholly within an eligible blighted
area, as identified from time to time by city council.
(5) There has been a demonstration of community interest and
there is evidence that substantial number of owners of
taxable real property in the reinvestment zone will
participate in such a program.
(6) Be reasonably likely as a result of the designation to
contribute to the retention or expansion of primary
employment or to attract major investment in the zone
that would be a benefit to the property and that would
contribute to the economic development of the city.
(f) The goals and objectives expressed above and the standards
and restrictions expressed in Chapter 312 of the Texas Tax Code, as
amended, are not exhausti ve and shall be supplemented by such
further and additional goals, obj ecti ves, rules, standards and
restrictions as the city council may from time to time impose.
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(g) The designation of a reinvestment zone hereunder shall
expire five years after the date of its designation and may be
renewed for periods not to exceed five years. The expiration of a
designation, however, shall not affect existing agreements entered
into pursuant to section 66-145 or section 66-146 of this chapter.
Sec. 66-141. Definitions.
For the purpose of this article, the following words and terms
shall have the meanings respectively ascribed:
Abatement means the full or partial exemption from ad valorem
taxes of certain real and/or personal property in a reinvestment
zone designated for economic development purposes.
Agreement means a contractual agreement between a property
owner and/or lessee and an eligible jurisdiction for the purpose of
tax abatement.
Base year value means the assessed value of eligible property
January 1, preceding the execution of the agreement plus the agreed
upon value of eligible property improvements made after January 1,
but before the execution of the agreement.
Competitively-sited project means a project where the
applicant has studied competing locations for expansion,
relocation, or new operations to evaluate operating cost
differentials and incentives available.
Contract employee means a person who is not an employee of the
abatement recipient, but who does work for the abatement recipient
in the reinvestment zone on a contract basis, either on a full or
part-time basis.
Deferred maintenance means improvements necessary for
continued operations which do not improve productivity or alter the
process technology.
Director means the director of the ci ty I S department of
finance.
Economic life means the number of years a property improvement
is expected to be in service in a facility.
Eligible jurisdiction means any county, municipality, school
district or college district, that levies ad valorem taxes upon and
provides services to property located wi thin the proposed or
existing reinvestment zone.
Expansion means the addition of buildings, structures, fixed
machinery or equipment for purposes of increasing production
capacity.
Facili ty means property improvements completed or in the
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process of construction which together comprise an integral whole.
Full time equivalent job means a job that is equal to 1,750
hours of work annually performed in the reinvestment zone by
contract employees or part-time employees.
Manufacturing facility means buildings and structures,
including fixed machinery and equipment, the primary purpose of
which is or will be the manufacture of tangible goods or materials
or the processing of such goods or materials by physical or
chemical change.
Modernization means the replacement and upgrading of existing
facilities which increases the productive input or output, updates
the technology or substantially lowers the unit cost of the
operation. Modernization may result from the construction,
al teration, or installation of buildings, structures, or fixed
machinery or equipment. It shall not be for the purpose of
reconditioning, refurbishing, or repairing to meet local, state, or
federal regulations.
New facili ty means improvements on a property previously
undeveloped which is placed into service by means other than or in
conjunction with expansion or modernization.
other basic industry facility means buildings and structures,
including fixed machinery and equipment not elsewhere described,
used or to be used for the production of products or services which
primarily serve a market outside the Houston Consolidated
Metropolitan statistical Area and resulting in the creation of new
permanent jobs and additional investment.
Part-time employee means a person who works for, and is an
employee of, the abatement recipient in the reinvestment zone, but
is not a permanent employee.
Permanent emp~oyee means a person who works for, and is an
employee of, the abatement recipient and works a minimum of 35
hours in a seven-day period, and reports to work in the
reinvestment zone. A permanent employee does not include a
contract employee, seasonal employee, or part-time employee.
Regional distribution center facility means buildings or
structures, including fixed machinery and equipment, used or to be
used primarily to receive, store, service or distribute goods or
materials owned by the facility operator where a majority of the
goods or services are distributed to points at least 100 miles from
any part of Harris County, unless there is no facility in Harris
County that receives, services, or distributes such goods and
services to businesses and residents of Harris County.
Regional entertainment facility means buildings and
structures, including fixed machinery and equipment, used or to be
used to provide entertainment through the admission of the general
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public where the majority of users reside at least 100 miles from
any part of Harris County, unless there is no facility providing
the same or similar entertainment in Harris County.
Regional service facility means buildings and structures,
including fixed machinery and equipment, used or to be used to
service goods where a majority of the goods being serviced
originate at least 100 miles from any part of Harris County, unless
there is no facility in Harris County where businesses and
residents of the county can obtain such service.
Research and development facility means buildings and
structures, including machinery and equipment, used or to be used
primarily for research or experimentation to improve or develop
current technology in bio-medicine, electronics or pre-commercial
emerging industries.
Research facility means buildings and structures, including
fixed machinery and equipment, used or to be used primarily for
research or experimentation to improve or develop the production
processes thereto.
Sec. 66-142. Application.
(a) Any present or potential owner of taxable property in the
city may request tax abatement by filing a written request with the
city manager or the city manager's designee.
(b) The application shall consist of a completed application
form accompanied by: a general description of the new improvements
to be undertaken; a descriptive list of the improvements for which
abatement is requested; a list of the kind, number and location of
all proposed improvements of the property; a map and legal
description of the property; a time schedule for undertaking and
completing the proposed improvements. The application shall also
include a certification of the current number of permanent, part-
time and contract employees of the applicant, by category, at the
time of the application, and information regarding the project's
competitive siting. In the event the project is to be located in
a leased facility, the applicant shall provide with the application
the name and address of the lessor and, if executed, a copy of the
lease. In the case of modernization, the application shall include
a statement of the assessed value of the existing facility for the
tax year immediately preceding the application year, separately
stated for real and personal property. The application form may
require such financial and other information as the city deems
appropriate for evaluating the financial capacity and other factors
of the applicant.
(c) Upon receipt of the completed application, the director
shall notify in writing and provide a copy of the application to
the presiding officer of the governing body of each eligible
jurisdiction.
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(d) After receipt of an application for abatement, the city
shall prepare a cost/ benefit impact analysis setting out the
impact of the proposed tax abatement. The cost/ benefit impact
analysis shall include but not be limited to an estimate of the
economic effect of the abatement of taxes and the benefit to the
city and the property to be included in the zone, and any other
pertinent measures of the project's overall impact on the city's
revenue stream both during and after the abatement period.
(e) The city shall not enter into an abatement agreement if it
finds that the request for the abatement was filed after the
commencement of construction, alteration, or installation of
improvements related to a proposed modernization, expansion or new
facility. An applicant is ineligible for abatement if a decision
to commence a modernization, expansion or new facility in the city
has been formally announced on or before an application for
abatement has been filed with the city.
(f) Variance: Requests for a variance from the prov1s1on of
subsections (a), (b), (e), (g), (h) and (j) of section 66-144 shall
be made in writing to the director; provided however, the total
duration of an abatement authorized in section 66-144 shall in no
instance exceed ten years and the total duration of an abatement
authorized under section 66-146 or section 66-147 shall in no
instance exceed five years. Such request shall include a complete
description of the circumstances explaining why the applicant
should be granted a variance and how the grant of abatement will
lead to the creation or retention of job opportunities and new
investment in the zone. Approval of a request for variance
requires a majority vote of the city council members present.
Sec. 66-143. Public hearinq and approval.
(a) Prior to entering into a tax abatement agreement the city
council may, at its option, hold a public hearing at which
interested persons shall be entitled to speak and present written
materials for or against the approval of the tax abatement
agreement.
(1) Notice of the public hearing shall be published in a
local daily newspaper of general circulation not later
than the seventh day before the date of the hearing.
Notice of the public hearing may be given, posted or
published in other places or by other means as the
director deems appropriate, including giving notice to
civic associations in the area surrounding the proposed
zone.
(2) Reserved.
(b) In order to enter into a tax abatement agreement, the city
council must find that the terms of the proposed agreement met
these guidelines and criteria and that:
(1) There will be no substantial potential adverse impact on
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the provision of city services or tax base; and
(2) The planned use of the property will not constitute a
hazard to public safety, health, or morals.
Sec. 66-144. Economic development abatement authorized.
(a) Authorized .facility. A facility may be eligible for
economic development abatement if it is a: manufacturing facility,
regional distribution facility, regional service facility, regional
entertainment facility, research facility, research and development
facility or other basic industry facility.
(b) Creation o.f new value. Abatement may only be granted for
the additional value of eligible property improvements made
subsequent to and listed in an abatement agreement between the city
and the property owner and lessee (if required), subject to such
limitations as the city council may require.
(c) New and existing .facilities. Abatement may be granted for
new facilities or the expansion of existing facilities.
Improvements to existing facilities for purposes of modernization
may receive abatement if proven to be essential to the entity's
economic survival.
(d) Eligible property. Abatement may be extended to the value
of buildings, structures, fixed machinery and equipment, site
improvements, plus that office space and related fixed improvements
necessary to the operation and administration of the facility, or
tangible personal property when in conjunction with leased
facilities.
(e) Ineligible property. The following types of property shall
be ineligible for abatement: land; inventory; supplies; tools;
vehicles; vessels; aircraft; housing; hotel accommodations;
tangible personal property when not in conjunction with leased
facili ties; deferred maintenance investments; property to be rented
or leased except as provided in subsection (f); improvements for
the generation or transmission of electrical energy not wholly
consumed by a new facility or expansion; any improvements,
including those to produce, store or distribute natural gas, fluids
or gases, that are not integral to the operation of the facility;
property owned or used by the state of Texas or its political
subdivisions or by an organization owned, operated or directed by
a political subdivision of the state of Texas; and property that is
owned or leased by a member of city councilor by a member of the
city planning commission.
(f) OWned and leased .facilities. If an authorized facility
located on leased real property is granted abatement, the abatement
agreement shall be executed by the city, the lessor and the lessee.
If the real property is leased from a municipal corporation, the
municipality shall not be required to execute the agreement in its
capacity as a lessor.
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(g) Value and term of the abatement. Abatement shall be
granted effective upon the January 1 valuation date immediately
following the effective date of the Agreement. Projects (other
than modernization) which meet these guidelines and criteria are
eligible for abatement on the value of the new property on a
sliding scale as follows:
Year abated
Percentage of
value abated
1, including construction
2, including construction
3 - 8
0%
50%
50%
Provided, however that no abatement shall be given in the year
when the facility fails to meet the employment minimum set forth in
section 66-144(h) (4) except where the jurisdiction has determined
that employment falls below minimum due to accident, casualty,
fire, explosion, or natural disaster.
If the period of construction exceeds two years, the facility
shall be considered complete for purposes of abatement and in no
case shall the period of abatement inclusive of construction and
completion exceed eight years.
If a modernization project includes facility replacement, the
value upon which abatement shall be determined shall be the value
of the new unites) less the value of ~he old unites).
Modernization projects are eligible for abatement according to the
above formula with the exception that abatement shall not exceed 50
percent in any year."
(h) Economic qualifications. Except as provided in sections
66-144(i) and (j) below, to be eligible for tax abatement, the
planned improvement:
(1) Should provide an economic benefit to the city, taking
all relevant factors into consideration, including (i)
size of the abatement, (ii) income from sales tax and
franchise fees generated by the planned improvement, and
(iii) any additional expense to the city in providing
city services as a result of the improvement; and
(2) Must be necessary because capacity cannot be provided
efficiently utilizing existing improved property when
reasonable allowance is made for necessary improvements;
and
(3) Must be reasonably expected to increase the value of the
property in the amount of $21,000,000.00 upon completion
of construction, and
(4) Must be expected to prevent the loss of permanent
employment, retain or create permanent employment for at
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least 25 people on a permanent basis in the in the
designated zone, provided that this employment
qualification, shall take effect three years after the
effective date of abatement and continue through the
remaining term of the agreement; or
(5) An abatement may be granted for a maximum investment of
$750,000.00 per job created or retained.
(i) Economic qualifications. If the property is located in an
area designated as an enterprise zone pursuant to the Texas
Enterprise Zone Act, as amended (Article 5190-7, Vernon's Texas
civil statutes) and the city has not created a reinvestment zone,
which includes property described under the provision of section
66-144 or 66-146 of this chapter, in order to be eligible for tax
abatement the planned improvement:
(1) Must be reasonably expected to increase the value of the
property by a m1n1mum amount of $500,000.00 upon
completion of construction;
(2) Must be expected to create additional permanent
employment for at least five people on a permanent basis
who are residents of the enterprise zone or who are
economically disadvantaged as that term is defined in the
Texas Enterprise Zone Act;
(3) Must not be expected to solely or primarily have the
effect of transferring employment from one part of the
city to another;
(4) Must be necessary because capacity cannot be provided
efficiently utilizing existing improved property when
reasonable allowance is made for necessary improvements;
and
(5) Must be made by an entity operating an authorized
facility that meets the criteria established for a
qualified business under the Texas Enterprise Zone Act.
(j) Research and development projects. If the planned
improvement is for a research and development facility, in order to
be eligible for tax abatement the planned improvement:
(1) Must be reasonably expected to increase the value of the
property by a minimum amount of $500,000.00 upon the
completion of construction; and
(2) Must be expected to create permanent employment for at
least five people on a permanent basis in the designated
zone, provided that this employment qualification shall
take effect two years after the effective date of
abatement and continue through the term of the agreement.
The abatement period shall not exceed five years from the
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effective date of abatement and the percentage of value
to be abated shall be 100 percent throughout the
abatement period.
(k) Taxability. From the date of execution of the abatement
agreement to the end of the abatement period, taxes shall be
payable as follows:
(1) The value of ineligible property as provided in section
66-144(e) shall be fully taxable;
(2) The base year value of existing eligible property as
determined each year shall be fully taxable; and
(3) The additional value of new eligible property shall be
taxable in the manner described in section 66-144(g),
except as provided in sections 66-144 (h) (5) and (j) (2)
above.
(1) Environmental qualification. In determining whether to
grant a tax abatement, consideration will be given to compliance
with all state and federal laws designed to protect human health,
welfare and the environment ("environmental laws") that are
applicable to all facilities in the state of Texas owned or
operated by the owner of the facility, its parent, subsidiaries
and, if a joint venture or partnership, every member of the joint
venture or partnership ("applicants"). Consideration may also be
given to compliance with environmental laws by applicants at other
facilities within the united states"
Sec. 66-145. Aqreement for economic development abatement.
After approval, the city shall enter into an agreement with
the owner of the facility and lessee (as required), which agreement
shall include:
(1) Estimated value to be abated and the base year value;
(2) Percent of value to be abated each year as provided in
this article;
(3) The commencement date and the termination dated of
abatement;
(4) The proposed use of the facility; nature of construction,
time schedule, map, property description and improvement
list as provided in this article;
(5) Contractual obligations in the event of default,
violation of terms or conditions, d~linquent taxes,
recapture, administration, and assignment as provided in
this article and other provisions that may be required
for uniformity or by state law;
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(6) Amount of investment and total permanent employees to be
retained or created and total full-time equivalent jobs
to be retained or created; and
(7) A requirement that the company, on or before February 1
of each year the tax abatement agreement is in effect,
provide the director a sworn statement that includes a
delineation of the number of permanent employees,
contract employees and part-time employees of the
applicant company as of the immediately preceding January
1, who report to work in the reinvestment zone at each
site covered by the agreement.
(8) A requirement that the company annually file the form
11.28 with the appropriate county appraisal district to
qualify for the abatement.
(9) A provision that contract employees and part-time
employees may be used to comply with the company's
contractual obligation to create/retain jobs on a
full-time equivalency basis for any number of jobs;
provided that full-time equivalents shall only be
used to satisfy the company's contractual
obligation if the company maintains a minimum of 50
permanent employees who work on the project within
the reinvestment zone."
(10) A requirement that property in a reinvestment zone that
is owned or leased by a member of the city councilor by
a member of the city planning commission is excluded from
tax abatement.
Sec. 66-146. Redevelopment tax abatement authorized.
(a) Creation. A property tax abatement program is hereby
created to be administered in accordance with Chapter 312 of the
Texas Tax Code, as amended from time to time.
(b) Definitions. For purposes of this section and section 66-
147, the following words and terms shall have the meanings
respectively ascribed:
Department shall mean the department of finance and
administration of the city.
Revitalization strategy shall mean a plan prepared by the
department to guide in the development of a designated reinvestment
zone for the purpose of creating a viable and cohesive area in
which to live and work. The revitalization strategy shall take
into consideration input from interested individuals, civic
associations and business groups from the proposed reinvestment
zone.
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OWner of taxable real property shall mean the person,
corporation, company or other entity responsible for paying
property taxes on certain property or an interest therein including
a leasehold interest or interests.
Sec. 66-147. Agreement for redevelopment property tax abatement.
(a) Upon designation of a reinvestment zone, the city shall
enter into property tax abatement agreements with interested owners
of taxable real property located within the reinvestment zone. Upon
the city's execution of an agreement hereunder, the base year value
shall be determined. The agreement shall be conditioned on the
owner of the property making certain improvement or repairs to the
property as certified by the director as being consistent with the
revitalization strategy.
(b) In addition, the agreement shall be conditioned on those
improvements or repairs being completed within two years of the
date of the agreement. The tax abatement allowed under these
agreements shall be 100 percent of the increase above the certified
appraised value of the building or buildings or the portion of the
building or buildings used for commercial or industrial purposes.
The agreement shall provide that property tax abatement shall begin
on January of the year following the completion of the improvements
or repairs contemplated by the agreement. The maximum duration of
tax abatements approved under sections 66-146 and 66-147 shall not
exceed five years.
(c) Property in a reinvestment zone that is owned or leased by
a member of the city councilor by a member of the city planning
commission is excluded from property tax abatement.
(d) The city may enter into a property tax abatement agreement
with the interested owners of taxable real property for
improvements or repairs completed before the city's approval of the
tax abatement agreement if:
(1) The applicant has complied with the requirements of
section 66-142; and
(2) The applicant provides evidence of good cause as to why
the city should grant tax abatements for improvements or
repairs completed before the city's approval of the tax
abatement agreement; and
(3) The agreement is consistent with the requirements of
subsections (a) through (c) above, except as provided in
paragraph (2) of this subsection.
Notwithstanding any other provision of this section, for tax
abatement agreements approved under this subsection (d), city
council shall determine the year that property tax abatement shall
begin.
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Sec. 66-148. Recapture.
(a) In the event that the facility is completed and begins
producing the product or service delineated in the agreement, but
subsequently discontinues producing the product or service 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 be terminated and the abatement of
taxes for the calendar year during which the facility no longer
produces the product or service also shall be terminated. The
taxes otherwise abated for the calendar year in which the facility
discontinued production or services specified in the agreement
shall be paid to the city wi thin 60 days from the date of the
termination of the agreement.
(b) Should the city determine that the company or individual
is in default according to the terms and conditions of the
agreement, the city shall notify the company or individual in
writing at the address stated in the agreement, and if such
condition of default is not cured within the 60 days from the date
of such notice ("cure period"), then the agreement may be
terminated.
(c) The company or individual shall be in default of the
agreement in the event the company or individual:
(1) Allows its ad valorem taxes owed the city to become
delinquent and fails to timely and properly follow the
legal procedures for their protest and/or contest; or
(2) Violates any of the terms and conditions of the abatement
agreement and fails to cure during the cure period;
In the event of default, the agreement may be terminated and
upon the termination all or a pro rata portion of the taxes
previously abated by virtue of the agreement shall be recaptured
and paid wi thin 60 days of the termination. The pro rata recapture
of abated taxes shall be based on the number of years that the
company was out of compliance and the degree to which the company
was out of compliance, with equal weight being given to job
creation and investment.
(d) In the event the company defaults on any of the terms and
conditions of the agreement, the company shall notify the city
within 90 days of such default.
(e) Notwithstanding the foregoing, the director and the city
attorney are hereby authorized to negotiate and recommend to the
city council amendments to tax abatement agreements subject to
termination under this section in lieu of termination.
Sec. 66-149. Administration.
(a) The chief appraiser of the county appraisal district shall
annually determine the value of the real and personal property
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comprising the reinvestment zone. Each year, the company or
individual receiving abatement shall furnish the city with such
additional information applicable to the tax abatement as may be
necessary for the administration of the abatement. Once the value
of the real and personal property has been established, the chief
appraiser shall notify the affected jurisdiction which levy taxes
of the amount of the assessment.
(b) The agreement shall stipulate that employees and/or
designated representatives of the city will have access to the
reinvestment zone during the term of the abatement to inspect the
facility and all company records related to the abatement agreement
and the project to determine if the company is in compliance with
the agreement. All inspections will be made only after the giving
of 24 hours notice and will only be conducted in such a manner as
to not unreasonably interfere with the construction and/or
operation of the facility. All inspections will be made with one
or more representati ves of the company or indi vidual and in
accordance with its safety standards.
(c) Upon completion of construction, the city shall annually
evaluate each facility receiving abatement to ensure compliance
with the agreement and report possible violations to the contract
and agreement.
Sec. 66-150. Assignment.
The abatement agreements may be assigned to a new owner or
lessee of the facility with the written consent of the city
council, which consent shall not be unreasonably withheld. Any
assignment shall provide that the assignee shall irrevocably and
unconditionally assume all the duties and obligations of the
assignor upon the same terms and conditions as set out in the
agreement. Any assignment of a tax abatement agreement shall be to
an entity that contemplates the same improvements or repairs to the
property, except to the extent such improvements or repairs have
been completed. No assignment shall be approved if the assignor or
the assignee are indebted to the city for ad valorem taxes or other
obligations.
Sec. 66-151. The adoption of the guidelines and criteria by
the City Council of the City of La Porte does not:
a) limit the discretion of the City Council of the City of
La Porte to decide whether to enter into a specific tax
abatement agreement;
b) limit the discretion of the City Council of the City of
La Porte to delegate to its employees the authority to
determine whether or not the governing body should
consider a particular application or request for tax
abatement; or
c) create any property, contract, or other legal right in
any person to have the City Council of the City of La
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. OR~GINAL
Porte consider or grant a specific application or request
for tax abatement.
Sec. 66-152. The City Council of the City of La Porte hereby
establishes the policy of the City of La Porte, that tax abatement
agreement applications will not be accepted for areas within the
Battleground Industrial District and the Bayport Industrial
District of the City of La Porte. However, as to any portion of
such areas which are not within the corporate limits of the city of
La Porte, Harris County Commissioners Court may establish tax
abatement agreements for the benefit of itself, and taxing units
other than the City of La Porte having jurisdiction over said area.
section 2. The City Council officially finds, determines,
recites, and declares that a sufficient written notice of the date,
hour, place and subject of this meeting of the City Council was
posted at a place convenient to the public at the City Hall of the
City for the time required by law preceding this meeting, as
required by the Open Meetings Law, Chapter 551, Texas Government
Code; and that this meeting has been open to the public as required
by law at all times during which this ordinance and the subject
matter thereof has been discussed, considered and formally acted
upon.
The City Council further ratifies, approves and confirms
such written notice and the contents and posting thereof.
section 3. This Resolution shall be effective from and after
its passage and approval.
PASSED AND APPROVED this 28th day of September, 1998.
By:
ATTEST:
_~(l~
Ma.tha A. Gillett
City Secretary
15
. .--r11tl/e1J /J.1lfTIL "1/2. 'i/48
ORDINANCE NO. 98-2279 0 RIG' N A L
AN ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA
PORTE BY ADDING ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX
ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, ADDING SECTIONS 66-
140 THROUGH 66-142 INCLUSIVE; AUTHORIZING CONSIDERATION OF AN
APPLICATION FOR DESIGNATION OF THE "PPG INDUSTRIES REINVESTMENT
ZONE"; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING
AN EFFECTIVE DATE HEREOF.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE:
Section 1. The City Council of the City of La Porte hereby
amends the Code of Ordinances of the City of La Porte by adding
Article V. "Guidelines and criteria Governing Tax Abatement
Agreements by the City of La Porte", and adding Sections 66-140
through 66-142 inclusive, as follows, to-wit:
ARTICLE V. GUIDELINES AND CRITERIA
GOVERNING TAX ABATEMENT AGREEMENTS
Sec. 66-140. The City Council of the City of La Porte hereby
adopts the attached "City of Houston Tax Abatement Guidelines And
Ordinances" as adopted and approved by the City Council of the City
of Houston, in compliance with Section 312.002, Tax Code, except as
specifically revised or modified by this Ordinance. These
guidelines and criteria are attached hereto as Exhibit "A". The
"City of La Porte" is hereby substituted for any references to the
ci ty of Houston in the attached city of Houston Tax Abatement
Guidelines and Ordinances, and the section references are amended
to conform with the numbers set forth on this ordinance. Exhibit
"A" is incorporated by reference herein and made a part hereof for
all purposes.
Section 44-112, "Economic development abatement authorized",
subparagraph (g), is revised, and shall read as follows, to-wit:
"(g) Value and Term of Abatement. Abatement shall be
granted effecti ve upon the January 1 valuation date
immediately following the effective date of the
Agreement. Projects (other than modernization) which
meet these guidelines and criteria are eligible for
abatement on the value of the new property on a sliding
scale as follows:
Year abated
Percentage of
value abated
1, including construction
2, including construction
3 - 8
0%
50%
50%
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Provided, however that no abatement shall be given in the
year when the facility fails to meet the employment
minimum set forth in section 44-112(h) (4) except where
the jurisdiction has determined that employment falls
below minimum due to accident, casualty, fire, explosion,
or natural disaster.
If the period of construction exceeds two years, the
facility shall be considered complete for purposes of
abatement and in no case shall the period of abatement
inclusive of construction and completion exceed eight
years.
If a modernization project includes facility replacement,
the value upon which abatement shall be determined shall
be the value of the new unites) less the value of the old
unites). Modernization projects are eligible for
abatement according to the above formula with the
exception that abatement shall not exceed 50 percent in
any year.1I
section 44-112, "Economic development abatement authorized",
subparagraph (h) (3), and (5), are revised, and shall read as
follows, to-wit:
"(3) Must be reasonably expected to increase the value
of the property in the amount of $21,000,000.00
upon completion of construction; and"
" (5) An abatement may be granted for a maximum
investment of $750,000.00 per job created or
retained."
section 44-112, "Economic development abatement authorized",
is revised, by adding thereto subparagraph (1), which shall read as
follows, to-wit:
"( 1) Environmental qualification. In determining
whether to grant a tax abatement, consideration
will be given to compliance with all state and
federal laws designed to protect human health,
welfare and the environment ("environmental laws")
that are applicable to all facilities in the state
of Texas owned or operated by the owner of the
facility, its parent, subsidiaries and, if a joint
venture or partnership, every member of the joint
venture or partnership ("applicants") .
Consideration may also be given to compliance with
environmental laws by applicants at other
facilities within the United states"
section 44-113, "Agreement
abatement" , subparagraph (9), is
follows, to-wit:
for economic development
revised, and shall read as
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"(9) A prov1s1on that contract employees and part-time
employees may be used to comply with the company's
contractual obligation to create/retain jobs on a
full-time equivalency basis for any number of jobs;
provided that full-time equivalents shall only be
used to satisfy the company's contractual
obligation if the company maintains a minimum of 50
permanent employees who work on the project within
the reinvestment zone."
Sec. 66-141. The adoption of the guidelines and criteria by
the City Council of the City of La Porte does not:
a) limit the discretion of the City council of the City of
La Porte to decide whether to enter into a specific tax
abatement agreement;
b) limit the discretion of the City Council of the City of
La Porte to delegate to its employees the authority to
determine whether or not the governing body should
consider a particular application or request for tax
abatement; or
c) create any property, contract, or other legal right in
any person to have the City Council of the City of La
Porte consider or grant a specific application or request
for tax abatement.
Sec. 66-142. The City Council of the City of La Porte hereby
establishes the policy of the City of La Porte, that tax abatement
agreement applications will not be accepted for areas within the
Battleground Industrial District and the Bayport Industrial
District of the City of La Porte. However, as to any portion of
such areas which are not within the corporate limits of the City of
La Porte, Harris County Commissioners Court may establish tax
abatement agreements for the benefit of itself, and taxing units
other than the City of La Porte having jurisdiction over said area.
section 2. Without limiting the generality of the foregoing,
the City Council of the city of La Porte hereby authorizes City
staff to entertain an application for designation of a reinvestment
zone, to be designated the "PPG Industries Reinvestment Zone". The
location of such zone is within the corporate limits of the City of
La Porte, and is fully shown on a site plan attached hereto as
Exhibit "B", and incorporated by reference herein for all purposes,
and is more particularly described by metes and bounds on Exhibit
"c" attached hereto and incorporated by reference herein. Such tax
abatement agreement shall only apply to new investment having a
3
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total value of a minimum of twenty-one million dollars. The
agreement shall provide for exemption from taxation of real
property or of fixed machinery, equipment, and process uni ts
located on the real property, as provided in Section 44-112,
subparagraph (g), hereinabove, subject to the rights of holders of
outstanding bonds of the municipality, on the condition that the
owner of the property make specific improvements or repairs to the
property described on Exhibit "B" attached hereto. Such agreement
shall provide for the exemption of the real property in each year
covered by the agreement only to the extent its value for that year
exceeds its value for the year in which the agreement is executed.
Such agreement shall provide for the exemption of fixed machinery,
equipment, and process units located on the real property in each
year covered by the agreement other than fixed machinery,
equipment, and process units that were located on the real property
at any time before the period covered by the agreement with the
City of La Porte, and other than inventory or supplies. An
improvement, repair, development, or redevelopment taking place
under the agreement must conform to the ci ty of La Porte I s
Comprehensive Zoning Ordinance.
Section 3. The City council officially finds, determines,
recites, and declares that a sufficient written notice of the date,
hour, place and subject of this meeting of the City Council was
posted at a place convenient to the public at the City Hall of the
City for the time required by law preceding this meeting, as
required by the Open Meetings Law, Chapter 551, Texas Government
Code; and that this meeting has been open to the public as required
by law at all times during which this ordinance and the subject
4
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matter thereof has been discussed, considered and formally acted
upon.
The City Council further ratifies, approves and confirms
such written notice and the contents and posting thereof.
Section 4. This Resolution shall be effective from and after
its passage and approval.
PASSED AND APPROVED this 14th day of September, 1998.
CITY OF LA PORTE
By:
Norman L. Malone
Mayor
ATTEST:
Martha A. Gillett
City Secretary
5
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ORIGINAL
Potential Abatement Ramifications for PPG Project
The numbers shown below are for illustration purposes only. The actual amounts of value that
will be on line each year are unknown. I have selected numbers that are realistic enough that a
decision based on those number is prudent.
Year Project Value Full Taxes Taxes Abated Tax City Receives
1999 5,000,000 $ 35,500 $ 0 $ 35,500
2000 30,000,000 213,000 106,500 106,500
2001 35,000,000 248,500 124,250 124,250
2002 35,000,000 248.500 124,500 124,500
2003 45,000,000 319,500 151,762 167,738
2004 45,000,000 319,500 151,762 167,738
2005 55,000,000 390,500 151,762 238,738
2006 55,000,000 390,500 151,762 238,738
Totals $ 2,165,500 $ 962,048 $ 1,203,452
Assumptions:
1, No abatement is being offered the for the first year since the project is under construction.
2 The minimum value for abatement is $21,000,000. Once the $21,000,000 is reached, the
entire amount, including the base $21,000,000 is included in the abatement calculation.
3. The maximum amount of the abatement is set at $42,750,000. This limit is set in order to
assist Harris County in the adoption of their abatement, which is limited to $750,000 per
full time job created. This project is set to add 57 full time jobs.
"
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,
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m
" '.
PPG Industries, Inc., 1901 Avenue H & 16th 51., P.O. Box 995, La Porte, Texas 77572-0995
John A, Weihrich, Plant Manager
Fine Chemicals
281-471-0943
May 19, 1998
Mr. Robert T. Herrera, City Manager
City of La Porte
P.O. Box 1115
La Porte, TX 77572-1115
CITY ~t4\NAGeR
q - ()-()- - C;q
Re: Property Tax Relief -La Porte Plant
Dear Mr. Herrera,
Thank you very much for meeting with Hansen Gilan and myself in regards to
the City of La Porte providing property tax abatement for our major capital improvement
projects that may be constructed at the La Porte, Texas plant site.
As we discussed, PPG Industries is currently considering the construction of a
new Pharmaceutical Intermediates production unit, a new Isocyanates production unit,
and an accompanying thermal oxidizer for pollution control. We estimate that the total
cost of building these three units will be in the range of $40 million to $50 million.
We would expect these three projects to require a permanent workforce of a
minimum of 30 to a maximum of 42 highly skilled chemical plant operators and
maintenance mechanics. It is expected that construction of these two units will take
eighteen to twenty months and will employ upwards of 150 local construction workers.
As I'm sure you are aware, there are several facilities with-in the PPG
organization that would like to acquire these three units at their plant sites. As you also
know, the current property tax rate on the La Porte plant is one of the highest rates paid
by PPG. These three units, if built at our Lake Charles, LA plant, would enjoy a ten
year 100% tax abatement and a low value and low tax rate when they finally enter the
tax rolls in ten years.
Any assistance that the City of La Porte can provide in making the La Porte plant
more competitive, through property tax abatement, would be viewed very favorably by
PPG's management and would provide additional incentive for PPG to locate these
three units at the La Porte plant site.
Sincerely,
PPG Industries '.
9 rL CcJ ..<.~'
John A. Weihrich,
Plant Manager