HomeMy WebLinkAboutR-1989-19
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RESOLUTION NO. 89-19
A RESOLUTION ESTABLISHING GUIDELINES AND CRITERIA GOVERNING TAX
ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE; FINDING COMPLIANCE
WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LA PORTE:
Section 1. The City Council of the City of La Porte hereby
adopts the attached "Model Guidelines And Criteria For Granting Tax
Abatement In A Reinvestment Zone Created In Harris County" as
adopted and recommended by the Harris County Commissioners Court, in
compliance with Section 312.002, Tax Code, as amended by Senate Bill
1312, of the 7lst Legislature. These guidelines and criteria are
attached hereto as Exhibit "A", and incorporated by reference herein
for all purposes.
Section 2. 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.
Section 3. 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.
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RESOLUTION NO. 89-19
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Section 4. 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 "International Cargo Network Reinvestment
Zone." The location of such zone shall be on North Broadway Street,
in the City of La Porte, and is more fully shown on a site plan
attached hereto as Exhibit "B", and incorporated by reference herein
for all purposes.
The City Council of the City of La Porte further
establishes the policy of the City of La Porte, that the City of La
Porte, in exercise of its discretion as authorized by Senate Bill
1312, elects not to enter into a specific tax abatement agreement
for the International Cargo Network, for abatement of City of La
Porte ad valorem taxes.
Section 5. 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 of La Porte, Texas for the time required by law preceding this
meeting, as required by the Open Meetings Law, Article 6252-17,
Texas Revised Civil Statutes Annotated; and that this meeting has
been open to the public as required by law at all times during which
this resolution 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 6. This Resolution shall be in effect from and after
its passage and approval.
PASSED AND APPROVED this the 13th day of November, 1989.
AT(/~~
Cherie Black, City Secretary
APPROVED, J ~
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Knox W. Askins, City Attorney
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RESOLUTION NO. 89-19
A RESOLUTION ESTABLISHING GUIDELINES AND CRITERIA GOVERNING TAX
ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE; FINDING COMPLIANCE
WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LA PORTE:
Section 1. The City Council of the City of La Porte hereby
adopts the attached "Model Guidelines And Criteria For Granting Tax
Abatement In A Reinvestment Zone Created In Harris County" as
adopted and recommended by the Harris County Commissioners Court, in
compliance with Section 312.002, Tax Code, as amended by Senate Bill
1312, of the 7lst Legislature. These guidelines and criteria are
attached hereto as Exhibit "A", and incorporated by reference herein
for all purposes.
Section 2. 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.
Section 3. 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.
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RESOLUTION NO. 89-19
Page 2
Section 4. 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 "International Cargo Network Reinvestment
Zone." The location of such zone shall be on North Broadway Street,
in the City of La Porte, and is more fully shown on a site plan
attached hereto as Exhibit "B", and incorporated by reference herein
for all purposes.
The City Council of the City of La Porte further
establishes the policy of the City of La Porte, that the City of La
Porte, in exercise of its discretion as authorized by Senate Bill
1312, elects not to enter into a specific tax abatement agreement
for the International Cargo Network, for abatement of City of La
Porte ad valorem taxes.
Section 5. 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 of La Porte, Texas for the time required by law preceding this
meeting, as required by the Open Meetings Law, Article 6252-17,
Texas Revised Civil Statutes Annotated; and that this meeting has
been open to the public as required by law at all times during which
this resolution 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 6. This Resolution shall be in effect from and after
its passage and approval.
PASSED AND APPROVED this the 13th day of November, 1989.
CITY OF LA PORTE
By4~~q./~
Norman L ~ Malo .e, Mayor
ATT~~
Cherie Black, City Secretary
AP~Md
Knox W. Askins, City Attorney
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1-10DEL GUIDELINES AND CRITERIA FOR GRANTING TAX ABATEJ.IENT
IN A REINVESTMENT ZONE CREhTED IN HARRIS COUNTY
\'lhereas, the creation and retention of job opportunities
that bring new wealth is the highest civic priority; and
l'lhereas, new jobs and investment will benefit the area
economy, provide needed opportu~ities, strengthen the real estate
market and generate tax revenue to support local services; and
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Whereas, the communities \-:ithin Harris County must compete
'Wi th other localities across the nation currently offering ta,:
inducements to attract new plant and modernization projects; and
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Whereas, any tax incentives offered in Harris County would
reduce needed tax revenue unless strictly limited in application
to those new and existing industries that bring new wealth to the
community; and
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Whereas, any tax incentives should not adversely affect the
competitive position c;>f existing companies operating in Harris
County; and
Whereas the abatement of property taxes, when offered to
attract primary jobs in .industries .which bring in money from
outside a community instead cf merely recirculating dollars
within a community, has been shown to be an effective method of
enhancing and diversifying an area's economy; and
Whereas effective September '1, 1987, Texas law will require
any eligible taxing jurisdiction to establish Guidelines and
Criteria as to eligibility for tax abatement agreements prior to
granting of any future tax abatement, said .Guidelines and
Criteria to be unchanged for a two year period unless amended by
a three-quarters vote; and
Whereas to assure a common, coordinated effort to promote
our communities' economic development, any such Guidelines and
Criteria should be adopted only through the cooperation of
affected school districts, cities and Barris County; and
Whereas Harris County Commissioners Court has approved the
,.circulation of the attached Guidelines and Criteria to affected
taxing jurisdictions for consideration as a common policy for all
jurisdiction which choose to participate in tax abateffient
agreements;
Now; therefore be it resolved that (effected jurisdiction)
does hereby' propose for consideration and adoption these
Guidelines and Criteria for granting tax abatement in
reinvestment zones in (affected iurisdictionl.
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EXHIBIT "A"
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DEFINITIONS Section 1.
(a)
II Abatement" means the full or
valorem taxes of certain real
zone designated by (affected
development purposes.
partial e>:emption from ad
property in a reinvestment
jurisdiction) for economic
(b) "Affected jurisdiction" means Harris County and any
municipality or schoo.l district, the majority of which is
located in Harris County, that levies ad valorem taxes upon
and provides services to property located within the
proposed or existing reinvestment zone designated by Harris
County.
(c)
"Agreement" means a contractuAl
property owner and/or lessee and
for the purposes of tax abatement.
agt'.eement between a
(affected jurisdiction)
(d)
"Base year value" means the assessed value of
property January 1 preceding the execution of the
plus the agreed upon value of eligible
improv'ements made after January 1 but before the
of the agreement. 0 :
eligible
agreement
property
execution
(e) "Deferred maintenance" means improvements necessary for
continued operations which do not improve productivity or
alter the process technology.
(f). "Distribution Center Facility" means buildings and
structures, including 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 Cou~ty.
(g)
"Expansion" means the addition
machinery. or equipment for
production capacity.
of buildings,
purposes . _ of
structures,
increasing
(h) "Facility" means property improvements completed or in the
process of construction which together comprise an integral
whole.
( i)
"M~nuf~cturing Facility" means buildings and structures,
including 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.
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(j)
(k)
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"Moderniza tion II means a complete or partial demolition of
facili ties and the completE: or partiQl reconstruction or
installation of a. facility of !:imilar or expanded
production capacity. Modernization may result from the
construction, alteration, or installation of bUilding!:,
structures, machinery or equipment. Modernization shall
include improvements for the purpose of increasing
productivi ty or updating the technology of machinery and
equipment, or both.
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"New Facility" means a property previously
which is placed into service by means other
conjunction with expansion or modernization.
undeveloped
than or in
(1) "Other Basic Industry" 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 prima~~ly serve a market outside
the Houston. Consolidated Metropolitan Statistical Area
(CMSA) and result in the creation of new permanent jobs and
bring new wealth in.
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(rn)
(n)
(0)
"Productive Life" means the number of years a property
improvement is expected to be in "serv'ice in a facility.
"Regional Entertainment Facility" means buildings and
structures, including machinery and equipment, used or to
be used to provide' entertainment through the admission of
the general public where the majority of users reside at
least 100 miles from any part of Harris County.
"Research Facility" means building and
including machinery and equipment, used or
primarily for r.esearch or e::perimentation to
develop new tangible goods or materials or to
develop the,production processes thereto.
structures,
to be used.
improve or
improve or
(p) "Regional Service Facility" means buildings and structures,
including 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.
(a)
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ABATEMENT AUTHORIZED Section 2
Authorized
abatement
Facility,
Facility,
Industry.
Facility. A facility may be eligible for
if it is a: Manufacturing Facility, Research
Distribution Center or Regional Service
Regional Entertainment Facility or Other Basic
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(b)
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Creation of New Value. Abatement may only be granted for
the additional value of eligible property improvements made
subsequent to and specified in an abatement agreement
between the (affected jurisdiction) and the property owner
or lessee, subject to such limitations as (governing body)
may require.
(c) New and Existing Facilities. Abatement may be granted for
new facilities and improvements to existing ~acilities for
purposes of modernization or exp.ansion.
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(d) Eligible Property. Abatement may be e>:tended 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. " .
Ineligible Property. The following types of property shall
be fully taxable and ineligibie for abatement: land;
inventories; supplies; tools; furnishings, and other forms
of movable personal property; vehicles; vessels; aircraft;
housing; hotel accommodations; deferred maintenance
investments; property to be rented or leased except as
provided in Section 2 (f); improvements for the generation
or transmission of ~~ectrical "energy not wholly consumed by
a new facility or expansion; any improvements, including
those to' produce, store or distribute natural gas, fluids
or gases, which are not integral to the operation of the
facility; property which has a productive life of less than
15 years; property o\'med or used by the, State of Texas or
its political subdivisions or by any organization owned,
operated or directed by. a political subdivision of the
State of Texas.
(f) OWned/Leased. Facilities. If a leased facility is granted
abatement the agreement shall be executed with the lessor
and the lessee.
(e)
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(g)
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Value and .Term of Abatement. Abatement shall be granted
effective with the January 1 valuation d~te immediately
following the date of execution of the agreement. One
hundred percent of the value of new eligible properties
shall be abated for up to two years during the period of
constructions and for five years thereafter. The abatement
may be extended through an initial agreement and a
subsequent agreement as may be required to comply with
state law regarding the term of a reinvestment zone. If
the period of construction exceeds two years the facility
shall be considered completed for purposes of abatement and
in no case shall the period of abatement inclusive of
construction and completion exceed seven years.
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(h)
Economic Qualification. In order to be eligible for
ciesignation as a reinvestment zone and receive tax
abatement the planned improvement:
(1) must be reasonably expected to increase the value of
the property in the amount of $5 million;
(2) must be expected to prevent the loss of employment,
retain or create emploj~ent for at least 30 people on
a permanent basis in Harris County; and,
(3) must not. be expected to solely or primarily have the
effect of transferring employment from one part .of
Harris County to another.
(4) must be necessary because capacity cannot be provided
efficiently utilizing. existing improved property when
reasonable allowance is made for necessary
improvements. '
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(i) Taxability. From the execution of. the abatement to the end
of the agreement period taxes shall be payable as follows:
(1) The value of ineligible property as provided in
Section 2(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 adcitional value of n~w~ eligible property shall be
taxable in the manner described in Section,f(g).
APPLICATION Section 3.
(a) Any present or potential owner of taxable property in
(affected jurisdiction) may request the creation of a
reinvestment zone and ta>: abatement by filing a written
request with 'the(affected jurisdiction). .
(b) The application shall consist of a completed application
form accompanied by: a. general description of the proposed
use and the general nature and extent of the mOdernization,
expans~on or new improvements to be undertaken; a
descriptive list of the improvements which will be a part
of the facility; a map and property description; a time
schedule .for undertaking and completing t~e' planned
improvements. In the case of modernization a statement of
the assessed valu~ of the facility, separately stated for
real and personal property, shall be given for the tax year
inunediately proceeding the application. The application
form may require such financial and other information as
the (qoverning body) deems appropriate for evaluating the
fin~ncial .capacity and other factors of the applicant.
Upon receipt of a completed application, the County Judge
shall notify in writing the presiding officer of the
legislative body of each affected jurisdiction. Before
acting upon the application, the (affected jurisdiction)
shall through public hearing afford the applicant and the
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designated representative of any affected juri~eiction
opportunity to show cause why the abatement should or
should not be granted. Notice of the public hearing shall
be clearly ic1entifie=d on a (aoverning body) agenda to be
posted at least 30 days prior to the hearing.
(d) The (governing bodv), not more than 60 days after receipt
of the appli~ation, EJhall by resolution either approve or
disapprove the application for tax abatement. The
(presiding officer) shall notify the applicant of approval
or disapproval. If disapproved a (member of the governing
body) may request a second rev.iew, in which case a new
application and hearing shall be required.
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(e) The (aoverninq body) shall not establish a reinvestment
zone for the purpose of abatement if it finds that the
request for the abatement was fil~d after the commencement
of construction, alteration,'" or installation of
improvements related to a proposed modernization, expansion
or new facility.
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(f)
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Variance. Requests for variance from the provisions of
Section 2 may be made in written form to a designated
member of (aoverning "body). Such request shall include all
the item~ listed in Se'ction 3 (b) above, together with a
complete description of the circumstances which prompt the
applicant to request a variance. The approval process for
a variance shall be identi.cal to that for a standard
application and may be supplemented by such additional
requirements as may be deemed necessary' by the designated
member of (qoverning body). '
PUBLIC HEARING Section 4.
(a) Should any affected jurisdiction be able to show c~use in
the public hearing why the granting of ~batement will-have
a substantial adverse affect on its bonds, tax revenue ~
service capacity or the provision of service, that showing
shall be .reason for the (governing body) to deny any
designation of the reinvestment zone, the granting of
abatement, or both.
(b) Neither a reinvestment zone nor abatement agreement shall
be authorized if it is determined that:
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(1) there would be a substantial adverse affect on the
provision of government service or tax base:
(2) the applicant has insufficient financial capacity;
(3) planned .or potential use of the property would
constitute a hazard to public safety, health or
morals: or,
(4) violation of other codes or laws.
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AGREEl>~EN'r Section 5.
(a) After appro~al the. (qoverninq body) shall formally pass a
resolution "and execute an agreement with the owner of the
facility and lessee as required which shall include:
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(a)
(b)
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(1) estimated value to be abated and the base year value;
(2) percent of value to be abated each year as provided in
Section 2(g);
(3) the commencement date and the termination date of
abatement;
(4) . the proposed use of the facility; nature of
construction, time schedule, map, property description
and improvement list as provided in Application,
Section 3(b)i
(5) contractual obligations in the event of default,
violation of terms or cond:i::tions, delinquent taxes,
recapture, administration and assignment as provided
in Sections 2(a), 2(f), 2(g), 6,7 and 8, and;
(6) size of investment and average number of jobs
involved.
Such agreement shall. normally. be executed wi thin 60 days
after the applicant has ~forwarded all necessary information
and doc~entation to the (qoverning bodv).
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RECAPTURE Section 6.
:I:n the event that the facility is completed and begins
producing product or service, but subsequently discontinues
producing 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 terminate and so shall the abatement of
the taxes for the calendar year during which, the facility
no longer produces. The taxes othenlise abated for that
calendar year shall be paid to the (effected jurisdiction)
within sixty days from the date of termination.
Should the (governing body) determine that the company or
individual is in default according to the terms and
conditions of it's agreement, the (qovc:.-ning body) shall
notify the company or individual in writ~ng at the address
stated in the agreement, and if such is not cured wi thin
sixty (60) days from the date of such notice ("Cure
Period")~ then the agreement may be terminated.
In the event that the company or individual (1) allows its
ad valorem taxes owed the County or affected jurisdiction
to become delinquent and fails to timely and properly
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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, the. agreemen.t then may be terminated and all taxes
previously. abated by virtue of the agreement will be
recaptured and paid within sixty (60) days of the
termination.
ADMINISTRATION Section 7
(a) ~le Chief Appraiser of the County shall annually determine
an assessment of the ~eal and personal property comprising
the reinvestment zone. Each year, the company or
individual receiving abatement shall furnish the assessor
with such information as may be necess:ary for the
abatement. Once value has been established, the Chief
Appraiser shall notify the affe~ted jurisdictions which
levies ta}~es of the amount of the .assessment.
(b)
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(c)
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The agreement shall stipulate that employees and/or
designated representatives of the (affected juriSdiction)
will have access to the reinvestment zone during the term
of the abatement to. inspect th.e facility to determine if
the terms and conditions of .the agreement are being met.
All inspections will be made only after the giving of
twenty-four (24) hours prior notice and will only be
conducted in such manner as to not unreasonably interfere
with the construction and/or operation of the facility.
All inspections will be' made with one or more
representatives of the company or individual and in
accordance with its safety standards.
Upon completion of construction the (affected
jurisdiction) shall annually evaluate each facility
receiving abatement to insure compliance with the agreement
and report possible violations to the contract and
agreem~nt to. the (affected jurisdiction) and its attorney.
ASSIGNMENT Section 8
Abatement may be transferred and assigned by the holder to
a new owner or lessee of the same facility upon the
approval by resolution of the (aoverninq bOdy) subject to
the financial capacity of the assignee and provided that
all conditions and obligations in the abatement agreement
are guaranteed by the,'execution of a new contractual
agreement with the (affected 1urisdiction). No assignment
or .transfer shall be approved if the parties to the
existing' agreement, the new owner or new lessee are liable
to Harris County or any affected jurisdiction for
outstanding taxes or other obligations. Approval shall not
be unreasonably withheld.
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(a)
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SUNSET PROVISION Section 9.
These Guicielines and Criteria are effective upon the date
of their adoption and will remain in force for two years,
at which time all reinvestment zones and tax abatement
contracts created pursuant to its provisions will be
reviewec. by the (governing body) to determine whether the
goals have been. achieved. Based on that review, the
Guidelines and Criteria will be modified, renewed or
eliminated.
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This policy is mutually exclusive of e>:isting Industrial
District Contracts and owners of real property in areas
deserving of special attention as agreed by the affected
jurisdictions.
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Annotation of the Guidelines and Criteria
For the Creation of Reinvestment Zones in Harris County
Section la.The abatement policy is defined for .'economic
development purposes." No provision is made for redevelopment,
which io being handled separately. Abatement applies to real
proper~7 only and therefore excludee p~r~onal property such as
office fi::tureo and inventories. The net effect of thio
limitation will be to assure that local governments receive
addi tional revenue from personal property associated. with the
tax.
Section lb. All "affected jurisdictions" will receive notice o~
public hearing (Section 3c) and abatement will not be granted if
it has a negative impact on an affed~ed ju:isdiction (Section
4a). l'7ater districts and other special jurisdiction~ arc not
"affected jurisdictions."
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'Section ld. The "base year value" applies to the vo.lue before
irnprovement~, which will be full~ taxable (Section 2i). It has
not. been determined at this time whether the base year value will
be fixed or allowed to fluctuate based on the cho.nges in market
conditions and value of the base assets. The base year value
includes properties on the tax roll January 1 preceding the
~greernent as well as any properties added until the ag:eemcnt is
execu~ed. In ether words, . improvements added after J4nuary I bu~
before the execution of the agreement will not be eliyible for
abatement.
Section Ie. The definition "deferred maintenance" appliao to
certain ineligible maintenance investments necessary for
continued operations (Section 2e).
Section If. A "diotribution center facility" is eligible for
abatement (Section 2a) p~ovided that the majority of service is
provided to points at least 100 miles from Harris County. The
purpose is to avoid abating property located in' Harris County
that primarily serves Harris County markets. Such businesses
locate here to tap our market and incentive is unnecessary. It
is doubtful whether abatement would provide any addition4l
employment. The definition provides tho.t the facility may also
"service" owned goods or a~sets. In other words, a regional or
nationa~, service or repair facility is eligible.
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" Section. 19. Eligibility :for iObCltement due to "expansion"
-1 (Section 2c) requires that production capacity be increased.
Section lie A "manufacturing facility" eligible for abatement
(Section 20.) need :'lot meet a requirement with respect to where
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Annotation, page 2
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the product is destined or sold. The rationale
high plateau $5 million m1n1mum inve~tment
effectively eliminates any m~nufacturer who is
regional, nationa~ or international market.
Section lj. Definition of "modernization" allows the
administrator to delineate between an ineligible deferred
maintenance investment and an eligible modernization investment
where productivity ~s increased or the technology is updated.
here is that the
(Section 2!)
not selling in a
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Section 11 Other Basic Induntry is a catchall intended to allow
abat~lnent (Sec~ion 2a) for good economic development projects not
elsewhere covered. The requirements are that the facility (1)
produce products or services that primarily serve outside the
four-county Houston Consolidated Hetropolitan Statistical Area
(CllSA); (2) result in n~w jobs; and (3) bring neu uealth in.
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Section 1m. "Productive life" deals with ineligble property
(Section 2e). It would be illogical for jurisdictions to yrant
abatement to a short-lived property that would never be ta~ed.
Accounting conventions often allow for a short productive life
'for depreciation purposes. "Productive life" here means the
number of years the property is ilctually expected to be in
service in the facility. Section 2e states that property must.
have productive life of at least l5 years to be eligible.
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Section In. 'l'he purpone in allowing for an abatement for a
regional entertainment facility (Section 2a) is to encourage the
location oi regional facilities that will draw maximum dollars
and new wealth to the conununit~,. E:cample: Disneyworld. E:~clud~d
are indigenous facilities that primarily serve the local
population. Such a facility has no positive effect since it
merely shift. entertainment dollars from one form of entertail~er.t
to another. Definition requires that a majority of users reside
100 miles from any part of Harris County.
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Section lO..A "research facility" eligible for abatement (Section
2.:1) must focus on applied product research as Opposed to
behuvioral or government-related research.
Section Ip. A "regional service facility" is eligible (~ection
2a) and is similar to a regional distribution facility. It
requires that the facility must primarily serve a regional market
at least 100 miles from Harris County. The intent is to make
ineligible' those types of service businesses which do most their
\'lcrk in cur local markets while at the same time encouraging
national servi~e centers that bring new payroll.
Section 2a. Abutement is restricted to defined facilitieo.
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Section 2b. Provideo that no work unuer construction beiore the
ilgreement is executed will be. abilted, that abatement is
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r.estricted to new improvements that must be specified in the
a~eement .
Section 2c. Provides that new facilities as well as those.
exi.sting facilities which are being expanded or modernized are
eligible. This "level playing field" gives equal treo.tment to
empl.oyers who have. already made. investments in Harris County
since their new investments could be abuted.
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Section 2d. Describes the types of investments that are eligible.
Included' are structures, fi~ed machinery and si tei:nprovelilents
plus office space and other improvements necessary for the
operation and administration. Assets unrelated to the project arc
not eligible. .
Section 2e. Provides an ey.tensive list of properties that arc
ineligible fo~ abatements: land, in~entories (particulurly
manufacturing inventory, \-/hich is a.' significant sourc~ ot
revenues for local governments), supplies, tools, furr.ishings,
personal property, vehicles, vessels, aircraft, housing, hotel
accommodations. Housing is excluded because it creates unworkable
problem!; for competitors in the housing industry. The ::lame
problem applies with the hotel industry, which locates facilities
because of the market, not abatement. Deferred maintenance is
ineligible because it is a normal part of operating a plant.
Improvements. for the generation of electrical capacity are
e]:cluded from abatement because these types of invcst.-nents enter
into direct competition with regulated utilities which do not
nave the benefit of abatement. Improvements to store, produce or
distribute natur~l gas and fluids that are not integral to the
operation of the facility are excluded because existing pipeline::;
and other transmission systems are not eligible. Properties which
have a productive life of less that 15 years are excluded to
assure governments will get ta]: revenue for a period e:.:ceeding
the time frame oi the abatement.
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Section 2f. Owned/leased Facilities. Al though it would be
advantageous to exclude all leaseu property, financing
arrangements ortcn force an operator to use a leased facility. In
this case abatement will be allowed only if a binding agreement
is e~ecuted by the county with the lcssor and the lessee. iloth
parties are subject to recapture.
Section 2g. Value anc. Term of Abatement. Once the agreement io
executed, taxes will be abated effective January 1 following for
up to t~o years during construction and a ma::imum of five years
thcreafter.
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B}' abating the construction period, we do not put the goverr.mcnt
in the position where they collect revenue during construction
only to have it cut off o.fter construction is completed. Not~
that if construction e::ceeds two years for purposes of abatecent,
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the project is considered completed and the clock begins running
which means that in no case will the abatement exceed seven
yearo. The full abatement during construction is typical of
abatement progr~s elsewhere.
Provisions for extending the abatement period through the term oi
the reinvestment zone is intended to deal with any future chi.1nges
that might occur in state lau, ao well as provide for the
aba~ement of a second or third-stage project th~t might e~tcnd
well into the term of the reinves~lent zone.
The abatement need not start immediately. Execution' of the
contract (Section Sa) can occur at any time after County approves
the resolution (Section 3d).
Section 2h. Economic qualifications de~cribed herein are intended
to limit investments as far as practical to those th~t are
beneficial to the community and practical to administer.
Section 2hl. Provides for a minimum new investment yielding
$25.,000 incremental tax revenue to H~rris County government. A~ a
$.48 tax rate, the minimum investment is $5 million. Attar
aba,tement, the minimum project can be e::pected to yield a.bout
$100,000 annually under the typical $2.00 combined'
city-county-school tax rate.
Section 2h2. Deals with the employment impliciltions of the
proposed improvement. Note that the project. does not have to
Ciluse or create new employment. It can preve~t. or mildIlli::e the
loso of existing employment where technolo.q;..cal change would .
otherwise cause us to lose a plant to another .state or regior~. AS
an e~:a.mple, assume that a company approves a new petrochemical
plant and is between a HiOrris County location or ~nother
location. As a part 0: that decision, an old plant in li.arris
County would be shut down. The new plant is a significant step
forward in technology, and as a consequence would onl1 require 5U
employes, compared to the existing process that reguires ~OO
employes. In the event that no ab4tement \lere offf::red, harris
County could lose all 200 employes. Howev~r, by allo\'lillg
abatement to minimi~e the loss of employm~nt, Harris County would
be eligible to offer the abatement and compete to keep those 50
permanent jobs. Construction jobs are a bonus. _
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Section 2h3. Deals with the concern that companies might transfer
ereployes from one part of the county to anothe~ to get abatement.
That ~ort of situation is not entirely precluded, since there
\'lill be' cases ill which companies might want to consolidate part
of their work force into a new f~cility. However, policy do~s
provide that the investment cust ~ot solcly or primarily h~ve the
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effect of transferring employment. The term ..primarily" as used
here and elsewhere means a majority of the jobs must be new.
Section 2h4. Deals wit~_ the competitive problems created by
abatement. It .provides that the facility must JJe necessar~'
because the prospect cannot conduct businef?s using existing
capaci ty when a reasonable financial allo\/ance is made for the
improvements necessary to bring that existing property up to
specitication. This particular circumstance is appropriate to
office headquarters location. With 40 to 50 million square feet
ot empty office space in the community, it is hard to imagine a
situation where another office building would be justifi~d. o~
the othcr hand, a corporate headquarters might be justified in
an area such as Clear Lake where there is a shortage'of office
space. It would be reasonable to abate because of the multiplier
eifect on jobs. In another case, if a company h~d u~ique office
requirements that could not be met with existing property, we
should be able to abClte rather than lose the jobs. Yet \Ie dQ !lot
want: to grant blanket exemption to office buildings (even tor
headquarters) that might add to the space glut, cause the loss of
taxes or put'owners at a diso.dvantage. If a developer or anyone
el~e can make a reasonable case that existing property can be
used efficiently, abatement will not be granted.
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Section 2i Describes and specifies taAable status of property en
the facility.
Section 3a. Informs the potential applica11 where to file an
-application for abatement.
Section 3b. Describes the information that. must be in the
application. Notice that the details filed with the applic~tion
are e~tensive and provide the necessary information for the
County to determine whether the abatement. complies with the
intent of these guidelines. In the case of modernization, it
requires a separate rendering of real and personal propert~es for
the purpose of establishing the base year value. Also notice that
the county io authorized to require such other financial
information as it may.deem appropriate. In this case, it may be
Clpprcpriate to look at the resources of the applicant, clearar,ces
\~i th respect to pollution or environmental impacts, and other
information.
Section 3c. Provides a show-cause hearing and a 30-day \/ait
period before the hearing to allow for thorough investigation by
the public and affected parties.
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Section 3d.' Provides for a speedy 60-day e::ecution of the
a?plication. It is required that the county notify the applicilnt
if the abatement will be approved or not. The approval re~olution
constitutes an intent on the part of the county to execute an
agreement. It illeo provides that. it tc:.kes a commisioner to
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request a second review if an abatement is turned down. A second
hearing would be required. "The logic behind this provision is
twoiold. First, if the petitioner doesnlt have the support of at
least one commissioner, then there is no point in having a secQ~d
review. Second, in requiring a new hearing, interested parties
will have a full opportunity to view the modified proposal.
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Section 3e. Provides the abatement will not be granted if it io
found that construction has alre&dy uegun. Some ~dmini~trutive
interpretation is required for this section relative to \",hat
level of activity constitutes "conunencementl' (permit, company
project approval, and initial engineering, etc.)
Section .3f.Variance procedure allows individual application
changes to Section 2 provisions regarding the length, v.alue,
eligible ~ropcrt1 and economic criteria for abatement.
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Section 4a. If an affecteu jurisdiction is able to sho\., cause \,hy
the abatement Ghould not be provided, such showing will be cause
for the COIlUaissioners Court to derlY the designation. !t i~
important to point out that the affected juri~dicticns are tho~c
.which. levy ta:;es and provide services into the affected area. Ii:
the- jurisdiction levies taxes but pro.vides no services, it is not
positioned to appeal. If it provides services but levies no
te.:~es, it is not positioned to' appeal.
Section 4b. In addition to adverse impact 011 affected
jurisdictions, abatement will be denied if the applicant ha~
-i'ilsufficient financial capacity, the :filcility would viola. te
safety or laws, etc.
Section Sa. The agreement must contain specific definition of
the base value, new improvements, years of abatement. The
applicant also cornmi ts to the use of the property subj ect to
verification and potential recapture. Applicant contracts l~ase
conunit:nents, recapture, resolutioll. of conflicts, access';. to
property, limits on assignment, etc.
Section 6. nec~pture. Self-explanatory.
Section 7. Administration. Self-explanatory.
Section 8. The abatement may be assigned but not if obligations
ara outstanding (buyer or seller) to all affected jurisdiction.
Subject to County determination that the new operator hilS
adequate".fiI:1ancial cilpacity to follow through on the agreemeat.
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Section 9a. The abatement policy docs no~ expire ilutomatically
but a 1989 date is ~et to review the program. Any abc..tement is
binding tor its full terI:\ stated in th~ agreement.
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Annotation, ...
Section 9b.
arrangements
district. 'l'he
zone overlaps
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This abatement policy does not preclude other
that may be made within a city, county or school
section may be used in cases where the reinvestment
a~ indust~ial district.
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