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Home My WebLink AboutO-2005-2809-A 10 Agenda Date Requested: Jan FOR CITY COUNCIL AGENDA ITEM Bud!!:et Requested By: Source of Funds: Department: Account Number: Report: Resolution: Ordinance: x Amount Budgeted: Exhibits: Ordinance 2007- Amount Requested: Exhibits: Budgeted Item: YES NO Exhibits: Exhibits: SUMMARY & RECOMMENDATION Per the previous correspondence, the City's Guidelines and Criteria for Tax Abatement expire on January 31, 2007. The current guidelines were adopted on February 14,2005 and per the Tax Code (and the City's Code), these guidelines sunset after a two year period. During the time these guidelines were in effect the City has approved two tax abatement agreements and a third application is expected. If Council wishes to continue to offer tax abatements it is recommended that our current guidelines be extended. If Council wishes to consider changes or amendments these could be enacted by a % vote of Council while these guidelines are in effect. As drafted the extension is for another two-year period (the maximum allowed) although it could be for less. Attached is a previous explanation of the key elements of the current guidelines. Action Reauired bv Council: Consider approval of Ordinance renewing the City's Guidelines and Criteria for tax abatements. f; tlO? ate ORDINANCE NO. 2007- Z809-A AN ORDINANCE OF THE CITY OF LA PORTE RENEWING GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS OF THE CITY OF LA PORTE, AS CODIFIED IN ARTICLE V "GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE", SECTIONS 66-140 THROUGH 66-151, INCLUSIVE, OF THE CODE OF ORDINANCES OF THE CITY OF LA PORTE, FOR ADDITIONAL TWO YEAR PERIOD; AND, AMENDING ARTICLE V "GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE", SECTION 66-149 "SUNSET PROVISION", OF THE CODE OF ORDINANCES, REGARDING NEW TWO YEAR TERM, AND CODIFYING SAID RENEWAL; 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, having reviewed all tax abatement contracts created pursuant to the guidelines and criteria governing tax abatement agreements, heretofore adopted by the City Council on February 14, 2005, and codified as Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-140 through 66-151, inclusive, of Chapter 66 of the Code of Ordinances of the City of La Porte, hereby finds and declares that all of the said tax abatement contracts reviewed by the City Council have met and fulfilled the goals and objectives of the tax abatement agreements, as well as the guidelines and criteria governing tax abatement agreements of the City of La Porte, as required under Section 66-149( a) of the Code of Ordinances. Section 2. The City Council of the City of La Porte hereby renews and adopts the Guidelines and Criteria governing tax abatement agreements, heretofore adopted by the City Council on February 14, 2005, and codified as Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-140 through 66-151, inclusive, of Chapter 66 of the Code of Ordinances of the City of La Porte, for an additional two year term, as allowed by Chapter 312 of the Texas Tax Code. - I - Section 3. The City Council of the City of La Porte hereby amends Chapter 66 of the Code of Ordinances of the City of La Porte by amending Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-149, "Sunset Provision", subsection "a", to read as follows, to-wit: "(a) These Guidelines and Criteria are effective January 22, 2007, and will remain in force until January 19, 2009, at which time all tax abatement contracts created pursuant to these provisions will be reviewed by the City to determine whether the goals have been achieved. Based on that review, the Guidelines and Criteria will be modified, renewed, or eliminated." Section 4. 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 5. This Ordinance shall be effective from and after its passage and approval. PASSED AND APPORVED this 22nd day of January, 2007. - 2 - ATTEST: '--1r;1bttt4d Martha A. Gillett City Secretary APPROVED: ~(~yVj Clark T. Askins Assistant City Attorney - 3 - CITY OF LA PORTE By: ~LV~ Alton E. Porter Mayor City of La Porte Interoffice Memorandum To: Mayor and City Council Debra B. Feazelle, . From: Manager Date: February 8, 2005 Subject: Tax Abatement: Proposed Guidelines & Criteria After the January 24 Workshop, Council was asked if they wished to consider tax abatement for projects that increased assessed value by $1,000,000 but created less than 25 jobs. Some Council have responded and suggested that we consider a second scale. I noted another city that had created a second tier of abatement for fewer jobs created. The investment level, number of jobs and the abatement level were in essence cut in half. Attached is a substitute page 7 for Council to consider. I have left the investment level at $1,000,000, lowered the jobs created to 10 and also lowered the abatement level by one- half. The sheet will be available for Council's consideration at the February 14 Council Meeting. JJ/ml c: Cynthia Alexander, Assistant City Manager Knox Askins, City Attorney Year Abated Percentage of Value for Proiects Creating or Maintaining a Minimum of25 Full-time Emo10vees 100% 80% 60% 40% 20% Percentage of Value for Proiects Creating or Maintaining a Minimum of 10 Full-time Employees 50% 40% 30% 20% 10% 1-3 Including Construction 4 5 6 7-10 2. No tax abatement shall be given in any year in which the facility fails to meet The contractually defined "Minimum Value Requirement." 3. All Tax Abatement Agreements shall set out in detail the exact method to be used in computing each year's exemption. 4. No tax abatement shall be given in any year in which the facility fails to meet the employment minimum set forth in Section 66-142(h), "Basic Qualifications for Tax Abatement." (h) Basic Qualifications for Tax Abatement. To be eligible for designation as a reinvestment zone and receive tax abatement the planned improvement: 1. must be shown to increase the assessed value of the property at least $1.0 million upon completion of the contractually-defined "Construction Period;" 2. must be shown to directly create or prevent the loss of permanent full-time employment for at least 10 people within the reinvestment zone upon completion of the contractually-defined "Employment Period;" 3. must be shown not to solely or primarily have the effect of transferring employment from one part of City to another. 4. the City may, at its discretion, take into account alternative or competing site information provided with the application for tax abatement. (i) Research and Development Projects. If the planned project 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 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 no more than two years after the effective date of the agreement and continue through the term of the agreement. The abatement period shall not exceed five years from the effective date of abatement and the percentage of value to be abated shall be up to 100 percent of new value throughout the abatement period, subject to a maximum abatable new value of - 7 - Guidelines and Criteria Governing Tax Abatement Agreements Similar to Harris County's - This will benefit both the applicant and the City in administration of the application and review process 1 Guidelines and Criteria Governing Tax Abatement Agreements A facility may be eligible for abatement if it is: -Manufacturing Facility -Regional Distribution, Service or Entertainment Facility -Research and Development Facility -Other Basic Industry Guidelines and Criteria Governing Tax Abatement Agreements To be eligible for abatement the planned improvement: -J) 0i..JJ,:J JH0 jJ ,:b -:jfJ ':; sr.JfJ0JJJJ r.; fY:iJE:]E(0 SEj) .r:-:Jj~JJJ'j :::JJJ f:::;bJ-:JfJl Sbf0 l0 S0JbJ,:bf:::JlJ JJJSb,:JJJJ'j (1) 0J::::,:; u1 HJ':; :::Jf..J-:Jl':;JJJ':;JJl) JfJS0JJJ':; i1'0JJJ::';-:Jb0 l:::v :::JJEJ 1J-:JJJdJL,:; j':;':;0 'j':;Jb.i:::JlC::i,:J f.Jj lJT:::iJ.JbJJib~ JJjJ J.Jf':.! 'j':;JJJ :::;iJl) -:JJd(JJJ)?JJJj -:d,:mbJEJJ ':;J~J)':;JLS l.J-J,:;sHj 0'2fJHa0 ::J0 :::J J':; 0 i..JH DillJC::i JJfJJ.J.i0j':;JJJ2JJ1~ :::m':.J 2) JYJi..J0l13 ilJ20':;00:::JfY 135:::Ji..b36tljJ:::stHy :12 .? Ju:ArJO:!.r:J 3i]j 51 2iJi:J ).!J1JJh:JJ J:0 '2,,~J ::)lj1 J;J JjjJ':jJ'2:JJ,:;~J ,jJ'J'0j:.Hr'lj \)YfJ.2'iJf3::J00iJ:::JlUa:::JJJ0'/)::JiJ6..':; j0 '1Jj-:J.Cb 101' ifJ3D200::JIJ jjjJplb'/3i iJ3IJlBJ 2 Guidelines and Criteria Governing Tax Abatement Agreements Value and Term of Abatement Project must increase assessed value by a minimum of $1.0 million and create 25 jobs Abatement period is 10 years and amount abated is: /::i::Jr .;"!J::Ji'j~J?3i,::;0iJb~I'j 0J\h1hJ'j j jDU% ~ 0D% :; (S;SJo/!J if.) iJlJ% J'--"1JlJ ~lJ% 3 Guidelines and Criteria Governing Tax Abatement Agreements Council has an insert in their package which is an alternate page 7 This alternate would allow abatement for projects that increase assessed value by $1.0 million but create a minimum of 10 jobs In. th.is ca. se.. - the abatement is . -.. -". ..-... -. -. _.. reduced by 1/2 Guidelines and Criteria Governing Tax Abatement Agreements For research and development projects, the increase in assessed value is $500,000 and the jobs requirement is five and the abatement period is 5 years 4 Guidelines and Criteria Governing Tax Abatement Agreements There is a cap on the abatement set at $1.0 million x the number of jobs created There are provisions for recapture if the project fails to meet the terms of the agreement ? ~Lb J J s }- J 3 ~J f J JJ fJ ;; Prior to the creation of a reinvestment zone the City must publish notice regarding a public hearing and notify other taxing entities at least 7 days in advance of the hearing The proposed Reinvestment Zone "A" is a site specific 12.156 Ac tract for Project "Fix Up" i) At the Public Hearing interested persons are entitled to speak and present evidence for or against the designation '" After the Public Hearing, Council will consider an ordinance designating a 12.156 Ac tract as La Porte Reinvestment Zone "A". The Ordinance finds that the designation of the Zone is likely to contribute to the retention or expansion of primary employment or to attract major investments in the zone that would be a benefit to the property and that would contribute to the economic development of the City of La Porte 5 6 7