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HomeMy WebLinkAboutO-2006-2955REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: November 6, 2006 Requested By: John Joerns Department: Administration Report: Resolution: Ordinance: X Exhibits: Ordinance 2006 - Exhibits: "A" Public Notice Budget Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YES NO Exhibits "B/C/D" Notices to LPISD, Harris County Commissioners Court and San Jacinto College District Exhibits "E" Legal Meets and Bounds Description Exhibits "F" Aerial of Proposed Reinvestment Zone "C" SUMMARY & RECOMMENDATION Prior to the creation of a reinvestment zone the City must publish a public notice regarding a public hearing and notify other taxing entities at least 7 days in advance of the hearing. The proposed Reinvestments Zone "C" is a site specific 10.115 Ac tract for Preferred Freezer Services Houston Port, LLC. 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 designation a 10.115 Ac tract as La Porte Reinvestment Zone "C" — "Preferred Freezer Services Houston Port, LLC." 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. Action Required by Council: Consider Ordinance designation a 10.115 Ac tract as La Porte Reinvestment Zone "C" — Preferred Freezer Services Houston Port, LLC. D �-/a 6 Dat ORDINANCE NO 2006 -RAS AN ORDINANCE AUTHORZING THE DESIGNATION OF THE CITY OF LA PORTE REINVESTMENT ZONE "C" - "PREFERRED FREEZER SERVICES HOUSTON PORT, LLC."; MAKING FINDINGS OF FACT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDANIED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte has heretofore, on the 14th day of February, 2005, adopted Ordinance No. 2005-2809, an Ordinance establishing guidelines and criteria governing tax abatement agreements by the City of La Porte. A public hearing was held before the City Council of the City of La Porte on November 6, 2006, pursuant to notice as required by Section 312.201, Texas tax Codes, which notice was published not later than the 7th day before the date of the hearing in the Bayshore Sun, a newspaper having general circulation in the City of La Porte, a true and correct copy of said published notice being attached hereto as Exhibit "A" and incorporated by reference herein; and pursuant to notice delivered in writing not later than the 7th day before the hearing, to the presiding officer of the La Porte Independent School District; to the County Judge of Harris County, Texas presiding officer of the Harris County Commissioners Court, on behalf of Harris County, the Harris County Flood Control District, the Port of Houston Authority of Harris County, and the Harris County Department of Education; and to the presiding officer of the San Jacinto College District; being all of the taxing units included in the proposed reinvestment zone. A copy of the notices to the La Porte Independent School District and Harris County Commissioners Court, and the San Jacinto College District, are attached hereto as Exhibits `B", "C", and "D", respectively, incorporated by reference herein, and made a part hereof for all purposes. Section 2. Specifically, and without limiting the generality of the foregoing, the City Council of the City of La Porte finds, determines and declares that the subject property would be reasonably likely as a result of the designation as a reinvestment zone, 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 LaPorte. The City Council of the City of La Porte further finds, determines and declares that the improvements sought are feasible and practical and would be a benefit to the land to be included in the zone and to the City of La Porte after the expiration of an agreement into under Section 312.204, Texas Tax Code. Section 3. Accordingly, there is hereby established and designated a reinvestment zone in the City of La Porte to be know as the La Porte Reinvestment Zone "C" — Preferred Freezer Services Houston Port, LLC.", for commercial/industrial tax abatement, legally described by metes and bounds on Exhibit "E", and as more particularly shown on the location map attached hereto as Exhibit "F", Proposed La Porte Reinvestment Zone "C" — "Preferred Freezer Services Houston Port, LLC.", reference to which is here made for all purposes. This designation shall be effective for five (5) years from the effective date of this Ordinance. Section 4. This Ordinance shall serve as notice of the establishment of the La Porte Reinvestment Zone "C" by the City of La Porte, to every taxing unit that includes inside its boundaries property that is located within the boundaries of the Zone, and the City Secretary is hereby directed to send certified copies of this ordinance to all such affected taxing units. 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 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 6. This Ordinance shall be effective from and after its passage and approval, and it is so ordered. PASSED AND APPROVED, this &7'— day of Oelp& , 2006. ITY OF LA P� By: UA�L. Alton E. Porte Mayor ATTEST: APPROVED: Cil `7'pr Martha A. Gillett 4Giox W. Askins City Secretary City Attorney EXHIBIT "A" Public Notice STATE OF TEXAS ) COUNTY OF HARRIS ) ( CITY OF LA PORTE ) ( PUBLIC NOTICE Notice is hereby given that a public hearing will be held before the City Council of the City of La Porte, City Hall, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 pm on Monday, November 6, 2006, at which public hearing interested persons shall be entitled to speak and present evidence for or against the designation of La Porte Reinvestment Zone "Zone C", for Preferred Freezer Services Houston Port, LLC, pursuant to Chapter 312, Texas Tax Code, as amended. The legal description of the property to comprise the proposed reinvestment zone is as follow; to -wit: Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all bearings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest corner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Page173 of the Deed Record of harris County, Texas, said corner being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch rod with cap set for the southwest corner and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. A location map of said property is available for inspection in the City Secretary's Office. THIS FACILITY HAS DISABILITY ACCOMMODATIONS AVAILABLE. REQUESTS FOR ACCOMMODATIONS OR INTERPRETIVE SERVICES AT MEETING SHOULD BE MADE 48 HOURS PRIOR TO THIS MEETING. PLEASE CONTACT CITY SECRETARY'S OFFICE AT 281-471-5020 OR TDD LINE 281-471-5030 FOR FURTHER INFORMATION. A POSSIBLE QUORUM OF CITY COUNCIL MEMBERS MAY BE PRESENT AT THIS MEETING AND PARTICIPATE IN DISCUSSIONS BUT NOT TAKE ANY ACTION. Martha A. Gillett, TRMC City Secretary Date Posted Q � W CrW a oa ? Q W G _ C. Cr 0 AL - Lll W F - Z Cr M0 LL W � 0 Q W LL V 'Q 0 STATE OF TEXAS COUNTY OF HARRIS, CITY OF LA PORTE PUBLIC NOTICE Notice is hereby given that a public hearing will be held before the City Coun- cil of the City of La Porte, City Hall, 604 West Fair mont Parkway, La Porte, Texas beginning at 6:00 pm on Monday, November 6, 2006, at which public hearing interested persons shall be entitled to speak and present evidence for or against the designation of La Porte Reinvestment Zone "Zone C", for Prefer- red Freezer Services Houston Port, LLC, pur- suant to Chapter 312, Texas Tax Code, as amended. The legal de- scription of the property to comprise the proposed re- investment zone is as fol low; to -wit: Being a tract or; parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and - part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly descri- bed as follows (all bear- ings based on the souther- ly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East.per said deed): . BEGINNING at a broken concrete monument called and found at the south- west comer of both the herein described tract and aforesaid 207.049 acre tract, for the northwest cor- ner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Vol- ume 2355, Pagel 73 of the Deed Record of Harris County, Texas, said comer being on the west line of aforesaid Enoch Brinson Survey and the east line of the. Nicholas Clopper Sur- vey; PRETIVE SERVICES P THENCE, coincident the MEETING SHOULD E south line of aforesaid MADE 48 HOURS PRIO 207.049 acre tract and the TO THIS MEETIN( north of aforesaid 19.566 PLEASE CONTACT CIT acre tract, North 89 De- SECRETARY'S OFFIC grees 39 Minutes 06 Sec- AT 281-471-5020 OR TD onds East, a distance of LINE 281-471-5030 FO 3,740.00 feet to a 5/8 inch FURTHER INFORM) rod with cap set for the TION. southwest comer and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest comer of the herein descri- bed tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a-5/8 inch iron rod with cap set for the northeast corner of the herein descri- bed tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. A location map of said property is available for in- spection in the City Secre- tary's Office. THIS FACILITY HAS DIS- . ABILITY ACCOMMODA- TIONS AVAILABLE. RE- QUESTS FOR ACCOM- MODATIONS OR INTER - A POSSIBLE QUORUI OF CITY COUNCIL MEA BERS MAY BE PRESEN AT THIS MEETING AN PARTICIPATE IN DI: CUSSIONS BUT NO TAKE ANY ACTION. Martha A. Gillett, TRMC City Secretary City of La Porte EXHIBIT "B" Notice to LPISD O� AO 16 y,�� City of La Porte Established 1892 TEXA9 October 24, 2006 CM/RRR# 7005 0390 0004 8165 3522 Dr. Michael Say, Superintendent La Porte Independent School District Attn: Gene Horn, President LPISD School Board 1002 San Jacinto Street LaPorte, TX 77571 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Dr. Say: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/kip Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 • (281) 471-5020 EXHIBIT "C" Notice to Harris County Commissioners Court O� AO 46 an A��► City of La Porte Established 1892 October 24, 2006 CM/RRR# 7005 0390 0004 8165 3515 The Honorable Robert Eckels Harris County Judge Attn: David Turkel Director of Community & Economic Development 8410 Lantern Point Drive Houston, TX 77054 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Judge Eckels: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC. on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 • (281) 471-5020 EXHIBIT "D" Notice to San Jacinto College District City of La Porte " y Established 1892 ` 0" .mks «' .,r?�,:• � TEXp,B October 24, 2006 CM/RRR# 7005 0390 0004 8165 3508 Dr. Bill Lindemann, Chancellor San Jacinto College Attn: Dr, Ruede Wheeler Board of Regents 4624 Fairmont Parkway, Suite 200 Pasadena, TX 77504 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Dr. Lindemann: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC. on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, LaPorte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. 9 La Porte, Texas 77571 • (281) 471-5020 EXHIBIT "E" Legal Metes & Bounds METES AND BOUNDS DESCRIPTION 10.115 ACRE TRACT LOCATED IN THE ENOCH BRINSON SURVEY, A-5 HARRIS COUNTY, TEXAS Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all bearings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest corner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F. Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Page 173 of the Deed Records of Harris County, Texas, said corner being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north line of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch iron rod with cap set for the southwest corner and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of the herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. Reno & Associates July 13, 2006 Job No. 36-0404_10.1 acre ��i tip EXHIBIT "F" Aerial of Proposed Reinvestment Zone "C" Y OF y'�� BEVERLY KAUFMANCOUNTY OFTCLU March 28, 2007 Chief Admin Officers of LaPorte 604 W. Fairmont Parkway LaPorte, Texas 77571 Dear Sir: RECEIVED MAR 2 9 2007 ASSISTANT CITY MANAGER'S OFFICE Enclosed is the tax abatement agreement between Harris County, Preferred Freezer Services Houston Port, LLC (Lessee) a Delaware limited liability corporation, and Under Bear, LLC (Owner/Lessor) a Delaware limited liability corporation, for a cold storage warehouse and distribution facility within Harris County on a 10.115 acre tract located at 1000 Porter Road, La Porte, Texas 77571 in Precinct Two. Sincerely, Beverly B. Kaufman, County Clerk and Ex -Officio Clerk of Commissioners Court of Harris County, Texas Maricela V. Martinez, Deputy Count6lerk Commissioners Court Records enclosures 1001 PRESTON, 4TH FLOOR • P. O. BOX 1525 • HOUSTON, TX 77251-1525 • 713 / 755-6411 www.cclerk.hctx.net �S COLS T�4 HARRIS COUNTY, TEXAS COMMUNITY & ECONOMIC DEVELOPMENT DEPARTMENT 8410 Lantern Point Drive David B. Turkel Houston, Texas 77054 Director Tel (713) 578-2000 Fax (713) 578-2190 -e )> c Vote of the Court:Yes No Abstain' �-' March 13, 20070 ❑ 71-' �;o Judge Emmett Comm. Lee c r, County Judge Emmett and Comm. Garcia Commissioners Lee, Garcia, Comm. Radack Comm. Eversole :-3 -< Radack and Eversole AGENDA LETTER Please consider the following item on the Commissioners Court Agenda for March 20, 2007. Approval of the tax abatement agreement between Harris County, Preferred Freezer Services Houston Port, LLC (Lessee) a Delaware limited liability corporation, and Under Bear, LLC (Owner/Lessor) a Delaware limited liability corporation, for a cold storage warehouse and distribution facility within Harris County on a 10.115 acre tract located at 10000 Porter Road, La Porte, Texas 77571 in Precinct 2. Preferred Freezer Services Houston Port, LLC will invest a minimum of $10.4 million of which $9.9 million will be subject to abatement in the proposed facility and will create 35 full time jobs in Harris County. The City of La Porte held the required public hearing, created the Reinvestment Zone, and approved its own tax abatement on November 6, 2006. Commissioners Court approved an Early Start Variance on November 21, 2006. i cerely, David B. Turkel M ra b t'e ( C1 Director Community & Economic Development Department Presented to Commissioner's Court MAR 2 0 2007 APPROVE 8000rdod x'91 - P -Ago -_-�— HARRIS COUNTY, TEXAS IL15 COMMUNITY & ECONOMIC DEVELOPMENT DEPARTMENT rFxns 8410 Lantern Point Drive David B. Turkel Houston, Texas 77054 Director Tel (713) 578-2000 Fax (713) 578-2190 Vote of the Court: Yes No Abstain oces November 13, 2006 Comm. Lee Gomm. Garcia County Judge Eckels and omm, adack Commissioners Lee, Garcia, Gomm, l=veraais Radack and Eversole AGENDA LETTER Please consider the following items on the Commissioners Court Agenda for November 21, 2006: Approval of a variance to allow for construction of improvements to commence prior to the execution and delivery of a tax abatement agreement for Preferred Freezer Services Houston Port, LLC for a proposed refrigerated warehouse facility to be located in the Underwood Business Park at 10000 Porter Road, LaPorte, TX 77571 in Precinct 2 as provided by.the Harris County Guidelines and Criteria_ David Turkel Director Community & Economic Development CA Cott _ v���64a�.�* Type of Project: Company Name: Project Location: Key Map: 'G OF Harris County Tax Abatement Program Project Summary and Economic Analysis Revised — March 13, 2007 New Construction — Cold Storage Warehousing and Distribution Preferred Freezer Services (Lessee) Under Bear, LLC (Owner/Lessor) 10000 Porter Road LaPorte, Texas 77571 Precinct 2, Commissioner Sylvia Garcia 539J PROJECT SUMMARY Municipal Action: On November 6, 2006, the City of La Porte held a public hearing to consider the creation of a reinvestment zone for entering into a tax abatement agreement with Preferred Freezer Services Houston Port, LLC (Preferred Freezer) where no public opposition was expressed, created the La Porte Reinvestment Zone "Zone C" by City Ordinance No. 2006-2955, and approved a tax abatement agreement by City Ordinance No. 2006-2956. Prior Actions by Commissioners Court: An early start variance was approved for the proposed project November 21, 2006, to enable construction to commence prior to the execution of a tax abatement agreement. Business Profile: Preferred Freezer Services (Preferred Freezer) started operations in Perth Amboy, New Jersey in 1989. Currently, Preferred Freezer operates 14 cold storage warehouses with a total 74 million cubic feet of space. Locations for the facilities are in New York, New Jersey, Boston, Los Angeles, Miami, and Chicago. Preferred Freezer Services will be new to Harris County having no other business facilities in operation in the state of Texas. Sales for the 14 facilities generated $79 million in 2005. Development Plan: Preferred Freezer Services' business is steadily growing. The proposed project consist of a new 167,381 square foot state of the art, standardized refrigerated warehouse and distribution facility in the Underwood Business Park in La Porte, TX. The new site will be located on an estimated 10.115 -acre tract at 10000 Porter Road in Precinct 2. Preferred Freezer estimates an investment of $10.4 million in the new facility of which $9.9 million will be subject to abatement. Competitive Siting: Preferred Freezer Services considered two other cities as potential site locations for this project. Chicago, IL was considered because it would be the second facility in that area market and they have the resources for employees, vendors and customers. Chicago has offered a Tax Increment Financing (TIF) which allows lower multiples on the assessed value thereby lowering property taxes. Jacksonville, Fl has been considered because the site is located in an Enterprise/Empowerment Zone offering hiring incentives, infrastructure grants, and tax refunds. Environmental Issues: According to the Pollution Control Division of Harris County Public Health & Environmental Services, the compliance history database of the Texas Commission on Environmental Quality (TCEQ) and the EPA Integrated Compliance Information System were reviewed with no enforcement actions, violation notices, or complaints found regarding Preferred Freezer Services. This project will be subject to state and local storm water permitting requirements and any air emissions must be permitted or otherwise authorized by the TCEQ. Occupational and Safety Issues: The Federal Occupational Health and Safety Administration compliance records were searched and no violations or complaints have been recorded concerning Preferred Freezer Services. Current Property Tax History: According to the Office of the Tax Assessor -Collector there are no records for Preferred Freezer Services in Harris County. Proposed Abatement Schedule: • Duration -Ten years, beginning January 1, 2007 and ending December 31, 2016. • Amount Abated — 50 percent in, each of the ten years to be covered by the abatement agreement, in accordance with the terms of The Harris County Tax Abatement Guidelines in effect at the time the application was received in August of 2006. Jobs: Preferred Freezer Services will commit to creating 35 new full time positions for the Harris County facility. ECONOMIC BENEFIT ANALYSIS Fiscal Impact: • Average Annual Taxes Abated: $22,175 • Current Annual Revenue: $1,053 • Average annual revenue during abatement period: $33,055 • The County's average annual revenue during the abatement period increases by $32,002' • After the Abatement Period, the annual revenue increases by $35,169 over current revenues. Regional Multiplier AnalysisZ: • By creating 35 new full time jobs as described. above, 38 indirect jobs would also be created. • The total annual economic impact of this project is estimated to be $9.8 million. ' Total for all County entities (.63998 per $100 valuation). County base -portion is (.40239 per $100 valuation) = $20,121. 2Impacts calculated by GHP using the Regional Input -Output Modeling System developed by the U.S. Department of Commerce, Bureau of Economic Analysis. TAX ABATEMENT QUALIFICATIONS DETERMINATION SUMMARY March 13, 2007 Applicant: Preferred Freezer Services Houston Port, LLC (Lessee) and Under Bear, LLC (Owner/Lessor) Following are determinations that Commissioners Court will have to make in order to offer a tax abatement to Preferred Freezer Services Houston Port, LLC and Under Bear, LLC. • That the facility is an "Authorized Facility" as defined in the guidelines. This project meets the definition of "Regional Service Facility" as Under Bear, LLC will construct a new cold storage facility, including 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. • That the improvements proposed to be subject to the abatement are "Eligible Property" as defined in the guidelines. The proposed real property improvements meet the definition. • That the project will increase the value of the property by at least $1 million upon completion. Preferred Freezer contemplates investing approximately $10.4 million of which $9.9 million would be subject to abatement, for the new real property improvements, which should increase taxable value by at least $1 million. • That the project will create or prevent the loss of full-time employment for at least 25 people in Harris County. Preferred Freezer will commit to creating 35 new full time jobs at competitive wage rates with full benefits. • That Harris County was in competition with other locations for the project. The Company has considered locating the project in Chicago, IL, and Jacksonville, FL. • That construction had not commenced on the proposed project before the filing of an application. Construction had not commenced as of August 28, 2006, when the fully completed application was received by Harris County. • That there will be no substantial adverse effect on the County's tax base. The proposed addition to the County's tax base will result in an average annual increase in revenue of $33,055 during the abatement period. Since the project is proposed for a partially developed location in Harris County, it is unlikely that the County will need to provide additional services for the area. • That the planned use of the property will not constitute a hazard to public safety, health, or morals. There is currently no indication that the facility would present any safety, health or moral problems. • That the Applicant has a history of compliance with all applicable state and federal "environmental laws" and Federal Occupational Health and Safety Administration regulations. According to the Pollution Control Division of Harris County Public Health & Environmental Services, the compliance history database of the Texas Commission on Environmental Quality (TCEQ) and the EPA Integrated Compliance Information System were reviewed with no enforcement actions, violation notices, or complaints found regarding Preferred Freezer Services, LLC or Under Bear, LLC. This project will be subject to state and local storm water permitting requirements and any air emissions must be permitted or otherwise authorized by the TCEQ. The Federal Occupational Health and Safety Administration compliance records were searched and no violations or complaints have been recorded concerning Preferred Freezer Services, LLC or Under Bear, LLC. Community and Economic Development Economic Development Division SEE 499 MAP SEE 579 MAP MILLER Q KEY MAPS INC. 2-6A 03000 HL&JPSAM 13ERTROM STATION A 7R Al SOL TER AP INC. 1.4 (D KEY MAPS INC. 2004 us] (D KEY A TEXAS ALKYLS HARRIS ALKYLS COUNTY OLD CLARK RD DOW cHEmICAL +4 i cc l cd .-I I DUP04T SYNGkS pt JAPHET 4 0 KEY MAPS INC. 2004 If i SIMMONS uss CHEMICALS tv Ik STRANG RD AIR 10200 T 'o 119 0 jRODUcrs LA PORTE a SPAIR W U ggmgp-,�� NkPl,� S IN" WO, --w v m F ff "Uv" N TG 714, -"T A M= -CR -q MALN, s2oa� AW 000 U,11 -�FA ON ��,vmqo- V, SEE 579 MAP TALKING POINTS TAX ABATEMENT WITH PREFERRED FREEZER HOUSTON PORT, LLC (Lessee) and UNDER BEAR, LLC (Lessor) AGENDA ITEM COURT SESSION March 20, 2007 Representatives from Preferred attending court session: Bill Forrester, Development Manager Municipal Action: On November 6, 2006, the City of La Porte held a Public Hearing (no opposition expressed), created the La Porte Reinvestment Zone "Zone C" , and approved a tax abatement agreement. Prior Actions by Commissioners Court: An early start variance was approved for the proposed project November 21, 2006, to enable construction to commence prior to the execution of a tax abatement agreement. ■ Preferred Freezer Services began operations in Perth Amboy, NJ in 1989 as a cold storage warehousing business primarily for food and related products. ■ Current locations are in New York, New Jersey, Boston, Los Angeles, Miami, and Chicago. ■ The company will be new to Texas and Harris County. ■ Preferred will invest approximately $10.4 million in the new facility of which $9.9 million would be subject to abatement. ■ They will create 35 new full time jobs. ■ As an alternative to the site in La Porte, Preferred considered two other cities as potential site locations. One in Chicago where they would expand an already existing market and the second in Jacksonville, Florida both of which are offering tax incentive packages. FISCAL IMPACT: • Average Annual Taxes Abated: $22,175 • Current Annual Revenue: $1,053 • Average annual revenue during abatement period: $33,055 • The County's average annual revenue during the abatement period increases by $32,002 • After the abatement period, annual revenue increases by $35,169 over current revenues. • By creating 35 jobs, 38 indirect jobs would also be created because of this project. • Total annual economic impact of this project is estimated to be 9.8 million TAX ABATEMENT AGREEMENT FOR REAL PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE " ZONE C" THE STATE OF TEXAS § COUNTY OF TEXAS § This Tax Abatement Agreement (the "Agreement") is made and entered into by and among Harris County on behalf of itself, the Harris County Flood Control District, the Harris County Hospital District, and the Port of Houston Authority of Harris County, Texas, (collectively referred to as the "County"), and Preferred Freezer Services Houston Port, LLC ("Lessee"), a Delaware limited liability corporation, qualified to do business in the State of Texas, and Under Bear, LLC ("Lessor"), a Delaware limited liability corporation and an owner of interests in real property located within the Reinvestment Zone (defined in Section III). I. AUTHORIZATION This Agreement is authorized by the following: (a) the Texas Property Redevelopment and Tax Abatement Act, chapter 312 of the Texas Tax Code, as it exists on the effective date of the City of La Porte Tax Abatement Agreement (the "City Agreement") which is attached hereto as Exhibit A; (b) the City of La Porte Ordinance No. 2005-2809, establishing the property tax abatement program for properties in designated reinvestment zones, a true and correct copy of which is attached hereto as Exhibit A-1; (c) the City of La Porte Ordinance No. 2006-2955 which created the Zone, a true and correct copy of which is attached hereto as Exhibit A-2 and incorporated herein by reference for all purposes; (d) the City of La Porte Ordinance No. 2006-2956 which approved and authorized the City Agreement, a true and correct copy of which is attached hereto as Exhibit A-3 and incorporated herein by reference for all purposes; (e) the Order of Harris County Commissioners Court authorizing this Agreement on behalf of the County; and (f) Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone Created in Harris County, re -adopted by the Harris County Commissioners Court on November 22, 2005 (the "Guidelines") and effective January 1, 2006, attached hereto as Exhibit B and made a part hereof. All definitions set forth therein are applicable to this Agreement, except as otherwise expressly provided in this Agreement. II. DEFINITIONS As used in this Agreement, the following terms shall have the meanings as set forth below: a) "Abatement" means the partial exemption of ad valorem taxes of certain real property (including fixed -in-place machinery and equipment) located within the Reinvestment Zone designated for economic development purposes. b) "Effective Date of Abatement" means January 1, 2007. c) "Base Year Value" means the 2006 certified appraised value, as determined by the Harris County Appraisal District ("HCAD"), for the property located in the Reinvestment Zone. d) "Improvements" means the buildings or portions thereof and other improvements, including fixed -in-place machinery and equipment, that are erected by the Lessor and Lessee in the Reinvestment Zone on or after November 21, 2006 and more fully described in the "Application for Tax Abatement in Harris County" (the "Application"), attached hereto as Exhibit C and made part hereof for all purposes. e) "Construction" means a material and substantial improvement of the property, which represents a separate and distinct Construction operation undertaken for the purpose of erecting the Improvements. The period of Construction ends when the facility is available for occupancy, or on December 31, 2008, whichever occurs first. f) "Eligible Property" means the Construction commencing on or after November 21, 2006 of buildings, structures, fixed -in-place machinery, equipment and process units, site improvements, and that office space and related fixed improvements necessary to the operation and administration of the facility, as set forth in the Investment Budget in the Application. The value of all property shall be the certified appraised value as ultimately determined by HCAD each year. g) "Ineligible Property" means any Construction commencing before November 21, 2006 and after December 31, 2008, land, inventories, supplies, tools, furnishings and other forms of movable personal property, vehicles, vessels, aircraft, housing, hotel accommodations, deferred maintenance investments, improvements for generation or transmission of electrical energy not wholly consumed by a new facility or expansion, any improvements which are not integral to the operation of the facility, property that has an economic life of less than fifteen (15) years, any Improvements that have an economic life of less than fifteen (15) years, or any Improvements exempted by local, state or federal law. h) "Lessee" means Preferred Freezer Services Houston Port, LLC a Delaware limited liability corporation. i) "Lessor" means Under Bear, LLC, a Delaware limited liability corporation. 2 j) "Permanent Employee" means a person who works a minimum of 1,750 hours per year exclusively within the Reinvestment Zone (excluding any contract employee, seasonal employee, full-time equivalent, or part-time employee), whose employment is both permanent and full-time, who receives industry -standard benefits, and whose employment is stated in the quarterly report filed with the Texas Workforce Commission ("TWC") by the Lessee. III. SUBJECT PROPERTY The Reinvestment Zone is an area within Harris County, Texas, generally described as a tract or parcel of land containing 10.115 acres of land, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract of record in the name of St. Joe Paper Company, filed in the Official Public Records of Real Property of Harris County, Texas, under Harris County Clerk's File Number M032856, attached hereto as Exhibit D, and made a part hereof for all purposes. The Zone is located within the boundaries of a number of taxing units whose ad valorem taxes are by law approved or levied by the Commissioners Court of Harris County, to wit: Harris County, the Harris County Flood Control District, the Port of Houston Authority of Harris County, Texas, and the Harris County Hospital District. Upon completion of the Improvements to be constructed and further described in Exhibit C, the facility will consist of a cold storage, warehouse and distribution facility. In accordance with TEX. TAX CODE ANN. §312.204(a), HCAD shall determine the Base Year. Value of the real property subject to the Abatement Agreement. The Chief Appraiser of HCAD shall annually certify the appraised value of the Improvements located within the Reinvestment Zone and any improvements to the Reinvestment Zone subject to abatement under this Agreement and more fully described in the Application, attached hereto as Exhibit C and made part hereof for all purposes. IV. REPRESENTATIONS AND CONTEMPLATED IMPROVEMENTS A. The Lessor and Lessee each represent that the Improvements will be constructed within the boundaries of the Reinvestment Zone. B. The Lessor and Lessee each represent and warrant that (1) the Lessor is the owner of fee simple title to real property located at 10000 Porter Road, LaPorte, Texas; (2) the Lessee is the owner and operator of certain materials and equipment; and (3) the property is located within the boundaries of the Reinvestment Zone. C. The Lessor and Lessee each represent and warrant that construction of the Improvements described in the Investment Budget in Exhibit C shall begin on or after November 21, 2006. D. The Lessor and Lessee each represent and warrant that the proposed use of the facility is a cold storage, warehouse and distribution center. Additionally, the Lessor 3 and Lessee each agree to maintain the facility in good repair and condition during the Abatement period, and that construction of the Improvements shall be done in conformity with the Investment Budget included in Exhibit C. E. The Lessor and Lessee each represent and warrant they will invest at least $10,400,000 in Improvements, of which $9,900,000 is subject to the fifty percent (50%) abatement calculation as defined in Section V (B), by December 31, 2008. Furthermore, the Lessor and Lessee each represent and warrant that the certified appraised value of the Improvements, as determined by HCAD, shall be at least $9,900,000 by January 1, 2009. F. The Lessee represents and warrants that it will create thirty-five (35) new employment positions in the Reinvestment Zone on a permanent, full-time basis no later than December 31, 2009 and continuing through the remaining term of this Agreement. If at any time the Lessee fails to meet the total employment requirement, all taxes previously abated by virtue of this Agreement may be recaptured by the County and in such event such taxes shall be paid to the County, and the other political subdivisions that are parties to this Agreement, within sixty (60) days from demand. G. The Lessor and Lessee each represent and warrant that they are not indebted to the County for any past due ad valorem taxes or other obligations. H. The Lessor and Lessee each represent and warrant that they are in compliance with all state and federal laws designed to protect human health and welfare. The construction of the Improvements and operation of the facility shall be in compliance with all applicable federal, state and local laws, rules and regulations, including those designated to protect the environment from environmental hazards and degradation. V. VALUE AND TERM OF AGREEMENT A. The Lessor and Lessee shall make the Improvements in conformity with this Agreement as set out in the Investment Budget in Exhibit C, attached hereto and made a part of hereof for all purposes. Upon completion of the Improvements, the Lessor and Lessee shall use the Improvements as set forth in Section III of this Agreement. The Lessor and Lessee shall further maintain the Improvements in good repair and condition during the Abatement Period. B. The term of this tax abatement shall be for a period of ten (10) years beginning on January 1, 2007 ("Effective Date of Abatement"). In no case shall the terms of this abatement exceed ten (10) years from the Effective Date of Abatement. In no case shall the value of the Eligible Property subject to abatement exceed $4,950,000 (50% of the abatable value). The value of the Eligible Property shall be abated as follows: Improvements are eligible for abatement of new value, subject to an abatement cap, to be calculated as: $1,000,000 per job created/retained times the number of such jobs as required in the Abatement Agreement. 9 Such cap shall not exceed the increased value requirement as set out in the Abatement Agreement and will be adjusted annually. To determine the amount of each year's exemption, the adjusted cap shall be multiplied by fifty percent (50%) each year, up to a total of ten (10) years. Under no circumstance will any facility be granted the benefit of tax abatement for longer than ten (10) years. C. If the period of Construction extends beyond December 31, 2008, two (2) years from the Effective Date of Abatement, the Improvements shall be considered completed for compliance purposes of abatement. In no case shall the abatement period, inclusive of the Construction period, exceed ten (10) years from the Effective Date of Abatement. VI. TAXABILITY During the period that this Abatement Agreement is in effect, taxes shall be payable as follows: (1) The certified appraised value of the Ineligible Property as determined each year by the Harris County Appraisal District will be fully taxable. (2) The tax abatement shall apply only to Eligible Property which value shall be abated in accordance with the percentage set forth in Section V (B), above. The abatement applied to Eligible Property subject to abatement calculation in any year cannot be greater than the amount by which the value of all property located in the Reinvestment Zone, including Eligible Property subject to abatement calculation, and existing property for the year in which the Agreement is executed, as listed on the appraisal roll for that year, exceeds the Base Year Value. VII. EVENT OF DEFAULT A. During the period covered by this Agreement, the County may declare a default hereunder upon the occurrence of any one or more of the following circumstances or events: 1. Failure by the Lessor and/or Lessee to commence construction of the Improvements specified in the Investment Budget of Exhibit C and Section IV of this Agreement by December 31, 2008; or 2. If the Lessor and/or Lessee fail, refuse, or neglect to comply with any of the terms of this Agreement; or 3. Failure by the Lessor and/or Lessee to comply with TEX. TAX CODE ANN. §22.01, as amended, requiring an annual rendition of all personal property with HCAD; or 4. If any representation made by the Lessor and/or Lessee in the Application or in this Agreement is false or misleading in any material respect. 5 B. In the event the County declares the Lessor and/or Lessee to be in default of this Agreement, this Agreement shall terminate unless such default is cured in accordance with Subsection C below. If this Agreement is terminated, the County, and the other political subdivisions that are parties to this Agreement, shall be entitled to recapture all property taxes which have been abated as a result of this Agreement. Additionally, the Lessor and/or Lessee each agree to pay the County, and the other political subdivisions who are parties to this Agreement, interest at the rate of six percent (6%) per annum on any amount of previously abated taxes that are due to be recaptured under Section VII of this Agreement from the effective date of this Agreement. Interest for each year's abated taxes to be recaptured pursuant to Section VII of this Agreement shall be calculated beginning from the effective date of this Agreement. Interest shall be calculated on the basis of a year of 360 days and the actual days elapsed (including the first day but excluding the last day) occurring in the period for which such interest is payable, unless such calculation would result in an usurious rate, in which case interest shall be calculated on the per annum basis of a year of 365 or 366 days, as applicable, and the actual days elapsed (including the first day but excluding the last day). C. The Lessor and/or Lessee are each responsible for notifying the County of any default of this Agreement within ten (10) days of the default and must cure such default within sixty (60) days of the default ("Cure Period"). If the County determines that the Lessor or Lessee have failed to notify the County of any default of this Agreement as provided in this paragraph, the Agreement may be terminated immediately by the County and all taxes previously abated by virtue of this Agreement may be recaptured from the Lessor and/or Lessee. In such event, such taxes must be paid to the County, and other political subdivisions that are parties to this Agreement, within sixty (60) days from the date of termination. If the County does not receive full payment within said sixty (60) days of termination of this Agreement, a penalty may be added, pursuant to section 312.205 (b)(6) of the Texas Tax Code, equal to fifteen percent (15%) of the total amount of taxes abated under this Agreement. D. In the event the Lessor and/or Lessee allow the ad valorem taxes owed the County to become delinquent or fails to timely and properly follow the legal procedures for its protest and/or contest, then this Agreement may be terminated and all taxes previously abated by virtue of this Agreement will be recaptured from the Lessor and/or Lessee. In such event, such taxes must be paid to the County, and other political subdivisions that are parties to this Agreement, within sixty (60) days from the date of termination. E. In the event the facility herein is completed and the Lessee begins operation, but subsequently discontinues operation for any reason, for a period of 180 days during the abatement period, or one year in the event of a natural disaster, then this Agreement will terminate. In the event of termination pursuant to the provisions of this paragraph, the abatement of taxes under this Agreement for the calendar year during which the facility no longer is in operation will terminate and there shall be full recapture with penalties and interest as set out herein. Further, the Lessor and/or Lessee shall notify the County within ten (10) days of any discontinuation, stating the reason for the discontinuation and the projected length of discontinuation. Any taxes otherwise abated for the calendar year during which the Lessee no longer operates its cold storage, warehouse and distribution facility, must be paid directly to the Tax Assessor -Collector for Harris County for the benefit of the political subdivisions who are parties to this Agreement, within sixty (60) days from the date of discontinuation. VIII. ADMINISTRATION The Harris County Community & Economic Development Department ("HCCEDD") will administer this Agreement on behalf of the County and all political subdivisions on whose behalf it is entered. The Lessor and/or Lessee shall allow employees and/or representatives of the County who have been designated by HCCEDD to have access to the Reinvestment Zone during the term of this Agreement to inspect the facility to determine compliance with the terms and conditions of this Agreement. All inspections will be made only after giving 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 Lessor and Lessee and in accordance with safety standards of the Lessor and Lessee. Upon completion of the Improvements, HCCEDD shall annually evaluate the facility to ensure compliance with the terms and provisions of this Agreement and shall report possible defaults to the Commissioners Court, the County Attorney, and HCCEDD. The Lessee shall annually submit to HCAD and to HCCEDD, beginning on March 1, 2007, and continuing through the term of this Agreement,. a January 1 st employee -count for the Reinvestment Zone which shall correspond to employment counts reported in the Employer's Quarterly Report to the Texas Workforce Commission filed by the Lessee for the quarter ending on the previous December 31, and a separate notarized letter certifying: (1) the number of jobs created as a direct result of the Improvements, and (2) the Lessor and/or Lessee is in compliance with the environmental and worker safety requirements for the preceding year. This information will be used to determine eligibility and value of abatement for that year and shall be subject to audit if requested by HCCEDD. The Lessee's failure to submit this information will render the Lessor and Lessee ineligible to receive abatement. The Lessor and/or Lessee shall (a) obtain and maintain all required permits and other authorizations from the United States Environmental Protection Agency and the Texas Commission on Environmental Quality ("TCEQ") for the construction and operation of the facility and for the storage, transport, and disposal of solid waste; and (b) seek a permit from TCEQ for all grand -fathered units in the Reinvestment Zone, if any, by filing with TCEQ, within three (3) years of receiving the abatement, a technically complete application for such a permit. The HCAD Chief Appraiser shall annually determine (i) the taxable value pursuant to the terms of this abatement for all property located in the Reinvestment Zone and (ii) the full taxable value without abatement of the real and personal property 7 comprising the Reinvestment Zone. The Chief Appraiser shall record both the abated value and the full taxable value in the appraisal records. The full exemption value listed in the HCAD records shall be used to compute the amount of abated taxes that are required to be recaptured and paid in the event this Agreement is terminated in a manner that results in recapture. Each year, the Lessor and/or Lessee shall furnish the HCAD Chief Appraiser with such information outlined in Chapter 22, TEXAS TAX CODE, as may be necessary for the administration of the tax abatement specified herein. If the County terminates this Agreement, it shall provide the Lessor and/or Lessee with written notice of such termination. If the Lessor and/or Lessee believe that such termination was improper, the Lessor and Lessee may file suit in the Harris County District Courts appealing such termination within sixty (60) days after receipt from the County of written notice of termination. If a suit is filed, the Lessor and Lessee shall remit to the County, and other political subdivisions who are parties to this Agreement, within sixty (60) days after receipt of the notice of termination, any additional and/or recaptured taxes as may be payable during the pendency of the litigation pursuant to the payment provisions of TEX. TAX CODE ANN. § 42.08. If the final determination of the appeal increases the Lessor's and Lessee's tax liability above the amount of tax paid, the Lessor and Lessee shall remit the additional tax to the County and other political subdivisions that are parties to this Agreement, pursuant to TEX. TAX CODE ANN. § 42.42. If the final determination of the appeal decreases tax liability of the Lessor and Lessee, the County and other political subdivisions that are parties to this Agreement shall refund the difference between the amount of tax paid and the amount of tax for which the Lessor and Lessee is liable pursuant to TEX. TAX CODE ANN. § 42.43. IX. ASSIGNMENT The Lessor and Lessee may assign this Agreement to a new owner of the facility with the written consent of the Commissioners Court, 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 this Agreement. Any assignment of this Agreement shall be to an entity that contemplates the same improvements to the property, except to the extent such improvements have been completed. No assignment shall be approved if the Lessor, Lessee or assignee is indebted to the County, or the other political subdivision that are parties to this Agreement, for ad valorem taxes or other obligations. X. RENDITION This Agreement is specifically conditioned upon the Lessor and Lessee complying with TEX. TAX CODE ANN. § 22.01, as amended, requiring an annual rendition of all personal property with HCAD. XI. NOTICE Any notice required to be given under the provisions of this Agreement shall be in writing and shall be duly served when it shall have been deposited, enclosed in a wrapper with the proper postage prepaid thereon, and duly registered or certified, return receipt requested, in a United States Post Office, addressed to the County and the Lessor and Lessee at the following addresses. If mailed, any notice or communication shall be deemed to be received three (3) days after the date of deposit in the United States Mail. Unless otherwise provided in this Agreement, all notices shall be delivered to the following addresses: To Lessor: Under Bear, LLC 360 Avenue P Newark, NJ 07105 Attention: Dan Coon, CEO To Lessee: Preferred Freezer Services Houston Port, LLC 360 Avenue P Newark, NJ 07105 Attention: John Galiher, President To County: Harris County Office of Community and Economic Development 8410 Lantern Point Drive Houston, Texas 77054 Attention: Economic Development Division with a copy to: Office of the Chief Appraiser/Abatements Harris County Appraisal District P.O. Box 920975 Houston, Texas 77292-0975 Any party may designate a different address by giving the other party ten (10) days' written notice. XII. MERGER The parties agree that this Agreement contains all of the terms and conditions of the understanding of the parties relating to the subject matter hereof. All prior negotiations, discussions, correspondence and preliminary understandings between the parties and others relating hereto are superseded by this Agreement 6 XIII. APPLICABLE LAWS Each party to this Agreement understands and agrees that this Agreement shall be governed and construed according to the laws of the State of Texas. XIV. SEVERABILITY The parties agree that if any provision, section, subsection, sentence, clause or phrase contained in this Agreement is for any reason held to be unconstitutional, void or invalid, the remaining portions of this Agreement shall not be affected thereby and all provisions contained herein are deemed severable for that purpose. XV. DATE The County executes this Agreement by and through the Director of Harris County Community and Economic Development Department acting pursuant to Order of the Commissioners Court of Harris County, Texas, so authorizing. This Agreement shall not become enforceable until executed by all parties hereto. The Effective Date of Abatement shall be January 1, 2007. The parties in multiple originals, each, have executed this Agreement having full force and effect. 10 APPROVED AS TO FORM: MICHAEL A. STAFFORD County Attorney ByY—a"&& RACHEL BOATES Assistant County Attorney ATTEST: By Name Title 0 By Nam Title �!'t�aTY IL��fNSp-r.J cFJ COUNTY DAVID B. TURKEL Director, Community & Economic Development Date signed: .3-- / Z , 0 7 LESSOR UNDER BEAR, LLC a Delaware limited liability corporation By DAN COON, COO Date signed: ,?/7A5x LESSEE PREFERRE EEZER SERVICES HOUSTONORT, LC a Delaware li ited lia ility corporation By JOHN GALIHER, Pres3 Date signed: THE STATE OF TEXAS § COUNTY OF HARRIS § The Commissioners Court of Harris County, Texas, convened at a meeting of said Court at the Harris County Administration Building in the City of Houston, Texas, on the day of MAR 2 02 2007, with the following members present, to -wit: Edward Emmett County Judge El Franco Lee Commissioner, Precinct No. 1 Sylvia R. Garcia Commissioner, Precinct No. 2 Steve Radack Commissioner, Precinct No. 3 Jerry Eversole Commissioner, Precinct No. 4 and the following members absent, to -wit: , constituting a quorum, when among other business, the following was transacted: ORDER AUTHORIZING EXECUTION OF TAX ABATMENT AGREEMENT BETWEEN HARRIS COUNTY, PREFERRED FREEZER SERVICES HOUSTON PORT, LLC AND UNDER BEAR, LLC FOR PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE " ZONE C" Commissioner ntroduced an order and made a motion that the same be adopted. Commissioner econded the motion for adoption of the order. The motion, carrying with it the adoption of the order, prevailed by the following vote: Judge Emmett Comm. Lee Comm. Garcia Comm. Radack Comm. Eversole Yes No Abstain ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ The County Judge thereupon announced that the motion had duly and lawfully carried and that the order had been duly and lawfully adopted. The order thus adopted follows: RECITALS: The Texas Property Redevelopment and Tax Abatement Act, Texas Tax Code, Chapter 312, as amended, authorizes the commissioners court of a county to designate as a reinvestment zone, an area of the county that does not include area in the taxing jurisdiction of a municipality; Presented to Commissioner's Court MAR 2 0 2007 APPROVE Rnrnrrivri Vni Pane It is the policy of Harris County to encourage the redevelopment of areas wherein the creation and retention of new jobs and investment will benefit the area economy, provide needed opportunities, strengthen the real estate market and generate tax revenue to support local services; The Reinvestment Zone is an area within Harris County, Texas, generally described as a tract or parcel of land containing 10.115 acres of land, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract of record in the name of St. Joe Paper Company, filed in the Official Public Records of Real Property of Harris County, Texas, under Harris County Clerk's File Number M032856. The Zone is located within the boundaries of a number of taxing units whose ad valorem taxes are by law approved or levied by the Commissioners Court of Harris County, to wit: Harris County, the Harris County Flood Control District, the Port of Houston Authority of Harris County, Texas, and the Harris County Hospital District; Preferred Freezer Services Houston Port, LLC (the "Lessee") represents and warrants that it will create thirty-five (35) permanent full-time employment positions in the Reinvestment Zone no later than December 31, 2009, and continuing through the term of this Agreement; Under Bear, LLC (the "Lessor") and the Lessee each represent and warrant that they will invest at least $10,400,000 in Improvements, of which $9,900,000 is subject to abatement calculation, in the facility by December 31, 2008, which will result in an estimated increase in certified appraised value of at least $9,900,000 by January 1, 2009; The Commissioners Court further finds that the terms of the tax abatement agreement with Under Bear, LLC and Preferred Freezer Services Houston Port, LLC and the property subject to the said agreement satisfies the Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone Created in Harris County, as re -adopted by Commissioners Court on November 22, 2005, and effective January 1, 2006, and that: (1) there will be no substantial adverse effect on the provision of the County's tax base or services, and (2) the planned use of the property will not constitute a hazard to public safety, health or morals; and The Commissioners Court of Harris County desires to approve the County's entering into a tax abatement agreement with Under Bear, LLC and Preferred Freezer Services Houston Port, LLC, based on the aforesaid representations. NOW, THEREFORE, BE IT ORDERED BY THE COMMISSIONERS COURT OF HARRIS COUNTY, TEXAS THAT: Section 1. The recitals set forth in this order are true and correct. Section 2. This tax abatement is approved under the Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone Created in Harris County. Section 3. The Director of Harris County Community and Economic Development Department is hereby authorized to execute an agreement on behalf of Harris County, the Harris County Hospital District, the Harris County Flood Control District, and the Port of Houston Authority of Harris County, Texas, to abate a portion of any increase in the certified appraised value of the property described in the Agreement, per the Harris County Appraisal District, for the period of ten (10) years beginning on January 1, 2007. Section 4. The Clerk of Commissioners Court must transmit a copy of this Order and, upon execution by Harris County, any agreement entered into pursuant to the authorization provided herein, to the Harris County Appraisal District, to the Assessor and Collector of Taxes for Harris County, to the City Manager of the City of La Porte, and to the Chief Administrative Officers of the La Porte School District and the San Jacinto College District with a request that such taxing units notify the Assessor and Collector of Taxes for Harris County and the Harris County Appraisal District of any agreements by those entities to abate taxes on property located within the Reinvestment Zone, and transmit "Information Only" copies to the Harris County Hospital District, the Port of Houston Authority of Harris County, Texas, and the Texas Comptroller of Public Accounts. TAX ABATEMENT AGREEMENT FOR REAL PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE "ZONE C' - THE STATE OF TEXAS § COUNTY OF HARRIS § This Tax Abatement Agreement (the "Agreement") is made and entered into by and between the City of LaPorte, Texas, a municipal corporation (the "City), and Preferred Freezer Services Houston Port, LLC, ("Lessee"), a Delaware Corporation qualified to do business in the State of Texas and Under Bear, LLC. ("Lessor"), a Delaware Corporation and an owner of interests in real property located within the Zone (defined below). I. AUTHORIZATION This Agreement is authorized by the following: (a) the Texas Property Redevelopment and Tax Abatement Act, chapter 312 of the Texas Tax Code, as amended, (b) the City of La Porte Ordinance 2006- authorizing this agreement; and (c) Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone Created in La Porte, Texas, adopted by the La Porte City Council on February 14, 2005; Ordinance 2005-2809 (the "Guidelines"), attached hereto as Exhibit A and made a part hereof. All definitions set forth therein are applicable to this Agreement, except as otherwise expressly provided in this Agreement. H. DEFINITIONS As used in this Agreement, the following terms shall have the meanings set forth below: a) "Abatement" means the full or partial exemption from ad valorem taxes of certain real property (including fixed -in-place machinery & equipment) located on the Project Site within the Zone designated for economic development purposes. b) "Effective Date of Abatement" means January 1, 2007. c) "Base Year Value" means the 2006 certified appraised value, as determined by the Harris County Appraisal District ("HCAD"), for the real property located in the Reinvestment Zone "Zone C". d) "Improvements" means the buildings or portions thereof and other improvements, including fixed -in-place machinery and equipment, that are erected by the Lessor or Lessee in the Reinvestment Zone "Zone C" on or after August 16, 2006 and no later than December 31, 2008, and more fully described in the "Application for Tax Abatement in La Porte, Texas" (the "Application"), attached hereto as Exhibit B and made part hereof for all purposes. e) "Construction" means a material and substantial improvement of the property, which represents a separate and distinct construction operation undertaken for the purpose of erecting the Improvements. The period of Construction ends when the facility is available for occupancy, or on December 31, 2008, whichever occurs first. f) "Eligible Property" means the construction commencing on or after August 16, 2006, of buildings, structures, fixed machinery, equipment and process units, site improvements, and that office space and related fixed improvements necessary to the operation and administration of the facility, as set forth in the Investment Budget in the Application. The value of all property shall be the certified appraised value as finally determined by HCAD each year. g) "Ineligible Property" means any construction commencing before August 16, 2006 and after December 31, 2008, land, inventories, supplies, tools, furnishings and other forms of movable personal property, vehicles, vessels, aircraft, housing, hotel accommodations, deferred maintenance investments, improvements for generation or transmission of electrical energy not wholly consumed by a new facility or expansion, any improvements which are not integral to the operation of the facility, property that has an economic life of less than fifteen (15) years, any Improvements that have an economic life of less than fifteen (15) years, or any Improvements exempted by local, state or federal law. h) "Lessee" means Preferred Freezer Services Houston Port, LLC. a Delaware Corporation. i) "Lessor" means Under Bear, LLC, a Delaware Corporation j) "Permanent Employee" means a person who works a minimum of 1,750 hours per year exclusively in the Project within the Zone (excluding any contract employee, seasonal employee, full-time equivalent, or part-time employee), whose employment is both permanent and full-time, who receives industry -standard benefits, and whose employment is reflected in the quarterly report filed with the Texas Workforce Commission ("TWC") by the Lessor and/or Lessee (or Contractor, if applicable). k) "Project" means the 167,381 Square feet Building and Improvements to be built on a 10.15 acre tract of real property located at 10000 Porter Road, La Porte, Texas, known herein as the Project Site, and as more fully described in the Investment Budget included in Exhibit B, attached hereto and made a part hereof for all purposes. 1) "Project Site" means the 10.15 acre tract of real property to be improved, as more fully described in Exhibit C attached hereto and made a part hereof for all purposes. m) "Reinvestment Zone "Zone C"" means the 10.15 acre tract of real property located at 10000 Porter Road in La Porte, Texas, and as more fully described in Exhibit C attached hereto and made a part hereof for all purposes. III. SUBJECT PROPERTY The Project Site is in La Porte, Texas, generally described as 10.15 acres of land situated in the Enoch Brinson Survey, Abstract 5, Harris County, Texas and as more fully described in Exhibit C, attached hereto and made a part hereof for all purposes. Upon completion of the Improvements to be constructed and further described in Exhibit B, the Project will consist of a Public Cold Storage Distribution Center. In accordance with TEXAS TAX CODE Arne. §312.204(a), HCAD shall determine the Base Year Value of real property subject to the Abatement Agreement. The Chief Appraiser of HCAD shall annually certify the appraised value of the Project Site and any improvements to the Project Site subject to abatement under this Agreement. IV. REPRESENTATIONS AND CONTEMPLATED IMPROVEMENTS A. The Lessor and Lessee represents that Under Bear, LLC, presently owns fee simple title to the project site more fully described in Exhibit C, attached hereto and made a part hereof, and that the Improvements will be constructed on the project site within the boundaries of the Reinvestment Zone. . B. The Lessor and Lessee each represent that: (1) Preferred Freezer Services Houston Port, LLC. is the lessee of the real property located at 10000 Porter Road in LaPorte, Texas; and (2) the property is located within the boundaries of the zone. C. The Lessor and Lessee each represent and warrant that they have executed a valid Lease Agreement in Exhibit D for the construction of the Improvements described in the Investment Budget in Exhibit B, which will begin on or after August 16, 2006. D. The Lessor and Lessee represents and warrants that the proposed use of the Project is a Public Cold Storage Distribution Center. Additionally, the Lessor and Lessee agrees to maintain the Improvements in good repair and condition during the Abatement Period, and that construction of the Improvements shall be done substantially in conformity with the Investment Budget included in Exhibit B. E. The Lessor and Lessee represents and warrants they will invest at least $10.4 million in the Improvements by December 31, 2008, and that the certified appraised value of the Improvements, as determined by HCAD, shall be at least $9.9 million by January 1, 2009. F. The Lessee represents and warrants that they will create at least 35 new full-time, permanent employment positions on the Project Site no later than December 31, 2008. If at any time the Lessee fails to meet the total employment requirement, all taxes previously abated by virtue of this Agreement may be recaptured by the City and in such event such taxes shall be paid to the City, and the other political subdivisions that are parties to this Agreement, within sixty (60) days from demand. G. The Lessor and Lessee represents and warrants that they are not indebted to the City for any past due ad valorem taxes or other obligations. H. The Lessor and Lessee represents and warrants that they are in compliance with all state and federal laws designed to protect human health and welfare. The construction of the Improvements and operation of the facility shall be in compliance with all applicable federal, state and local laws, rules and regulations, including those designed to protect the environment from environmental hazards and degradation. V. VALUE AND TERM OF AGREEMENT A. The Lessor and Lessee shall make the Improvements in conformity with this Agreement as set out in the Investment Budget in Exhibit B attached hereto and made a part hereof for all purposes. Upon completion of the Improvements, the Lessor and Lessee shall use the Improvements as set forth in Section III of this Agreement. The Lessor and Lessee shall further maintain the Improvements in good repair and condition during the Abatement Period. B. The term of this tax abatement shall be for a period of ten (10) years beginning on January 1, 2007 ("Effective Date of Abatement"). In no case shall the term of this abatement exceed ten (10) years from the Effective Date of Abatement. The value of the Eligible Property shall be abated as follows: Year Abated 1-3 Including Construction 4 5 6 7-10 Percentage of Value 100% 80% 60% 40% 20% C. If the period of construction extends beyond December 31, 2008, two (2) years from the Effective Date of Abatement, the Improvements shall be considered completed for purposes of abatement. In no case shall the abatement period, inclusive of the construction period, exceed ten (10) years from the Effective Date of Abatement. VI. TAXABILITY During the period that this Abatement Agreement is in effect, taxes shall be payable as follows: (1) The certified appraised value of the Ineligible Property as determined each year by the Harris County Appraisal District will be fully taxable. (2) The tax abatement shall apply only to Eligible Property which value shall be abated in accordance with the percentage set forth in Section V (B), above. The abatement applied to Eligible Property in any year may not be greater than the amount by which the value of all property located in the Project Site, including Eligible Property, existing property and Ineligible Property, as listed on the appraisal roll for that year, exceeds the Base Year Value. VII. EVENT OF DEFAULT A. During the period covered by this Agreement, the City may declare a default hereunder upon the occurrence of any one or more of the following circumstances or events: 1. Failure by the Lessor and Lessee to commence construction of the Project Improvements specified in the Investment Budget of Exhibit B and Section IV of this Agreement by January 1, 2007, or 2. If the Lessor and Lessee fails, refuses, or neglects to comply with any of the terns of this Agreement; or 3. Failure by the Lessor and Lessee to comply with TEX. TAX CODE ANN. §22.01, as amended, requiring an annual rendition of all personal property with HCAD; or 4. If any representation made by the Lessor and Lessee in the Application or in this Agreement is false or misleading in any material respect. B. In the event the City declares the Lessor and Lessee to be in default of this Agreement, this Agreement shall terminate unless such default is cured in accordance with Subsection C below. If this Agreement is terminated, the City, and the other political subdivisions that are parties to this Agreement, shall be entitled to recapture all property taxes which have been abated as a result of this Agreement. Additionally, the Lessor and Lessee agrees to pay the City, and the other political subdivisions who are parties to this Agreement, interest at the rate of six percent (6%) per annum on any amount of previously abated taxes that are due to be recaptured under Section VII of this Agreement from the effective date of this Agreement. Interest for each year's abated taxes to be recaptured pursuant to Section VII of this Agreement shall be calculated beginning from the effective date of this agreement. Interest shall be calculated on the basis of a year of 360 days and the actual days elapsed (including the first day but excluding the last day) occurring in the period for which such interest is payable, unless such calculation would result in a usurious rate, in which case interest shall be calculated on the per annum basis of a year of 365 or 366 days, as applicable, and the actual days elapsed (including the first day but excluding the last day). C. The Lessor and Lessee is responsible for notifying the City of any default of this Agreement within ten (10) days of the default and must cure such default within sixty (60) days of the default ("Cure Period"). If the City determines that the Lessor and Lessee has failed to notify the City of any default of this Agreement as provided in this paragraph, the Agreement may be terminated immediately by the City and all taxes previously abated by virtue of this Agreement may be recaptured from Lessor and Lessee. In such event, such taxes must be paid to the City, and other political subdivisions that are parties to this Agreement, within sixty (60) days from the date of termination. If the City does not receive full payment within said sixty (60) days of termination of this Agreement, a penalty may be added, pursuant to section 312.205 (b)(6) of the Texas Tax Code, equal to fifteen percent (15%) of the total amount of taxes abated under this Agreement. D. In the event the Lessor and Lessee allows the ad valorem taxes owed the City to become delinquent or fails to timely and properly follow the legal procedures for its protest and/or contest, then this Agreement may be terminated and all taxes previously abated by virtue of this Agreement will be recaptured from the Lessor and Lessee. In such event, such taxes must be paid to the City, and other political subdivisions that are parties to this Agreement, within sixty (60) days from the date of termination. E. In the event the facility herein is completed and the Lessee begins operation, but subsequently discontinues operation after January 1, 2007, for any reason, for a period of 180 days during the abatement period, or one year in the event of a natural disaster, then this Agreement shall terminate. In the event of termination pursuant to the provisions of this paragraph, the abatement of taxes under this Agreement for the calendar year during which the facility no longer is in operation shall terminate and there shall be full recapture with penalties and interest as set out herein. Further, the Lessor and Lessee shall notify the City within ten (10) days of any discontinuation, stating the reason for the discontinuation and the projected length of discontinuation. Any taxes otherwise abated for the calendar year during which the Lessee no longer operates its Public Cold Storage Distribution Center, must be paid directly to the Tax Assessor -Collector for City for the benefit of the political subdivisions who are parties to this Agreement, within sixty (60) days from the date of discontinuation. VIII. ADMINISTRATION The City of La Porte Finance Department shall administer this Agreement on behalf of the City. The Lessor and Lessee shall allow employees and/or representatives of the City who have been designated by the City Manager's Office to have access to the Project Site during the term of this Agreement to inspect the facility to determine compliance with the terms and conditions of this Agreement. All inspections will be made only after giving 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 Project. All inspections will be made with one or more representatives of the Lessor and Lessee and in accordance with safety standards of the Lessor and Lessee. Upon completion of the Improvements, the City shall annually evaluate the Project to ensure compliance with the terms and provisions of this Agreement and shall report possible defaults to the City Council and City Attorney. The Lessee shall annually submit to HCAD and to the City, beginning on January 1, 2007, and continuing through the term of this Agreement, a January 1st employee -count for the Project Site which shall correspond to employment counts reported in the Employer's Quarterly Report to the Texas Workforce Commission filed by the Lessor, Lessee or Contractor, for the quarter ending on the previous December 31, and a separate notarized letter certifying: (1) the number of jobs created as a direct result of the Improvements, and (2) the Lessee is in compliance with the environmental and worker safety requirements for the preceding year. This information will be used to determine eligibility and value of abatement for that year and shall be subject to audit if requested by the City. The Lessee's failure to submit this information will render the Lessor and Lessee ineligible to receive abatement for that year. The Lessor and Lessee shall (a) obtain and maintain all required permits and other authorizations from the United States Environmental Protection Agency and the Texas Commission on Environmental Quality ("TCEQ") for the construction and operation of the Project facility and for the storage, transport, and disposal of solid waste; and (b) seek a permit from the TCEQ for all grandfathered units on the Project Site, if any, by filing with the TCEQ, within three years of receiving the abatement, a technically complete application for such a permit. The HCAD Chief Appraiser shall annually determine (i) the taxable value pursuant to the terms of this abatement for all property located in the Project Site and (ii) the full taxable value without abatement of the real and personal property comprising the Project Site. The Chief Appraiser shall record both the abated value and the full taxable value in the appraisal records. The full exemption value listed in the HCAD records shall be used to compute the amount of abated taxes that are required to be recaptured and paid in the event this Agreement is terminated in a manner that results in recapture. Each year, the Lessee shall furnish the HCAD Chief Appraiser with such information outlined in Chapter 22, TEXAS TAX CODE, as may be necessary for the administration of the tax abatement specified herein. If the City terminates this Agreement, it shall provide the Lessor and Lessee with written notice of such termination. If the Lessor and Lessee believes that such termination was improper, the Lessor and Lessee may file suit in the Harris County District Courts appealing such termination within sixty (60) days after receipt from the City of written notice of termination. If a suit is filed, the Lessor and Lessee shall remit to the City, and other political subdivisions who are parties to this Agreement, within sixty (60) days after receipt of the notice of termination, any additional and/or recaptured taxes as may be payable during the pendency of the litigation pursuant to the payment provisions of TEXAS TAX CODE ANN. § 42.08. If the final determination of the appeal increases the Lessor's and Lessee's tax liability above the amount of tax paid, the Lessor and Lessee r shall remit the additional tax to the City and other political subdivisions that are parties to this Agreement, pursuant to TEXAS TAX CODE ANN. § 42.42. If the final determination of the appeal decreases tax liability of the Lessor and Lessee, the City and other political subdivisions that are parties to this Agreement shall refund the difference between the amount of tax paid and the amount of tax for which the Lessor and Lessee is liable pursuant to TEX. TAX CODE ANN. § 42.43. IX. ASSIGNMENT The Lessor and Lessee may assign this Agreement to a new owner 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 this Agreement. Any assignment of this Agreement shall be to an entity that contemplates the same improvements to the property, except to the extent such improvements have been completed. No assignment shall be approved if the Lessor and Lessee or assignee is indebted to the City or the other political subdivision that are parties to this Agreement, for ad valorem taxes or other obligations. X. RENDITION This Agreement is specifically conditioned upon the Lessor and Lessee complying with TEX. TAX CODE ANN. § 22.01, as amended, requiring an annual rendition of all personal property with HCAD. XI. NOTICE Any notice required to be given under the provisions of this Agreement shall be in writing and shall be duly served when it shall have been deposited, enclosed in a wrapper with the proper postage prepaid thereon, and duly registered or certified, return receipt requested, in a United States Post Office, addressed to the City and the Lessor and Lessee at the following addresses. If mailed, any notice or communication shall be deemed to be received three (3) days after the date of deposit in the United States Mail. Unless otherwise provided in this Agreement, all notices shall be delivered to the following addresses: To Lessee: Preferred Freezer Services Houston Port, LLC. A Delaware Corporation John Galiher, President/ Chief Executive Officer 360 Avenue P Newark, NJ 07105 To Lessor: Under Bear, LLC a Delaware Corporation Dan Coon, Chief Operating Officer 360 Avenue P Newark, NJ 07105 To the City: Director, Department of Finance City of La Porte 604 West Fairmont Parkway LaPorte, Texas 77571 with a copy to: Office of the Chief Appraiser/Abatements Harris County Appraisal District 13013 Northwest Freeway Houston, Texas 77040-6305 Any party may designate a different address by giving the other party ten (10) days' written notice. XII. MERGER The parties agree that this Agreement contains all of the terms and conditions of the understanding of the parties relating to the subject matter hereof. All prior negotiations, discussions, correspondence and preliminary understandings between the parties and others relating hereto are superseded by this Agreement. XIII. APPLICABLE LAWS Each party to this Agreement understands and agrees that this Agreement shall be governed and construed according to the laws of the State of Texas. XIV. SEVERABILITY The parties agree that if any provision, section, subsection, sentence, clause or phrase contained in this Agreement is for any reason held to be unconstitutional, void or invalid, the remaining portions of this Agreement shall not be affected thereby and all provisions contained herein are deemed severable for that purpose. XV. DATE The City executes this Agreement by and through the City Manager acting pursuant to City of La Porte Ordinance 20064?& 'so authorizing. This Agreement shall not become enforceable until executed by all parties hereto. The Effective Date of Abatement shall be January 1, 2007. The parties in multiple originals, each, have executed this Agreement having full force and effect. APPROVED AS TO FORM: By: Kno4x. 6A City Attorney ATTEST: By: (i( . Martha A. Gillett City Secretary CITY OF LA PORTE �y 0 Date sited: Prefer ed Freezer er LLC e essee") A D law By: John Galiher es Houston Port, Corporation President/Chief Executive Officer Date Signed: 16 — 3 O c�c, Under Bear, LLC ("Lessor") A Delaware Corporation By: Dan Coon Chief Operating Officer Date Signed: % — �U - 0 6 XIII. APPLICABLE LAWS Each party to this Agreement understands and agrees that this Agreement shall be governed and construed according to the laws of the State of Texas. XIV. SEVERABILITY The parties agree that if any provision, section, subsection, sentence, clause or phrase contained in this Agreement is for any reason held to be unconstitutional, void or invalid, the remaining portions of this Agreement shall not be affected thereby and all provisions contained herein are deemed severable for that purpose. XV. DATE The City executes this Agreement by and through the City Manager acting pursuant to City of La Porte Ordinance 2006- -'so authorizing. This Agreement shall not fiecome enforceable until executed by all parties hereto. The Effective Date of Abatement shall be January 1, 2007. The parties in multiple originals, each, have executed this Agreement having full force and effect. APPROVED AS TO FORM: By: Knox W. Askin City Attorney ATTEST: By: Martha A. Gillett City Secretary ATTEST: By: Martha A. Gillett City Secretary CITY OF LA PORTE By: John Joerns, Interim City Manager Date LLC U Lessee") A By: John ervices Houston Port, President/Chief Executive Officer Date Signed: /0 - 36 d<;- Under G Under Bear, LLC ("Lessor") A Delaware Corporation By: �l Dan Coon Chief Operating Officer Date Signed: 1`0 - j 0 -C'G ORDINANCE NO 2006 -JRA AN ORDINANCE AUTHORZING THE DESIGNATION OF THE CITY OF LA PORTE REINVESTMENT ZONE "C" - "PREFERRED FREEZER SERVICES HOUSTON PORT, LLC."; MAKING FINDINGS OF FACT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDANIED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte has heretofore, on the 140' day of February, 2005, adopted Ordinance No. 2005-2809, an Ordinance establishing guidelines and criteria governing tax abatement agreements by the City of La Porte. A public hearing was held before the City Council of the City of La Porte on November 6, 2006, pursuant to notice as required by Section 312.201, Texas tax Codes, which notice was published not later than the 7`t' day before the date of the hearing in the Bayshore Sun, a newspaper having general circulation in the City of La Porte, a true and correct copy of said published notice being attached hereto as Exhibit "A" and incorporated by reference herein; and pursuant to notice delivered in writing not later than the 7'h day before the hearing, to the presiding officer of the La Porte Independent School District; to the County Judge of Harris County, Texas presiding officer of the Harris County Commissioners Court, on behalf of Harris County, the Harris County Flood Control District, the Port of Houston Authority of Harris County, and the Harris County Department of Education; and to the presiding officer of the San Jacinto College District; being all of the taxing units included in the proposed reinvestment zone. A copy of the notices to the La Porte Independent School District and Harris' County Commissioners Court, and the San Jacinto College District, are attached hereto as Exhibits `B", "C", and "D", respectively, incorporated by reference herein, and made a part hereof for all purposes. Section 2. Specifically, and without limiting the generality of the foregoing, the City Council of the City of La Porte finds, determines and declares that the subject property would be reasonably likely as a result of the designation as a reinvestment zone, 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. The City Council of the City of La Porte further finds, determines and declares that the improvements sought are feasible and practical and would be a benefit to the land to be included in the zone and to the City of La Porte after the expiration of an agreement into under Section 312.204, Texas Tax Code. Section 3. Accordingly, there is hereby established and designated a reinvestment zone in the City of La Porte to be know as the La Porte Reinvestment Zone "C" — Preferred Freezer Services Houston Port, LLC.", for commercial/industrial tax abatement, legally described by metes and bounds on Exhibit "E", and as more particularly shown on the location map attached hereto as Exhibit "F", Proposed La Porte Reinvestment Zone "C" — "Preferred Freezer Services Houston Port, LLC.", reference to which is here made for all purposes. This designation shall be effective for five (5) years from the effective date of this Ordinance. Section 4. This Ordinance shall serve as notice of the establishment of the La Porte Reinvestment Zone "C" by the City of La Porte, to every taxing unit that includes inside its boundaries property that is located within the boundaries of the Zone, and the City Secretary is hereby directed to send certified copies of this ordinance to all such affected taxing units. 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 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 6. This Ordinance shall be effective from and after its passage and approval, and it is so ordered. PASSED AND APPROVED, this day of ko , 2006. ATTEST: Mardia A. Gillett City Secretary ITY OF LA PCR -TE Alton E. Porte Mayor APPROVED: 6�/ /�r— / -7� ox W. Askins City Attorney EXHIBIT "A" Public Notice REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: November 6, 2006 Requested By: John Joerns Department: Administration Report: Resolution: Ordinance: X Exhibits: Ordinance 2006 - Exhibits: "A" Public Notice Budget Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YES NO Exhibits "B/C/D" Notices to LPISD, Harris County Commissioners Court and San Jacinto College District Exhibits "E" Legal Meets and Bounds Description Exhibits "F" Aerial of Proposed Reinvestment Zone "C" SUMMARY & RECOMMENDATION Prior to the creation of a reinvestment zone the City must publish a public notice regarding a public hearing and notify other taxing entities at least 7 days in advance of the hearing. The proposed Reinvestments Zone "C" is a site specific 10.115 Ac tract for Preferred Freezer Services Houston Port, LLC. 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 designation a 10.115 Ac tract as La Porte Reinvestment Zone "C" —'Preferred Freezer Services Houston Port, LLC." 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. Action Required by Council: Consider Ordinance designation a 10.115 Ac tract as La Porte Reinvestment Zone "C" — Preferred Freezer Services Houston Port, LLC. 40 O Dat STATE OF TEXAS } COUNTY OF HARRIS ) ( CITY OF LA PORTE ) ( PUBLIC NOTICE Notice is hereby given that a public hearing will be held before the City Council of the City of La Porte, City Hall, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 pm on Monday, November 6, 2006, at which public hearing interested persons shall be entitled to speak and present evidence for or against the designation of La Porte Reinvestment Zone "Zone C", for Preferred Freezer Services Houston Port, LLC, pursuant to Chapter 312, Texas Tax Code, as amended. The legal description of the property to comprise the proposed reinvestment zone is as follow; to -wit: Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all bearings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest corner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Pagel73 of the Deed Record of hams County, Texas, said corner being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch rod with cap set for the southwest corner and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. A location map of said property is available for inspection in the City Secretary's Office. THIS FACILITY HAS DISABILITY ACCOMMODATIONS AVAILABLE. REQUESTS FOR ACCOMMODATIONS OR INTERPRETIVE SERVICES AT MEETING SHOULD BE MADE 48 HOURS PRIOR TO THIS MEETING. PLEASE CONTACT CITY SECRETARY'S OFFICE AT 281-471-5020 OR TDD LINE 281-471-5030 FOR FURTHER INFORMATION. A POSSIBLE QUORUM OF CITY COUNCIL MEMBERS MAY BE PRESENT AT THIS MEETING AND PARTICIPATE IN DISCUSSIONS BUT NOT TAKE ANY ACTION. Martha A. Gillett, TRMC City Secretary Date Posted 'STAm F TEXAS COUNTY OF HARRIS. CITY OF LA PORTE PUBLIGNOTICE Notice -is hereby given that a Public hearing will. be held before the City Coon -of this City of La Porte, City Hall, 604 West Fair - moat . Parkway, La Porte, Texas . beginnipg at 6:00 pm on Monday, November 6, 2006,,; at which public hearing interested persons shall be "entitled to speak and present evidence for or against the designation of LaPorte Reinvestment' a 10 LL suant, 'tn Chapter 312, Texas Tax. ;`Code, as amended Th6.'legal de- scrio, of the property to comprise, the proposed re-_ investment zone `is as .fol- low•, to-wit Being a tract or parcel of i land containing 10.115 acres of land or 440,618 square feet, located: in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and part of that certain 207.049 acre tract (called 206.990 acre tract) of record in. the name of St. Joe . Paper Company in Harris County Clerk's File . (H.C.C.F.) Number . M032856; Said 10.115 acre tract being more particularly descri- bed escribed as follows (all bear- ings based on the souther- ly Right -of -Way line of the Souther Pacific -Railroad "bearing South 70 Degrees 15 Minutes - 00 Seconds East .per said deed): . BEGINNING at a broken concrete monument called and found at the south- west comer of both :the herein described tract and aforesaid 207.049 acre tract, for the northwest cor- ner of a called 19.566 acre tract of record in the name of Houston ;Lighting and Power Company in H.C.C.F Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston lighting and Power Company in Vol- ume 2355, Pagel 73 of the Deed Record of Harris County, Texas, said comer being on the west line of . aforesaid Enoch Brinson Survey and the east line of the- Nicholas Clopper Sur- vey; PRETIVE SERVICES P THENCE, coincident the MEETING SHOULD E south line of aforesaid MADE 48 HOURS FRIO 207.049 acre tract and the TO THIS MEETIN( north of aforesaid 19.566 PLEASE CONTACT CIT acre tract, North 89 De- . SECRETARY'S OFFIC grees 39 Minutes 06 Sec- AT 281-471-5020 OR TD onds East, a distance of TINE 281-471-5030 FO 3,740.00 feet to a 5/8 inch FURTHER INFORM) rod with cap set for the TION. southwest comer and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest comer of the herein descd- bed tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a -5/8 inch iron rod with cap set for the northeast comer of.the herein descd- bed tract; . 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast comer of herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. A location map of said property is available for in- spection in the City Secre- tary's Office. THIS FACILITY HAS DIS ABILITY ACCOMMODA- ' TIONS AVAILABLE. RE- QUESTS FOR ACCOM- MODATIONS OR INTER- A POSSIBLE QUORUI OF CITY COUNCIL MEh BERS MAY BE PRESEN AT THIS MEETING AN PARTICIPATE IN Dl: CUSSIONS BUT NO TAKE ANY ACTION. Martha A. Gillett, TRMC City Secretary . City of La Porte EXHIBIT "B" Notice to LPISD o� A y;. City of La Porte Established 1892 L.. 7'eXAS October 24, 2006 CM/RRR# 7005 0390 0004 8165 3522 Dr. Michael Say, Superintendent La Porte Independent School District Attn: Gene Horn, President LPISD School Board 1002 San Jacinto Street LaPorte, TX 77571 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Dr. Say: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, LaPorte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 9 (281) 471-5020 EXHIBIT "C" Notice to Harris County Commissioners Court J *ty of La Porte .. ....... .. Ci -Established 1892 6 b s October 24, 2006 CM/RRR# 7005 0390 0004 8165 3515 The Honorable Robert Eckels Harris County Judge Attn: David Turkel Director of Community & Economic Development 8410 Lantern Point Drive Houston, TX 77054 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Judge Eckels: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC. on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 9 (281) 471-5020 EXHIBIT "D" Notice to San Jacinto College District °� Ao �--0: City of La Porte Established 1892 �-' Texas October 24, 2006 CM/RRR# 7005 0390 0004 8165 3508 Dr. Bill Lindemann, Chancellor San Jacinto College Attn: Dr, Ruede Wheeler Board of Regents 4624 Fairmont Parkway, Suite 200 Pasadena, TX 77504 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Dr. Lindemann: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC. on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 9 (281) 471-5020 EXHIBIT "E" Legal Metes & Bounds METES AND BOUNDS DESCRIPTION 10.115 ACRE TRACT LOCATED IN THE ENOCH BRINSON SURVEY, A-5 HARRIS COUNTY, TEXAS Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St Joe Paper Company in Hams County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all beatings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes .00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest cornet of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F. Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Page 173 of the Deed Records of Harris County, Texas, said comer being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north line of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch iron rod with cap set for the southwest comer and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to 2.5/8 inch iron rod with cap set for the southeast corner of the herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. ©,. a KENNUH A. GRULL�R p: 1 b/Ns.e►.lee».s.......... j.... f' Ve 5478 )� G�$SS���'�• / — Reno & Associates July 13, 2006 Job No. 36-0404_10.1 acre EXHIBIT "F" Aerial of Proposed Reinvestment Zone "C" ORDINANCE NO. 2006- �qJ AN ORDINANCE APPROVING AND AUTHORIZING A TAX ABATEMENT AGREEMENT BETWEEN THE CITY OF LA PORTE AND PREFERRED FREEZER SERVICES HOUSTON PORT, LLC., A DELAWARE CORPORATION, FOR REAL PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE C; MAKING VARIOUS FINDINGS AND PROVISIONS RELATING TO THE SUBJECT; 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 hereby approves and authorizes the contract, agreement, or other undertaking described in the title of this ordinance, a copy of which is on file in the office of the City Secretary. The City Manager is hereby authorized to execute such document and all related documents on behalf of the City of La Porte. The City Secretary is hereby authorized to attest to all such signatures and to affix the seal of the City to all such documents. 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 Ordinance shall be effective from and after its passage and approval, and it is so ordered. PASSED AND APPROVED, this 6ch day of November, 2006. ity of La Porte By: Alton E. Porter, Mayor ATTEST: APPROVED: Martha A. Gillett Knox W. Askins City Secretary City Attorney EXHIBIT «A99 EXHIBIT "A" ORDINANCE NO. 2005- a�_ AN ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA PORTE BY REPEALING ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, SECTIONS 66-140 THROUGH 66-152 AND ADDING -ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, SECTIONS 66-140 THROUGH 66-151 INCLUSIVE; 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 repealing Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-140 through 66-152 and adding Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-140 through 66-151 inclusive, as follows, to -wit: ARTICLE V. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS Section 66-140. REDEVELOPMENT TAX ABATEMENT AUTHORIZED. (1) Creation of Reinvestment Zones. (a) A property tax abatement program is hereby created to be administered in accordance with V.T.C.A., Tax Code Ch. 312, as amended from time to time. Tax abatement shall only be allowed m 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 City Manager's Office. 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 - 1 - 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. (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 any one 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 constitutes 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 V.T.C.A., Tax Code Ch. 312, as amended, are not exhaustive and shall be supplemented by such further and additional goals, objectives, rules, standards and restrictions as the city council may from time to time impose. -2- (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 66-140 or section 66-145 of this chapter. (2) Agreement for property tax abatement. (a) Upon designation of a reinvestment zone, the city may enter into property tax abatement agreements with interested owners of taxable real property located within the reinvestment zone. The agreement shall be conditioned on the owner of the property making certain improvement or repairs to the property as outlined in Section 66-143, Application. (b) In addition to the.guidelines and criteria contained herein, 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 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 (c) Property in a reinvestment zone that is owned or leased by a member of the city council or 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 66-143; 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. Section 66-141. DEFINITIONS (a) "Abatement" means the full or partial exemption from ad valorem taxes of certain -3- real property (including fixed-in-place machinery & equipment) in a reinvestment zone designated for economic development purposes. (b) "Eligible Jurisdiction" means the city and any school district, college district or other taxing district eligible to abate its taxes according to Texas law that levies ad valorem taxes upon and provides services to property located within the proposed or existing reinvestment zone. (c) "Agreement" means a contractual agreement between a property owner and/or lessee and an eligible jurisdiction for the purposes of tax abatement. (d) 'Base Year Value" means the assessed value of eligible property on 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, or the sales price, if the property was conveyed subsequent to January 1, whichever is greater. (e) "Competitively -Sited Project" means a project where the applicant has completed a written evaluation of competing locations for expansion, relocation, or new operations, including identification of specific sites in those locations. (f) "Department" shall mean the department of finance of the city. (g) "Economic Life" means the number of years a property improvement is expected to be in service in a facility. (h) "Employee" means a person whose employment is both permanent and fulltime; who works for and is an employee of the Owner or an employee of a Contractor, who works a minimum of 1,750 hours per year exclusively within the Zone, who receives industry standard benefits, and whose employment is reflected in the Owner's (and Contractor's, if applicable) quarterly report filed with the Texas Workforce Commission; but excluding any direct contract (seasonal, part-time, and full-time equivalent). (i) "Expansion" means the addition of buildings, structures, fixed machinery or equipment for purposes of increasing production capacity. (j) "Facility" means property improvements completed or in the process of construction which together comprise an integral whole. (k) "Manufacturing Facility" means buildings and structures, including fixed -in-place 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. (I) "New Facility." means a property, previously undeveloped, which is placed into service by means other than or in conjunction with expansion or modernization. (m) "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 in the creation of new permanent employment and bring in new wealth. (n) "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. (o) "Regional Distribution Center Facility" means buildings and 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 outside the city. (p) "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 public where the majority of users reside outside the city. (q) "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 outside the city. (r) "Research Facility" means building and structures, including fixed machinery and equipment, used or to be used primarily for research or experimentation to improve or develop new tangible goods or materials or to improve or develop the production processes thereto. (s) "Research and Development Facility" means buildings and structures, including. fixed -in-place machinery and equipment, used or to be used primarily for research or experimentation to improve or develop current technology in biomedicine, electronics or pre -commercial emerging industries. Section 66-242. ABATEAMN'T AUTHORIZED (a) Authorized Facility. A facility may be eligible for abatement if it is a: Manufacturing Facility, Research Facility, Regional Distribution Center Facility, Regional Service Facility, Regional Entertainment Facility, Research and Development Facility or Other Basic Industry. (b) Creation of New Value. Abatement may only be granted for the additional value of eligible real property (including fixed -in-place machinery and equipment) listed in an abatement agreement between the City and the property owner and lessee (if required), subject to such limitations as City Council and the property tax code may require. (c) New and Existing Facilities. Abatement may be granted for new facilities, the expansion of existing facilities, or the improvement to existing facilities having the -5- effect of improving current environmental conditions. (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. The value of all property shall be the Certified Appraised Value for each year, as finally determined by the County Appraisal District ("HCAD"). (e) Ineligible Property. The following types of property shall be fully taxable and ineligible 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 the Section 66-142(f), "Owned/Leased Facilities"); - property which has an economic life of less than 15 years; property owned 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, or any property exempted by local, state or federal law. When such exempted property includes manufacturing machinery and equipment listed in the Investment Budget (as required in Section 3, "Application7% then the value of such property may not be included toward the achievement of the investment or valuation thresholds set out in the Tax Abatement Agreement. (f) Owned/Leased Facilities. If a leased facility is granted abatement the agreement shall be executed with the lessor and the lessee. (g) Value and Term of Abatement. A tax abatement shall be granted in accordance with the terms of a Tax Abatement Agreement, as follows: 1. Either with the January 1st valuation date immediately following the date of execution of the agreement or a subsequent January 1 st valuation date not more than three years after execution of a tax abatement agreement, but not beyond the completion of construction. Projects are eligible for abatement of new value, subject to an abatement cap: to be calculated as $1,000,000 per job created/retained times the number of such jobs as required in the abatement agreement. Such cap shall not exceed the increased value requirement as set out in the abatement agreement, and will be adjusted annually (as set out in Section 66-142 (j), "Taxability"). Under no circumstances will any facility be granted the benefit of a tax abatement for longer than ten (10) years. Value subject to abatement must remain greater than or equal to the contractually -defined "Minimum Value Requirement." To determine the amount of each year's exemption, the adjusted cap shall be multiplied by a sliding scale as follows: M Year Abated Percentage of Value for Proiects Percentage of Value for.Proiects 1-3 Including Construction 4 5 6 7-10 Creatine or Maintaining a Minimum of 25 Full-time Employees_ 100% 80% 60% 40% 20% Creatine or Maintaining a Minimum of 10 Full-time Employees. 50% 40% 30% 20% 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- $1,000,000 per job created/retained. (j) Taxability. From the execution of the abatement to the end of the agreement period, taxes shall be payable as follows: value of ineligible property (as provided in Section 66-142 (e), "Ineligible Property,") shall be fully taxable; 2. the non abatable real property within the reinvestment zone shall be fully taxable each year, 3. additional value of new eligible property shall be taxable in the manner described in Section 66-142 (g), "Value and Term of Abatement;" 4. when due to the employment formula (as described in Section 66-142 (g), "Value and Term of Abatement,"), the maximum amount eligible for abatement ("the cap") is less than the total value of the new facility, the amount of the cap will be reduced each year at the same rate as the taxable improvements are reduced in value from the previous year's value; and 5. each year's exemption will be computed by HCAD in the following manner: (a) The Base Property Value will be the current value of all real property plus fixed -in-place machinery and equipment within the zone that is not subject to abatement. (b) The Base Year Value will be subtracted from the value of the Abated Property plus the Base Property Value, the result to be called Current Amount Eligible for Abatement. In no case can this amount exceed the cap set'out in the abatement contract. (c) The Current Amount Eligible for Abatement is then multiplied by the abatement schedule set out in section 66-142 (g) to determine the amount of each year's exemption. (k) Environmental and Worker Safety 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 or lessee, 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 and worker safety laws by applicants at other facilities within the United States. Section 66-143. APPLICATION (a) Timely application: Any current or potential owner or lessee of taxable property in City must request a tax abatement by filing a completed application with the City prior to any public expression of a siting decision or any commitment (legal or financial) to the proposed project. (b) A complete application package for consideration of a tax abatement shall consist of: - a completed City Application form; • a completed narrative prepared in accordance with the template provided with the City Application and its instructions; • an "Investment Budget" detailing components and costs of the real property improvements .and fixed -in-place improvements -for which tax abatement is requested, including type, number, economic life, and eligibility for a tax exemption granted by the Texas .Commission on Environmental Quality ("TCEQ") (if known); • a map and legal description of the property; • a time schedule for undertaking and completing the proposed improvements; • a ten-year environmental and worker safety compliance history for all facilities located within the State of Texas and owned in whole or in part by applicants (as defined in Section 66-142(k), "Environmental and Worker Safety Qualification"); • a copy of the evaluation of competing locations, as described in Section 66-141, 'Definitions, - information Definitions, - information pertaining to the reasons that the requested tax abatement is necessary to ensure that the proposed project is built in City (Le., documentation supporting assertion that "but for" a tax abatement, the stated project could not be constructed in City); • copies of the immediately preceding quarterly report(s) filed with the Texas Workforce Commission, documenting the current number of permanent full- time employees, and full-time Contractor employees, if any, at the time the application is submitted; • financial and other information, as the City deems appropriate for evaluating the financial capacity and other factors of the applicant; • certification prepared by City Tax Assessor -Collector stating that all tax accounts within City are -paid on a current basis; • for- a leased facility, the applicant shall provide with the application the name and address of the lessor and a draft copy of the proposed lease, or option contract. In the event a lease or option contract has already been executed with owner of site, the document must include a provision whereby abatement applicant may terminate such contract without penalty or loss of earnest money, in the event that City does not grant a tax abatement. (c) Upon receipt of a completed application, the City shall notify in writing and provide a copy of the application to the presiding officer of the governing body of each eligible taxing juiisdictiori. (d) After receipt of an application for creation of a reinvestment zone and application for abatement, the City shall.determine whether the application qualifies for a tax abatement under the terms of these guidelines and criteria. Such determination may be delegated to an employee or City department. If it is determined that an application qualifies for abatement, it shall be recommended to the City Council that the applicant be notified in writing that subject to a public hearing, if applicable, and approval of a contract by City Council, the project qualifies for abatement. (e) The City shall not establish a reinvestment zone or 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. Property eligible for abatement includes only the new improvements that occur after the completion of an abatement agreement with City. Section 66-144. PUBLIC HEARING .AND APPROVAL (a) The City Council may not adopt an ordinance designating a reinvestment zone for the purposes of considering approval of a tax abatement 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 clearly identified on the City Council agenda at least 10 days prior to the hearing. The presiding officers of eligible Jurisdictions shall be notified in writing at least 7 days prior to the hearing. (b) At the public hearing, interested persons shall be entitled to speak and present written materials for or against the approval of the proposed project or tax abatement agreement. (c) In order to enter into a tax abatement agreement, the City Council must find that the terms of the proposed agreement meet these Guidelines and Criteria and that: 1. there will be no substantial adverse effect on the provision of the jurisdictions' service or tax base; and 2. the planned use of the property will not constitute a hazard to public safety, health or morals. Any variance to these guidelines must be approved by a vote of at least three-fourths (3/4) of the City Council. -10- Section 66-145. AGREEMENT After approval the City shall formally pass an ordinance and execute an agreement with the owner of the facility and lessee as required which shall include: (a) estimated value to be abated and the base year value; (b) percent of value to be abated each year as provided in Section 66-142 ("Abatement Authorized); (c) the commencement date and the termination date of abatement; (d) the proposed use of the facility; nature of construction, time schedule, survey, property description and improvement list; (e) contractual obligations in the event of default, violation of terms or conditions, delinquent taxes, recapture, administration and assignment as provided in Section 66-142 ("Abatement Authorized"), Section 66-146 ("Recapture"), Section 66-147 ("Administration"), and Section 66-148 ("Assignment"), or other provisions that may be required for uniformity or by state law; (f) amount of investment, increase in assessed value and number of jobs involved,. as provided in Section 66-142 ("Abatement Authorized"); (g) a requirement that the applicant annually submit to HCAD and City, a January ~ employee count for the abated facility which corresponds to employment counts reported in the facility's Employer's Quarterly Report to the Texas Workforce Commission for the quarter most recently ended at calendar year=end, and a separate notarized letter certifying the number of jobs created or retained as a- direct result of the abated improvements_and the number of employees in other as located within the City and the compliance with the environmental and. worker safety requirements in the agreement -for the preceding calendar year, for as of January 1. Submission shall be used to determine abatement eligibility for that year and shall be subject to audit if requested by the governing body. Failure to submit will result in the ineligibility to receive an abatement for that year, and (h) A requirement that the owner or lessee will (a) obtain and maintain all required permits and other authorizations from the United States Environmental Protection Agency and the TCEQ for the construction and operation of its facility and for the storage, transport and disposal of solid waste; and (b) seek a permit from the TCEQ for all grandfathered units on the site of the abated facility by.filing with the TCEQ, within three years of receiving the abatement, a technically complete application for such a permit. (i) Amount of investment and total permanent employees to be retained or created and total full-time equivalent jobs to be retained or created. -11- (j) 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. (k) A requirement that the company annually file the Form 111.28 with the appropriate County appraisal district to qualify for the abatement. (1) Limit the uses of the property consistent with the general purpose of encouraging development or redevelopment of the zone during the period that property tax exemptions are in. effect. (m) Contain each term agreed to by the owner of the property. (n) Require the owner of the property to certify annually to the governing body of each taxing -unit that the owner is in compliance with each applicable term of the agreement. (o) Provide that the governing body of the municipality may cancel or modify the agreement if the property owner fails to comply with the agreement. Such agreement normally shall be executed within 60 days after the applicant has forwarded all necessary information and documentation to the City Section 66-146: RECAPTURE (a) If the facility is completed and begins producing product or service, but subsequently discontinues producing product or service for any reason for a period of 180 days during the abatement period, or one year in the event of natural disaster, 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 otherwise abated for that calendar year shall be paid to the City within sixty (60) days from the date of termination.. The company or individual shall notify the City in writing at the address stated in the agreement within ten (10) days from any discontinuation, stating the reason for the discontinuation and the projected length of the discontinuation. If the City determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured and paid within sixty (60) days of the termination. (b) If the company or individual is in default according to the terms and conditions of its agreement; the company or individual shall notify the City in writing at the address stated in the agreement within ten (10) days from the default, and cure such default within sixty (60) days from the date of the default ("Cure Period"). If the City determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured, together with interest at 6% per annum calculated from the effective date of the agreement and paid within sixty (60) days of the termination. If -12- the City -does not receive full payment within said sixty (60) days, a penalty may be added, equal to 15% of the total amount abated. (c) If the company or individual allows its ad valorem taxes owed the City to become delinquent and fails to timely and properly follow the legal procedures for its protest and/or contest, the agreement then may be terminated, and all taxes previously abated by the agreement may be recaptured and paid within sixty (60) days of the termination, and penalties and interest may be assessed as set out in Section 66-146 ("Recapture"). Section 66-147. ADMINISTRATION (a) The Chief Appraiser of the County annually shall determine an assessment of the real 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 necessary for the abatement. Once value has been established, the Chief Appraiser shall notify the affected jurisdictions, which levies 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 to determine if the terms and conditions of the agreement are being met. All inspections will be made only after giving 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 the facility's safety standards. (c) Upon completion of construction, the City or the jurisdiction creating the reinvestment zone annually shall evaluate each facility receiving abatement to ensure compliance with the agreement and report possible violations to the contract and agreement to the City Council and the City Attorney and the affected jurisdictions which levy taxes. Section 66-148. ASSIGN ANT A tax abatement agreement may be assigned to a new owner or lessee of a 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 continues the same improvements or repairs to the property (except to the extent such improvements or repairs have been completed), and continues the same use of the facility as stated in the original Tax Abatement Agreement with the initial applicant. No assignment shall be approved -if the assignor or the assignee is indebted to the City for past due ad valorem taxes or other obligations. -13- Section 66-149. SUNSET PROVISION (a) These Guidelines and Criteria are effective February 14, 2005, and will remain in force until January 31, 2007, 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. . (b) This policy is mutually exclusive of existing industrial District Contracts and owners of real property in areas deserving of special attention as agreed by the affected jurisdictions. Section 66-150. LIIVIITATIONS The adoption of the guidelines and criteria by the city council of the City of LaPorte does not: (1) Limit the discretion of the city, council of the City of La Porte to decide whether to enter into a specific tax abatement agreement; (2) 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 (3) 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 66-151. NONAPPLICABLE AREAS; EXCEPTION 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 any existing Industrial District or Tax Increment Reinvestment Zone of the City of La Porte or any Industrial District or Tax Increment Reinvestment Zone, which may be created. 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 -14- times -during which this ordinance and the subject matter thereof has been discussed, considered and formally acted upon. The City Council fiirther ratifies, approves and confirms such written notice and the contents and posting thereof. Section 3. This Ordinance shall be effective from and after its passage and approval. PASSED AND APPORVED this le day of February, 2005. ATTEST: Martha A. Gillett City Secretary APPROVED: Knox W. ;skins City Attorney -15- CITY OF LA PORTE B Y Alton E. Porter Mayor EXHIBIT «B99 Application for Tax Abatement -La Porte, Texas - Prior to any public expression of a decision or any commitment (legal or financial) to the proposed project by applicant, a completed original of this application, including supporting documentation of competitive siting and narrative impact statement, must be submitted to the City of La Porte, 604 West Fairmont Parkway, La Porte, TX 77571. This application will become part of the Tax Abatement Agreement and any knowingly false representations will be grounds for terminating the application and/or voiding the agreement. The City will forward copies to other taxing jurisdictions, as may be required by Texas statute. PART I - APPLICANT INFORMATION Company Name: Preferred Freezer Services Application Date —8—/-10—L06 Headquarters Address: 360 Avenue P Newark NJ 07105 Local Address: 10000 Porter Rd. La Porte, TX Annual Sales: $79 million Local Phone: (305) 885-7077 ext. 3453 Total All Employees Worldwide: 500 Years in City of LaPorte: 0 Employees in La Porte at Present: 0 Attach description of Applicant Company, including brief history, corporate structure, financial statement, & annual report: PART II - PROJECT INFORMATION Location Address: 10000 Porter Rd. City: La Porte School District: La Porte ISD Legal Description*: Metes and Bounds Attached College District: San Jacinto Community College County: Harris Tax Acct. Numbers: 040-174-000-0006 *Attach plat survey, with a metes & bounds description, for project site. Project Description: FX -1 New Construction ❑ Expansion Attach statement fully explaining project, describe existing site and all proposed improvements, and provide "Investment Schedule" detailing improvements for which abatement is requested. Section A - Economic Development Type of Facility: ❑ Manufacturing ❑ Regional Entertainment 0 Regional Distribution ❑ Regional Service Center ❑ Research & Development ❑ Other Basic Industries Describe product or service to be provided: Public Cold Storage Distribution Center For regional facilities, provide market studies business plans or other materials demonstrating that the facility will serve a primary market which lies outside of La Porte. Section B - Variance Is the applicant seeking a variance to Guidelines? 0 Yes ❑ No If "yes" attach letter requesting and justifying the variance, with supplemental information. Application – Page 1 of 4 PART III - ECONOMIC INFORMATION Construction Estimate: Start Date _11_/_01_/_06_ Contract Amount $10,483,492 Completion Date _05 / O1 / 07_. Peak Construction Jobs _150_ Construction Man -Years 1 If Modernization: Estimated current economic life of structure N/A years Added economic life from modernization N/A years Permanent Job Creation/Retention in LaPorte: • Current employment in LaPorte: ^0 • Jobs to be Retained in LaPorte: 0 • Jobs to be created within 3 years from contract inception (by Jan. 1, 2009) _35 Company Representative to be Contacted: Name: Bill Forrester Title: Development Director, Telephone: (305) 885-7077 ext. 3453 Authorized Company Official: Authorized Signature: Name (please print): Dan Coon Title: Chief Operating Officer Application — Page 2 of 4 Preferred Freezer Services Narrative for Tax Abatement I. Introduction of the Company A. Describe the Company's business activities, locations, primary markets, history (when and where incorporated), headquarters location, parent or subsidiary companies, etc. Preferred Freezer Services started in 1989 in Perth Amboy, NJ. Preferred Freezer Services was formed with intentions of becoming a leader in the cold storage warehousing industry. Owner and President/CEO John Galiher acquired a 3 million cubic foot freezer in Perth Amboy that had 26 full time employees and. generated $3.6 million dollars in sales. As of August 2006 Preferred Freezer Services operates fourteen (14) cold storage warehouses with a total 74 million cubic feet of space. Sales for the 14 facilities generated $79 million in 2005. The fourteen (14) current Preferred Freezer Services cold storage warehouses are in the New York/New Jersey metropolitan surrounding area, Boston -Massachusetts surrounding area, Los Angeles -California surrounding area, Miami -Florida and Chicago -Illinois. Headquarters: Preferred Freezer Services 360 Avenue P Newark, NJ 07105 (973) 820-4040 (973) 820 -4004 -fax B. Names of Chief Officers: John Galiher-President/Chief Executive Officer Dan Coon -Chief Operating Officer Greg Robinson -Chief Financial Officer C. Provide copy of annual report or financial statements, as detailed in "Instructions". 2005 Audited Financial Report is attached. II. Reasons For Seeking Abatement Preferred Freezer Services is proud of the business model it has formulated over the past 17 years. Integral to that business model is the development of state of the art, standardized refrigerated warehouses that can be built quickly and efficiently. The financial burden of constructing and operating these state of the art facilities is substantial. The reason Preferred Freezer Services is seeking the tax abatement with La Porte and Harris County is the abatement will lessen the financial burden, which will allow us to stay competitive in the market place. III. Describe The Project A. Facts about the proposed site (acreage, cost, location, ownership). The proposed site is 10.1 acres in the Underwood Business Park in La Porte, TX. Cost of•the land will be $1,300,000. The current owner of the property is Clay Development and Construction, Inc. B. Type and value of proposed improvements (budget, list of fixed in place equipment to be included in the project). Preliminary construction costs of proposed 167,381 square foot facility: Hard Costs Foundations $ 250,500 Concrete Slabs 888,488 Structural Steel & Misc Iron 1,183,500 Racking 1,456,800 Tilt Up Concrete Walls 575,500 Siding & Insulation 580,510 Roofing 802,247 HVAC 81,200 Plumbing 145,800 Building Sprinkler 535,847 Electric 672,500 Refrigeration (see below) 854,800 FKI Condors (see below) 1,600,000 Glass and Glazing 52,100 Carpentry 96,900 Doors & Hardware 37,100 Drywall & Metal Stubs 138,400 Painting 68,400 Floor Covering 49,300 Ceilings 31,400 Overhead doors/Dock Equipment 157,200 Standby Generator 225,000 Total Hard Costs $ 10,483,492 Fixed Equipment List Refrigeration Equipment Equipment Condensing Unit Evaporators Compressors Starters for Compressors Condensers Refrigerant Vessels Heat Exchanger Motor Control Center Qty - 1 20 -freezer area 4 -dock area 1 -USDA inspection room 4 4 2 4 1 1 FKI Logistex Condor Cranes The Condor Cranes (8 for this facility) are fixed in place full mast material handling hybrid cranes. They are fixed in place within the freezer area. C. Project timeline -construction start date and end date. Preferred Freezer Services intends to start this project upon receipt of the tax abatement. Preferred Freezer Services is hopeful to have a start date of November 1, 2006 with a scheduled completion date of May 1, 2007. D. Environmental impact information must be provided, noting any anticipated impacts of the project on the environment, including, but not limited to, water quality, storm water and runoff, floodplain and wetlands, solid waste disposal, noise levels and air quality. Further, include history of environmental compliance by company as required in Guidelines and Criteria. Preferred Freezer Services is committed to maintaining an excellent environmental record and complying with all local, state and federal mandates. A Phase I environmental site assessment, which is attached, was performed on the 207 acres of property of which is the 9.2 acres Preferred Freezer Services plans on acquiring. There were no issues or findings noted. The proposed facility will not have an adverse affect on this site. Preferred Freezer Services believes in the environment and its surroundings, including neighbors. All equipment is indoors and therefore minimal noise levels go outside the facility. Even the back up generator is in an enclosure to eliminate engine noise. There will be an enclosed trash compactor on site to prevent rodents, odor and other issues relating to waste disposal. E. All other governmental assistance/incentives being requested or already approved for the project, (e.g. Industrial Development Bonds, Smart Job Funds). There are none at the time of application. IV. Jobs A. Provide information on current level of employment, including: (1) current payroll and (2) breakdown of current employment by zip code. Attach a copy of the company's most recent filing with the Texas Workforce Commission or other supporting documentation that can be used to determine actual employment level at time of application. There is no current level of employment with respect to this application because this will be the first facility in the state of Texas. B. Provide information on the projected job creation associated with the project, including: (1) new employee needs; e.g. skilled vs. non -skilled, level of education, experience, etc; (2) proposed pay scale; (3) any training which the company will provide to its new employees; (4) upward mobility opportunities, career tracks, etc. available to less educated and experienced workers; and (5) if this is a consolidation, information on number of "new hires" vs. "transfers". Also, provide information on construction jobs to be created by the project. 1) New employment needs for this facility will be 35 employees with 8 skilled workers (management, clerical and mechanical) and 27 non- skilled workers. 2) Proposed pay scale is as follows: Skilled salary workers $40,000-$90,000/year Skilled hourly workers $15.00-$22.00/hour Non -skilled hourly workers $10.00-$15.00/hour 3) Preferred Freezer Services provides all training for its employees, especially on the specialized equipment used in the freezer. Employees are often cross -trained for multiple jobs to maximize their productivity and provide opportunities for them. 4) Preferred Freezer Services strongly believes in promoting from within the company. Many employees with long tenures with the company are running current facilities. The expansion and growth of the company is directly due to the workers that make it successful and they have been rewarded. 5) This is not a consolidation project so all jobs are "new hires" Construction There will be an estimated 150 jobs created for this project. The trades involved will be masonry, electrical, ironworkers, pipe fitters, crane operators, skilled and unskilled laborers, construction supervisors, etc. V. Competition With Local Business A. List any competition or similar businesses in the area. There are 6 facilities in the Houston marketplace Preferred Freezer Services considers direct competition. Houston Central Industries 800 Middle Street Houston, TX 77003 P&O Cold Logistics 16110 E. Hardy Road Houston, TX 77032 International Trading Co., Inc. 300 Portwall St. Houston, TX 77029 Houston Central Industries 7080 Express Lane Houston, TX 770078 P&O Cold Logistics 502 North Broadway LaPorte, TX 77571 NOCS West Gulf, Inc. 9223 Highway 225 LaPorte, TX 77571 B. Describe how an abatement will impact competition with other similar businesses in the area. The abatement will impact our competitors in the sense that a competing company has built a facility in their area. The abatement will allow Preferred Freezer Services to compete with the facilities that are established in the area. It will help Preferred Freezer Services compete in pricing, which is directly related to the cost of building and operating a state of the art facility. The tax abatement will ease some of the cost and allow Preferred Freezer Services to establish themselves in the market. This facility will be servicing many of our nationwide customers who are interested in the Houston market as discussed below. VI. How will this project attract new business? Preferred Freezer Services has a tremendous following and loyal customer base that. has been the backbone of the growth of the company over the years. Through this loyal base of customers Preferred Freezer Services has expanded a local New Jersey warehouse into a nationwide corporation in currently in 5 states. This relationship has benefited Preferred Freezer's customers as well. In many scenarios customers have either expanded their businesses in the markets we have opened facilities in or started selling product in markets they had never prior to Preferred Freezer Services opening within said market. Preferred Freezer Services will also become a good customer for local vendors. All warehouse supplies are purchased on a local level within each market. VII. Provide information on alternative site considerations/and incentives being offered the company. Preferred Freezer Services is considering 2 other cities besides Houston to allocate funds to building in 2006/2007, Chicago, IL and Jacksonville, FL. Chicago, IL is attractive to Preferred Freezer Services because it would be the second facility in that market so we know what to expect out of it. We have the resources for employees, vendors and customers. Chicago also offers a Tax Increment Financing (TIF) in areas to attract businesses such as Preferred Freezer Services. TIF allows lower multiples on the assessed value and therefore lowers the taxes on the property, up to 66% reduction. Jacksonville, FL is also attractive to Preferred Freezer Services because of its location in the Southeast. Jacksonville's strategic location and expanding port is very similar to why Houston is attractive to Preferred.Freezer Services. The site in Jacksonville is in an Enterprise/Empowerment Zone offering hiring incentives, infrastructure grants and tax refunds. The estimated 3 -year savings will be close to $2,000,000. VIII. If leasing property, please attach copy of lease. If company owns or is purchasing land, please attach copy of deed or executed contract -option to purchase. There are none at time of application. EXHIBIT «C» METES AND BOUNDS DESCRIPTION 10.115 ACRE TRACT LOCATED IN THE ENOCH BRINSON SURVEY, A-5 HARRIS COUNTY, TEXAS Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all bearings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest corner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F. Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Page 173 of the Deed Records of Harris County, Texas, said corner being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north line of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch iron rod with cap set for the southwest comer and POINT OF BEGINNING of the herein described tract THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of the herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. ' Oq. F• Fir; s•••MM••• •..•. h•..I •.•I...... •.... KENNETH A. GRULLEP R4 _ 5478 Reno & Associates July 13, 2006 Job No. 36-0404_10.1 acre ORDINANCE NO. 2005- G M AN ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA PORTE BY REPEALING ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, SECTIONS 66-140 THROUGH 66-152 AND ADDING -ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, SECTIONS 66-140 THROUGH 66-151 INCLUSIVE; FINDING COMPLIANCE WITH TE[E OPYN Al F,TR TGS LAW; ArHr PROWIDING AN EFFEC'T'IVE 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 repealing Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-140 through 66-152 and adding Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-140 through 66-151 inclusive, as follows, to -wit: ARTICLE V. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS Section 66-140. REDEVELOPMENT TAX ABATEMENT AUTHORIZED. (1) Creation of Reinvestment Zones. (a) A property tax abatement program is hereby created to be administered in accordance with V.T.C.A., Tax Code Ch. 312, as amended from time to time. 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 City Manager's Office. 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 -1- 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. (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) ity (e) In determining whether an area qualifies as a reinvestment zone for the property tax abatement program, the city council shall use any one 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 constitutes 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 V.T.C_A., Tax Code Ch. 312, as amended, are not exhaustive and shall be supplemented by such further and additional goals, objectives, rules, standards and restrictions as the city council may from time to time impose. -2- (g) The designation of a reinvestment' zone hereunder shall expire live 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 66-140 or section 66-145 of this chapter. (2) Agreement for property tax abatement. (a) Upon designation of a reinvestment zone, the city may enter into property tax abatement agreements with interested owners of taxable real property located vrtthm the reinvestment zone. The agreement shall be conditioned on the owner of the property making certain improvement or repairs to the property as outlined in Section 66-143, Application. (b) In addition to the.widelines and criteria contained herein, 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 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 (c) Property in a reinvestment zone that is owned or leased by a member of the city council or 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) £ (1) The applicant has complied with the requirements of section 66-143; 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. Section 66-141. DEFI1VMONS (a) "Abatement" means the full or partial exemption from ad valorem taxes of certain real property (including fixed -in-place machinery & equipment) in a reinvestment zone designated for economic development purposes. (b) "Eligible Jurisdiction" means the city and any school district, college district or other taxing district eligible to abate its taxes according to Texas law that levies ad valorem taxes upon and provides services to property located within the proposed or existing reinvestment zone. (c) ",Agreement" means a contactual agreement between a property owner and/or I=see and an eligible jurisdiction for the purposes of tax abatement. (d) "Base Year Value" means the assessed value of eligible property on January I 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, or the sales price, if the property was conveyed subsequent to January 1, whichever is greater. (e) "Competitively -Sited Project" means a project where the applicant has completed a written evaluation of competing locations for expansion, relocation, or new operations, including identification of specific sites in those locations. (f) "Department" shall mean the department of finance of the city. (g) "Economic Life" means the number of years a property improvement is expected to be in service in a facility. (h) "Employee" means a person whose employment is both permanent and fulltime, who works for and is an employee of the Owner or an employee of a Contractor, who works a minimum of 1,750 hours per year exclusively within the Zone, who receives industry standard benefits, and whose employment is reflected in the Owner's (and Contractor's, if applicable) quarterly report filed with the Texas Workforce Commission; but excluding any direct contract (seasonal, part-time, and X11 -time equivalent). (i) "Expansion" means the addition of buildings, structures, fixed machinery or equipment for purposes of increasing production capacity. (j) "Facility" means property improvements completed or in the process of construction which together comprise an integral whole. (k) "Manufacturing Facility" means buildings and structures, including fixed -in-place 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. (1) "New Facility." means a property, previously undeveloped, which is placed into service by means other than or in conjunction with expansion or modernization. M (m) "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 in the creation of new permanent employment and bring in new wealth. (n) "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. (o) "Regional Distribution Center Facility" means buildings and 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 outside the city. (p) "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 public where the majority of users reside outside the city. (q) "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 outside the city. (r) "Research Facility" means building and structures, including fixed machinery and equipment, used or to be used primarily for research or experimentation to improve or develop new tangible goods or materials or to improve or develop the production processes thereto. (s) "Research and Development Facility" means buildings and structures, including. fixed -in-place machinery and equipment, used or to be used primarily for research or experimentation to improve or develop current technology in biomedicine, electronics or pre -commercial emerging industries. Section 66-142. ABATEMENT AUTHORIZED (a) Authorized Facility. A facility may be eligible for abatement if it is a: Manufacturing Facility, Research Facility, Regional Distribution Center Facility, Regional Senrice Facility, Regional Entertainment Facility, Research and Development Facility or Other Basic Industry. (b) Creation of New Value. Abatement may only be granted for the additional value of eligible real property (including fixed -in-place machinery and equipment) listed in an abatement agreement between the City and the property owner and Iessee (if required), subject to such limitations as City Council and the property tax code may require. (c) New and Existing Facilities. Abatement may be granted for new facilities, the expansion of existing facilities, or the improvement to existing facilities having the -5- effect of improving current environmental conditions. (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. The value of all property shall be the Certified Appraised Value for each year, as finally determined by the County Appraisal District ("HCAD"). (e) Ineligible Property. The following types of property shall be fully taxable and ineligible 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 the Section 66-142(f), "Owned/Leased Facilities"), property which has an economic life of less than 15 years; property owned 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, or any property exempted by local, state or federal law. When such exempted property includes manufacturing machinery and equipment listed in the Investment Budget (as required in Section 3, "Application' ); then the value of such property may not be included toward the achievement of the investment or valuation thresholds set out in the Tax Abatement Agreement. (f) Owned/Leased Facilities. If a leased facility is granted abatement the agreement shall be executed with the lessor and the lessee. (g) Value and Term of Abatement. A tax abatement shall be granted in accordance with the terms of a Tax Abatement Agreement, as follows: 1. Either with the January 1st valuation date immediately following the date of execution of the agreement or a subsequent January lst valuation date not more than three years after execution of a tax abatement agreement, but not beyond the completion of construction. Projects are eligible for abatement of new value, subject to an abatement cap: to be calculated as $1,000,000 per job created/retained times the number of such jobs as required in the abatement agreement. Such cap shallnot exceed the increased value requirement as set out in the abatement agreement, and will be adjusted annually (as set out in Section. 66-142 0), "Taxability"). Under no circumstances will any facility be granted the benefit of a tax abatement for longer than ten (10) years. Value subject to abatement must remain greater than or equal to the contractually -defined "Minimum Value Requirement." To determine the amount of each year's exemption, the adjusted cap shall be multiplied by a sliding scale as follows: Year Abated 1-3 Including Construction 4 5 6 7-10 Percentage of V_ alue for Proi ects Creating or Maintaining a Minimum of 25 Full-time Employees 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% 2. No tax abatement s',1ald be given in any year in .which the facili -, fails to meet The contractually defined " finimum 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 shallnot 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 $1,000,000 per job created/retained. (j) Taxability. From the execution of the abatement to the end of the agreement period, taxes shall be payable as follows: value of ineligible property (as provided in Section 66-142 (e), "Ineligible Property,") shall be fully taxable; 2. the non abatable real property within the reinvestment zone shall be fully taxable each year, 3. additional value of new eligible property shall be taxable in the manner described in Section 66-142 (g), "Value and Term of Abatement;" 4. when due to the employment formula (as described in Section 66-142 (g), "Value and Term of Abatement,"), the maximum amount eligible for abatement ("the cap") is less than the total value of the new facility, the amount of the cap will be reduced each year at the same rate as the taxable improvements are reduced in value from the previous year's value; and 5. each year's exemption will be computed by HCAD in the following manner: (a) The Base Property Value will be the current value of all real property plus fixed -in-place machinery and equipment within the zone that is not subject to abatement. (b) The Base Year Value will be subtracted from the value of the Abated Property plus the Base Property Value, the result to be called Cuirent Amount Eligible for Abatement. In no case can this amount exceed the cap set,out in the abatement contract. (c) The Current Amount Eligible for Abatement is then multiplied by the abatement schedule set out in section 66-142 (g) to determine the amount of each year's exemption. (k) Environmental and Worker Safety 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 or lessee, 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 and worker safety laws by applicants at other facilities within the United States. Section 66-143. APPLICATION (a) Timely application: Any current or potential owner or lessee of taxable property in City must request a tax abatement by filing a completed application with the City prior to any public expression of a siting decision or any commitment (legal or financial) to the proposed project. (b) A complete application package for consideration of a tax abatement shall consist of: • a completed City Application form; • a completed narrative prepared in accordance withm.e template provided with the City Application and its instructions; • an "Investment Budget" detailing components and costs of the real property improvements .and fixed -in-place improvements -for which tax abatement is requested; including type, number, economic life, and eligibility for a tax exemption granted by the Texas .Commission on Environmental Quality ("TCEQ") (if known); a map and legal description of the property; • a time schedule for undertaking and completing the proposed improvements; - a ten-year environmental and worker safety compliance history for all facilities located within the State of Texas and owned in whole or in part by applicants (as defined in Section 66-142(k), "Environmental and Worker Safety Qualification'; • a copy of the evaluation of competing locations, as described in Section 66-141, "Definitions, - information pertaining to the reasons that the requested tax abatement is necessary to ensure that the proposed project is built in City (i.e., documentation supporting assertion that "but for" a tax abatement, the stated project could not be constructed in City); copies of the immediately preceding quarterly report(s) filed with the Texas Workforce Commission, documenting the current number of permanent full- time employees, and full-time Contractor employees, if any, at the time the application is submitted; • financial and other information, as the City deems appropriate for evaluating the financial capacity and other factors of the applicant; • certification prepared by City Tax Assessor -Collector stating that all tax accounts within City are -paid on a current basis; • for a leased facility, the applicant shall provide with the application the name and address of the lessor and a draft copy of the proposed lease, or option contract. In the event a lease or option contract has already been executed with owner of site, the document must include a provision whereby abatement applicant may terminate such contract without penalty or loss of earnest money, in the event that City does not grant a tax abatement. (c) Upon receipt of a completed application, the City shall notify in writing and provide a copy of the application to the presiding officer of the governing body of each eligible taxing jurisdiction. (d) After receipt of an application for .creation of a reinvestment zone and application for abatement, the City shall.determine whether the application qualifies for a tax abatement under the terms of these guidelines and criteria. Such determination may be delegated to an employee or City department. If it is determined that an application qualifies for abatement, it shall be recommended to the City Council that the applicant be notified in writing that subject to a public hearing, if applicable, and approval of a contract by City Council, the project qualifies for abatement. (e) The City shall not establish a reinvestment zone or 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. Property eligible for abatement includes only the new improvements that occur after the completion of an abatement agreement with City. Section 66-144. PUBLIC HEARING AND APPROVAL (a) The City Council may not adopt an ordinance designating a reinvestment zone for the purposes of considering approval of a tax abatement 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 clearly identified on the City Council agenda at least 10 days prior to the hearing. The presiding officers of eligible Jurisdictions shall be notified in writing at least 7 days prior to the hearing. (b) At the public hearing, interested persons shall be entitled to speak and present written materials for or against the approval of the proposed project or tax abatement agreement. (c) Ia order to enter into a tax abatement agreement; the City Council must find that the terms of the proposed agreement meet these Guidelines and Criteria and that: there will be no substantial adverse effect on the provision of the jurisdictions' service or tax base; and 2. the planned use of the property will not constitute a hazard to public safety, health or morals. Any variance to these guidelines must be approved by a vote of at least three-fourths (3/4) of the City Council. -10- Section 66-145. AGREEMENT After approval the City shall formally pass an ordinance and execute an agreement with the owner of the facility and lessee as required which shall include: (a) estimated value to be abated and the base year value; (b) percent of value to be abated each year as provided in Section 66-142 ("Abatement Authorized); (c) the commencement date and the termination date of abatement; (d) the proposed use of the facility, nature of construction, time schedule, survey, property description and improvement list; (e) contractual obligations in the event of default, violation of terms or conditions, delinquent taxes, recapture, administration and assignment as provided in Section 66-142 ("Abatement Authorized % Section 66-146 ('Recapture"), Section 66-147 ("Administration"), and Section 66-148 ("Assignment"), or other provisions that may be required for uniformity or by state law; (f) amount of investment, increase in assessed value and number of jobs involved,. as provided in Section 66-142 ("Abatement Authorized"); (g) a requirement that the applicant annually submit to HCAD and City, a January employee count for the abated facility which corresponds to employment counts reported in the facility's Employer's Quarterly Report to the Texas Workforce Commission for the quarter most recently ended at calendar year-end, and a separate notarized letter certifying the number of jobs created or retained as a- direct result of the abated improvements. and the number of employees in other facilities located within the City and the compliance with the environmental and. worker safety requirements in the agreement -for the preceding calendar year, for as of January 1. Submission shall be used to determine abatement eligibility for that year and shall be subject to audit if requested by the governing body. Failure to submit will result in the ineligibility to receive an abatement for that year; and (h) A requirement that the owner or lessee will (a) obtain and maintain all required . permits and other authorizations from the United States Environmental Protection Agency and the TCEQ for the construction and operation of its facility and for the storage, transport and disposal of solid waste; and (b) seek a permit from the TCEQ for all grandfathered units on the site of the abated facility by filing with the TCEQ, within three years of receiving the abatement, a technically complete application for such a permit. (i) Amount of investment and total permanent employees to be retained or created and total full-time equivalent jobs to be retained or created. -II- (j) 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. (k) A requirement that the company annually file the Form 111.28 with the appropriate County appraisal district to qualify for the abatement. (1) Limit the uses of the property consistent with the general purpose of encouraging development or redevelopment of the zone during the period that property tax exemptions are in. effect. (m) Contain each term agreed to by the owner of the property. (n) Require the owner of the property to certify annually to the governing body of each taxing -unit that the owner is in compliance with each applicable term of the agreement. (o) Provide that the governing body of the municipality may cancel or modify the agreement if the property owner fails to comply with the agreement. Such agreement normally shall be executed within 60 days after the applicant has forwarded all necessary information and documentation to the City Section 66-146: RECAP'T'URE (a) If the facility is completed and begins producing product or service, but subsequently discontinues producing product or service for any reason for a period of 180 days during the abatement period, or one year in the event of natural disaster, 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 otherwise abated for that calendar year shall be paid to the City within sixty (60) days from the date of termination. The company or individual shall notify the City in writing at the address stated in the agreement within ten (10) days from any discontinuation, stating the reason for the discontinuation and the projected length of the discontinuation. If the City determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured and paid within sixty (60) days of the termination. (b) If the company or individual is in default according to the terms and conditions of its agreement, the company or individual shall notify the City in writing at the address stated in the agreement within ten (10) days from the default, and cure such default within sixty (60) days from the date of the default ("Cure Period"). if the City determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured, together with interest at 6% per annum calculated from the effective date of the agreement and paid within sixty (60) days of the termination. If -12- the City -does not receive full payment within said sixty (60) days, a penalty may be added, equal to 15 % of the total amount abated. (c) If the company or individual allows its ad valorem taxes owed the City to become delinquent and fails to timely and properly follow the legal procedures for its protest and/or contest, the agreement then maybe terminated, and all taxes previously abated by the agreement may be recaptured and paid within sixty (60) days of the termination, and penalties and interest may be assessed as set out in Section 66-146 ("Recapture"). Section. 66-147. ADAT NISTRATION (a) The Chief Appraiser of the County annually shall determine an assessment of the real and personal property comprising the reinvestment zone. Each year, the company or individual receiving abatement shall famish the assessor with such information as may be necessary for the abatement. Once value has been established, the Chief Appraiser shall notify the affected jurisdictions, which levies 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 to determine if the terms and conditions of the agreement are being met. All inspections will be made only after giving 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 the facility's safety standards. (c) Upon completion of construction, the City or the jurisdiction creating the reinvestment zone annually shall evaluate each facility receiving abatement to ensure compliance with the agreement and report possible violations to the contract and aggeement to the City Council and the City Attorney and the affected jurisdictions which levy taxes. Section 66-148. ASSIGNMENT A tax abatement agreement may be assigned to a new owner or lessee of a 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 continues the same improvements or repairs to the property (except to the extent such improvements or repairs have been completed), and continues the same use of the facility as stated in the original Tax Abatement Agreement with the initial applicant. No assignment shall be approved if the assignor or the assignee is indebted to the City for past due ad valorem taxes or other obligations. -1�- Section 66-149. SUNSET PROVISION (a) These Guidelines and Criteria are effective February 14, 2005, and will remain in force until January 31, 2007, at which time all tax abatement contracts created pursuantto 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. . (b) This policy, is mutually exclusive of existing Industriaf District Contracts and owners of real property in areas deserving of special attention as agreed by the affected jurisdictions. Section 66-150. LIlbII.'TATIONS The adoption of the guidelines and criteria by the city council of the City of La Porte does not: (1) Limit the discretion of the city council of the City of La Porte to decide whether to enter into a specific tax abatement agreement; (2) 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 (3) 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 66-151. NONAPPLICABLL' SAS; EXCEPTION The city council of the City of La Porte hereby establishes the policy of the City of La Porte, ax that tabatement agreement applications will not be accepted for areas within the any existing Industrial District or Tax Increment Reinvestment Zone of the City of La Porte or any Industrial District or Tax Increment Reinvestment Zone, which may be created. 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 -14- J 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 Ordinance shall be effective from and after its passage and approval. PASSED AND APPORVED this 14'h day of Febraary, 2005. ATTEST: dV Martha A. Gillett City Secretary APPROVED: GA 1 Knox W. Askin City Attorney -15- CITY OF LA PORTE B Alton E. Porter Mayor ORDINANCE NO 2006 - AN ORDINANCE AUTHORZING THE DESIGNATION OF THE LA PORTE REINVESTMENT ZONE "C" - "PREFERRED FREEZER SERVICES HOUSTON PORT, LLC."; MAKING FINDINGS OF FACT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDANIED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte has heretofore, on the 14" day of February, 2005, adopted Ordinance No. 2005-2809, an Ordinance establishing guidelines and criteria governing tax abatement agreements by the City of La Porte. A public hearing was held before the City Council of the City of La Porte on November 6, 2006, pursuant to notice as required by Section 312.201, Texas tax Codes, which notice was published not later than the 7th day before the date of the hearing in the Bayshore Sun, a newspaper having general circulation in the City of LaPorte, a true and correct copy of said published notice being attached hereto as Exhibit "A" and incorporated by reference herein; and pursuant to notice delivered in writing not later than the 7th day before the hearing, to the presiding officer of the La Porte Independent School District; to the County Judge of Harris County, Texas presiding officer of the Harris County Commissioners Court, on behalf of Harris County, the Harris County Flood Control District, the Port of Houston Authority of Harris County, and the Harris County Department of Education; and to the presiding officer of the San Jacinto College District; being all of the taxing units included in the proposed reinvestment zone. A copy of the notices to the La Porte Independent School District and Harris - County Commissioners Court, and the San Jacinto College District, are attached hereto as Exhibits "B", "C", and "D", respectively, incorporated by reference herein, and made a part hereof for all purposes. Section 2. Specifically, and without limiting the generality of the foregoing, the City Council of the City of La Porte finds, determines and declares that the subject property would be reasonably likely as a result of the designation as a reinvestment zone, 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. The City Council of the City of La Porte further finds, determines and declares that the improvements sought are feasible and practical and would be a benefit to the land to be included in the zone and to the City of La Porte after the expiration of an agreement into under Section 312.204, Texas Tax Code. Section 3. Accordingly, there is hereby established and designated a reinvestment zone in the City of La Porte to be know as the La Porte Reinvestment Zone "C" — Preferred Freezer Services Houston. Port, LLC.", for commercial/industrial tax abatement, legally described by metes and bounds on Exhibit "E", and as more particularly shown on the location map attached hereto as Exhibit "F", Proposed La Porte Reinvestment Zone "C" —'Preferred Freezer Services Houston Port, LLC.", reference to which is here made for all purposes. This designation shall be effective for five (5) years from the effective date of this Ordinance. Section 4. This Ordinance shall serve as notice of the establishment of the La Porte Reinvestment Zone "C" by the City of La Porte, to every taxing unit that includes inside its boundaries property that is located within the boundaries of the Zone, and the City Secretary is hereby directed to send certified copies of this ordinance to all such affected taxing units. 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 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 6. This Ordinance shall be effective from and after its passage and approval, and it is so ordered. PASSED AND APPROVED, this V/ --I day of oUt , 2006. M= OITY OF LA P By: Alton E. Porte Mayor ATTEST: APPROVED- c ,!tel / ` -7� Mart a A. Gillett ox W. Askin City Secretary City Attorney ORDINANCE NO. 2006- AISP AN ORDINANCE APPROVING AND AUTHORIZING A TAX ABATEMENT AGREEMENT BETWEEN THE CITY OF LA PORTE AND PREFERRED FREEZER SERVICES HOUSTON PORT, LLC., A DELAWARE CORPORATION, FOR REAL PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE C; MAHING VARIOUS FINDINGS AND PROVISIONS RELATING TO THE SUBJECT; 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 hereby approves and authorizes the contract, agreement, or other undertaking described in the title of this ordinance, a copy of which is on file in the office of the City Secretary. The City Manager is hereby authorized to execute such document and all related documents on behalf of the City of LaPorte. The City Secretary is hereby authorized to attest to all such signatures and to affix the seal of the City to all such documents. 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 fizrther ratifies, approves and confirms such written notice and the contents and posting thereof. Section 3. This Ordinance shall be effective from and after its passage and approval, and it is so ordered. PASSED AND APPROVED, this 6th day of November, 2006. —City of La Porte By: f y Alton E. Porter, Mayor ATTEST: APPROVED: Martha A. Gillett Knox W. Askins 1 City Secretary City Attorney HARRIS COUNTY, TEXAS COMMISSIONERS COURT: ROBERT ECKELS COUNTYJUDGE EL FRANCO LEE COMMISSIONER, PRECINCT 1 SYLVIA R. GARCIA COMMISSIONER, PRECINCT 2 STEVE RADACK COMMISSIONER, PRECINCT 3 JERRY EVERSOLE COMMISSIONER, PRECINCT 4 c/o Community and Economic Development Department 8410 Lantern Point Drive Houston, Texas 77054 (713)578-2000 Approved by Commissioners Court on November 22, 2005 GUIDELINES AND CRITERIA FOR GRANTING TAX ABATEMENT IN A REINVESTMENT ZONE CREATED IN HARRIS COUNTY Whereas, the creation and retention of job opportunities that bring new wealth is the highest civic priority; and Whereas, new jobs and investment will benefit the area economy, provide needed opportunities, strengthen the real estate market and generate tax revenue to support local services; and Whereas, the communities within Harris County must compete with other localities across the nation currently offering tax inducements to attract jobs and investments; and 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 Whereas, any tax incentives should not have a substantial adverse effect on the competitive position of existing companies operating in Harris County; and Whereas, tax incentives should not be used to attract those industries that have demonstrated a lack of commitment to protecting our environment, but should be used to encourage projects designed to protect our environment; and Whereas, the abatement of property taxes, when offered to attract primary jobs in industries which bring in money from outside a community instead of merely re -circulating dollars within a community, has been shown to be an effective method of enhancing and diversifying an area's economy; and Whereas, Texas law requires any eligible taxing jurisdiction to establish Guidelines and Criteria as to eligibility for tax abatement agreements prior to granting any 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 Harris County; and HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS PAGE 1 OF 1 I Effective Jan. 1, 2006, through Dec. 31, 2007 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 abatement agreements; Now, therefore, be it resolved that Harris County does hereby adopt these Guidelines and Criteria for granting tax abatement in reinvestment zones in Harris County. SECTION I DEFINITIONS (a) "Abatement" means partial exemption from ad valorem taxes of certain real property (including fixed -in-place machinery & equipment) in a reinvestment zone designated for economic development purposes. (b) "Eligible Jurisdiction" means Harris County and any municipality, school district, college district or other taxing district eligible to abate its taxes according to Texas law that levies ad valorem taxes upon and provides services to property located within the proposed or existing reinvestment zone. (c) "Agreement" means a contractual agreement between a property owner and/or lessee and an eligible jurisdiction for the purposes of tax abatement. (d) "Base Year Value" means the assessed value of eligible property on January 1 preceding the effective date of the agreement, plus the agreed upon value of eligible property improvements made after January 1 but before the effective date of the agreement, or the sales price, if the property was conveyed subsequent to January 1, whichever is greater. (e) "Competitively -Sited Project" means a project where the applicant has completed a written evaluation of competing locations for expansion, relocation, or new operations, including identification of specific sites in those locations. (f) "Economic Life" means the number of years a property improvement is expected to be in service in a facility. (g) "Employee" means a person whose employment is both permanent and fulltime, who works for and is an employee of the Owner or an employee of a Contractor, who works a minimum of 1,750 hours per year exclusively within the Zone, who receives industry - standard benefits, and whose employment is reflected in the Owner's (and Contractor's, if applicable) quarterly report filed with the Texas Workforce Commission; but excluding any direct contract (seasonal, part-time, and full-time equivalent). - (h) "Expansion" means the addition of buildings, structures, fixed machinery or equipment for purposes of increasing production capacity. (i) "Facility" means property improvements completed or in the process of construction which together comprise an integral whole. HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 2 OF 11 (j) "Manufacturing Facility" means buildings and structures, including fixed -in-place 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. (k) New Facility" means a property, previously undeveloped, which is placed into service by means other than or in conjunction with expansion or modernization. (1) "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 in the creation of new permanent employment and bring in new wealth. (m)"Regional Distribution Center Facility" means buildings and 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. (n) "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 public where the majority of users reside at least 100 miles from any part of Harris County. (o) "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. (p) "Research Facility" means building and structures, including fixed machinery and equipment, used or to be used primarily for research or experimentation to improve or develop new tangible goods or materials or to improve or develop the production processes thereto. (q) "Research and Development Facility" means buildings and structures, including fixed -in-place machinery and equipment, used or to be used primarily for research or experimentation to improve or develop current technology in biomedicine, electronics or pre -commercial emerging industries. SECTION 2 ABATEMENT AUTHORIZED (a) Authorized Facility. A facility may be eligible for abatement if it is a: Manufacturing Facility, Research Facility, Regional Distribution Center Facility, Regional Service Facility, Regional Entertainment Facility, Research and Development Facility or Other Basic Industry. HARRIS CouNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 3 OF 11 (b) Creation of New Value. Abatement may only be granted for the additional value of eligible real property (including fixed -in-place machinery and equipment) listed in an abatement agreement between the County and the property owner and lessee (if required), subject to such limitations as Commissioners Court and the property tax code may require. (c) New and Existing Facilities. Abatement may be granted for new facilities, the expansion of existing facilities, or the improvement to existing facilities having the effect of improving current environmental conditions. (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. The value of all property shall be the Certified Appraised Value for each year, as finally determined by the Harris County Appraisal District ("HCAD"). (e) Ineligible Property. The following types of property shall be fully taxable and ineligible 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 the Section 2(f), "Owned/Leased Facilities"); property with an economic life of less than 15 years; property owned 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, or any property exempted by local, state or federal law. When such exempted property includes manufacturing machinery and equipment listed in the Investment Budget (as required in Section 3, "Application"), then the value of such property may not be included toward the achievement of the investment or valuation thresholds set out in the Tax Abatement Agreement. (f) Owned/Leased Facilities. If a leased facility is granted abatement the agreement shall be executed with the lessor and the lessee. (g) Value and Term of Abatement. A tax abatement shall be granted in accordance with the terms of a Tax Abatement Agreement, as follows: Either with the January 1st valuation date immediately following the date of execution of the agreement or a subsequent January 1 st valuation date not more than three years after execution of a tax abatement agreement, but not beyond the completion of construction. Projects are eligible for abatement of new value, subject to an abatement cap: to be calculated as $1,000,000 per job created/retained times the number of such jobs as required in the abatement agreement. Such cap shall not exceed the increased value requirement as set out in the abatement agreement, and will be adjusted annually (as set out in Section 20), "Taxability"). To determine the amount of each year's exemption, the adjusted cap shall be multiplied by up to 50 percent in each year, up to a total of ten (10) years. Under no circumstances will any HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 4 OF 11 facility be granted the benefit of a tax abatement for longer than ten (10) years. Value of eligible property must remain greater than or equal to the contractually - defined "Minimum Value Requirement." 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 2(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 $1,000,000 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 25 people within the reinvestment zone upon completion of the contractually -defined "Employment Period;" 3. must be competitively -sited; and 4. must be shown not to solely or primarily have the effect of transferring employment from one part of Harris County to another. (i) Research and Development Projects. If the planned project improvement is for a biomedical 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 $1,000,000 per job created/retained. (j) Taxability. From the execution of the abatement to the end of the agreement period, taxes shall be payable as follows: 1. value of ineligible property (as provided in Section 2(e), "Ineligible Property,") shall be fully taxable; HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 5 OF 11 2. the non abatable real property within the reinvestment zone shall be fully taxable each year; 3. additional value of new eligible property shall be taxable in the manner described in Section 2 (g),"Value and Term of Abatement;" 4. if the Base Year Value decreases during the term of the tax abatement or if an additional exemption is granted by the state or federal government, then the maximum amount of abatable value to be used in abatement calculation ("the cap") will be reduced each year at the same rate; and 5. each year's exemption will be computed by HCAD in the following manner: (a) The Base Property Value will be the current value of all real property plus fixed - in -place machinery and equipment within the zone that is not subject to abatement. (b) The Base Year Value will be subtracted from the value of the Abated Property plus the Base Property Value, the result to be called Current Amount Eligible for Abatement. In no case can this amount exceed the lower of the cap (as set out in the abatement contract) or the adjusted cap (as described in Section 2(i)4., "Taxability"). (c) The Current Amount Eligible for Abatement is multiplied by up to 50 percent to determine the amount of each year's exemption. Environmental and Worker Safety 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 or lessee, 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 and worker safety laws by applicants at other facilities within the United States. SECTION 3 APPLICATION (a) Timely application: Any current or potential owner or lessee of taxable property in Harris County must request a tax abatement by filing a completed application with the Community and Economic Development Department ("CEDD") prior to any public expression of a siting decision or any commitment (legal or financial) to the proposed project. HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAx ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 6 OF 11 (b) A complete application package for consideration of a tax abatement shall consist of: • a completed Harris County Application form; • a completed narrative prepared in accordance with the template provided with the Harris County Application and its instructions; • an "Investment Budget" detailing components and costs of the real property improvements and fixed -in-place improvements for which tax abatement is requested, including type, number, economic life, and eligibility for a tax exemption granted by the Texas Commission on Environmental Quality ("TCEQ") (if known); • a map and legal description of the property; • a time schedule for undertaking and completing the proposed improvements; • a ten-year environmental and worker safety compliance history for all facilities located within the State of Texas and owned in whole or in part by applicants (as defined in Section 2(k), "Environmental and Worker Safety Qualification"); • a copy of the evaluation of competing locations, as described in Section 1, "Definitions; • information pertaining to the reasons that the requested tax abatement is necessary to ensure that the proposed project is built in Harris County (i.e., documentation supporting assertion that "but for" a tax abatement, the stated project could not be constructed in Harris County); • copies of the immediately preceding quarterly report(s) filed with the Texas Workforce Commission, documenting the current number of permanent full-time employees, and full-time Contractor employees, if any, at the time the application is submitted; • financial and other information, as the County deems appropriate for evaluating the financial capacity and other factors of the applicant; • certification prepared by Harris County Tax Assessor -Collector stating that all tax accounts within Harris County are paid on a current basis; • for a leased facility, the applicant shall provide with the application the name and address of the lessor and a draft copy of the proposed lease, or option contract. In the event a lease or option contract has already been executed with owner of site, the document must include a provision whereby abatement applicant may terminate such contract without penalty or loss of earnest money, in the event that Harris County does not grant a tax abatement. HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 7 OF ll (c) Upon receipt of a completed application, the CEDD shall notify in writing and provide a copy of the application to the presiding officer of the governing body of each eligible taxing jurisdiction. (d) After receipt of an application for creation of a reinvestment zone and application for abatement, the County shall determine whether the application qualifies for a tax abatement under the terms of these guidelines and criteria. Such determination may be delegated to an employee or County department. If it is determined that an application qualifies for abatement, it shall be recommended to the Commissioners Court that the applicant be notified in writing that subject to a public hearing, if applicable, and approval of a contract by Commissioners Court, the project qualifies for abatement. (e) The County shall not establish a reinvestment zone or 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. Property eligible for abatement includes only the new improvements that occur after the completion of an abatement agreement with Harris County or participating municipality. SECTION 4 PUBLIC HEARING AND APPROVAL (a) The Commissioners Court may not adopt a resolution designating a reinvestment zone for the purposes of considering approval of a tax abatement 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 clearly identified on the Commissioners Court agenda at least 13 days prior to the hearing. The presiding officers of eligible jurisdictions shall be notified in writing at least 7 days prior to the hearing. (b) At the public hearing, interested persons shall be entitled to speak and present written materials for or against the approval of the proposed project or tax abatement agreement. (c) In order to enter into a tax abatement agreement, the Commissioners Court must find that the terms of the proposed agreement meet these Guidelines and Criteria and that: 1. there will be no substantial adverse effect on the provision of the jurisdictions' service or tax base; and 2. the planned use of the property will not constitute a hazard to public safety, health or morals. Any variance to these guidelines must be approved by a vote of at least three-fourths (314) of the Commissioners Court. HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAx ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 8 OF 1 1 SECTION 5 AGREEMENT After approval the County shall formally pass a resolution and execute an agreement with the owner of the facility and lessee as required which shall include: (a) estimated value to be abated and the base year value; (b) percent of value to be abated each year as provided in Section 2 ("Abatement Authorized); (c) the commencement date and the termination date of abatement; (d) the proposed use of the facility; nature of construction, time schedule, survey, property description and improvement list; (e) contractual obligations in the event of default, violation of terms or conditions, delinquent taxes, recapture, administration and assignment as provided in Section 2 ("Abatement Authorized"), Section 6 ("Recapture"), Section 7 ("Administration"), and Section 8 ("Assignment"), or other provisions that may be required for uniformity or by state law; (f) amount of investment, increase in assessed value and number of jobs involved, as provided in Section 2 ("Abatement Authorized"); (g) a requirement that the applicant annually submit to HCAD and CEDD, a January employee count for the abated facility which corresponds to employment counts reported in the facility's Employer's Quarterly Report to the Texas Workforce Commission for the quarter most recently ended at calendar year-end, and a separate notarized letter certifying the number of jobs created or retained as a direct result of the abated improvements and the number of employees in other facilities located within Harris County and the compliance with the environmental and worker safety requirements in the agreement for the preceding calendar year, for as of January 1. Submission shall be used to determine abatement eligibility for that year and shall be subject to audit if requested by the governing body. Failure to submit will result in the ineligibility to receive an abatement for that year; and (h) A requirement that the owner or lessee will (a) obtain and maintain all required permits and other authorizations from the United States Environmental Protection Agency and the TCEQ for the construction and operation of its facility and for the storage, transport and disposal of solid waste; and (b) seek a permit from the TCEQ for all grandfathered units on the site of the abated facility by filing with the TCEQ, within three years of receiving the abatement, a technically complete application for such a permit. Such agreement normally shall be executed within 60 days after the applicant has forwarded all necessary information and documentation to the County. HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS PAGE 9 OF 1 I Effective Jan. 1, 2006, through Dec. 31, 2007 SECTION 6 RECAPTURE (a) If the facility is completed and begins producing product or service, but subsequently discontinues producing product or service for any reason for a period of 180 days during the abatement period, or one year in the event of natural disaster, 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 otherwise abated for that calendar year shall be paid to the County within sixty (60) days from the date of termination. The company or individual shall notify the County in writing at the address stated in the agreement within ten (10) days from any discontinuation, stating the reason for the discontinuation and the projected length of the discontinuation. If the County determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured and paid within sixty (60) days of the termination. (b) If the company or individual is in default according to the terms and conditions of its agreement, the company or individual shall notify the County in writing at the address stated in the agreement within ten (10) days from the default, and cure such default within sixty (60) days from the date of the default ("Cure Period"). If the County determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured, together with interest at 6% per annum calculated from the effective date of the agreement and paid within sixty (60) days of the termination. If the County does not receive full payment within said sixty (60) days, a penalty may be added, equal to 15% of the total amount abated. (c) If the company or individual allows its ad valorem taxes owed the County to become delinquent and fails to timely and properly follow the legal procedures for its protest and/or contest, the agreement then may be terminated, and all taxes previously abated by the agreement may be recaptured and paid within sixty (60) days of the termination, and penalties and interest may be assessed as set out in Section 6 ("Recapture"). SECTION 7 ADMINISTRATION (a) The Chief Appraiser of the County annually shall determine an assessment of the real and personal property comprising the reinvestment zone. Each year, the company or individual receiving abatement shall furnish the Chief Appraiser with such information as may be necessary for the abatement. Once value has been established, the Chief Appraiser shall notify the affected jurisdictions, which levies taxes of the amount of the assessment. (b) The agreement shall stipulate that employees and/or designated representatives of the County will have access to the reinvestment zone during the term of the abatement to inspect the facility to determine if the terms and conditions of the agreement are being met. All HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAx ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 10 OF 11 inspections will be made only after giving 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 the facility's safety standards. (c) Upon completion of construction, the County or the jurisdiction creating the reinvestment zone annually shall evaluate each facility receiving abatement to ensure compliance with the agreement and report possible violations to the contract and agreement to the Commissioners Court and the County Attorney and the affected jurisdictions which levy taxes. SECTION 8 ASSIGNMENT A tax abatement agreement may be assigned to a new owner or lessee of a facility with the written consent of the Commissioners Court, 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 continues the same improvements or repairs to the property (except to the extent such improvements or repairs have been completed), and continues the same use of the facility as stated in the original Tax Abatement Agreement with the initial applicant. No assignment shall be approved if the assignor or the assignee is indebted to the County for past due ad valorem taxes or other obligations. SECTION 9 NON -COMPETE AGREEMENTS Tax abatement shall not be granted for projects whose competitive siting consists only of counties that have agreed with Harris County to forego the use of tax incentives to compete for such projects. SECTION 10 SUNSET PROVISION These Guidelines and Criteria are effective January 1, 2006, and will remain in force until December 31, 2007, at which time all tax abatement contracts created pursuant to these provisions will be reviewed by the County to determine whether the goals have been achieved. Based on that review, the Guidelines and Criteria will be modified, renewed, or eliminated. This policy is mutually exclusive of existing Industrial District Contracts and owners of real property in areas deserving of special attention as agreed by the affected jurisdictions. Re -adopted November 22, 2005, by Harris County Commissioners Court HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE I 1 OF 11 PART I - APPLICANT INFORMATION Application Date –08—/-16—/-2006— Company Name: Preferred Freezer Services Headquarters Address: 360 Avenue P City: Newark State: NJ Zip: 07105 Local Address: 10000 Porter Rd La Porte TX Zip: 77571 Annual Sales: $79 million Local Phone Number• (3051885-7077 ext. 3453 State Incorporation: DE Years in Harris County: 0 Total All Emplofees Worldwide: 500 Employees in Texas: 0 Employees in Harris County at Present: 0 Attach description of Applicant Company, including brief history, corporate structure, financial statement, & annual report, if incorporated in what state corporation designated: PART II - PROJECT INFORMATION Location Address: 10000 Porter Rd City La Porte Zip: 77571 Key Map # 539J School District: La Porte Legal Description* • Metes and Bounds Attached College District: San Jacinto Community College County: Harris Tax Acct. Numbers: 040-174-000-0006 NAICS #: 49312 * Attach plat survey, with a metes & bounds description, for project site. Project Description: 0 New Construction ❑ Expansion Attach statement fully explaining project, describe existing site and all proposed improvements, provide "Investment Schedule " detailing improvements for which abatement is requested Section A - Economic Development Type of Facility: ❑ Manufacturing ❑ Regional Entertainment 0 Regional Distribution ❑ Regional Service Center ❑ Research & Development ❑ Other Basic Industries Describe product or service to be provided: Public Cold Storage Distribution Center For re%donal facilities provide market studies business plans or other materials demonstrating that the facility is intended to serve a primary market which lies at least 100 miles outside of Harris County. Section B - Variance Is the applicant seeking a variance to Guidelines? 0 Yes ❑ No If "yes" attach letter requesting and justifying the variance, with supplemental information. PART III - ECONOMIC INFORMATION Construction Estimate: Start Date —11–/-01 /_06_ Contract Amount $ 10,483,492 Completion Date —05–/-01—/-07— Peak Construction Jobs _150_ Construction Man -Years 1 If Modernization: Estimated current economic life of structure N/A years Added economic life from modernization N/A years Permanent Job Creation/Retention in Harris County: • Current employment:--O— Jobs mployment:0Jobs to be Retained: 0 • Jobs to be created after 3 years from contract inception _35 at Jan 1, 2009_ 10 Value on January 1 preceding abatement $1,300,000 $0 $1,300,000 Estimated value of new abatable investment $10,483,492 $10,483,492 Estimated value not subject to abatement (e.g., Inventor) $400,000 $400,000 Estimated value of property subject to ad valorem tax at end of abatement Company Representative to be Contacted: Name: Bill Forrester Title: Development Director Telephone: (305) 885-7077 ext 3453 Authorized Company Official: Authorized Signature: Name and Title: Dan Coon/COO To: Jean Anne Spivey, Harris County Project Manager From: Bill Forrester, Preferred Freezer Services CC: John Galiher, President/CEO; Dan Coon, COO Date: August 16, 2006 Re: Early Start Variance Dear Jean, This letter is intended to inform you that Preferred Freezer Services is requesting an "early start" variance with respect to the application this is accompanying. This request is being made at the recommendation of the Greater Houston Partnership because Preferred Freezer Services would like to begin construction as close to November 1, 2006 as possible. GHP recommended requesting the variance to ensure Preferred Freezer Services would be able to begin construction once approved for the tax abatement and not have to wait for an executed contract. Preferred Freezer Services understands the company would take sole responsibility of moving forward without an executed contract in regards to construction. Preferred Freezer Services is confident if approved for the abatement an executed contract will soon follow. Preferred Freezer Services also understands it does take time with any legal document and would not want the project to delay start while all the details are ironed out in the contract. Please contact me if you have any questions or comments. Best regards, Bill Forrester Preferred Freezer Services 13700 NW 115th Ave. Medley, FL 33304 (305) 885-7077 ext. 3453 bforrester@preferredfreezer.com 13700 N.W. 115th Ave. - Medley, FL 33178 Phone: (305) 885-7077 - Fax: (305) 885-7377 Preferred Freezer Services Narrative for Tax Abatement I. Introduction of the Company A. Describe the Company's business activities, locations, primary markets, history (when and where incorporated), headquarters location, parent or subsidiary companies, etc. Preferred Freezer Services started in 1989 in Perth Amboy, NJ. Preferred Freezer Services was formed with intentions of becoming a leader in the cold storage warehousing industry. Owner and President/CEO John Galiher acquired a 3 million cubic foot freezer in Perth Amboy that had 26 full time employees and generated $3.6 million dollars in sales. As of August 2006 Preferred Freezer Services operates fourteen (14) cold storage warehouses with a total 74 million cubic feet of space. Sales for the 14 facilities generated $79 million in 2005. The fourteen (14) current Preferred Freezer Services cold storage warehouses are in the New York/New Jersey metropolitan surrounding area, Boston -Massachusetts surrounding area, Los Angeles -California surrounding area, Miami - Florida and Chicago -Illinois. Headquarters: Preferred Freezer Services 360 Avenue P Newark, NJ 07105 (973) 820-4040 (973) 820 -4004 -fax B. Names of Chief Officers: John Galiher-President/Chief Executive Officer Dan Coon -Chief Operating Officer Greg Robinson -Chief Financial Officer C. Provide copy of annual report or financial statements, as detailed in "Instructions". 2005 Audited Financial Report is attached. IIS Reasons For Seeking Abatement Preferred Freezer Services is proud of the business model it has formulated over the past 17 years. Integral to that business model is the development of state of the art, standardized refrigerated warehouses that can be built quickly and efficiently. The financial burden of constructing and operating these state of the art facilities is substantial. The reason Preferred Freezer Services is seeking the tax abatement with La Porte and Harris County is the abatement will lessen the financial burden, which will allow us to stay competitive in the market place. Describe The Project A. Facts about the proposed site (acreage, cost, location, ownership). The proposed site is 10.1 acres in the Underwood Business Park in La Porte, TX. Cost of the land will be $1,300,000. The current owner of the property is Clay Development and Construction, Inc. B. Type and value of proposed improvements (budget, list of fixed in place equipment to be included in the project). Preliminary construction costs of proposed 167,381 square foot facility: Hard Costs Foundations $ 250,500 Concrete Slabs 888,488 Structural Steel & Misc Iron 1,183,500 Racking 1,456,800 Tilt Up Concrete Walls 575,500 Siding & Insulation 580,510 Roofing 802,247 HVAC 81,200 Plumbing 145,800 Building Sprinkler 535,847 Electric 672,500 Refrigeration (list below) 854,800 FKI Condors (see below) 1,600,000 Glass and Glazing 52,100 Carpentry 96,900 Doors & Hardware 37,100 Drywall & Metal Stubs 138,400 Painting 68,400 Floor Covering 49,300 Ceilings 31,400 Overhead doors/Dock Equipment 157,200 Standby Generator 225,000 Total Hard Costs $ 10,483,492 Fixed Equipment List Refrigeration Equipment Equipment Qty. Condensing Unit 1 Evaporators 20 -freezer area 4 -dock area 1 -USDA inspection room Compressors 4 Starters 4 Condensers 2 Refrigerant Vessels 4 Heat Exchanger 1 Motor Control Center 1 FKI Logistex Condor Cranes The Condor Cranes (8 for this facility) are fixed in place full mast material handling hybrid cranes. They are fixed in place within the freezer area. C. Project timeline -construction start date and end date. Preferred Freezer Services intends to start this project upon receipt of the tax abatement. Preferred Freezer Services is hopeful to have a start date of November 1, 2006 with a scheduled completion date of May 1, 2007. D. Environmental impact information must be provided, noting any . anticipated impacts of the project on the environment, including, but not limited to, water quality, storm water and runoff, floodplain and wetlands, solid waste disposal, noise levels and air quality. Further, include history of environmental compliance by company as required in Guidelines and Criteria. Preferred Freezer Services is committed to maintaining an excellent environmental record and complying. with all local, state and federal mandates. A Phase I environmental site assessment, which is attached, was performed on the 207 acres of property of which is the 9.2 acres Preferred Freezer Services plans on acquiring. There were no issues or findings noted. The proposed facility will not have an adverse affect on this site. Preferred Freezer Services believes in the environment and its surroundings, including neighbors. All equipment is indoors and therefore minimal noise levels go outside the facility. Even the back up generator is in an enclosure to eliminate engine noise. There will be an enclosed trash compactor on site to prevent rodents, odor and other issues relating to waste disposal. E. All other governmental assistance/incentives being requested or already approved for the project, (e.g. Industrial Development Bonds, Smart Job Funds). There are none at the time of application. IV. Jobs A. Provide information on current level of employment, including: (1) current payroll and (2) breakdown of current employment by zip code. Attach a copy of the company's most recent filing with the Texas Workforce Commission or other supporting documentation that can be used to determine actual employment level at time of application. There is no current level of employment with respect to this application because this will be the first facility in the state of Texas. B. Provide information on the projected job creation associated with the project, including: (1) new employee needs; e.g. skilled vs. non -skilled, level of education, experience, etc; (2) proposed pay scale; (3) any training which the company will provide to its new employees; (4) upward mobility opportunities, career tracks, etc. available to less educated and experienced workers; and (5) if this is a consolidation, information on number of "new hires" vs. "transfers". Also, provide information on construction jobs to be created by the project. 1) New employment needs for this facility will be 35 employees with 8 skilled workers (management, clerical and mechanical) and 27 non -skilled workers. 2) Proposed pay scale is as follows: Skilled salary workers $40,000-$90,000/year Skilled hourly workers $15.00-$22.00/hour Non -skilled hourly workers $10.00-$15.00/hour 3) Preferred Freezer Services provides all training for its employees, especially on the specialized equipment used in the freezer. Employees are often cross -trained for multiple jobs to maximize their productivity and provide opportunities for them. 4) Preferred Freezer Services strongly believes in promoting from within the company. Many employees with long tenures with the company are running current facilities. The expansion and growth of the company is directly due to the workers that make it successful and they have been rewarded. 5) This is not a consolidation project so all jobs are "new hires". Construction There will be an estimated 150 jobs created for this project. The trades involved will be masonry, electrical, ironworkers, pipe fitters, crane operators, skilled and unskilled laborers, construction supervisors, etc. V. Competition With Local Business A. List any competition or similar businesses in the area. There are 6 facilities in the Houston marketplace Preferred Freezer Services considers direct competition. Houston Central Industries 800 Middle Street Houston, TX 77003 P&O Cold Logistics 16110 E. Hardy Road Houston, TX 77032 International Trading Co., Inc 300 Portwall St. Houston, TX 77029 Houston Central Industries 7080 Express Lane Houston, TX 770078 P&O Cold Logistics 502 North Broadway LaPorte, TX 77571 NOCS West Gulf, Inc. 9223 Highway 225 LaPorte, TX 77571 B. Describe how an abatement will impact competition with other similar businesses in the area. The abatement will impact our competitors in the sense that a competing company has built a facility in their area. The abatement will allow Preferred Freezer Services to compete with the facilities that are established in the area. It will help Preferred Freezer Services compete in pricing, which is directly related to the cost of building and operating a state of the art facility. The tax abatement will ease some of the cost and allow Preferred Freezer Services to establish themselves in the market. This facility will be servicing many of our nationwide customers who are interested in the Houston market as discussed below. VI. How will this project attract new business? Preferred Freezer Services has a tremendous following and loyal customer base that has been the backbone of the growth of the company over the years. Through this loyal base of customers Preferred Freezer Services has expanded a local New Jersey warehouse into a nationwide corporation in currently in 5 states. This relationship has benefited Preferred Freezer's customers as well. In many scenarios customers have either expanded their businesses in the markets we have opened facilities in or started selling product in markets they had never prior to Preferred Freezer Services opening within said market. Preferred Freezer Services will also become a good customer for local vendors. All warehouse supplies are purchased on a local level within each market. VII. Provide information on alternative site considerations/and incentives being offered the company. Preferred Freezer Services is considering 2 other cities besides Houston to allocate funds to building in 2006/2007, Chicago, II. and Jacksonville, FL. Chicago, IL is attractive to Preferred Freezer Services because it would be the second facility in that market so we know what to expect out of it. We have the resources for employees, vendors and customers. Chicago also offers a Tax Increment Financing (TIF) in areas to attract businesses such as Preferred Freezer Services. TIF allows lower multiples on the assessed value and therefore lowers the taxes on the property, up to 66% reduction. Jacksonville, FL is also attractive to Preferred Freezer Services because of its location in the Southeast. Jacksonville's strategic location and expanding port is very similar to why Houston is attractive to Preferred Freezer Services. The site in Jacksonville is in an Enterprise/Empowerment Zone offering hiring incentives, infrastructure grants and tax refunds. The estimated 3 -year savings will be close to $2,000,000. VIII. If leasing property, please attach copy of lease. If company owns or is purchasing land, please attach copy of deed or executed contract -option to purchase. There are none at time of application. METES AND BOUNDS DESCRIPTION 10.115 ACRE TRACT LOCATED IN THE ENOCH BRINSON SURVEY, A-5 HARRIS COUNTY, TEXAS Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all bearings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest corner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F. Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Page 173 of the Deed Records of Harris County, Texas, said corner being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north line of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch iron rod with cap set for the southwest corner and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of the herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. jt�.®.assse.srw.�ese>e.eseceosese0000,. `+�, eeNr MeeefiifelseL.+ee+cee5476 j9e.. Reno & Associates July 13, 2006 Job No. 36-0404_10.1 acre VACANTLANO XATOEN NATIE SUNOCO FIGURE 2 Rone Engineerin SITE MAP -� UNDERWOOD DISTRIBUTION CENTER n1 In i IIunr-Rwrf)n ROAD AIR PRODUCTS FACILITY KATOEN NATIE o�NTION POND �► �, ----- -------------- ' -�••~ PRIME TIXAS SCRAP METAL BIN, ENERGY ELECTRIC PILE OFWOOD DEBRIS 8 METALAL Dr $RI = BAKER TAN1C8 PUMP i+ METAL 0 — RESIDENTIAL p loop 1000 1`ACUREN CLAY DEVELOPMENT F&M ME 0311132. M _ COMMERCIAL.�_�'� i gra, BUSINESS PARI( ; ! ROSEMONT PUMPS �• FURMANTE 1 fi 1 IAL� BUILDING UNDER r STARCON j UNDERWOOD CONSTRUCTION i BUSINESS I I MRPAW PARK 1 I MUNICIPAL TRASH SUBSTATION + COLUMBIA + t _ ��� w w o! w w w� w + +------ INDUSTRIAL SERVICES OVERHEAD FIGTENSION ELECTRIC LINE H -------------- --------------------------------------------- NEW OFFM i WATER DISTRIBUTION FACILITY j I DOW PIPELINE VACANT LAND SUBSTATION VACANT LAND OVERREAD HIGH TENSION CENTER ELECTRIC LIME 6 POINT ENERGY TEPPCO PETROLEUM & ELECTRIC NATURAL GAS PIPELINE SUBSTATION LEGEND (D - POLE -MOUNTED TRANSFORMER FIGURE 2 Rone Engineerin SITE MAP -� UNDERWOOD DISTRIBUTION CENTER n1 In i IIunr-Rwrf)n ROAD AIR PRODUCTS FACILITY KATOEN NATIE o�NTION POND �► �, ----- -------------- Tt� SCRAP METAL BIN, FARM IMPLEMENTS, PILE OFWOOD DEBRIS 8 METALAL Dr $RI EMPTY FLET. AM j260•GAL,). PILE OF TIRES, CONCRETE, 8 METAL RESIDENTIAL p loop 1000 a"CAZF I' ■ 1000' PROJECT NM: 03-11132.00 F&M ME 0311132. M _