2022-002 - Authorizing the City to be Eligible to Participate in Property tax Abatements and Approving Guidelines and Criteria for Granting Tax Abatements

Home Browse Search

(Updated 01-10-2022) POLICY STATEMENT CRITERIA AND GUIDELINES FOR TAX ABATEMENT A tax abatement may be made available to employers who are increasing new capital investment and creating jobs with respect to an authorized facility located anywhere within the area served by the Taxing Jurisdictions based on the following criteria. 1. To be eligible for any tax abatement, there must be a minimum capital investment in the authorized facility of $1,000,000 and at least ten (10) new jobs added to the new employer's labor force. 2. Any project with a capital investment of more than twenty-five million dollars ($25,000,000), AND accompanied by a newly created minimum annual payroll of two and one-half million dollars ($2,500,000), OR creating more than two hundred twenty-five (225) jobs will be individually negotiated. 3. As specified in state law, no abatement will be granted for more than 10 years and the total abatement shall not exceed 100%. 4. A newly created business must be (or will be) located within an enterprise zone or a designated reinvestment zone. 5. The taxing jurisdictions recognize a significant difference in the valuation of real property versus personal property. Because of depreciation schedules, the abatement of personal property could result in a tax exemption. For this reason, the abatement schedule for personal property versus real property may be different. Each industrial account is looked at and valued on an individual basis by the Lamar County Appraisal District (LOAD). The typical depreciation used for industrial accounts by LCAD is as follows: a. Computers – 3 year life b. Furniture & Fixtures– 10 year life c. Vehicles – 7 to 10 year life (depending on type) d. Machinery & Equipment – 15 year life (maybe longer or shorter depending on the type) 6. For each abatement request the PEDC will evaluate the equipment (personal property) investment and useful life separate from the real estate (real property) investment to determine the length of the abatement for each. 7. If personal property should become obsolete and be replaced while under an abatement agreement, the replacement personal property is not eligible for abatement. 8. The charts below provide capital investment guidelines to qualify for tax abatement and the related schedule and percentage of abatement. .......................... ........ __ .. _ --, ........ . For Capital Investment ($1M minimum investment AND 10 jobs for new employers.) Amount of Investment Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 $1,000,000 to $5,000,000 - 70% 60% 50% 40% 30% 20% 10% $5,000,001 to $20,000,000 80% 70% 60% _ ... 50% 40% 30% .. 20% $20,000,001 to $25,000,000 90% 80% 70% 60% — . 50% 40% 30% $25,000,001 and Above " For projects with capital investment above $25MAND $2.5Min new annual payroll OR creating more than 225 new jobs, the term and percentage of the abatement are both ne Motiable, but cannot exceed 10 oears or 100%. 9. An additional 20% abatement for new job creation is available based on the following requirements: a. A project that creates a minimum of 10 new jobs. b. The new job wages are equal to or greater than the current County average wage for all private sector jobs excluding retail trade and accommodation and food services ($41,158 annually for 2013. Source: Texas Workforce Commission 4