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13-Ordinance authorizing the City of Paris to participate in the Texas Enterprise Zone ProgramCITY COUNCIL AGENDA ITEM BRIEFING SHEET Submittal Date: Originating Department: Presented By: Agenda Item No.: 08/O 1 /2011 Council Date: Legal W. Kent McIlyar 13. 08/08/2011 RECOMMENDED MOTION: Public hearing and first reading. POLICY ISSUE(S): Economic Development. BACKGROUND: City Council is being asked to consider possible action on an ordinance nominating Kimberly-Clark Corporation as a Jumbo Enterprise Project to the State of Texas. Participation in the Texas Enterprise Zone Program is possible because KC plans to invest in and upgrade its facility, invest more than $150,000,000, and retain at least 500 existing jobs at the Paris plant. A company that qualifies as a State Enterprise Project qualifies for reimbursement of the sales and use tax paid as a part of the business expansion. The designation is for a five year period. BOARD/COMMISSION RECOMMENDATION: EXHIBITS: Ordinance ACTION: BUDGET INFO: ❑ Financial Report ❑ Minute Order Expense $ ❑ Department Report ❑ Resolution Budgeted Amt. $ ❑ Presentation ~ Ordinance bli Z P H i y'I'D Actual $ u c ear ng ❑ Other Acct. Name Acct. Number FISCAL NOTES: REVIEWED AND APPROVED BY: Z Administration Z City Clerk ❑ Community Development ❑ EMS/IT ❑ Finance ❑ Fite ❑ Municipal Court Z Legal ❑ Library ❑ Police ❑ Eng./Public Works ❑ Utilities City of Paris Revised 2/04/08 _ ` 114 DRAFT #1 s/attorney/enterprise zone/2011/KC ORDIIVANCE NO. A1V ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS AUTHORIZING THE CITY OF PARIS TO PARTICIPATE IN THE TEXAS ENTERPRISE ZONE PROGRAM UNDER THE TEXAS ENTERPRISE ZONE ACT, CHAPTER 2303, TEXAS GOVERNMENT CODE; PROVIDING TAX INCENTIVES; NOMINATING KIMBERLY-CLARK CORPORATION TO THE OFFICE OF THE GOVERNOR ECONOMIC DEVELOPMENT AND TOURISM THROUGH THE ECONOMIC DEVELOPMENT BANK FOR DESIGNATION AS A QUALIFIED BUSINESS AND DOUBLE JUMBO ENTERPRISE PROJECT UNDER THE ACT; DESIGNATING A LIAISON FOR OVERSEEING ENTERPRISE PROJECTS AND COMMUNICATING WITH INTERESTED PARTIES; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City of Paris, Texas ("the City") desires to create the proper economic and social environment to induce the investment of private resources in productive business enterprises located in severely distressed areas of the City and to provide employment to residents of those areas; and, WHEREAS, Kimberly-Clark was previously designated an Enterprise Project on December 22, 1999, with an expiration date of December 22, 2004, by the Texas Department of Economic Development and successfully completed all elements of its designation; and, WHEREAS, Kimberly-Clark was previously designated an Enterprise Project on December 1, 2005, with an expiration date of December 1, 2010, by the Texas Department of Economic Development and successfully completed all elements of its designation; and WHEREAS, Kimberly-Clark continues to be a major employer for the City of Paris, Lamar County, Texas; and, WHEREAS, the Texas Enterprise Zone Act, Chapter 2303, Texas Government Code, as amended, (the "Act") authorizes the designation of enterprise projects within an enterprise zone (or, if the requirements of Section 2303.402(a)(2) of the Act are met, within an area that does not qualify as an enterprise zone); and, WHEREAS, under the 2003 amendments to the Act, the Act is now administered by the Office of the Governor Economic Development and Tourism ("OOGEDT") through the Texas Economic Development Bank ("Bank"); and, WHEREAS, following posting and publication of the notice of hearing, a public hearing was held by the Paris City Council at the Council Chambers, Paris City Hall, 107 E. Kaufman, Paris, Texas to consider this ordinance and to allow all interested persons to appear and be heard; and, - 115 WHEREAS, the City Council has determined that passage of this Ordinance would be in the best interests of the City of Paris and its citizens. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS THAT: Section 1. The findings set out in the preamble to this ordinance are hereby in all things approved. Section 2. As required by Section 2303.4051(b) of the Act, the City's local incentives available in each area within an enterprise zone and in each area not in an enterprise zone are identified and summarized in the attached Exhibit "A;" and at least one of the local incentives is unique to the enterprise zone area. The City is in full compliance with the Act. Section 3. The City finds that KIMBERLY-CLARK CORPORATION Kimb erly- Clark") meets the criteria for designation as an enterprise project under the Act on the following grounds: (a) Kimberly-Clark is a"qualified business" under Section 2303.402 of the Act because it is engaged in the active conduct of a trade or business at a qualified business site and at least thirty-five percent (35%) of its new employees at the qualified business site will be residents of an enterprise zone in this state or economically disadvantaged individuals; (b)The Kimberly-Clark project is qualified under Section 2303.404 of the Act because (1) it involves "an expansion, renovation, or new construction"; (2) it will be completed within a predetermined period not to exceed five years; and (3) Kimberly-Clark maintains separate books and records for the Paris manufacturing operations; (c) There has been and will continue to be a high level of cooperation between public, private, and neighborhood entities within the jurisdiction of the City; (d) The designation of Kimberly-Clark as an enterprise project will contribute significantly to the achievement of the plans of the City for development and revitalization of the area in which the enterprise project will be located; and Section 4. Kimberly-Clark qualifies as a Double Jumbo Enterprise Project as defined in Section 2303.407(b)(6) and Section 2303.407(d) of the Act because Kimberly-Clark will be making a capital investment in a project in excess of $150,000,000. The City finds that it is in the best interest of the City to nominate Kimberly-Clark as a Double Jumbo Enterprise Project under the Act. Section S. The City Council of the City of Paris hereby nominates Kimberly-Clark as a Double Jumbo Enterprise Project under the Act and designates the City's Director of Engineering, Planning & Community Development as liaison to oversee enterprise projects nominated by the City and to perform the other duties described in Section 2303.204 of the Act (hereinafter "Director"). The City authorizes the Director to file an application requesting designation of Kimberly-Clark as a Double Jumbo Enterprise Project with the Bank, and to execute all documents and agreements necessary to process the application. Further, the City directs the Director or his designee to submit to the Bank the information required by section 2303.4052 of the Act. Section 6. The City finds that Kimberly-Clark meets the criteria for tax relief and other incentives adopted by the City and that Kimberly-Clark will be located wholly within the qualified 116 business site and will retain jobs and increase economic activity and stability. As required by Section 2303.4051(c)(2) of the Act, the City's local incentives, including tax incentives, that at the election of the City Council, are or will be made available to Kimberly-Clark, the nominated project, are identified and summarized in the attached Exhibit "B". Section 7. Upon approval by the Bank, the Double Jumbo Enterprise Project will be named KIMBERLY-CLARK CORPORATION PROJECT ("Project"). Section 8. The Enterprise Project designation must be for a predetermined designation period approved by the Bank, with a beginning date and ending date for the Project; and the designation period for the Project may not exceed five (5) years from the date on which the designation is made, as required by Section 2303.404 of the Act. Kimberly-Clark and the City request that the Bank approve April 28, 2011, as the beginning date and September 1, 2016, as the ending date of the Project. Section 9. The enterprise zone areas within the City are reinvestment zones in accordance with the Texas Tax Code, Chapter 312. Section 10. The Paris areas that meet the 2003 requirements in Section 2303.101 of the Act for automatic qualification for designation as an enterprise zone are shown in the attached Exhibit "C". Section 11. That the City Council voted by a supermajority vote of the entire Council to suspend the rule requiring two readings before adoption of ordinances ayes and _ nays. Section 12. That this ordinance shall be effective following passage and publication as required by law. PASSED, APPROVED, AND ADOPTED this 8th day of August, 2011. A.J. Hashmi, M.D., Mayor ATTEST: Janice Ellis, City Clerk APPROVED AS TO FORM: W. Kent McIlyar, City Attorney 11.'7 Exhibit A Paris, Texas Financial Incentives (Cash, Tax Abatements, Exemptions and Related Programs) PEDC Staff will assist your company with all of the following programs to maximize the financial incenNves for your company. Each project is unique, aud PEDC will consider and pursue a variety of options, for ezample: direct loans (can be bank subordinate), loan guarantees, interest rate write downs, site development costs, including elctension of utilities, cash grants for job creation, rent subsidies, build-to-suit with lease-back or purchase options, customized job training, loans with forgiveness based on job creation, reimbursement of relocatian ex nses, and other o tions sub'ect to ne otiation. T ical incentives include the followin : Pro-Business Because of a pro-business attitude, Texas has limited the number of state controls and taxes Climate in regulating the activities of business. Texas is a right-to-work State, and has no personal or co orate income tax, nor a state property tax. Tax Abatements The City of Paris has a proven track record of negotiating tax abatements for up to 10 years for new and expanding industries. In addition, Lamar County and Paris Jr. College will consider local tax abatements for projects with significant job creation and private capital investment. Local Cash The citizens of Paris adopted a Y4 cent sales tax as an incentive assistance program to Incentive for Job facilitate industrial locations and expansions. This program is administered directly by the Creation Paris Economic Develo ment Co oration. Industrial Dev. PEDC has a history of providing industrial development bonds as a viable alternative for Bonds financin industrial ex ansion and construction. Skills An incentive to relocating or expanding businesses through Texas community and technical Development colleges and workforce boards to provide customized assessment and training services to Fund business in a timel , efficient and res onsive manner. Enterprise Zone Depending on the exact site location, Paris is a qualified Enterprise Zone (EZ). If your development or revitalization project is located in the EZ, the City of Paris can approve partial or deferred payment of sales and use taxes for qualified purchases, leases, or rentals. Specifically, the EZ provides sales and use tax rebates on machinery and equipment, building materials, labor for the rehabilitation of existing buildings, and electricity and natural gas purchases. The EZ also provides priorityjob training, and other preferential treatment on state and federal programs. The tax refund is $2,000 for each permanent job the project creates or retains during the five year designation period. Qualifying projects may also be eligible for franchise tax reduction, property tax abatement up to 100% of the estimated local tax increase to be levied on the proposed property improvements for a term not to exceed ten (10) ears, and other regulatory relief. Freeport Law Article VIII, Section 1 of the Texas Constitution has been amended to allow real and Tax Exemptions personal property to be tax-exempt (city, county and school districts.) All goods, wares, merchandise, other than tangible personal property (inventory) acquired in or imported into Texas to be forwarded outside this state, which is detained for storing, assembling, manufacturing, rocessing, or fabricating in Texas for 175 days or less, may be tax exem t. Financial Local financial services companies in Paris and Lamar CounTy are committed to the Services economic growth of the region through aggressive commercial and industrial development. Paris is currently served by seven commercial banks, two savings & loan associations, and has access to morta e bankers, and other creative financial services. SBA and Other Small business loans are available through the SBA 504 program. Up to 40% of total cost Loan Programs can be provided in the form of subordinate debt to SBA for most fixed asset projects at interest cost of 2 to 3% below market for periods of 15-25 years. This type of financing can provide 90% of the long-term financing needs of a small business. Also available are the SBA 7(A) Loan Guarantee program, the FmHA, Paris' local Revolving Loan Fund, various ro rams of the ArkTex Council of Governments, and the Texas Levera e Fund. (Updated 8-4-11) 11"'1- N Exhibit A Paris, Texas Financial Incentives (Cash, Tax Abatements, Exemptions and Related Programs) Tax Increment Financing Financing through the creation of tax increment reinvestment zones. Low-Interest The City may offer low-interest loans to develop or revitalize the zone. Loans Municipal Sales The City may refund the amount of tax paid under the Municipal Sales and Use Tax (Texas and Use Tax Tax Code, Chapter 321) by the business and remitted to the Comptroller of Public Account Refund up to the maximum extent authorized by Sections 2303.505 and 2303.506 of the Act, and for a eriod determined b the Ci , but which shall not exceed five (5) ears. Bonds Tax-Exem t Industrial Bonds. Fee Waivers The Ci ma waive or refund an and all a licable fees due or aid. Infrastructure The City may provide infrastructure improvements for industries. Im rovements Zoning Changes Allows changes in the zoning and variances. or Variances Streamlined The City may allow permit applications and supporting materials to be tendered to one Permittin de artment far distribution to the a ro riate ci de artments. Enhances Municipal Daily convenience for City residents. Services Increased Fire and Police Safety and protection for City residents. Protection Community Community crime prevention programs such as D.A.R.E., Crime Watch, Think Child Safety, Crime Prevention and Think Senior Safety. Pro rams Capital The City can provide resources for a capital improvement plan related to water and sewer Improvements in Water and Sewer service. Road Repair The City is responsible for maintaining and repairing all public streets and alleys inside city limits. Creation or Maintain healthy lifestyle for city residents. Parks are located in city limits and are the Improvement of responsibility of city government. Parks Low-Interest Loans for Encourage home ownership for City residents. Housin Public Land for Development Strategic sustenance and growth for the City. Pur oses Promotion and Assistance offered by Lamar County Chamber of Commerce and Paris Economic Marketing Development Corporation. Service Job Trainin Offered in conjunction with Paris Junior College. (Updated 8-4-11) \1'1-~ Exhibit A Paris, Texas Financial Incentives (Cash, Tax Abatements, Exemptions and Related Programs) Retraining Offered in conjunction with Paris Juniar College. Pro ram Literacy and Employment Offered in conjunction with Paris Junior college and public school districts. Skills Pro rams Vocational Offered in conjunction with Paris Junior College and public school districts. Education Cash Grants Offered by Paris Economic Development Corporation (4A Economic Development Sales Tax). (Updated 8-4-11) 1 lr1 - C. Exhibit B Incentives that may be considered and offered by the City of Paris to Nominated Texas Enterprise Zone Projects 2011-12 1 1~1_~ Exhibit C Paris Areas meeting the 2011 Requirements for Texas Enterprise Zone (Sections 2303.101 and 2303.109) County Census Tract Block Group Percent Poverty Lamar 000100 5 0.227170 La m a r 000200 2 0.240000 Lamar 000500 1 0.474128 Lamar 000500 3 0.330309 Lamar 000500 4 0.308840 La ma r 000600 1 0.264624 La ma r 000600 2 0.603846 La ma r 000600 3 0.460733 La ma r 000600 4 0.274131 La ma r 000700 1 0.275218 La ma r 000800 1 0.405204 La m a r 000800 2 0.255940 La m a r 000800 3 0.204124 La m a r 001000 1 0.311111 11'1 - F,