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14-MOTION TO APPROVE RES AUTHORIZING CITY TO BECOME ELIGIBLE TO PARTICIPATE IN TAX ABATEMENTS UNDER CHAPTER 312 OF TX TAX CODECITY COUNCIL AGENDA ITEM BRIEFING SHEET Submittal Date: Originating Department: Ptesented By: Agenda Item No.: 6-1-12 Council Date: 6-11-12 Legal W. Kent McIlyar Ci Attorney 14. RECOMMENDED MOTION: Motion to approve a resolution authorizing the City to become eligible to participate in Tax Abatements under Chapter 312 of the Texas Tax Code and approving the Amended Guidelines and Criteria for Granting Tax Abatements in the City of Paris. POLICY ISSUE(S): Economic Development Paris Economic Development Corporation has indicated that several industries will be approaching the City of Paris and the other local taxing entities this year for tax abatements. Prior to moving forward with review of these tax abatement requests, the City Council must approve Amended Guidelines and Criteria for the Tax Abatement Program. The Amended Guidelines and Criteria for Tax Abatement are streamlined and allow the City Council more flexibility in negotiating tax abatement agreements on a case by case basis. The Guidelines also eliminate the need for an extra tax abatement review committee which is no longer necessary as all tax abatement applications are subject to review by the Board of Directors of the Paris Economic Development Corporation, City Manager and staff and final review and approval by the Paris City Council. The Amended Guidelines and Criteria will also allow the City Council to pursue a Residential Tax Abatement Program for designated areas of the community needing economic reinvestment. BOARD/COMMISSION RECOMMENDATION: None EXHIBITS: Resolution and Amended Guidelines and Criteria for Granting Tax Abatements ACTION: BUDGET INFO: ❑ Financial Report ❑ Minute Order Expense $NA ❑ Department Report Z Resolution Budgeted Amt. $NA ❑ Presentation ❑ Ordinance ❑ P bli H i ❑ O h Y7'D Actual $NA u c ear ng er t Acct. Name NA Acct. Number NA FISCAL NOTES: None REVIEWED AND APPROVED BY: ❑ Administration 0 City Clerk ❑ Community Development ❑ EMS/IT Z Finance ❑ Fire ❑ Municipal Court Z Legal ❑ Library ❑ Police ❑ Eng./Public Works ❑ Utilities City of Paris I~ n Revised 2/04/08 iG. Draft RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS AUTHORIZING THE CITY TO BECOME ELIGIBLE TO PARTICIPATE IN TAX ABATEMENT AND APPROVING AMENDED GUIDELINES AND CRITERIA FOR GRANTING TAX ABATEMENTS IN THE CITY OF PARIS, TEXAS; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Paris, Texas has previously adopted a resolution expressing its intent to consider Tax Abatements and adopting Tax Abatement Guidelines as required by the Texas Tax Code, Chapter 312; and WHEREAS, Section 312.002 of the Texas Tax Code requires the city to update its guidelines and criteria for granting tax abatements every two years; and WHEREAS, the Paris City Council desires to amend the Tax Abatement Guidelines that will govern the implementation of the City's Tax Abatement Program as allowed by the Texas Tax Code, Chapter 312; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS, THAT: Section 1. The findings set out in the preamble to this resolution are hereby in all things approved. Section 2. The City hereby elects to be eligible to participate in a tax abatement program and adopts the Amended Guidelines and Criteria for Tax Abatements attached hereto and incorparated herein as Exhibit "A". The Guidelines are the policies that the City of Paris, Texas will follow in considering and approving Tax Abatement Agreements with property owners within the City Limits. Section 3. This resolution shall become effective from and after the date of passage. PASSED AND APPROVED this 11th day of June, 2012 ATTEST: Janice Ellis, City Clerk APPROVED AS TO FORM: W. Kent McIlyar, City Attorney A.J. Hashmi, M.D., Mayor 133 CITY OF PARIS, TEXAS GUIDELINES AND CRITERIA FOR TAX ABATEMENTS JUNE 2012 Section 1. General Purpose And Objectives The City of Paris, Texas (hereinafter referl-ed to as the "City"), is committed to the promotion of high-quality development in all parts of the City, and to an ongoing improvement in the quality of life for its citizens. Insofar as these objectives are generally served by the enhancement of the tax base and expansion and diversification of the local economy, the City will, on a case-by-case basis, give consideration to providing tax abatement, pursuant to the Texas Property Redevelopment and Tax Abatement Act, Chapter 312 Texas Tax Code, as from time to time amended, as a stimulus for economic growth and diversification in the City. Consideration will be given to both new facilities and structures and for the expansion or modernization of existing facilities and structures. Proposed abatement agreements will be considered in accordance with the guidelines, criteria and procedures outlined in this document. Nothing herein shall suggest or imply that the City is under any obligation to provide tax abatement in any amount or value to any applicant. All applicants shall be considered on a case-by-case basis. Section 2. Definitions. (a) Act- means the Property Redevelopment and Tax Abatement Act, Texas Tax Code Ann. § 312.001 et. seq., as amended from time to time. (b) Agreement - means a contractual agreement not to exceed ten (10) years between a property owner and a]essee (if necessary) and the City for the purposes of tax abatement. (c) Ap licant - means an owner of real property located in a Reinvestment Zone who requests tax abateinent in accordance with these guidelines. (d) City - means the City of Paris, Texas. (e) Eligible Pronerty - means real property located within a Reinvestment Zone or real property located in a Historic District or Historically Designated Property and/or tangible personal property located on the real property which is eligible for tax abatement under the Act. The Eligible Property inay not be in an improvement project financed by tax increinent bonds. (f) Expansion - means the addition ar enlargement of buildings, structures, fixed machinery or equipinent far the purposes of increasing production capacity. (g) Ineligible Propertv - means property not eligible for tax abatement under the Act, including without limitation inventories, supplies, or property owned or leased by a 1 member of the City Council of the City or by a meinber of any other zoning or planning board or commission of the City. (h) Modernization - means the replacement and upgrading of existing facilities which increases the productive input ar output, updates the technology or substantially lowers the unit cost of the operation. Modernization inay result from the construction, alteration ar installation of builduigs, structures, fixed machinery ar equipment, but shall not include reconditioning, refurbishijlg or repairing. (i) Reinveshnent Zone - ineans an area within the corporate city limits of the City of Paris, Texas designated in accordance with the Act. Section 3. Availability of Tax Abatements. (a) Tax abatement is available for both new facilities, structures, and equipment and far the Expansion ar Modernization of existing facilities and structures. (b) Abatement may only be granted for the additional value of Eligible Property improvements specified in an abatetnent agreement. (c) As provided in the Act, abatement may only be granted for the value of Eligible Property listed in an Agreement between the City and the property owner and ]essee (if required), subject to sucli limitations as the City inay require and to the following limitations. ]n the case of real property that is Eligible Property, an Ageement may provide far exemption of the rea] property in each year covered by the Agreement only to the extent its value for that year exceeds its value for the year in which the Ageement is executed. In the case of tangible personal property that is Eligible Property, an Agreement may not provide for the exemption of tangible personal property that is located on the real property at any time before the period covered by the Agreement. (d) Tax abatement is not available for Ineligible Property. (e) Upon determination that tax abatement should be offered to tlle Applicant, the value and terms of the abatement will be determined by the City on a case-by-case basis. (f) Abatement will be granted on a case-by-case basis effective with the first valuation date immediately following the date of execution of the Agreement The period of abatement may not exceed ten (10) years including the construction period. Section 4. Tax Abatement Agreements. (a) The City Council may not enter into a tax abatement agreement unless it finds that the terms of the Agreement and the property subject to the Agreement meet these Guidelines and Criteria. (b) An Agreement must contain the following provisions: (1) List the kind, number and location of all proposed improvements of the Eligible Property; 2 1? 5 (2) Applicant shall provide access to and authorize inspection of the Eligible Property by City or the City's employees or agents to insure compliance with the specifications and conditions of the Agreement; (3) Limit the uses of the Eligible Property consistent with the general purpose of encouraging development or redevelopment of the Reinvestment Zone during the period that property tax exemptions are in effect; (4) Provide for recapturing property tax revenue ]ost if the owner of the Eligible Property fails to make the improvements or repairs as provided by the Agreement; (5) The terms that were agreed upon with the property owner and requires the owner to annually certify compliance with the terms of the Agreement; (6) Provide the taxing unit the ability to cancel or modify the Agreement at any time should the owner fail to comply with the terms of the Agreement; (c) At its option, the City inay include the following provisions in an Agreement: (1) A map showing existing and proposed improvements and uses in the Reinvestment Zone; or (2) Improvements or repairs by the City to streets, sidewalks, utility services or facilities associated with the Eligible Property, except that the Agreement wil] not provide for lower charges or rates that are made for other services or properties of a similar character; or (3) The recapture of all or a portion of property tax revenue lost as a result of the Agreement if the owner of the Eligible Property fails to create all or a portion of the number of new jobs provided by the Agreement. If the appraised value of the Eligible Property subject to the Agreement does not obtain a value specified in the Agreement, or if the owner fails to meet any other performance criteria provided by the Agreement, and payment of a penalty ar interest, or both, on that recaptured property tax revenue; or (4) The foregoing options do not in any way limit the City from including additional criteria permissible under§ 312.205 of tlie Texas Tax Code, as it may be amended. (d) If a leased Facility is granted abatement, the Agreemehnt must be executed with the City, the Lessor, and the lessee. (e) To be effective, an Agreement must be approved by the affirmative vote of a majority of the members of the City Council at a regularly scheduled meeting of the City Council. (f) At any time befare its expiration, an Agreement may be modified by the parties to the Agreement to include other provisions that could have been included in the original agreement or to delete provisions that are not necessary to the original agreement. The modification must be made by the same procedure by which the original agreement was approved and executed. The original agreement may not be modified to extend beyond ten 3 ~ 3 b, years from the date of the original agreement. (g) An Agreement may be terminated by the mutual consent of the parties in the same manner that the Agreement was approved and executed. (h) All improvements, repairs, development a n d r e-development of the Eligible Property m u s t conform to the City's Comprehensive Zoning Ordinance, Building Codes and other applicable ordinances. Section 5. Application and Review Procedures. (a) Application for Tax Abatement (1) The procedures as hereinafter delineated shall be utilized in the implementation of the tax abatement program for the City of Paris. (2) Tax abatement applicants shall complete and submit an application for economic incentives as prescribed by the Executive Director for the Paris Economic Development Corporation (PEDC). While the specific contents of application may vary, it is expected that the information requested wil] reveal the precise location of the property, provide a survey and legal description of the project site, provide projected job growth, and provide estimations for tlie projected capital investment. (3) Applicants shall coinplete all information detailed in this document or other inaterial as may be required by the PEDC or City and submit the application and supporting documents to the Executive Directar of the Paris Economic Development Corporation, 1625 Bonham Street, Paris, Texas 75460. (b) Application Review Steps• All information in the application package detailed above will be reviewed far completeness and accuracy. Additional information inay be requested as needed. 2. The application will be distributed to the Board of Directors of the Paris Economic Development Corporation and to the Paris City Manager for internal review and comments. Additional information may be requested as needed. 3. Applicant will meet with Paris Economic Development Corporation (PEDC) and the Paris City Manager or his designee to discuss details of the application. Additional meetings and proposal presentations may be scheduled as necessary. 4. The PEDC Board along with the Paris City Manager will consider the application at a regular ar called meeting(s). 5. The findings of the PEDC Board will be forwarded, with all relevant materials, to the chief administrative officer of each local taxing entity. 4 I I r) *7 6. The City Council of the City of Paris may call a public hearing to consider establishment of a tax abatement reinvestment zone. The amount and length of abatement may vary among tax abatement reinvestment zones approved by the City Council. 7. The Paris City Council may hold a public hearing to determine whether the project is feasible and would be of benefit to the land to be included in the zone and to the municipality. 8. The Paris City Council may consider adoption of an ordinance designating the Project area as a tax abatement reinvestment zone. 9. The City Council may consider adoption of a resolution or ordinance approving the terms and conditions of a contract between the City and the applicant governing the provision of a tax abatement. 10. The governing bodies of Lamar County, Texas and Paris Junior College may consider ratification of and participation in the tax abatement agreement between the City of Paris and the applicant. (c) Review Criteria : It is understood that much of the information provided in the application will be, out of necessity, estimates only. The applicant should endeavor to provide the most accurate estimates possible based upon available information. The applicant may be requested by the Paris Economic Development Corporation ar City to describe the logics/methodologies to be utilized and to supply supporting documentation that substantiates the economic feasibility of the overall project and assists in determining the long-term benefit to the City. The applicant, if requested by the PEDC or City, may be asked to provide the following information and estimated projections to the City. (1) Employmentlmpact The number of new jobs to be created in the City or existing jobs to be retained. (2) Proposed lmprovements Identification and description of the kind, number and location of all proposed improvements to the property, as well as the land area and cost, accompanied by a discussion of the development schedule far the proposed improvements. The City also may request the square footage of the proposed project. Identification/description of any infrastructure improvements that applicant will ask City to provide to serve the proposed project and the estimated cost of these improvements. (3) Fiscallmpact The amount of ad valorem taxes and sales tax to be generated by this project. 5 13O The cost to provide municipal services or additional infrastructure to the proposed proj ect. (d) Confidentialitv: Certain information provided to the City in connection with an application may be confidential and not subject to public disclosure until the incentive agreement is executed. The City of Paris, will respond to requests for disclosure as required by law and will assert exceptions on its behalf to disclosure as it deems relevant. The City will make reasonable attempts to notify the Applicant of the request so it may assert its own objecions to the Attorney General. Section 6. Effective Period, Amendment, Repeal, Effect. (a) These Guidelines and Criteria are effective for two (2) years from the date adopted. During that period, these Guidelines and Criteria may be amended or repealed only by a vote of three-fourths of thetotal membership of the Paris City Council. (b) The adoption of these Guidelines and Criteria does not: (1) limit the discretion of the City Council to decide whether to enter into a specific tax abatement agreement. (2) limit the discretion of the City Council to delegate to the PEDC Board or the Paris City Manager the authority to determine whether or not the City Council should consider a particular application or request for tax abatement; or (3) Create any property, contract, ar otherlegal right in anyperson to have the Ciry Council consider or grant a specific application or request for tax abatement. Section 7. State Administration. As required by law, on July 1 of the year following the year in which the Reinvestment Zone is designated or the Agreement is executed, a report providing the following information shall be delivered to the State Comptroller: (a) For a Reinvestment Zone, a general description of the zone, including its size, the types of property located in it, its duration, and the guidelines and criteria established for the Reinvestment Zone under § 312.002 of the Texas Tax Code, including subsequent ainendments and modifications; (b) A copy of each Tax Abatement Agreement to which the City is a party; and (c) Any other information required by the State Comptroller to administer its administrative duties. 6 1.29