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07 Kammer EZ Requestr~ a:. C'I~.T.~ Januazy 10, 2002 VIA HAND DELIVERY Kenneth L. Kammer and Gary W. Kammer K& G Properties, LLP and IS Management, Inc. 2485 Kessler Paris, TX 75460 In re: Inquiries of the Ciry of Paris Gentlemen: You have posed certain questions to the City of Paris and requested the City Council to respond to those inquiries. The substance of those inquiries relates to economic development incentives, presumably as they would apply to your particular proposed project. The City Council subsequently referred your inquiries to this office for response where appropriate. To that end, I will attempt to address your questions in the order in which they were posed to the extent the information necessary to address those questions is available to the City: 1. Ls the PEDC in an advisory capacity only to the City Council? Answer - The Paris Economic Development Corporation is a statutory corporation created pursuant to the provisions of the Development Corporation Act of 1979, Texas Civil Statutes Ar6cle 5190.6. The PEDC is customarily referred to as a"4A" corporation in that it was created pursuant to Section 4A of the Act, as opposed to Section 4B of the Act. , As a 4A corporation, PEDC is empowered to grant a number of economic development incentives on its own initiative and in that sense the PEDC is not in an advisory capacity to the City Council. One of the economic incentives authorized under state law is tax abatement. Tax abatement authorizes taxing entiUes to enter into agreements with qualified entides to abate the taxes on new property value; that is, on new or expanded real property improvements that would otherwise be subject to property tax. As a consequence, tax abatements can only be granted by taxing entities; that is, entities which -I- P.O. BOX 9037 • PARIS, TEXAS 75461 •9037 •(903) 785-7511 • FAX (903) 785-8519 assess property taxes, such as municipalities, counties, and school districts. Because the PEDC receives its tax support from sales tax revenues and not property ta1c, the PEDC cannot itself grant tax abatements. To that extent, the PEDC acts in an advisory capacity to the City Council on tax abatements. 2. Has the PEDC limited itself to manufacturing and warehousing type industry? Answer: I believe this question is answered in the attached correspondence dated December 10, 2001, which was forwarded to the Paris City Council by Mr. Erik Roddy on behalf of the Paris Economic Development Corpora6on (PEDC). See also the enclosed Mission Statement from the PEDC. 3. Is the PEDC's main purpose that of attracting manufacturing and warehousing type industries to all of Paris, and not just limited to the Enterprise Zone? Answer: I believe PEDC's role is to attract manufacturing and warehousing type industries to all of Paris. 4. Is the Enterprise Zone limited to manufacturing and warehousing type industries to qualify as an Enterprise Zone? Answer: According to the handbook on Economic Development Laws for Texas Cities, Volume II, page 2, the Texas Enterprise Zone Program is administered by the Texas Department of Economic Development and is designed ro encourage job creation and capital investment in areas of economic distress within Texas. Other criteria apply to the Zone such as size, economic development condition, etc. At page 3 of the handbook, it states "cities, counties, and other taxing units are able to offer local incentives such as tazx abatement, tax increment financing, local sales tax refunds, utility reductions, and other regulatory incentives to businesses within an Enterprise Zone." In other words, there are certain incentives for economic development within Enterprise Zones that aze offered by the State. The decision as to what kinds of industries receive those incentives is strictly up to the State. For incentives that are locally based, the decision as to what kinds of industries will receive those incentives is restricted solely to the local entities. 5. Are the Enterprise Zone incentives limited to manufacturing and warehousing types of industries? Answer: See answer in previous question number 4 above. In addidon, I am advised in order to receive Enterprise Zone incentives a project must be designated as an Enterprise Project by the Texas Department of Economic Development. I am further advised such designations are very competitive and only a limited number of projects each year receive -2- such a designation. Judging criteria for such a designation is based on the amount of capital investment and job creation. 6. Ls our type of industry eligible for the incentives in the Enterprise Zone? Answer: See answer to previous question 4. In addition, I refer you again to the material in the December 10, 2001, letter from the Paris Economic Development Corporation. 7. Is the main purpose For establishing an Enterprise Zone to restore that segment of our community to economic soundness? Answer: Again referring to the Texas Enterprise Program Handbook, the stated purpose of the program as administered by the Texas Department of Economic Development is for the program to "encourage job creation and capital investment in areas of economic distress within Texas." Presumably, the implementation of that program, the definition of what constitutes economic distress, and other similar issues would be subject to considerable interpretation. 8. Will you grant us a decision at this time on the Enterprise Zone incentives for our business? Answer: As stated in the previous letter from the PEDC and prior questions above, the only incentive which the City of Paris directly grants at this time is tax abatement. The issue as to whether or not to grant your project tax abatement is strictly up to the City Council, with the advice of the PEDC. Anecdotedley, one of the additional incentives referenced in the Texas Enterprise Zone Application for the City of Paris to be granted by the City of Paris is flexible zoning. It is my understanding that the zoning has already been changed for this proposed project by the City of Paris. Other incentives available and referenced in the City's Enterprise Zone Application include infrastructure improvements, which are constantly ongoing; Gvc abatement (already discussed); support for the Economic Development Corporation through the sales tax; and others. Traditionally, economic development incentives are not granted if the project will go forwazd even if the incentive is not granted; i.e., such incentives aze traditionally granted only if the industry cannot go forward without such incentives. It is my understanding this project will go forward with or without such assistance. , Yours very trul Lar W. S enk C' y Attorney LWS/ap Attachment -3- Paris Economic Development Corporation December 10, 2001 Address to Paris City Council Via Erik Roddy Tax abatement is always a/potentially can#rSversi issue and should always be considered in a most ~incere fidulrrary manner~s far as the request to the City of Paris by KG Propertigs, SY;Ivfa~agement, it is }}Yowing new ground. Historically the City has nQt-use'c~,#~x in entives outsi ~of those for what we define as primary employ s, i.e.: manu~acturin.g isiribution/warehousing, and basic industrial activities thftQq~nduct alvalue-added activity that brings new dollars into the Paris economy. There were six major points of disciission by the PEDC. 1.) This assisted living center is not the traditional type of project for which PEDC has offered incentives. All tax abatements to date have been for industrial type facilities. ' 2.) Staff recommendation to the PEDC Board was for a tax phase-in: 80% abatement for years lthru 3, Year 4- 25% reduction in the abatement amount Year 5- 50% reduction of original abatement Year 6- 75°/a reduction of original abatement Year 7 - no abatement. The PEDC Board rejected this proposal twice. 3.) Potential to have this project designated as an enterprise project is very minimal. That designation would be zequired to receive the original incentives requested. 4.) Some concerns raised by the PEDC: Would this business compete with similar existing businesses? What would be the advantage to the community to grant such an abatement? Where do we draw the line on tax incentives that are not industrial manufacturing type facilities? 5.) Typically tax abatements are granted in an attempt to atiract the location of facilities that may not otherwise have occurred. The general consensus of this project was that it would occur with or without the abatement. The property for the facility has already been purchased. 6.) PEDC could not support the various incentives requested, however, it is the hope of the PEDC that this project will become a realiiy:': 1651 Clarksville Street - Paris, Texas 75460 (903) 784-2501 - 1-800-PARISTX - Fax (903) 784-2503 http://www.paristexas.com aarr-e9,02 ee:ee , . i J FROM:CHAMBER OF CIX1MERCE 903-789-2503 T0:9037829721 PRGE:02 Mission Statement PARlS ECONOM/C DEVELOPMENT CORPORATION TO PLAN, PROM07E, FINANCE, AND CONSTRUCT OPPORTUNI7IES FOR THE RETENTION, GROWTH, AND ATTRAC710N OF BUSINESS' THAT ENHANCE THE LEVEL OF EMPLOYMENT, THE ECONOMIC BASE AND QUALITY OF LIFE IN PARIS AND LAMAR COUNTY, TEXAS Goal I. Retention and Expansion of the Paris area existing indusiriai sector jobs. Goal II. Recruitment of new primary employers in manufacturing, distribution/warehousing, and basic industrial activities by marketing the locational advantages and amenities of Paris. Goal I11 Encourage start-up business and small business development through the entrepreneurial spirit of the Paris economic environment. Goal IV. Infrastructure developmenl and workforce training to support the other goals of the Paris Economic Development Corporation I Definition of Business as used in this mission statement includes primary employers in manufacturing, distribution/warehousing, and basic industrial I activities that conduct a value-added activity lhat brings new dollars into the Paris economy. ~ < . TO: The Honorable Mayor of Paris, Tx., City Council Members, City Attomey and Staff, City Manager and Staff, Gary Vest from th6 Chamber of Commerce and the Pazis Economic Development Corporation (PEDC) FROM: Kenneth L. Kammer & Gary W. Kammer of K&G Properties, LLP and SI Management, Inc. RE: City of Paris, Paris,Texas Tax Abatement and Reinvestment Zone Designation Application (i" time applied 09-04-01, 2°a time applied revised application 10-09-01). Decision needed to determine otu eligibility/ineligibility for and to grant/deny us the Tax Abatement Incentive and/or other Incentives in accordance with the Excerpt from the City of Paris Enterprise Zone Application INCENTIVES (reflected in the Texas Enterprise Zone Application);.. 1 DATE: 12-03-01 We first became aware of the Paris Enterprise Zone Incentives this past August. We contacted Lisa Wright with the City Attorney's office who provided us with a copy of the application and a description of the various incentives. She then directed us to Gary Vest at the Chamber of Commerce for fiirther direction on the application process. We were told that the review process had recently clianged and that all applications would first be presented to the PEDC for their recommendation to the City Cotmcil who would make the fnal decision. We reviewed tlie qualifications for eligibility, of which it appears that we are, and we completed the application satisfactorily according to Gary Vest and Lisa Wright. It was then submitted to the PEDC for their recommendation to the City Council. The 15L time our application went before the PEDC (09-12-01) they were unable to get a motion to vote, so a decision was not made either way. The reasons we gathered were: 1) this was their first time to review this kind of application because it was not a Mamifacturing or Warehousing type industry [see PEDC By-Laws?], and 2) in addition to the Tax Abatement Incentive, we also applied for various other incentives that appeared we were eligible for and available to us in the Enterprise Zone, but this only complicated matters [see Texas Enterprise Zone Application #6. Local Incentives]. Gary Vest advised, that we apply only for the Tax Abatement Incentive, and go to each voting member to ask them to reconsider our application, and we did just that and they all agreed. The 2°d time our application went before the PEDC (10-17-01) they were unable to get a motion to vote, so AGAIN a decision was not made either way. So it appears that the PEDC has elected not to officiallv advise on this matter. We have just a few questions: • Is the PEDC in an advisory capacity only to the City Council? • Has the PEDC limited itself to Manufacturing & Warehousing type industry? • Is the PEDC's main plupose that of attracting Manufacturing & Warehousing type industries;to all of Paris, and not just limited to the Enterprise Zone? • Is the Enterprise Zone limited to Manufacturing & Warehousing type industries to qualify as an Enterprise Zone? • Are the Enterprise Zone INCENTIVES limited to Manufacturing & Warehousing types of industry? • Is otLr type of industry eligible for the Incentives in the Enterprise Zone? • Is the main purpose for establishing the Enterprise Zone to restore that segment of our community to economic soimdness? • Will you grant us a decision at tliis time on the Enterprise Zone Incentive(s) for our business? Special thanks to Gary Vest for his public service & assistance. And thank you for hearing our petition. 5. Economic In:pact of the Zone. The estimate must consider tax incentives; financial benefits, contemplatedprograms, and community costs. Provide a table showing the calculations and an explanation of the basis for the calculations. • From the economic impact tabie, provide the following information: Tablc uttached hereto ns Eshibit 2-E -Total number oF jotis expected to be crcated 700 -Total number of jobs expected to be retained, if applicable 1.952 -Total lmount of capital investment expected ro be injected $60.000.000.00 6. LOC[il IItC¢liliv¢S. Check and briefly describe the local incentives, benefits, programs or services ofFered by [he municipality, counry, or other entities in or throughout the municipatiry/county(ies). Note: At least three incentives must be oFFered in the zone that are not offered throughout the jurisdiction; one of the ^ inc~mtCs oCfered exciusively in the zone must be linanciat in namre. I OfFered OfFered En(ity(ies) Throughout Only In Offering Jurisdiction one the Incentives ■ Tax Abatement ❑ City of Paris. County oF Lamar. - Paris Junior Colleee. Independent $chool Districts 4 Real Property I Ttie Citv or Paris ind other pvticipating entities will oCfer uo ro one hundred percent (100%) tie abatement on imorovcments to anv industrial site or builciing for i period or uo to seven (7) years for businesses ind industries elieibic uncler the Teras Enterprise Zone Act The entemrite zone will be desi mted a "reinvestment 7one" in order to imolement this process ■ Personal Property Same as above. ■ Tax Increment Financino o ■ City of Paris Th_e_ Citv or Paris wili stronglv consider any request for Tax mcrement Fimncins from industries within the zone• ■ Freeport Exemption ■ [NA] City or Paris. Counry or Lamar Paris Junior Colle e. Independent School Districts OfFered by all taxine entities throuehout the jurisdiction ■ Local Sales and Use Tax ReFund [NA] ■ City or Paris T he City of Paris will provide for the partial or deFerred payment or refund oF siles Tnd use taxes by oersons mikine a tacable purchase lease or renial for nurposes of development or revitalization in the zone i r it of omme 6eY:p ,.•.e~.., .;;t~.. ~ ~ .:c. ,v ~ .4.. ~ . I N•"7'y~-"~:c'I.. . Offered Offered Entity(ies) t 7'tvoughout Only In Offering t' Jurisdiction 7,Qpg theincentives ■%i Cent Sates Tax ■ ❑ City of Paris ■ Ch. 4A for Industrial Development ic f a' in 1993, the City oF Pnris created the Pari Economic Development orporltion and adooted a one nuirrer (1/4) 9f one nercent (I s11es and uce tax for industrial develonment and a one quarre /I/4) of one percent (I sales nnd use tar to reduce the propsy tae rlte ❑ Ch, 4Ci Cor Economic Dzvelopment • ■ Bonds ■ ❑ Citv of Paris Paris Economic Dzvelonment Corpontion The City of Paris will lssist zone industries seeAint! Tndustrial Revenue Bonds financin and Private Activitv Bonds. The Ciev wiil aIso coooente wich the L1mar County industriaI Development Corporation the issuer of such honcls Additinnallv the Paris Economic Development orporltion mIv issue bonds for the puroose oF fimncine the cost of orojects to promote and develop new 1nd expinded bueiness enterprises anA to promote and encounee employment and the nublic welfare ■ Low-Interest Loans/Packaging ■ ❑ Paris Economic Develonment ■ ■ Devclopment Fce Exceptions ■ ❑ City of Paris The City of Paris does not have development fees Flexible Zoning ❑ ■ City of Paris The City of Parie will amencl zoning ordinances in order to nromote economic development in the zone Sveamlined Permitting ❑ 4 City of Paris . The City of Parie enjoys i reouhtion for eivine nrompt considention to buildin,permit requests a prictice that will certainlv be emphasized in the zone. Infrastruceure Improvements ■ ❑ City of Paris. Paris Economic Development Corpontion The City of Paris has recently authorized the issuance oF $5 000 000 00 in watenvorks and ewer vstem revenue bonds which ire to be used for the ~urpose of pavins for improvements and extensions to the ity'c combined watenvorks and sewer sysrem and the oayment of profesSiomi services relited to the conswction anA fimncine of such orojects AAditionallv the Parit Economic Develo2ment Corooration miv finance industrial water and seaer line extensions OFfered Offered Entity(ies) ~ 'llvoughout Only In Offering Jurisdiction Zone Ihe Incent'ives i ■ Increased Police/Fire Protectiod ■ ❑ City of Paris The City of Paris will rovide police orotection within the 2one including druz enforcement bv the Reeioml Controlled SuUstance Aporehension Proeram (RCSAP). a narcotics task force formed bv the City of Paris several vears aeo and funded throuqh the Crimiml Justice Division oF the Governor's Office St1te of Texis The City of Paris will also nrovide fire protection within the zone which will be enhanced by the construction of a new fire stntion immediatelv adjTCent to the zone, nearine comple[ion, ind designed to serve the northern gundrant of the zone. The southern quadrint will be served bv the existine West-Side Station. o Trnnsit Provisions ❑ ❑ ■ Job Training ■ O P~aris Economic Development Comorntion. Paris Junior Colleze Wilh financial assistance provided by the Paris Economic Deveiopment Corporation. Paris Junior Colleee off'ers job traininQ under a promm Anown ns the "Electro-Mechanicnl Technolo" Progam." which is an electro- mechanical maintcnance curriculum that meets the requirements of major technical employers identified in a survev conductec] bv a local mliar industry. The PEDC, through PJC. nlso utilizes the Skills Develonment Fund ihrough the Texas Norkforce Commission and the Smart Jobs Proeram throueh the Texas Department of Commerce. ❑ Incubators ❑ \ ❑ ❑ Day Care ❑ ❑ ■ Other (Please list and use additianal pages iF necessary) ■ Reduced Utility Rates ❑ Y Citv of Paris The City of Paris hae n water rate studv preoared everv three (3) ycars by an independent firm. which results in Ene City beine afForded the oooortunity oP offering 1 cost-o6service ratc on wirer nnd wastewater utilitv srrvices ro heavy users located inside the zone. T.U. Electric also oFfers n nte reduction rider of five percent (S%) ro industries within the zone. ■ Roads ❑ ■ Paris Economic Develqpment Corporation The Paris Economic Development Corporation has in the oast provided fundin~ for both the buildine oC new roads and improvinz existine roads ro industrial sites. ■ Transfer of City-owned properry ❑ ■ City oF Paris The City of Paris will neeotiate with industries within the zone for the tnnsfer oF City-owned property at below _ market rates. f Kg6 Properties, LLP s SI MANA6EMENT, inc. THE LAMAR COLONY An Assisted liuing Community 2485 KasIR Paris, Texas 73460 USA Phone 903-783-3149 September 04-2001 RE: ITEM # 21 OF T'HE APPLICATION FOR REINVESTMENT ZONE DESIGNATION : TfE TYPE AND VALUE OF ECONOMIC DEVELOPMENT INCENTIVES REQUESTED 1.) 100°/a Tax Abatement on improvements to site and building for seven (7) years @ $ 2,744,000.00and 2.) 100% Refund of Locai Sales and Use Taxes @$ 100,000.00- and 3.) Direct Low-Interest Loans/Packages land @ $36,000.00(refinancing) & land @ $55,000.00(purchase for expansion) ; building construction @$ 1 987 200.00 machinery & equipment @ $ 70,400.00 > , furniture & fixtures rCi $ 57,600 00 , working capital @ $100,000.00 4.) Amend Zoning Ordinances in order to promote economic development in the zone; and 5.) Give prompt consideration to building pertnit requests; and 6.) Utilization of the Waterworks and Sewer System Revenue Bonds for the purpose of improvements and the payment of professional services related to the construction and financing of such projects; and 7.) Increase Police and Fire Protection for this wlnerable segment of our community; and 8.) Reduced Utility Rates on Water and Waste Water by ten (10)%, as weli as, the five (5)% rate reduction rider offered by TXCJ Electric and Gas, both for seven (7) years: water and waste water $594.00 @ 10% rate reduction =$50.00 ner month, electric and gas via TXU $2.232.00 @ 5% rate reduction =$111.60 ner month; and 9.) Provide funding for improving of existing roads to the site as needed; and [ ATTACHMENT ] N&G Propertles. LLP a SI MANAGEMENT, inc. TNE IAMAR COLONY M Assisted tivino Community t ~ . 2483 Kessler Paris, Texas 73460 _ USA Phone 903J83-5149 October 17-2001 RE: ITEM # 21 OF THE APPLICATION FOR REINVEST[vIENT ZONE DESIGNATION : TfqE TYPE AND VALUE OF ECONOMIC DEVELOPMENT INCENTIVES REQUESTED 1.) 100% Tax Abatement on improvements to site and building for seven (7) years @ $ 2 744,900 00__ and 2.) X 100% Refund of Local Sales and Use Taxes @$_9_QQ ; and 3.) X Direct Low-Interest Loans/Packages: land @ $4.QQ(refinancing) & land @ $0.00 ,n ur .ha for x ancionl, building construction @ I 0.00 machinery & equipment @ $ 0.00 fumiture & fixtures cr $ 0.00 , working capital @ $0.00 ; 4.) X Amend Zoning Ordinances in order to promote economic development in the zone; and 5.) X Give prompt consideration to building permit requests; and 6.) X Utilization of the Waterworks and Sewer System Revenue Bonds for the purpose of improvements and the payment of professional services related to the construction and financing of such projects; and 7.) X Increase Police and Fire Protection for this wlnerable segment of our community; and 8.) X Reduced Utility Rates on Water and Waste Water by ten (10)%, as well as, the five (5)% rate reduction rider offered by TXil Electric and Gas, both for seven (7) years: * water and waste water $4.QQ @ 10% rate reduction =$0 00 ner month, * electric and gas via TXtJ $4.,QQ @ 5% rate reduction =$0.00 ner month; and 9.) X Provide funding for improving of existing roads to the site as needed; and [ ATTACHMENT ] 11 ` Ka6 ProDertles, LLP a rd MANAGEMENT, Inc. _ 'INE LAMAR COLONY M Assisted living Community 1 . 2485 Kesslxr . . Paris, Tem 73460 USA Phone 903•763-3149 December 03-2001 RE: ITEM # 21 OF THE APPLICATION FOR REINVESTMENT ZONE DESIGNATION : TfiE TYPE AND VALUE OF ECONOMIC DEVELOPMENT INCENTIVES REQUESTED 1.) 100% Tax Abatement on improvements to site and building for seven (7) years @ $ 2,744,000.00and 2.) 100% Refund of Local Sales and Use Taxes @$] 00,000.00and 3.) Direct Low-Interest Loans/Packages: land @ $36,000.00(refinancing) building construction @ $ 0.00 machinery & equipment @ S 0,00 ~ fumiture & fixtures @ $ 0.00 working capital @ $274,400.00 4.) X Amend Zoning Ordinances in order to promote economic development in the zone; and 5.) X Give prompt consideration to building pernut requests; and 6.) X Uti(ization of the Waterworks and Sewer System Reveriue Bonds for the purpose of improvements and the payment of professional services related to the construction and financing of such projects; and 7.) X Increase Police and Fire Protection for this wlnerable segment of our community; and 8.) X Reduced Utility Rates on Water and Waste Water by ten (10)%, as well as, the five (5)% rate reduction rider offered by TXiJ Electric and Gas, both for seven (7) years: * water and waste water $4.0.0 @ 10°/a rate reduction =$0.00 ner month. * electric and gas via TXU $4.Q4 tr 5% rate reduction =$0.00 ner month; and 9.) X Provide funding for improving of existing roads to the site as needed; and [ ATTACHMENT ] Government Code - CHAPTER 2303 CHAPTER 2303. ENTERPRISE ZONES SUBCHAPTER A. GENERAL PROVISIONS § 2303.001. Short Title This chapter may be cited as the Texas Enterprise Zone Act. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.002. Purposes Page 1 of 28 The purposes of this chapter are to establish a process that clearly identifies severely distressed areas of the state and provides incentives by state and local government to induce private investment in those areas by removing unnecessary governmental regulatory barriers to economic growth and to provide tax incentives and economic development program benefits. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.003. Definitions In this chapter: (1) "Day" means the period between 8 a.m. and 5 p.m. of a day other than a Saturday, Sunday, or state or federal holiday. (2) "Department" means the Texas Department of Economic Development. (3) "Enterprise zone" means an area designated as an enterprise zone under this chapter. (4) "Neighborhood enterprise association" means an association certified as a neighborhood enterprise association under Section 2303.302. (5) "Nominating body" means the governing body of a municipality or county, or a combination of the governing bodies of municipalities or counties, that nominates and applies for designation of an area as an enterprise zone. (6) "Qualified business" means a person certified as a qualified business under Section 2303.402. (7) "Qualified employee" means a person who: (A) works for a qualified business; and (B) performs at least 50 percent of the person's service for the business in the enterprise zone. (8) "Qualified hotel project" means a hotel proposed to be constructed by a municipality or a nonprofit municipally sponsored local government corporation created under the Texas Transportation Corporation Act, Chapter 431, Transportation Code, that is within 1,000 feet of a convention center owned by a municipality having a population of 1,500,000 or more, including shops, parking facilities, and any other facilities ancillary to the hotel. ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 2 of 28 Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 76, 5.50, 5.55, eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1121, § 1, eff. Sept. 1, 1999. § 2303.004. Jurisdiction of Municipality For the purposes of this chapter, territory in the extraterritorial jurisdiction of a municipality is considered to be in the jurisdiction of the municipality. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. SUBCHAPTER B. DEPARTMENT POWERS AND DUTIES RELATING TO ZONES § 2303.051. General Powers and Duties (a) The department shall administer and monitor the implementation of this chapter. (b) The department shall establish criteria and procedures for designating a qualified area as an enterprise zone and for designating an enterprise project. (c) The department shall adopt rules necessary to carry out the purposes of this chapter. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.052. Evaluation; Report (a) The department shall conduct a continuing evaluation of the programs of enterprise zones. (b) The department shall develop data from available information demonstrating the relationship between the incentives provided under this chapter and the economy. (c) The department biennially shall review local incentives. (d) On or before December 15 of each year the department shall submit to the governor, the legislature, and the Legislative Budget Board a report that: (1) evaluates the effectiveness of the enterprise zone program; (2) describes the use of state and local incentives under this chapter and their effect on revenue; and (3) suggests legislation. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1999, 76th Leg., ch. 1121, § 2, eff. Sept. 1, 1999. § 2303.053. Assistance (a) The department shall assist: (1) a qualified business in obtaining the benefits of any incentive or inducement program provided by ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 3 of 28 law; (2) a unit of local government in obtaining status as a federal enterprise zone; (3) the governing body of an enterprise zone in obtaining assistance from another state agency, including training and technical assistance to qualified businesses in a zone; and (4) the governing body of an enterprise zone in developing small business incubators. (b) The department shall provide to persons desiring to locate and engage in business in an enterprise zone information and appropriate assistance relating to the required legal authorization, including a state license, permit, certificate, approval, registration, or charter, to engage in business in this state. (c) The department shall publicize existing tax incentives and economic development programs in enterprise zones. (d) On request the department shall offer to a unit of local government having an enterprise zone within its jurisdiction technical assistance relating to tax abatement and the development of alternative revenue sources. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993 . § 2303.054. Coordination With Other Governmental Entities (a) In cooperation with the appropriate units of local government and other state agencies, the department shall coordinate and streamline state business assistance programs and permit or license application procedures for businesses in enterprise zones. (b) The department shall: (1) work with the responsible state and federal agencies to coordinate enterprise zone programs with other programs carried out in an enterprise zone, including housing, community and economic development, small business, banking, financial assistance, transportation, and employment training programs; (2) work to expedite, to the greatest extent possible, the consideration of applications for those programs by consolidating forms or by other means; and (3) work, when possible, for the consolidation of periodic reports required under those programs into one summary report. (c) The department shall encourage other state agencies in awarding grants, loans, or services to give priority to businesses in enterprise zones. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. SUBCHAPTER C. DESIGNATION OF ENTERPRISE ZONE § 2303.101. Criteria for Enterprise Zone Designation ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 (a) To be designated as an enterprise zone an area must: (1) have a continuous boundary; (2) be at least one square mile but not larger than the greater of: (A) 10 square miles, excluding lakes, waterways, and transportation arteries; or Page 4 of 28 (B) an area, not to exceed 20 square miles, that is equal to five percent of the area, excluding lakes, waterways, and transportation arteries, of the municipality, county, or combination of municipalities or counties nominating the area as an enterprise zone; (3) be an area of pervasive poverty, unemployment, and economic distress; and (4) be nominated as an enterprise zone by an ordinance or order adopted by the nominating body. (b) The department may not designate an area as an enterprise zone if three enterprise zones are located in the jurisdiction of and were nominated as enterprise zones by the governing body of the municipality or county nominating the area as an enterprise zone. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.102. Area of Pervasive Poverty, Unemployment, and Economic Distress (a) An area is an area of pervasive poverty, unemployment, and economic distress for the purposes of Section 2303.101 if: (1) the average rate of unemployment in the area during the most recent 12-month period for which data are available was at least one and one-half times the state average for that period; or (2) the area had a population loss of at least 12 percent during the most recent six-year period or at least four percent during the most recent three-year period; and (A) the area is a low-income poverty area; (B) the area is in a jurisdiction or pocket of poverty eligible for urban development action grants under federal law, according to the most recent certification available from the United States Department of Housing and Urban Development; (C) at least 70 percent of the residents or households of the area have an income that is less than 80 percent of the median income of the residents or households of the locality or state, whichever is less; or (D) the nominating body establishes to the satisfaction of the department that: (i) chronic abandonment or demolition of commercial or residential structures exists in the area; (ii) substantial tax arrearages for commercial or residential structures exist in the area; (iii) substantial losses of businesses or jobs have occurred in the area; ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 5 of 28 (iv) the area is part of a disaster area declared by the state or federal government during the preceding 18 months; or (v) the area has had a substantial increase in the number of individuals younger than 18 years of age arrested due to criminal activity. (b) Labor force and population data are considered current if: (1) they are the most recently published estimates; or (2) the enterprise zone application containing the data is received by the department before the 61st day after the date revised estimates of that data are published. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 985, § 2, eff. Sept. 1, 1995. § 2303.103. Nomination of Enterprise Zone (a) The governing body of a municipality or county, individually or in combination with other municipalities or counties, by ordinance or order, as appropriate, may nominate as an enterprise zone an area within its jurisdiction that meets the criteria under Section 2303.101. (b) Unless the nominating body holds a public hearing before adopting an ordinance or order under this section, the ordinance or order is not valid. (c) The governing body of a county may not nominate territory in a municipality, including extraterritorial jurisdiction of a municipality, to be included in a proposed enterprise zone unless the governing body of the municipality also nominates the territory and together with the county files a joint application under Section 2303.105. (d) The governing bodies of a combination of municipalities or counties may not jointly nominate an area as an enterprise zone unless the governing bodies have entered into a binding agreement to administer the zone j ointly. (e) Notwithstanding Subsections (c) and (d), the governing body of a county with a population of 750,000 or more may nominate territory in that county that is in the extraterritorial jurisdiction of a municipality to be included in one or more of the county's enterprise zones, and the county shall administer a zone that is established as the result of the nomination. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.104. Nominating Ordinance or Order (a) An ordinance or order nominating an area as an enterprise zone must: (1) describe precisely the area to be included in the zone by a legal description or reference to roadways, lakes, waterways, or municipal or county boundaries; (2) state a finding that the area meets the requirements of this chapter; ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 6 of 28 (3) summarize briefly the incentives, including tax incentives, that, at the election of the nominating body, apply to business enterprises in the area; and (4) nominate the area as an enterprise zone. (b) At least one of the incentives summarized under Subsection (a)(3) must not apply throughout the governmental entity or entities nominating the area as an enterprise zone. (c) This section does not prohibit a municipality or county from extending additional incentives, including tax incentives, for business enterprises in an enterprise zone by a separate ordinance or order. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.105. Application for Designation (a) For an area to be designated as an enterprise zone, the nominating body, after nominating the area as an enterprise zone, must send to the department a written application for designation of the area as an enterprise zone. (b) The application must include: (1) a certified copy of the ordinance or order, as appropriate, nominating the area as an enterprise zone; (2) a map of the area showing existing streets and highways; (3) an analysis and appropriate supporting documents and statistics demonstrating that the area qualifies for designation as an enterprise zone; (4) a statement that specifies each tax incentive, grant, other financial incentive or benefit, or program to be provided by the nominating body to business enterprises in the area that is not to be provided throughout the governmental entity or entities nominating the area as an enterprise zone; (5) a statement of the economic development and planning obj ectives for the area; (6) a description of the functions, programs, and services to be performed by a neighborhood enterprise association in the area; (7) an estimate of the economic impact of the designation of the area as an enterprise zone on the revenues of the governmental entity or entities nominating the area as an enterprise zone, considering all the financial incentives and benefits and the programs contemplated; (8) a transcript or tape recording of all public hearings on the proposed zone; (9) if the application is a joint application, a description and copy of the agreement between the applicants; (10) the procedures for negotiating with residents, community groups, and other entities affected by the designation of the area as an enterprise zone and with qualified businesses in the area; ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 7 of 28 (11) a description of the administrative authority, if one is to be appointed for the enterprise zone under Section 2303.202; and (12) any additional information the department requires. (c) Information required by Subsection (b) is for evaluation purposes only. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.106. Review of Application (a) On receipt of an application for the designation of an enterprise zone, the department shall review the application to determine if the nominated area qualifies for designation as an enterprise zone under this chapter. (b) The department shall allow an applicant to correct any omission or clerical error in the application and to return the application to the department on or before the lOth day after the day on which the department receives the application. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.107. Designation Agreement (a) If the department determines that a nominated area for which a designation application has been received satisfies the criteria under Section 2303.101, the department shall negotiate with the nominating body for a designation agreement. (b) A designation agreement must: (1) designate the nominated area as an enterprise zone; and (2) designate the administrative authority, if one is to be appointed for the zone under Section 2303.202, and describe its functions and duties, which should include decision-making authority and the authority to negotiate with affected entities. (c) The department shall complete the negotiations and sign the agreement not later than the 60th day after the day on which the application is received unless the department extends that period to the 90th day after the day on which the application was received. (d) If an agreement is not completed within the 60-day period provided by Subsection (c), the department shall provide to the nominating body the specific areas of concern and a final proposal for the agreement. (e) If the agreement is not executed before the 91st day after the day on which the application was received, the application is considered to be denied. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.108. Denial of Application; Notice ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 8 of 28 (a) The department may deny an application for the designation of an enterprise zone only if the department determines that the nominated area does not satisfy the criteria under Section 2303.101. (b) The department shall inform the nominating body of the specific reasons for denial of an application, including denial under Section 2303.107(e). Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.109. Period of Designation (a) An area may be designated as an enterprise zone for a maximum of seven years. A designation remains in effect until September 1 of the final year of the designation. (b) Notwithstanding Subsection (a), an area designated as a federal enterprise zone, federal empowerment zone, or federal enterprise community may be designated as an enterprise zone without further qualification for longer than seven years but not longer than the period permitted by federal law. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 985, § 3, eff. Sept. 1, 1995. § 2303.110. Amending Boundaries (a) The nominating body may amend the boundary of an enterprise zone by ordinance or order, as appropriate, adopted after a public hearing on the issue. (b) The amended boundary: (1) must be continuous; (2) may not exceed the original size requirement of Section 2303.101; and (3) may not exclude any area originally included within the boundary of the zone as designated. (c) The entire enterprise zone with the amended boundary must continue to meet the unemployment and economic distress requirements of Section 2303.101. (d) A nominating body may not make more than one boundary amendment annually for an enterprise zone. (e) For each amendment of an enterprise zone boundary, the nominating body shall pay the department a reasonable fee, in an amount specified by the department, not to exceed $500. The department may use fees collected under this subsection to administer this chapter and for other purposes to advance this chapter. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.111. Removal of Designation (a) The department may remove the designation of an area as an enterprise zone if: ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 9 of 28 (1) the area no longer meets the criteria for designation under this chapter or by department rule adopted under this chapter; or (2) the department determines that the governing body of the enterprise zone has not complied with commitments made in the ordinance or order nominating the area as an enterprise zone. (b) The removal of a designation does not affect the validity of: (1) a tax incentive or regulatory relief granted or accrued before the removal; or (2) bonds issued under this chapter. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.112. Exception to Limit on Designation Designation as an enterprise zone under this chapter of an area designated as a federal enterprise zone, federal empowerment zone, or federal enterprise community located in a municipality or county does not reduce the number of enterprise zones that the municipality or county may have designated under this chapter. Added by Acts 1995, 74th Leg., ch. 985, § 5, eff. Sept. 1, 1995. SUBCHAPTER D. ADMINISTRATION OF ENTERPRISE ZONE § 2303.201. Administration by Governing Body The governing body of an enterprise zone is the governing body of the municipality or county, or the governing bodies of the combination of municipalities or counties, that applied to have the area designated as an enterprise zone. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.202. Administration by Administrative Authority (a) The governing body of an enterprise zone may delegate its administrative duties to an administrative authority appointed by the governing body. (b) An administrative authority must: (1) be composed of 3, 5, 7, 9, 11, or 15 members; (2) be a viable and responsive body generally representative of all public or private entities that have a stake in the development of the zone; and (3) include enterprise zone residents and representatives of the governing body of the zone and of local businesses. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 10 of 28 § 2303.203. Participation by Neighborhood Enterprise Associations Each neighborhood enterprise association organized under Subchapter E should: (1) actively participate in the administration of the enterprise zone for which the association was organized; and (2) be encouraged to participate in planning and carrying out activities in the enterprise zone. Added by Acts 1993, 73rd Leg., ch. 268, 1, 0, eff. Sept. 1, 1993. § 2303.204. Liaison The governing body of an enterprise zone shall designate a liaison to communicate and negotiate with: (1) the department; (2) the administrative authority, if one exists; (3) an enterprise project; and (4) other entities in or affected by the enterprise zone. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.205. Annual Report (a) Not later than October 1 of each year, the governing body of an enterprise zone shall submit to the department a report in the form required by the department. (b) The report must be approved by the enterprise zone's administrative authority, if one exists. (c) The report must include for the year preceding the date of the report: (1) a list of local incentives for community development available in the zone; (2) the use of local incentives for which the governing body provided in the ordinance or order nominating the enterprise zone and the effect of those incentives on revenue; (3) the number of businesses assisted, located, and retained in the zone since its designation due to the existence of the enterprise zone; (4) a summary of all industrial revenue bonds issued to finance projects located in the zone; and (5) a description of all efforts made to attain revitalization goals for the zone. ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 11 of 28 Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 985, § 4, eff. Sept. 1, 1995. SUBCHAPTER E. NEIGHBORHOOD ENTERPRISE ASSOCIATIONS § 2303.301. Organization of Neighborhood Enterprise Association (a) Individuals residing in an enterprise zone may organize a neighborhood enterprise association. (b) Only one association may exist for a geographic neighborhood area. (c) The association must: (1) be a nonprofit corporation organized under the Texas Non-Profit Corporation Act (Article 1396- 1.01 et seq., Vernon's Texas Civil Statutes); and (2) be eligible for federal tax exemption under Section 501(c) of the Internal Revenue Code of 1986 (26 U.S.C. Section 501(c)). (d) The articles of incorporation must: (1) describe the geographic neighborhood area of the association; and (2) authorize the association to engage in business only in the enterprise zone in which the neighborhood area is located. (e) The incorporators shall publish in a newspaper of general circulation in the governmental entity or entities that applied to have the area designated as an enterprise zone an explanation of the proposed association and the incorporators' rights in the association. (f) A copy of the association's articles of incorporation and bylaws shall be available for public inspection at: (1) the office of the city manager or comparable municipal officer if the entity is a municipality; or (2) the county judge's office if the entity is a county. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.302. Certification of Association (a) After a neighborhood enterprise association is organized, the association's board of directors must apply to the governing body of the enterprise zone or to the department for certification as a neighborhood enterprise association. (b) The governing body of the enterprise zone or the department may not grant certification unless the association has hired or appointed a suitable chief executive officer. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 § 2303.303. Membership; Voting Page 12 of 28 (a) The membership of a neighborhood enterprise association may be composed only of residents of the enterprise zone. (b) An individual is entitled to be a member of a neighborhood enterprise association if the individual is (1) a resident of the association's geographic neighborhood area; and (2) of voting age. (c) To be entitled to vote, a member of the association must have been a resident of the association's neighborhood area for at least one year. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.304. Powers of Neighborhood Enterprise Associations (a) A neighborhood enterprise association may purchase or lease publicly or privately owned real property. (b) A neighborhood enterprise association with the approval of and in coordination with the responsible state or local governmental entity may: (1) establish crime watch patrols in the association's geographic neighborhood area; (2) establish volunteer day-care centers; (3) organize recreational activities for the association's geographic neighborhood area youth; (4) provide garbage collection; (5) maintain and improve streets, bridges, and water and sewer lines; (6) provide energy conservation proj ects; (7) provide health and clinic services; (8) provide drug abuse programs; (9) provide senior citizen assistance programs; (10) maintain parks; (11) rehabilitate, renovate, operate, or maintain low or moderate income housing; and (12) provide other types of public services as authorized by law or rule. ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 13 of 28 (c) A service may be provided under Subsection (b) by the association or, if feasible and prudent and after agreement with the appropriate state or local governmental entity, by a private firm or organization. (d) The governmental entity responsible for providing a service may contract with a neighborhood enterprise association to provide services in an amount equal to the amount saved by the entity by the provision of the service under the contract. (e) A neighborhood enterprise association has powers established by other law or rule, including powers available to similar corporations under state law. (f) A neighborhood enterprise association may enter into a contract and participate in a joint venture with the state or a state agency or institution. (g) A neighborhood enterprise association may receive money without approval of the governing body of the enterprise zone. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 76, § 5.51(a), eff. Sept. 1, 1995. § 2303.305. Approved Projects (a) On approval of the governing body of an enterprise zone, a neighborhood enterprise association may carry out projects other than those under Section 2303.304(b). The association must submit to the governing body an application that describes the nature and benefit of the project and that specifically states: (1) how the project will contribute to the self-help efforts of the residents of the association's geographic neighborhood area; (2) how the residents of the geographic neighborhood area will be involved in the planning and implementation of the proj ect; (3) whether there are sufficient resources to complete the project and whether the association will be fiscally responsible for the project; and (4) whether the project will enhance the enterprise zone by: (A) creating permanent jobs; (B) physically improving the housing stock; (C) stimulating neighborhood business activity; or (D) preventing crime. (b) If the governing body of an enterprise zone does not disapprove an application submitted under Subsection (a) before the 45th day after the day of receipt of the application, the application is considered to be approved. (c) If the governing body of an enterprise zone disapproves an application submitted under ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 14 of 28 Subsection (a), the governing body shall notify the association of the specific reasons for the decision and shall allow the association to amend the application on or before the 60th day after the date of the notification. (d) The association shall furnish to the governing body of the enterprise zone: (1) an annual statement of the programmatic and financial status of each approved project; and (2) an audited financial statement of the proj ect. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. SUBCHAPTER F. QUALIFIED BUSINESSES AND ENTERPRISE PROJECTS § 2303.401. Definitions In this subchapter: (1) "New permanent job" means a new employment position created by a qualified business as described by Section 2303.402 that: (A) has provided at least 1,820 hours of employment a year to a qualified employee; and (B) is intended to exist during the period that the qualified business is designated as an enterprise project under Section 2303.406. (2) "Retained job" means a job that existed with a qualified business before designation as an enterprise project that: (A) has provided employment to a qualified employee of at least 1,820 hours annually; and (B) is intended to be an employment position during the period the business is designated as an enterprise project in accordance with Chapter 151, Tax Code. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 76, § 5.52(a), eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch. 985, § 6, eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1121, § 3, eff. Sept. 1, 1999. § 2303.402. Qualified Business (a) A person is a qualified business if the department, for the purpose of state benefits under this chapter, or the governing body of an enterprise zone, for the purpose of local benefits, certifies that: (1) the person is engaged in or has provided substantial commitment to initiate the active conduct of a trade or business in the enterprise zone; and (2) at least 25 percent of the person's new employees in the enterprise zone are: (A) residents of any enterprise zone in the jurisdiction of the governing body of the enterprise zone; or ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 15 of 28 (B) economically disadvantaged individuals. (b) The governing body of an enterprise zone may certify a franchise or subsidiary of a new or existing business as a qualified business if the franchise or subsidiary: (1) is located entirely in the enterprise zone; and (2) maintains separate books and records of the business activity conducted in the zone. (c) For the purposes of this section, an economically disadvantaged individual is an individual who: (1) was unemployed for at least three months before obtaining employment with the qualified business; (2) receives public assistance benefits, including welfare payments or food stamps, based on need and intended to alleviate poverty; (3) is an economically disadvantaged individual, as defined by Section 4(8), Job Training Partnership Act (29 U.S.C. Section 1503(8)); (4) is an individual with handicaps, as defined by 29 U.S.C. Section 706(8); (5) is an inmate, as defined by Section 498.001; (6) is entering the workplace after being confined in a facility operated by the institutional division of the Texas Department of Criminal Justice or under contract with the Texas Department of Criminal Justice; (7) has been released by the Texas Youth Commission and is on parole, if state law provides for such a person to be on parole; or (8) meets the current low income or moderate income limits developed under Section 8, United States Housing Act of 1937 (42 U.S.C. Section 1437f et seq.). Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Renumbered from § 2303.401 and amended by Acts 1995, 74th Leg., ch. 76, § 5.52(a) and Acts 1995, 74th Leg., ch. 985, § 6, eff. Sept. 1, 1995. § 2303.403. Prohibition on Qualified Business Certification If the department determines that the governing body of an enterprise zone is not complying with this chapter, the department shall prohibit the certification of a qualified business in the zone until the department determines that the governing body is complying with this chapter. The department may not designate more than 65 businesses as enterprise projects during any biennium. Added by Acts 1993, 73rd Leg., ch. 268, § 1, ef£ Sept. 1, 1993. Renumbered from § 2303.402 by Acts 1995, 74th Leg., ch. 76, § 5.52(a), eff. Sept. 1, 1995, and Acts 1995, 74th Leg., ch. 985, § 6, eff. Sept. 1, 1995. § 2303.404. Request for Application for Enterprise Pro.ject Designation ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 16 of 28 (a) A qualified business in an enterprise zone described by Subsection (b) may request that the governing body of the enterprise zone apply to the department for designation of the business as an enterprise project. The request must also be made to the enterprise zone's administrative authority, if one exi sts. (b) A request may be made under this section only to the governing body of an enterprise zone that has: (1) an unemployment rate that is at least one and one-half times the state average; or (2) a population loss of at least: (A) 12 percent during the most recent six-year period; or (B) four percent during the most recent three-year period. Added by Acts 1995, 74th Leg., ch. 76, § 5.52(a), eff. Sept. 1, 1995, and Acts 1995, 74th Leg., ch. 985, § 6, eff. Sept. 1, 1995. § 2303.405. Application for Enterprise Project Designation (a) If the governing body of an enterprise zone or the governing body and administrative authority of an enterprise zone, as appropriate, approve a request made under Section 2303.404, the governing body may apply to the department for the designation of the qualified business as an enterprise project. (b) An application must: (1) describe completely the conditions in the enterprise zone that constitute pervasive poverty, unemployment, and economic distress for purposes of Section 2303.101; (2) describe the procedures and efforts of the governmental entity or entities that applied to have the area designated as an enterprise zone to facilitate and encourage participation by and negotiation among all affected entities in the zone in which the qualified business is located; (3) contain an economic analysis of the plans of the qualified business for expansion, revitalization, or other activity in the enterprise zone, including: (A) the number of anticipated new permanent jobs the business will create; (B) the anticipated number of permanent jobs the business will retain; (C) the amount of investment to be made in the zone; and (D) other information the department requires; and (4) describe the local effort made by the governmental entity or entities that applied to have the area designated as an enterprise zone, the administrative authority, if one exists, the qualified business, and other affected entities to develop and revitalize the zone. (c) For the purposes of this section, local effort to develop and revitalize an enterprise zone is: ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 17 of 28 (1) the willingness of public entities in the zone to provide services, incentives, and regulatory relief authorized by this chapter and to negotiate with the qualified business for which application is made and with neighborhood enterprise associations and other local groups or businesses to achieve the public purposes of this chapter; and (2) the effort of the qualified business and other affected entities to cooperate in achieving those public purposes. (d) Factors to be considered in evaluating the local effort of a public entity include: (1) tax abatement, deferral, refunds, or other tax incentives; (2) regulatory relief, including: (A) zoning changes or variances; (B) exemptions from unnecessary building code requirements, impact fees, or inspection fees; and (C) streamlined permitting; (3) enhanced municipal services, including: (A) improved police and fire protection; (B) institution of community crime prevention programs; and (C) special public transportation routes or reduced fares; (4) improvements in community facilities, including: (A) capital improvements in water and sewer facilities; (B) road repair; and (C) creation or improvement of parks; (5) improvements to housing, including: (A) low-interest loans for housing rehabilitation, improvement, or new construction; and (B) transfer of abandoned housing to individuals or community groups; (6) business and industrial development services, including: (A) low-interest loans for business; (B) use of surplus school buildings or other underutilized publicly owned facilities as small business incubators; ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 18 of 28 (C) provision of publicly owned land for development purposes, including residential, commercial, or industrial development; (D) creation of special one-stop permitting and problem resolution centers or ombudsmen; and (E) promotion and marketing services; and (7) j ob training and employment services, including: (A) retraining programs; (B) literacy and employment skills programs; (C) vocational education; and (D) customized j ob training. (e) Factors to be considered in evaluating the local effort of a private entity include: (1) the willingness to negotiate or cooperate in the achievement of the purposes of this chapter; (2) commitments to hire underskilled, inexperienced, disadvantaged, or displaced workers who reside in the enterprise zone; (3) commitments to hire minority workers and to contract with minority-owned businesses; (4) provision of technical and vocational job training for enterprise zone residents or economically disadvantaged employees; (5) provision of child care for employees; (6) commitments to implement and contribute to a tutoring or mentoring program for area students; (7) prevention or reduction of juvenile crime activity; and (8) the willingness to make contributions to the well-being of the community, such as job training, or the donation of land for parks or other public purposes. Added by Acts 1995, 74th Leg., ch. 76, § 5.52(a), eff. Sept. 1, 1995, and Acts 1995, 74th Leg., ch. 985, § 6, eff. Sept. 1, 1995. § 2303.406. Enterprise Project Designation (a) The department may designate a business as an enterprise project only if the department determines that: (1) the business is a qualified business under Section 2303.402 that is located in or has made a substantial commitment to locate in an enterprise zone described by Section 2303.404(b); ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 19 of 28 (2) the governing body of the enterprise zone making the application has demonstrated that a high level of cooperation exists among public, private, and neighborhood entities in the zone; (3) the designation will contribute significantly to the achievement of the plans of the governing body making the application for development and revitalization of the zone; and (4) if the business is seeking job retention benefits: (A) the permanent employees of the business will be permanently laid off; (B) the business will close down permanently; (C) the business will relocate out-of-state; (D) a 10 percent increase in the production capacity of the business will occur; (E) a 10 percent decrease in overall cost per unit produced will occur; or (F) the business facility has been legitimately destroyed or impaired because of fire, flood, tornado, hurricane, or any other natural disaster. (b) The department shall designate qualified businesses as enterprise projects on a competitive basis. The department shall establish a minimum scoring threshold that must be met by the qualified business applying for a project designation and make its designation decisions using a weighted scale in which: (1) 50 percent of the evaluation depends on the economic distress of: (A) the enterprise zone in which a proposed enterprise project is located; and (B) the area within the enterprise zone where the project is located; (2) 25 percent of the evaluation depends on the local effort to achieve development and revitalization of the enterprise zone; and (3) 25 percent of the evaluation depends on the evaluation criteria as determined by the department, which must include: (A) the level of cooperation and support the project applicant commits to the revitalization goals of the zone; and (B) the type and wage level of the jobs to be created or retained by the business. (c) The department may remove an enterprise project designation if it determines that the business is not complying with a requirement for its designation. Added by Acts 1995, 74th Leg., ch. 76, § 5.52(a), eff. Sept. 1, 1995, and Acts 1995, 74th Leg., ch. 985, § 6, eff. Sept. 1, 1995. Amended by Acts 1999, 76th Leg., ch. 1121, § 4, eff. Sept. 1, 1999. § 2303.407. Allocation of Jobs Eligible for Tax Refund ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 20 of 28 When the department designates a business as an enterprise project, the department shall allocate to the project the maximum number of new permanent jobs or retained jobs eligible to be included in a computation of a tax refund for the project. The number may not exceed 625 or a number equal to 110 percent of the number of anticipated new permanent jobs or retained jobs specified in the application for designation of the business as an enterprise project under Section 2303.405, whichever is less. Added by Acts 1995, 74th Leg., ch. 76, § 5.52(a), eff. Sept. 1, 1995, and Acts 1995, 74th Leg., ch. 985, § 6, eff. Sept. 1, 1995. § 2303.408. Duration of Certain Designations The department's designation of a qualified business as an enterprise project is effective until the fifth anniversary of the date on which the designation is made regardless of whether the enterprise zone in which the project is located expires before the fifth anniversary of the project. Added by Acts 1995, 74th Leg., ch. 76, § 5.52(a), eff. Sept. 1, 1995, and Acts 1995, 74th Leg., ch. 985, § 6, eff. Sept. 1, 1995. SUBCHAPTER G. ENTERPRISE ZONE BENEFITS § 2303.501. Exemptions From State Regulation; Suspension of Local Regulation (a) A state agency may exempt from its regulation a qualified business, qualified employee, qualified property, or neighborhood enterprise association in an enterprise zone if the exemption is consistent with: (1) the purposes of this chapter; and (2) the protection and promotion of the general health and welfare. (b) A local government may suspend local regulation, including an ordinance, rule, or standard, relating to zoning, licensing, or building codes in an enterprise zone. (c) An exemption from or suspension of regulation under this section must be adopted in the same manner that the regulation was adopted. (d) The authorization provided by Subsection (a) or (b) does not apply to regulation: (1) that relates to: (A) civil rights; (B) equal employment; (C) equal opportunity; (D) fair housing rights; or (E) preservation of historical sites or historical artifacts; ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 21 of 28 (2) the relaxation of which is likely to harm the public safety or public health, including environmental health; or (3) that is specifically imposed by law. (e) For the purposes of this section, property is classified as qualified property if the property is: (1) tangible personal property located in the enterprise zone that was: (A) acquired by a taxpayer not earlier than the 90th day before the date on which the area was designated as an enterprise zone; and (B) used predominantly by the taxpayer in the active conduct of a trade or business; (2) real property located in the enterprise zone that was: (A) acquired by a taxpayer not earlier than the 90th day before the date on which the area was designated as an enterprise zone and was used predominantly by the taxpayer in the active conduct of a trade or business; or (B) the principal residence of the taxpayer on the date of the sale or exchange; or (3) an interest in an entity that was certified as a qualified business under Section 2303.402 for the entity's most recent tax year ending before the date of the sale or exchange. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 76, § 5.56, eff. Sept. 1, 1995. § 2303.502. Review of State Agency Rules; Report (a) A state agency rule adopted after September 1, 1987, may provide, when applicable, encouragements and incentives to increase: (1) the renovation, improvement, or new construction of housing in enterprise zones; and (2) the economic viability and profitability of business and commerce in enterprise zones. (b) Annually each state agency shall: (1) review the rules it administers that: (A) may adversely affect: (i) the renovation, improvement, or new construction of housing in enterprise zones; or (ii) the economic viability and profitability of business and commerce in enterprise zones; or (B) may otherwise affect the implementation of this chapter; and ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 22 of 28 (2) report the results of the review to the department. (c) The department shall disseminate the reports to the governing bodies of enterprise zones and others as necessary to advance the purposes of this chapter. (d) To contribute to the implementation of this chapter, an agency may waive, modify, provide exemptions to, or otherwise minimize the adverse effects of the rules it administers on the renovation, improvement, or new construction of housing in enterprise zones or on the economic viability and profitability of business and commerce in enterprise zones. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.503. State Preferences (a) A state agency shall give preference to the governing body of an enterprise zone or a qualified business or qualified employee located in an enterprise zone over other eligible applicants for grants or loans that are administered by the state agency if: (1) at least 50 percent of the grant or loan will be spent for the direct benefit of the enterprise zone; and (2) the purpose of the grant or loan is to: (A) promote economic development in the community; or (B) construct, improve, extend, repair, or maintain public facilities in the community. (b) The comptroller may and is encouraged to deposit state money in financial institutions located or doing business in enterprise zones. (c) A state agency may and is encouraged to contract with businesses located in enterprise zones. (d) The department may give preference to enterprise zones in granting economic development money or other benefits. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 1423, § 8.71, eff. Sept. 1, 1997. § 2303.504. State Tax Refunds and Deduction; Report (a) An enterprise project is entitled to: (1) a refund of state taxes under Section 151.429, Tax Code; and (2) a deduction from taxable capital under Section 171.1015, Tax Code. (b) A qualified business is entitled to a refund of state taxes under Sections 151.431 and 171.501, Tax Code. (c) Not later than the 60th day after the last day of each fiscal year, the comptroller shall report to the ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 23 of 28 department the statewide total of the tax refunds made under this section during that fiscal year. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.505. Local Sales and Use Tax Refunds (a) To encourage the development of areas designated as enterprise zones, the governing body of a municipality through a program may refund its local sales and use taxes paid by a qualified business on: (1) the purchase, lease, or rental of equipment or machinery for use in an enterprise zone; (2) the purchase of material for use in remodeling, rehabilitating, or constructing a structure in an enterprise zone; (3) labor for remodeling, rehabilitating, or constructing a structure in an enterprise zone; and (4) electricity and natural gas purchased and consumed in the normal course of business in the enterprise zone. (b) To promote the public health, safety, or welfare, the governing body of a municipality or county through a program may refund its local sales and use taxes paid by a qualified business or qualified employee. (c) The governing body of a municipality or county that is the governing body of an enterprise zone may provide for the partial or total refund of its local sales and use taxes paid by a person making a taxable purchase, lease, or rental for development or revitalization in the zone. (d) A person entitled to a refund of local sales and use taxes under this section shall pay the entire amount of state and local sales and use taxes at the time the taxes would be due if an agreement for the refund did not exist. (e) An agreement to refund local sales and use taxes under this section must: (1) be written; (2) contain an expiration date; and (3) require that the person entitled to the refund provide to the municipality or county making the refund the documentation necessary to support a refund claim. (f) The municipality or county shall make the refund directly to the person entitled to the refund in the manner provided by the agreement. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 985, § 7, eff. Sept. 1, 1995. § 2303.5055. Refund, Rebate, or Payment of Tax Proceeds to Qualified Hotel Project (a) For a period that may not exceed 10 years, a governmental body, including a municipality, county, or political subdivision, may agree to rebate, refund, or pay eligible taxable proceeds to the ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 24 of 28 owner of a qualified hotel proj ect at which the eligible taxable proceeds were generated. (b) A municipality with a population of 1,500,000 or more may agree to guarantee from hotel occupancy taxes the bonds or other obligations of a municipally sponsored local government corporation created under the Texas Transportation Corporation Act (Article 15281, Vernon's Texas Civil Statutes) that were issued or incurred to pay the cost of construction, remodeling, or rehabilitation of a qualified hotel proj ect. (c) An agreement under this section must be in writing, contain an expiration date, and require the beneficiary to provide documentation necessary to support a claim. (d) A governmental body that makes an agreement under this section shall make the rebate, refund, or payment directly to the beneficiary. (e) In this section, "eligible taxable proceeds" means taxable proceeds generated, paid, or collected by a qualified hotel proj ect or a business at a qualified hotel proj ect, including hotel occupancy taxes, ad valorem taxes, sales and use taxes, and mixed beverage taxes. Added by Acts 1995, 74th Leg., ch. 76, § 5.53(a), eff. Sept. 1, 1995. § 2303.506. Reduction or Elimination of Local Fees or Taxes (a) To promote the public health, safety, or welfare, the governing body of a municipality or county through a program may reduce or eliminate fees or taxes that it imposes on a qualified business or qualified employee. (b) This section does not apply to sales and use taxes or property taxes. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.507. Tax Increment Financing and Abatement Designation of an area as an enterprise zone is also designation of the area as a reinvestment zone for: (1) tax increment financing under Chapter 311, Tax Code; and (2) tax abatement under Chapter 312, Tax Code. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.508. Tax Exemption for Neighborhood Enterprise Association A neighborhood enterprise association is exempt from state and local taxes during the period of the designation of the enterprise zone in which it is located. The exemption applies to tax arrearages and other back assessments on property leased under Section 2303.512. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.509. Development Bonds ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 25 of 28 To finance a project in an enterprise zone, bonds may be issued under: (1) the Act for Development of Employment, Industrial and Health Resources of 1971 (Article 5190.1, Vernon's Texas Civil Statutes); or (2) the Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes). Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.510. Industrial Development Corporation (a) The governing body of a municipality that is the governing body of an enterprise zone may create, in accordance with the Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes), an industrial development corporation for use by the enterprise zone. (b) A corporation created under this section has the powers and is subject to the limitations of a corporation created under the Development Corporation Act of 1979. To the extent of a conflict between this section and that Act, that Act prevails. (c) The articles of incorporation of a corporation created under this section must state that the corporation is governed by this section. (d) The governing body of the municipality that creates an industrial development corporation shall appoint the board of directors of the corporation. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.511. Other Local Incentives (a) The governing body of a municipality or county that is the governing body of an enterprise zone may: (1) defer compliance in the zone with the subdivision and development ordinances or rules, other than those relating to streets and roads or sewer or water services, of the municipality or county, as appropriate; (2) give priority to the zone for the receipt of: (A) community development block grant money; (B) industrial revenue bonds; or (C) funds received under the federal Job Training Partnership Act (29 U.S.C. Section 1501 et seq.); (3) adopt and implement a plan for police protection in the zone; (4) amend the zoning ordinances of the municipality or county, as appropriate, to promote economic development in the zone; (5) establish permitting preferences for businesses in the zone; ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 26 of 28 (6) establish simplified, accelerated, or other special permit procedures for businesses in the zone; (7) waive development fees for projects in the zone; (8) create a local enterprise zone fund for funding bonds or other programs or activities to develop or revitalize the zone; (9) for qualified businesses in the zone, reduce rates charged by: (A) a utility owned by the municipality or county, as appropriate; or (B) a cooperative corporation or utility owned by private investors, subj ect to the requirements of Subsection (b); (10) in issuing housing finance bonds, give priority to persons or projects in the zone; (11) in providing services, give priority to local economic development, educational, job training, or transportation programs that benefit the zone; or (12) sell real property owned by the municipality or county, as appropriate, and located in the enterprise zone in accordance with Section 2303.513. (b) A reduction in utility rates under Subsection (a)(9)(B) is subject to the agreement of the affected utility and the approval of the appropriate regulatory authority. The rates may be reduced up to but not more than five percent below the lowest rate authorized for a person described by Subsection (a)(9)(B). A qualified enterprise project or the governing body of the enterprise zone may petition the appropriate utility and the appropriate regulatory authority to receive a reduced rate under this section, and the regulatory authority may order that rates be reduced. In making its determination under this section, the regulatory authority shall consider revitalization goals for the enterprise zone. In setting the rates of the utility the appropriate regulatory authority shall allow the utility to recover the amount of the reduction. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 985, § 8, eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1121, § 5, eff. Sept. 1, 1999. § 2303.512. Lease of Public Property to Neighborhood Enterprise Association (a) The state or a local government may lease to a neighborhood enterprise association real property located in the association's geographical neighborhood area that is owned by the governmental entity and that is not being used by the entity. (b) The lease must be for a term of not less than 20 years and the full amount of the rental fees under the lease may not exceed $1 a year. (c) The state or local government shall renew the lease on its expiration if the association has continuously complied with Subchapter E during the lease term. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.513. Disposition of Public Property in Enterprise Zone ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Page 27 of 28 (a) After an area is designated as an enterprise zone, the state, a municipality, or a county that owns a surplus building or vacant land in the zone may dispose of the building or land by: (1) selling the building or land at a public auction; (2) selling the land to a neighborhood enterprise association; or (3) establishing an urban homestead program described by Subsection (c). (b) A municipality or county may sell a surplus building or vacant land in the enterprise zone at less than fair market value if the governing body of the municipality or county by ordinance or order, as appropriate, adopts criteria that specify the conditions and circumstances under which the sale may occur and the public purpose to be achieved by the sale. The building or land may be sold to a buyer who is not the highest bidder if the criteria and public purpose specified in the ordinance or order are satisfied. A copy of the ordinance or order must be filed with the department not later than the day on which the sale occurs. (c) An urban homestead program must provide that: (1) the state, municipality, or county is to sell to an individual a residence or part of a residence that it owns for an amount not to exceed $100; (2) as a condition of the sale, the individual must agree to live in the residence for at least seven years and to renovate or remodel the residence to meet the level of maintenance stated in an agreement between the individual and the governmental entity; and (3) after the individual satisfies the seven-year residency and property improvement requirements of the agreement, the governmental entity shall assign the residence to the individual. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. § 2303.514. Waiver of Performance Bond A subcontractor is not required to execute a performance bond under Chapter 2253 if: (1) the construction, alteration, repair, or other public work to be performed under the contract is entirely in an enterprise zone; and (2) the amount of the contract does not exceed $200,000. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 985, § 9, eff. Sept. 1, 1995. § 2303.515. Liability of Contractor or Architect A contractor or architect who constructs or rehabilitates a building in an enterprise zone is liable for any structural defect in the building only for the period ending on the lOth anniversary of the date on which beneficial occupancy of the building begins after the construction or rehabilitation, notwithstanding a statute of limitations to the contrary. ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 Government Code - CHAPTER 2303 Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Page 28 of 28 ://www.capitol.state.tx.us/statutes/go/go230300.html 1/12/2002 November 26, 2001 Mr. Kenny Kammer 6625 Pecan Place Place, TX 75462 Dear Mr. Kammer: #~3: •:i'.;T As per your request your name has been placed on the Monday, December 10, 2001 Council Meeting Agenda under the Paris Economic Development Section. This matter was tabled by City Council at its meeting in October so Council will need to vote to bring this matter from the table. If they vote in favor of the motion then the established policy allows up to two minutes for presentations under this item. If the Council does not vote in favor of bringing it from the table no presentation can be made. The City Council meeting will begin promptly at 6:00 o'clock p.m. When your item is introduced, you will be asked to come forward to the podium and state your name(s) and address(es) for the record and then proceed with your presentation which you should limit to two minutes. If I may be of further assistance in this matter, please do not hesitate to contact me in the future. Sincerely, . Michael E. Malone City Manager MEM/as P.O. BOX 9037 • PARIS,TEXAS 75481•9037 •(903) 785•7511 • FAX(903)785•8519 ~ NAME ADDRESS REQUEST FOR APPEARANCE AT CITY COUNCIL MEETING MAIL TO CITY MANAGER CITY OF PARIS RECEIVED P. O. BOX 9037 PARIS, TX 75461-9037 NOV 16 2001 Kenny Kammer CITY MANAGER PARIS, TEXAS STREET ADDRESS TELEPHONE 79'V 7 ~ 7~ REASON FOR APPEARANCE AT CITY COUNCIL MEETING: DATE APPROVED: DATE DISAPPROVED: E. Malone, " Manager _ P78D 640cK oF i16.Jh'4e"_ Ti{kvuaff 7o naet-:°cE 5-r4EE7. MINUTES OF THE PARIS ECONOMIC DEVELOPMENT CORPORATION SPECIAL MEETING OCTOBER 17, 2001 The Paris Economic Development Corporation met in special session on Wednesday, October 17, 2001, 4:00 P. M., at Heritage Hall, 1009 West Kaufman Street, Paris, Texas. Director Jay Guest called the meeting to order with the following Directors present: Don Wall, Mike Dunn, and Curtis Fendley. Also present were ex-officio Board Members Bobby Walters, Mike Graxiola, Executive Director Gary Vest, City Manager Michael E. Malone, and City Clerk Mattie Cunningham. Director Guest called for approval of minutes from the previous meeting. A motion was made by Director Fendley, seconded by Director Wall, for approval of the minutes as presented. The motion carried unanimously. City Manager Malone advised that the financial report for the month of September was not available at this time because the Finance Director was in the process of closing out the fiscal year and has not completed the process. He stated that the Finance Director would fonvard a financial report to the Board as soon as it was available. Director Guest called for consideration of and action on a recommendation to the City Council of the City of Paris on the tax abatement application from S. 1. Management, Inc., and KG Properties, LLP. Gary Vest, Executive Director of the Paris Economic Development Corporation, advised the Board that this request had been considered at the last meeting and the Board did not take any action. Mr. Vest advised that Gary Kammer, one of the principals of S.I. Management Inc., and KG Properties, LLP was here today to speak. Kenney Kammer who had visited with the Paris Economic Development Corporation at the last meeting asked if this matter could be placed back on the agenda for reconsideration. Mr. Vest said that last month nine incentives were requested. There was confusion about those incentives. Mr. Vest advised that the companies have Minutes of Special Mee[ing PEDC October 17, 2001 Page 2 withdrawn their request for all of the incentives except the tax abatement. Mr. Vest pointed out that one of the concerns that the PEDC had was about the financing. His understanding is they have 90 percent financing from HUD, which means they will have to do 10 percent ofthe financing locally. Mr. Vest advised that the PEDC has not done this type of tax abatement in the past. He said the other abatements that have been given were for industrial type facilities. He stated that it is allowed under state law because it is in an enterprise zone, and there is goodwill that could be established. Mr. Vest said he did not know if the City Council would go through with this tax abatement because of the perception of East and West Paris. He advised that this would be a significant addition to West Paris. Mr. Vest further advised that there are other things that they need to look at if the PEDC is going to recommend a taac abatement of this type. Mr. Vest said his recommendation to the Board would be to do the tax abatement on a phase-in basis for this type project. He said they would give 80 percent abatement for year one through three; year four would be reduced by 25 percent; and then continue to reduce the tax abatement for years five, six, seven. After seven years the property would be on the tax roll at one 100 percent. Mr. Vest said that the proposal that he and City Attorney Schenk have been working on is still not refined, and it will come to the Board as soon as it is finished. He said the recommendation of this type of tax abatement phase-in would be based on the amount of capital investment and job creation. He said for this project, the Board and Council could expect 2.7 million dollars for capital investment and 25 employees with a$400,000.00 annual payroll, so it would be a very significant investment for the area of town where it would be located. Mr. Vest further advised that the PEDC can only make a ' recommendation to the City Council. Director Guest suggested that the PEDC adopt a policy for use in the future. Mr. Gary Kammer came forward speaking on behalf of their request for a tax abatement. Mr. Kammer said that they had chosen West Paris to attempt to Minutes of Special Mee[ing PEDC October 17, 2001 Page 3 develop the area. Mr. Kammer advised that he was not aware ofthe enterprise zone, but that his brother was the one who researched the possibility of receiving a tax abatement. Mr. Kammer told the Board that he felt this was an excellent project. Mr. Kammer said they would appreciate the PEDC recommending this project to the City Council for a tax abatement. Director Guest called for consideration of and action on a recommendation to the City Council of the City of Paris on the tax abatement application from S.I. Management, Inc., and KG Properties, LLP. No motion was made and the item died for lack of a motion. Mr. Vest reported that they have received eight inquiries in response to their advertising campaign. Mr. Vest stated that, in light of the national economy, he thought the PEDC should stop advertising until after the first of the year. Mr. Vest said they were spending between 70 to 90 thousand dollars a year in advertisement through the PEDC, and he felt that they were not going to get any type of response from advertisement. Mr. Walters felt the PEDC should still utilize the internet because people go to the internet to look for opportunities to move to certain places. Mr. Vest stated that they still have annual directories that the PEDC is listed in, and they will still be working with the Deparhnent of Economic Development and TXLT. Mr. Vest said on September 28, 2001, they had a prospect visit from a company that was looking at Paris, and they showed the Oliver Rubber Plant along with a number of sites. He said the company is a relatively small operation requiring only thirty thousand square feet, and would employ approximately 35 ' employees. Mr. Vest advised that they made a proposal for a"build to suit" project, and they are considering that possibility at this time. Mr. Vest advised that they do have a company that has made an offer on the Oliver Building. The offer was rejected by Cooper Tire, but he is hoping that they will get back together. Minutes of Special Meeting PEDC October 17, 2001 ~ Page 4 Mr. Vest told the Board that the Texas Economic Development Council had their annual conference in Dallas from September 19' through the 21", and he and Eric attended that meeting. They also had a meeting with the Economic Development of Irving, Texas. Mr. Vest said that in 1998 the PEDC did a wage and benefit survey along with a labor survey and last year they talked about doing another. The Board instructed him to go out and get bids from a number of firms before they hiring this company to do this service. He said that as it turned out, they were trying to get regional service because they could get a regional labor survey at a considerably lower cost if they did it themselves. After he proposed the contract to the Board, Greenville, Commerce, and Sulphur Springs all decided not to do the survey. Mr. Vest said they had a meeting on October 1, 2001, with Economic Development Services and it looked as if the company has Greenville, Commerce, and Sulphur Springs lined up to do a labor survey along with a wage and benefit survey. Mr. Vest advised that the labor survey will cost approximately $10,000.00 and the wage and benefit survey will cost approximately $4,500.00. Mr. Vest pointed out that there is $15,000.00 budgeted forthe surveys. It was the consensus ofthe Board to go forward with the surveys. Mr. Vest reported that the Northeast Texas Regional Mobility Council is a new Council that has been formed to push for highway development in the region which includes Lamar, Delta, Hopkins, and Hunt Counties. He said there are two board members from each county along with one at-large, who is Jack Gray from Texas A& M Commerce. He said they have adopted a program of trying ' to get I-30 designated as a master corridor, Highway 24 four lane completed through Delta County, and getting Highway 19 as a super two lane. Mr. Vest furnished the Board Members with brochures regarding Proposition 15, which will allow TxDOT to issue bonds to finance highway construction. There being no further business, the meeting was adjourned. Minutes of Special Meeting PEDC October 17, 2001 Page 5 JAY GUEST, DIRECTOR ATTEST: THOMAS E. HAYNES ASSISTANT CITY CLERK REQUEST FOR APPEARANCE AT CITY COUNCIL MEETING MAIL TO CITY MANAGER CITY OF PARIS P. 0. BOX 9037 REL'EIVED PARIS, TX 75461-9037 NAME kADDRESS / ~ ~Q tz ~A-~s/ x 7~6 Z STREET ADDRESS TELEPHONE ~G3 - 7d'~-7 97f"~ REASON FOR APPEARANCE AT CITY COUNCIL MEETING: OCT 0 g 2001 3~ isAM- CITY NIANAGER PAR[S. TEXAS DATE APPROVED: DATE DISAPPROVED: Michael E. Malone, City Manager .N-n) o5{rfi r~~.d L/d/nt~'s s44 vUT Y MINUTES OF THE r PARIS ECONOMIC DEVELOPMENT CORPORATIbN SPECIAL MEETING SEPTEMBER 12, 2001 The Paris Economic Development Corporation met in special session on Tuesday, September 12, 2001, 4:00 P. M., Paris Junior College, Applied Technology Building, Room 1016, 2400 Clarksville Street, Paris, Texas. President Mike Rhodes called the meeting to order with the following Board Members present: Jay Guest, Michael Dunn, and Curtis Fendley; ex- officio Board Members Bobby Walters, and Terry Christian. Also present were Executive Director Gary Vest, City Attorney Larry Schenk, City Manager Michael E. Malone, Director of Finance W. E. Anderson, City Engineer Shawn Napier, and City Clerk Mattie Cunningham. President Rhodes called for approval of minutes from the previous meeting. A motion was made by Director Guest, seconded by Director Fendley, for approval of the minutes as presented. The motion carried unanimously. President Rhodes introduced Shawn Napier, the new City Engineer for the City of Paris. President Rhodes asked Gene Anderson, Director of Finance, to give the financial report for the month of August. Mr. Anderson came forward telling the Board that the interest amount is up because all of the CD's paid their interest, other than that, they would see the usual revenue. He said regarding the expenditures, the line item, associations, represents the payment to the World Economic Development Alliance. Other than that, you will see the usual repetitive expenditures. ' A motion was made by Director Fendley, seconded by Director Guest, for approval of the financial report as presented. The motion carried unanimously. President Rhodes called for consideration of and action on a recommendation to the City Council of the City of Paris on the tax Paris Economic Development Corp. Y Sept.12,2001 Page 2 abatement application from S. I. Management, Inc. And KG Properties, LLP. President Rhodes advised that a few months ago it was agreed that all tax abatement requests would come through the Paris Economic Development Corporation before they go to the City Council. Mr. Rhodes said this is our first request. Gary Vest, Executive Director of the Paris Economic Development Corporation, reported that this request is for an Assisted Living Center, which will be located at 1746 Bonham Street. He said it would employee twenty-five people, and will have a$400,000.00 payroll. They will have a capital investment of $2,744,000.00. Mr. Vest said normally this type of project would not be considered for a tax abatement, but the Assisted Living Center will be within the enterprise zone, and would be eligible for tax abatement under the state tax abatement laws. Mr. Vest advised that the Paris Economic Development Corporation's guidelines and procedures is to give tax abatements to manufacturing and warehouse distribution facilities. Mr. Vest said there would be goodwill to be gained from a new project in West Paris. Mr. Vest advised that the first thing that this compan.y asked for was a one hundred percent seven year tax abatement. Mr. Vest said that he and the City Attorney have been working on a tax abatement policy which has not been presented to this board or the City Council. I t has a scale that calls for a graduated tax phase-in. 1Ie said if this board makes a recommendation to the City Council, his suggestion would be that they go in with an eighty percent abatement for the first , three years and reduce that by twenty-five percent for the next four years so that after seven years they will be paying one hundred percent of the tax. Mr. Vest said the compan.y has asked for a one hundred percent refund of Local Sales and Use Tax. This is the first time this has been requested. Mr. Vest advised that in order for the PEDC to do this, they would also have to receive enterprise designation to qualify for this request. He said Paris Economic Development Corp. y Sept.12,2001 Page 3 it was really doubtful that this type project could receive enterprise status. The company was also asking for a Direct -Interest Loan packaize. Mr. Vest would not recommend that PEDC enter into such an incentive. Other requests were to promote economic development in the zone and give prompt consideration to building permit request; utilization of the Waterworks and Sewer System Revenue Bonds for the purpose of improvements and the payment of professional services related to the construction and financing of such projects; increase in Police and Fire Protection for this vulnerable segment of our community; reduce utility rates on Water and Wastewater by ten (10) percent, as well as the five (5) percent rate reduction rider offered by TXU Electric and Gas, both for seven years; and provide funding for improving of existing roads to the site as needed. Mr. Vest told the Board that the only thing he would recommend is the tax abatement using the tax phase-in basis, which is a performance agreement, and they would not get a tax break if they do not perform. President Rhodes called for consideration of and action on a recommendation to the City Council of the City of Paris on the tax abatement application from S.I. Management, Inc. And KG Properties, LLP. No motion was made and the item died for lack of a motion. Mr. Vest reported that they have had only four leads since the last meeting. One was from Outlook Magazine, another from Area Development and two from the World Economic Development Alliance. Mr. Vest said he and Eric attended a show, which was the Northeast Equipment Manufacturers, as an attendees to this show, they passed out brochures, pens, and business cards. Mr. Vest explained that they will place this information into the computer and will be able to direct mail those manufacturers and continue Paris Economic Development Corp. r Sept. 12,12001 Page 4 to work with them. Mr. Vest showed the Board a sample of the postcard that they are developing that will be distributed in California. Mr. Vest advised that ,yesterday, in Austin, he attended a meeting with the Texas Good Roads Association. At the next PEDC meeting he will bring to the Board a proposed resolution to support Proposition 15 which will allow TxDOT to issue bonds to finance highwav construction. He said this is something that PEDC has promoted to retain and attract manufacturers and warehouse distribution companies. Mr. Vest reported that he and Eric entertained a prospect today for the Oliver Rubber Building. He said it is a good company and project and felt that it is something that he will be visiting with the Board about, because he felt that the PEDC may have to participate in some degree to make this happen. Mr. Vest discussed the building with the Board. He said this company is a sister company with Flex-O-Lite and they would take the Flex-O-Lite product and use it in a further manufacturing process. Mr. Vest advised that this company would start with one shift of 15 people and eventually go to three shifts. There being no further business, the meeting was adjourned. MICHAEL RHODES, PRESIDENT ATTEST: MATTIE CUNNINGHAM City Clerk REQUEST FOR APPEARANCE AT CITY COUNCIL MEETING MAIL TO t CITY MANAGER CITY OF PARIS P. O. BOX 9037 PARIS, TX 75461-9037 NAME ADDRESS kcl-•d 4CJS;~ x7sZr1(0a-' STREET ADDRESS TELEPHONE ~?~6-7?7p REASON FOR APPEARANCE AT CITY COUNCIL MEETING: DATE APPROVED: DATE DISAPPROVED: Michael E. Malone, City Manager _ uroi~cve- itsr s7ir>es ~R7G lfBf4-T"~yinc^»✓T L..F!-tR'l5 REQLTEST FOR REINVESTMENT ZONE INCENTIVES OFFERED BY TfE CITY OF PARIS THE LAMAR COLONY An Assisted Living Community TABLE OF CONTENTS I. AT'PLICATION with Attachment ~ II. PLATS and MAPS III. LEGAL DESCRIPTION OF PROPERTIES A. LAND (refinance), previous owner - Phillip Nance B. LAND (purchase), current owner - Rance Merritt IV. APPRAISAL V. PRELIMNARY DRAFT OF MONTHLY CASH FLOW PROJECTION APPLICATION CITY OF PARIS, PARIS, TEXAS TAX ABATEMENT AND REINVESTMENT ZONE DESIGNATIOM i APPLICATION THIS APPLICATION MUST BE RECEIVED BY TXE CITY NOT LESS TKAN SIXTY (60) DAYS PRIOR TO TXE DATE THAT CONSTRUCTION OF THE IWROVEMENTS IS EXPECTED TO COMMENCE. 1. NAME OF APPLICANT FIRM: S. I. Management, Inc. & KG Properties, LLP 2. ADDRESS: 2485 Kessler Paris, TX 75460 3. TELEPHONE: (903) 784-7979 or (903) 783-5149 (Pager) 4. PROJEC'I' ADDRESS (if different from above): 1746 Bonham Street, Paris, TX 5. 1'YPE OF BUSINESS ORGANIZATION (corporation, etc.): Limited Liab.Partnership (R.E. ownership) Texas Corporation (Operations) in the state of Texas 6. NAME(S) OF PRINCIPAL OWNERS OR OFFICERS: Gary W. Kammer Kenneth L. Kammer Leonard J. Kammer. Sr. 7. IS THIS BUSINESS SEASONAL IN NATURE: _YES X NO 8. NUMBER OF CURRENT EMPLOYEES: (in Enterprise Zone) 0 (in City of Paris) I (in Lamar County) 9. CURRENT PAYROLL (in City of Paris): 10. NUMBER OF NEW JOBS PROPOSED: 0 0 25 11. LIST THE TYPE AND NUMBER OF NEW JOBS TO BE CREATED AND THE p~ PROJECTED SALARY FOR EACH JOB: ManagerQhSK r3 Medical Aides '~'10/f~.t . aa, " 1 Maintenance ^w~$/Jr,t ~ i v12 Persona~~ l~~a~~e Asst. , 1Activity Director / Food Service Per onnel ~ "1 Laundry Workerq'y P~/L 2 Housekeeping 1 Office Managerr,)~ / 12. PLEASE PROVIDE INFORMATION PERTAINING TO THE TRANSFER OF JOBS RELATED TO THE IMPROVEMENTS OR EXPANSION: N/A , 13. TOTAL IMPACT ON PAYROLL FROM NEW JOBS: $ 399,000 14. PRE-PROJECT MARKET VALUES, AS DETERMINED FOR LOCAL PROPERTY TAXATION, OF THE EXISTING FACILITY, SITE, TANGIBLE PERSONAL PROPERTY, AND INVENfORY: A. REAL PROPERTY: B. TANGIBLE PERSONAL PROPERTY $ 45,000 15. GIVE A DETAILED DESCRIPTION OF THE PROPOSED IMPROVEMENTS OR EXPANSION (A1"fACH ADDITIONAL SHEETS, IF NECESSARY): Construct a state licensed 39 suite assisted living community, consist3ng f of a 36.000 sq.ft. structure on a 68,460 sa ft tract of land located in the reinvestment enterprise zone designated by the City of Paris. An adjacent lot would be purchased for future expansion. 16. THE ESTIMATED DATE OF COMPLETION OF THE IMPROVEMENTS: 2 to March 2002 17. THE ESTIMATED DATE OF OPERATION OF THE IMPROVEMENfS OR EXPANSION: April, 2002 to June 2002 18. ESTIMATES OF AMOUNTS TO BE INVESTED: A. PURCHASE OF LAND/BUILDING: B. NEW BUILDING CONSTRUCTION: C. BUILDING ADDITIONS: D. IMPROVEMENTS TO EXISTING BLDG. E. MACHINERY & EQUIPMENT: F. FURNITURE & FIXTURES: TOTALINVESTMENT AMOUNT $ 45,000 + 55,000 (expansion; $ 2,484,000 $ 0 $ 0 88.000 $ 72,000 2,744,000 19. TOTAL INVESTMENT ELIGIBLE FOR ABATEMENT: $ 2,744,OOa fromitema (pleasecircle) 0 ( C D EO FQ 20. LIST THE TYPE AND VALUE OF ECONOMIC DEVELOPMENT INCENTNES REQUESTED (I.E., TAX ABATEMENT, LOCAL SALES TAX REFUND, SALE OF CITY- OWNED PROPERTY, ETC.): See Attached $ $ $ 21. FOR TOTAL PERSONAL PROPERTY INVESTMENT INDICATED ABOVE IN ITEM 19, LINES E& F, SHOW PROJECTED DOLLAR VALUE IN EACH DEPRECIATION SCHEDULE. KG Propertles, LLP SI MANA6EMENT, Inc. TNE LIIMAR COLONY Ao Assisted l"nnne Communft 2485 Kessler Paris, Texas 75460 USA Phone 903-783-5149 September 04, 2001 RE: ITEM # 21 OF TfE APPLICATION FOR REINVESTMENT ZONE DESIGNATION : TfE TYPE AND VALUE OF ECONOMIC DEVELOPMENT INCENTIVES REQUESTED 1.) 100% Ta3c Abatement on improvements to site and building for seven (7) yeazs @ $_2,744,000.00_; and 2.) 100% Refund of Local Sales and Use Taxes @$ 100.000.0Q; and 3.) Direct Low-Interest Loans/f'ackages land @$36,000 00 refinancel & land @$55,000 00 nurchase for exo n~ sionl_ building construction @ $ 1,987,200 00 machinery & equipment @ $ 70,400.00 fumiture & fixtures @ $ 57,600 00 working capital @ 100,000 00 ; and 4.) Amend Zoning Ordinances in order to promote economic development in the zone; and 5.) Give prompt consideration to building pernvt requests; and 6.) Utilization of the Waterworks and Sewer System Revenue Bonds for the purpose of improvements and the payment of professional services related to the construction and financing of such projects; and 7.) Increase Police and Fire Protection for this wlnerable segment of our community; and 8.) Reduced Utility Rates on Water and Waste Water by ten (10)%, as well as, the five (5)% rate reduction rider offered by TXLJ Electric and Gas, both for seven (7) yeazs: water and waste water $59.4,44 @ 10% rate reduction =$50 00 ner montlL electric and gas via TXU $2,232.9.4 @ S% rate reduction =$111 60 ner month; and 9.) Provide funding for improving of existing roads to the site as needed; and [ ATTACHIVIENT ] I• (7 yr) 22 ass N. (16 yr) t II. (10 yr) V. (18 yr) III. (12 yr) VI. (20 yr) 22. STANDARD INDUSTRIAL CLASSIFICATION (SIC) NUMBER: 623000 23. NAME, ADDRESS, AND PHONE NUMBER OF CONTACT FOR THE PURPOSES OF THIS APPLICATION: Kenneth L. Kamer 784-7979 or 783-5149 6625 Pecan Place Paris, TX 75462 24. INDICATE THE DATE AND TIME THAT CITY OFFICIALS MAY INSPECT THE CURRENT FACILITIES PRIOR TO THE COMMENCEMENT OF CONSTRUCTION: September, 2001 25. IF APPLICABLE, THE NAME, ADDRESS, AND PHONE NUMBER OF ANY CONSULTANT/ FINANCIAL ADVISOR ASSISTING YOU WITH THIS APPLICATION: Paul T. Wells> CPA 785-8481 1323 Lamar Avenue, St. D Paris, TX 75460 26. NAME AND TITLE OF PERSON WHO WILL HAVE AUTHORII'Y TO SIGN ANY AGREEMENTS RELATED TO THIS APPLICATION: Kenneth L. Kammer or Gary W. Kammer 27. DO YOU INTEND TO SUBMIT AN ENTERPRISE PROJECf APPLICATION? No 28. PLEASE ATTACH THE FOLLOWING: 1. A PLAT SHOWING THE PRECISE LOCATION OF THE PROPERTY, ALL ROADWAYS WITHIN 200 FEET OF THE SITE, AND ALL EXISTING ZONING AND LAND USES WITHIN 200 FEET TO THE SITE. 2. IF THE PROPERTY IS DESCRIBED BY METES AND BOUNDS, A COMPLETE LEGAL DESCRIPTION. 3. IF A RECENT APPRAISAL HAS BEEN DONE, ATTACH THE SAME HERETO. OTHERWISE, ATTACH A COPY OF THE PRINTOUT FROM THE LAMAR COUNTY APPRAISAL DISTRICT WHICH SHOWS THE VALUE OF THE PROPERTY. THIS PRINTOUT SHOULD BE AVAILABLE UPON REQUEST. CERTIFICATIONS l. THE APPLICANT BELIEVES THE INFOFtMATION CONTAINED HEREIN AND SUBMITTED HEREWITH IS COMPLETE AND CORRECT TO THE BEST OF HIS OR HER KNOWLEDGE. 2. THE APPLICANT HEREBY CERTIFIES THAT THE EXPANSION OR CONSTRUCTION OF IMPROVEMENTS THE SUBJECT OF THIS APPLICATION HAS NOT BEEN COMMENCED. 3. THE APPLICANT UNDERSTANDS THAT INITIATION OF THE PROJECT PRIOR TO RECEIVING FINAL LOCAL APPROVAL MAY RESULT IN THE LOSS OF THE ABATEMENT. 9. THE APPLICANT UNDERSTANDS THAT, IF APPROVED, THE INFORMATION CONTAINED IN THIS APPLICATION WILL FORM THE BASIS FOR A SIGNED AGREEMENT BETWEEN THE APPLICANT FIRM AND THE CITY. STATE LAW AND LOCAL POLICY REQUIRE ANNUAL MONITORING FOR COMPLIANCE TO THAT AGREEMENT. FAILURE TO COMPLY MAY RESULT IN LOSS OF INCENTIVES. 5. THE APPLICANT HEREBY CERTIFIES THAT THE FIRM IS CURRENT IN AI,L TAX OBLIGATIONS TO THE CITY OF PARIS. COMPANY: S.I. Management, Inc. By: ignatur NdIri2: 'Kenneth L. Kammer Title: President Date: 9-4-01 PLATS & MAPS l' ADDENDA City Map Photographs of the Subject Plat Map Flood Map Appraisal Order Qualification Summary for the Appraiser ~ Photographs Looking north from church lot across Bonham street at the subject, dwelling on right to be razed Looking east on Maple, subject on right starting at utility pole and extending east just past third (faz) dwelling, fust two dwellings to be salvaged (sold for move off) faz dwelling to be razed PAT MURPHY & ASSOCIATES Photographs Looking east on Bonham, subject on left; Immanuel Baptist Church on right and Hicks Tire and Muffler in background on right Looking northeast across Bonham at west half of frontage PAT MURPHY & ASSOCIATES Photographs Looking south at 1753 Maple Looking south at 1749 Maple PAT MURPHY & ASSOCIATES 2 ~ OD 31 _50' ~'p ~ ° HOGSTON 4°".~0 171o ,7oz ~ /A//.1o3 /777 : 7_ C /~Ct I ^J4Y 65 8 63 9 63' 10 63 II 65 'o 12 m 65 13 47 14 54 15 94 16 a) 17 ~ m ~ L 27 26 25 24 23 22 21 20 19 18 ~ co 45 45 4 4 4 ' 65' 61' 65 . /AYP /SYe i.Jbz 17)t4 177{L 17 ~ M N //Ld : •~a• //u~ PL~ 60' 87.4 24 23 22 21 20 19 IB I 16 l5 87.4' ~ . u q 11 ~I U q 11 1 CI+'t' . . ~ . IO 9 8 7 6 5 ~g • 2 I (D ~ 60~ 87.4" 14 I 15 I 16 Z I~ 13 ( 12 6 8' h ~ ;n ~ . 7 u~ 8 ti 6 b 9 ~ r 4 I 3G I 3F i _ Op I -B ~ X, 95.5 °I-A, 71f : 17 ' 174 I72G -1710 1704 /6t6 :F. '.:./G!~ U, S.' HIGHWAY':.._N O. 82 ~ ~ . ~ . . , tiI 2 3FI 4 5 6 7 8 `OD q 18 17 16 15 14 13 ~ 12 II 10~ 3 57 u ~ . CONNER i BoNHAM ~ C 17 KAUF IMIT O F ❑ DETAILED AUS STUDV ~ STREET :ONE B 560 ' 559 ' c STREET ❑ sc.... t r ~ L 589 Z No. 15 3 IMIT F ~Z 5, o Tuo 2 ZONE B N 20NE NHAM n F'=- y B~ , ST~T P M 56 STqEET )U F STqEET ~ 563 I ~ ¢ H N 55= SHERMqN F- I 3 ~ ZONE A2 w W 2 ti y ~ I~I ~,II i NITIOMAI FLOOD INSUNAMCE P0.060.AM FIRM FL000 INSUHANCE RATE MAP CITY OF PARIS, TE%AS LpMAR COONTY PANEI 3 OF 8 !su w~r wa~x roe r~wm ~or rnwrem 4 Branch a 551 Q F o w t RqME ~ 549 w w Q w F h e 545 ~ S M ^I y 546 542 ~ 539 R M 19 2 e I a r ZONE A2 p j ZONE B 0 531 O Sy ~ ~ Baker Branch Tributary No. 10 E B CUMMUNITY-PIINEL NUMBEB 480427 0003 B EFFECTIYE OATE: , DECEMBER 15, 1983 Fedenl Emenency Alenaaemem A6ency or:; az 133 3 P R N ~ w w ¢ ti ~ EIE , ~ LAKE ~r0 vAiNwi~ ICROOK , \ . awIu onn ' 1! ~ \\l l vAnis clrr uui*s ~ r--;-~ iJ ~I INDUSiMIAI I sti~F ~I ' ✓ I~ I ~ vewIE ~ AxousrRIet I srteIs. i ~ L_'a i I ~ I S ¢ ~2~ S r3i ~d~ I 0 u~. MH ~ ~ / the ie•as lakes iroil w;nds 654 mil=s thrwQn Norfreas. iexas. One- of the Ytv sroo! o i i: ,~I i; Pcris a-^ Counry. me oo~nnN V e n^~ s f s~~wn a o a~ u IpRP i i 115i '1 N']lP' re pn enprt5l . t'1JJ:9' f15 Oh 5 t.5 b toF J n" c mblem L M lound on i nCp o'np fne Tro.~i,soliwwmor,.oun ystaitlaH eC.^.'e o t 7e*a: 05 ~u/'dRysN InC.~Sa~OSO~ ~'Of.'le Irav=_I sOCrr iJ vi,^.' inE Lona 9or Sio1e. ine G'ean i nout_ is the 1`10nss'. most Sconic roule Irom Ine Mitlwesl Ic the GJI Coas? vo iotw ontl the Intlian Ni ?umpiY.e. We have Pinced the ertlblem On MB m7G Olpnq tne rpl'fe I . I I I J ~ , rJ ~ WAt" 1KE "°`°"`"m VISITOP.S C ~ and LAMAE CHAMBER < 1651 QRlSC P (21a)7 .~L; --1~ I- 0 NORiN ~ r l~ S\mS , ~ c aw f~/ ez iMENi Pil IIg F 'pEE Q YT P~ ~ m dITF1f! INOUSTNIAL ~ sire rw FIELDRO.~ ld' , INOYST111ALI I 411EI~ i 3 IINOU4TXIAL ~ ~ LTE I/! _ ~ IW. . \ W ~ tl~. 11 I ~ i_-4D- i m I I p.~RISC ~V l 41i9 . 6 ~ 19 I SCA4E I I } OI FIRST FEDERAL ~ ~~~,r~ Community Bank 1 APPRAISAL ENGAGEMENT LETTER TO: GVL( a 1 'C 4 SSnC_ You are hereby engaged to provide appraisal services to FIRST FEDERAL COMMIJNITY BANK to facilitate the underwriting of a loan appiica[ion. You are [o provide the appraisal service in compliance with [he Appraisal Policies of FIRST FEDERAL COMMUNITY BANK, a copy of which has been provided to you previously, and to provide your services in a timely manner. I-4 Family Dwelling : t-- - Limited Complete Summary Residential lot/acreage - Narrative Report Attach flood zone map Investment Property - Income Approach required ~ ~`3 ~ ,i 1 f e1 ei/ /te ~ ~ s~v~y /,~ur<ue~ZpI REAL ADDRESS: (zo .fLU S i . /8, /9.20 %z o/7- Cd i'3 /7 / INSTRUCTIONS TO SEE HOUSE: r-¢ c 5 F-+ec S i , ATTACHED HEREWITH: Sa el s Contract Plans Specifications of ma[erial List of contractors/sub-contrectors T:i Other: _ First Federal Representative Date B A N K I N G C E N T E R S PARIS PARIS - LOOP MT. PLEASANT CLARKSVILLE 830 CLARKSVILLE ST. 3010 NE LOOP 288 805 N. MADISON 203 W. WASHINGTON PARIS. TX 75480 PARIS. TX 75460 MT. PLEASANT. TX 75455 CLARKSVILLE. TX 75428 (903) 784-0881 (903) 784-0881 (903) 577•1118 (903) 427.7858 FAX (903) 789-8781 FAX (903) 784-6781 FAX (903) 577•0511 FAX (903) 427•4038 MEMBER FEDERAL DEPOSIT INSURANCE CORPORATION OUALIFICATION SUMMARY FOR W. P.(PAT) MURPHY Owner of Pat Murphy and Associates, Mc Murphy has been an independent fee appraiser since 1977, appraising and managing residential, farm/ranch, and income producing properties in Texas, Kansas, and Oklahoma, with prior work experience in farming, ranching, building material, and residential/light commercial construction businesses. He has appraised for a wide variety of clients including government agencies, lending institutions, lawyers, tide companies, insurance complnies, and large corporations. In addition to his appraisal and consultation business, he also manages several ranches and income properties for absentee owners, and resides on his own ranch outside of Puris in Lamar County, Texas. EDUCATION Mr. Murphy graduated from Paris High School in 1965 and from Texas A& M University with a Bachelor of Science degree in Agriculture Economics in 1969. Mr. Murphy has taken and successfully passed over 13 appraisal courses with formal examinations given by [he American Institute of Real Estate Appraisers, Society of Real Estate Appraisers; National Association of Independent Fee Appraisers; the American Society of Farm Managers and Rural Appraisers; and the Appraisal Institute. In addition, he has taken numerous seminars from these same appraisal groups on a wide variety of subjec[s pertaining to property valua[ion. MEMBERSHIPS CERTIFICATIONS, DESIGNATIONS State Certified General Real Estate Appraiser - Texas TX-1320215-G State Certified General Rea( Estate Appraiser - Oklahoma OK-10079 Appraisal Institute - Member Appraisal Institute, (MAI), #9495 American Society of Farm Managers and Rural Appraisers - Accredited Rural Appraiser, (ARA), # 948 Appraisal Insti[ute - Senior Residential Appraiser, (SRA) Former RM # 1689 Texas Real Estate Commission - Broker #274253 PROFESSIONAL ACTIVITIES Direc[or of the Texas Chapter of the American Society of Farm Managers and Rurai Appraisers, 1993 ro 1995, Vice Presiden[ - 1996, President Elect -1997, President - 1998 Member of Ihe national Membership Development Commi[tee of the American Society of Farm Managers and Rural Appraisers, 1994 through 1997 Member of the Regional Panel on Ethics and Counseling of the Appraisal Institute, 1992 ro present Co-developer and course coordinaror of the seminar "Appraising Rural Residential Properties" for [he American Society oF Farm Managers and Rural Appraisers Certified Instrucror for the American Society of Farm Managers and Rural Appraisers EXPERT TESTIMONY Mr. Murphy has testified as an expert wiMess regarding real estate valuation before various Federal, State, and County courts in Texas. PAT MURPHY & ASSOCIATES LEGAL DESCRIPTIONS Statement of Account NO71CE: 7his is a statement ot Taxes Pald & Due as of 08/7312001 02:07:05PA1 , basetl upon the tax recortls of ihe taz ofiice. LAMAR COUNTY APPRAISAL DISTRICT Property Information 521 BONHAM Property ID: 20442 Geo ID: 023010-00100-0190 - PO BOX 400 Legal Acres: 0.0000 ~ARIS, TX 75461-0400 Legel D25C: WARREN ADDITION, BLOCK 1, LOT 19-20, 1749 1753 MAPLE Value Information Improvement HS: 6,970 Improvement NHS: 0 8 00 Owner ID: 20433 OwnershiP 100.00 % Land NHS: 0 NANCE R C Productivity Market: 0 C/O PHILLIP NANCE Productivityuse: o 3610 GRAHAM ST Assessed Value 14,970 PARIS, TX 75460-3500 Entity Description ' . . Pct. Ex Code , Description CAD Central Appraisal District 100.00 % CPA CITY OF PARIS 100.00% GLA LAMARCOUNTY 100.00% JCP PJC 100.00% SPA PAFISISD 100.00% Paid Bills Summary Entity . Year Statement ID Tax Paid . Disc/P&1 Paid Att. Fee Paid Under/OvedRefund Posting Date . . Amount Paid CPA 1996 27681 726.53 60.74 28.09 0.00 01/31/2000 215.36 GLA 1996 27681 86.22 41.39 19.14 0.00 01/31/2000 146.75 JCP 1996 21681 39.18 18.82 8.70 0.00 01/31/2000 66.70 SPA 1996 27681 372.71 178.90 82.74 0.00 01/37/2000 634.35 Total tor Year 1996 7,063.16 CPA 1997 21874 135.25 48.69 27.59 ' 0.00 01/37/2000 277.53 GLA 1997 21874 87.81 37.61 17.97 0.00 01/37/2000 137.33 JCP 1997 21874 4020 14.47 820 0.00 01/37/2000 62.87 SPA 1997 21874 370.02 13321 75.48 0.00 01/31/2000 578.71 "otalfor Year 1997 990.44 JPA 1998 21799 73525 32.46 25.16 0.00 01/31/2000 192.87 GLA 1998 21799 87.81 21.08 16.33 0.00 01/37/2000 125.22 JCP 7998 21799 41.57 9.98 7.73 0.00 01/31/2000 59.28 SPA 1998 21799 370.02 88.80 68.82 0.00 01/3112000 527.64 Total tor Year 1998 905.01 CPA 1999 67373 126.58 0.00 0.00 0.00 01/31/2000 126.58 GLA 1999 67373 77.61 0.00 0.00 0.00 01/31/2000 77.61 JCP 1999 67373 35.94 0.00 0.00 0.00 07/37/2000 35.94 SPA 7999 67373 327.03 0.00 0.00 0.00 O1/31/2000 327.03 Total tor Year 1999 567.16 CPA 2000 22904 91.32 0.00 0.00 0.00 O1/08/2001 91.32 GLA 2000 22904 52.94 0.00 0.00 0.00 07/08/2001 52.94 JCP 2000 22904 24.51 0.00 0.00 0.00 O7/08/2001 24.51 SPA 2000 22904 229.64 0.00 0.00- 0.00 O1/08/2001 229.64 Total for Year 2000 398.41 Total Paid: 3,924.18 Unpaid Bills Summary . . No Information on File. . Paid Retunds Summary No Information on Fiie. End of Statement NOTICE: Thls tlxument is not a tax oertilicate and does not absolve a Taxpayer from taz liability in any way. If this document i5lountl to be In arror, It may be correctad by ihe Colleclion Oflice Iistetl above. Responsibility to pay the remaining taxes rests entirely with the Texpayer, es outlined In the Texas Property Tax Code. Page t .-w~.,irc. . Statement of Account NOTICE: This is a statement of Taxes Paitl & Due as o108/13/2001 02:00:43PI basetl upon the tax records of the tax office. LAMAR COUNTY APPRAISAL DISTRICT Property Information 521 BONHAM PropertylD: 20433 Geo ID: 023010-00100-0040 PO BOX 400 Legai Acres: 0.0000 ?ARIS, TX 75461-0400 Le9al DBSC: WARREN ADDITION, BLOCK 1, LOT ALL 4-18 W1/2 3-17, 1726 BONHAM ( Value Information Improvemenf HS: 4,390 Improvement NHS: 0 Owner ID: 20433 ownersniP: 1oo.oo°o Land HS: 12,080 Land NHS: 0 NANCE R C Productivity Market: o C/O PHILLIP NANCE Productiviry Use: o 3610 GRAHAM ST nssessed Value 16,470 PARIS, TX 75460-3500 Entity Description . Pct. Ex Code Description CAD Central Appraisal District 100.00 % HS HOMESTEAD CPA CITY OF PARIS 100.00 % OV65 OVER 65 GLA LAMARCOU NTY 100.00% JCP PJC 100.00% SPA PARISISD 100.00% Paid Bills Summary Entity Year Statement ID Tax Paid Disc/P&I Paid Att. Fee Paid Under/Over/Refund Posting Date Amount Paid CPA 7996 27679 56.79 2725 12.61 0.00 01/31/2000 96.65 GLA 1996 21679 4929 23.66 70.94 0.00 07/31/2000 83.89 JCP 1996 21679 28.87 73.83 6.40 0.00 01/31/2000 49.04 Totat for Year 1996 229.58 CPA 1997 27872 60.71 27.85 12.38 0.00 01/31/2000 94.94 GLA 1997 21872 50.19 18.08 10.24 0.00 01/37/2000 78.51 JCP 1997 27872 29.56 10.64 6.03 0.00 01/37/2000 46.23 Total tor Year 1997 219.68 CPA 1998 27797 60.77 14.56 1129 0.00 01/31/2000 86.56 iLA 1998 21797 50.19 12.04 9.33 0.00 07/31/2000 71.56 JCP 1998 21797 30.57 7.32 5.68 0.00 07/31/2000 43.57 To[al for Year 1998 201.69 CPA 7999 67371 61.77 0.00 0.00 0.00 01/31/2000 61.77 GlA 41999 67371 48.65 0.00 0.00 0.00 01/31/2000 48.65 JCP 1999 67371 29.19 0.00 0.00 0.00 01/31/2000 29.19 Total for Year 1999 139.61 , CPA 2000 22902 0.00 0.00 0.00 0.00 01/08/2001 0.00 GLA 2000 22902 8.73 0.00 0.00 0.00 01/08/2001 8.73 JCP 2000 22902 70.59 0.00 0.00 0.00 01/08/2001 70.59 SPA 2000 22902 0.00 0.00 0.00 0.00 01/08/2001 0.00 Total for Year 2000 19.32 Total Paid: 809.88 Unpaid Bills Summary . No Information on File. Paid Refunds Summary No Information on File. End of Statement NOTICE: This dxument Is not a taz certiflcate and does not absolve a Taxpayer Irom tax Iiability In any way. If this document is lound to 6e Page 1 In error, it may ba corrected by ihe Collection Ottice Iistetl above. Responsibility to pay Ihe remaining taxes rests entirely with the 7axpayer, es outlinetl In the Tezas Property Tax Coda. T"'""'°""pn'"`' Statement of Account NOTICE: This is a statement of Taxes Paid & Due as of 0811312001 02:00:55PM based upon ihe tax racortls of the tax olfice. LAMAR COUNTY APPRAISAL DISTRICT Property Information 6 521 BONHAM PropertylD: 20434 Geo ID: 023010-00100-0050 PO BOX 400 Legal Acres: 0.0000 'ARIS, TX 75461-0400 Legel DeSC: yyqRREN ADDITION. BLOCK 1, LOTS-6, 7746 BONHAM f Owner ID: 20433 NANCE R C C/O PHILLIP NANCE 3610 GRAHAM ST PARIS, TX 75460-3500 Enttty Deseription CAD Central Appraisal District CPA CITY OF PARIS GLA LAMAR COUNTY JCP PJC SPA PARIS ISD Entity Year Statement ID CPA 1996 27680 GLA 1996 27680 JCP 1996 21680 SPA 1996 21680 Total for Year 1996 CPA 1997 21873 GLA 1997 21873 JCP 1997 21873 SPA 1997 21873 "otalfor Year 1997 „PA 1998 21798 GLA 1998 21798 JCP 1998 21798 SPA 1998 21798 Total for Year 1998 CPA 1999 67372 GLA 1999 67372 JCP 1999 67372 SPA 1999 67372 Total for Year 1999 CPA 2000 22903 GLA 2000 22903 JCP 2000 22903 SPA 2000 22903 Total for Year 2000 Ownership: 100.00 % Improvement HS: Improvement NHS: Land HS: Land NHS: Productivity Market Productivity Use: Assessed Value Value Information Pct. Ex Code Descrlption 7 00.00 % 100.00 % 100.00 % 100.00 % 700.00 % . Paid Bills Summary . , Tax Paid bisc/P&I Paid Att. Fee Paid ' Under/Over/Refund Posting Date 72.69 34.89 16.14 0.00 01/31/2000 49.53 23.77 17.00 0.00 01/31/2000 22.51 10.80 5.00 0.00 01/31/2000 214.11 102.78 47.53 0.00 07/31/2000 77.70 27.98 15.85 0.00 01/3712000 50.45 18.16 1029 0.00 01/31/2000 23.10 8.32 4.71 0.00 01/31/2000 212.57 76.52 43.36 0.00 01/31/2000 77.70 18.64 14.45 0.00 01/31/2000 50.45 12.10 9.38 0.00 07/31/2000 23.88 5.72 4.44 0.00 01 /31 /2000 272.57 51.02 39.54 0.00 01/31/2000 8227 0.00 0.00 0.00 01/31/2000 50.44 0.00 0.00 0.00 01/31/2000 23.36 0.00 0.00 0.00 01/31/2000 212.56 0.00 0.00 0.00 01/31/2000 67.00 0.00 0.00 0.00 01/08/2007 35.36 0.00 0.00 0.00 01/08/2001 16.37 0.00 0.00 0.00 01/08/2001 153.40 0.00 0.00 0.00 01/08/2001 Total Paid: Unpafd Bills Summary No Information on File. Paid Refunds Summary No Information onFile. End of Statement NOTICE: This document is not a tax certiticate and tloes not absolve a Taxpayer from tax Ilability In eny way. If this document Is found to be In error, It may be corrected by the Collection OHice Iisted ebove. Responsi6ility to pay the remaining taxes rests entirely with the Tazpayer, as outlined In the Texas PropertyTax Code. 0 0 0 10,000 0 0 10,000 Amount Paid 123.72 84.30 38.31 364.42 610.75 121.53 78.90 36.13 332.45 569.01 110.79 71.93 34.04 303.13 519.89 82.27 50.44 23.36 212.56 368.63 61.00 35.36 16.37 153.40 266.13 2,334.41 Page 1 ....w~.~,. w. United General Title Insurance Company LEGAL DESCRIPTION Legal description of the land: Situated in the County of Lamar and State of Texas, a part of the ASA JARMAN HEADRIGHT SURVEY, being Lot number four (4), and the West one-half of Lot number three (3) of Warren's Addition to the City of Paris, Lamar County, Texas, also Lot Number Eighteen (18) and the West one-half of Lot number seventeen (17) in the Plat of Warrens Addition to the City of Paris, Texas, as shown by the plat recorded in Book 70, Page 367, of the Lamar County Deed Records. Lots Nineteen (19) and twenty (20) of the Warren Addition to the City of Paris, a part of the ASA JARMAN SURVEY, according to plat of such addition, recorded in Book 70, Page 367, Lamar County Deed Records. All those certain lots or parcels of land in Lamar County, Texas, described as Lots Five (5) and Six (6) of the Warren Addition to the City of Paris, according to map or plat of such addition recorded in Book 76, Page 367, Lamar County Deed Records. TLTA Commilment (Property Description) (074736ug.pfd/014736UG/11) PROPERTY 20432 R OWNERID ' Legal Description 106594 WARREN ADDITION, BLOCK 1, LOT ALL 2 16 1 /2 3 17,1710 BONHAM OWNERSHIP 100.00% Ref ID2: R20432 023010-00700-0020 MapID 14 SITUS 1710 BONHAM PARIS, TX 75460 GENERAL UTILITIES U LASTAPPR. BS,BM TOPOGRAPHY LEV L4ST APPR. YR ROAD ACCESS P L4ST INSP. DATE 03I3011999 ZONING SFR NEXT INSP. DATE NEXT REASON REMARKS DELETED 2 HOUSES FOR 1993. - - BUILDING PERMITS ISSUEDT PERMITNPE PERMITAREA PERMITVAL PROPERTY APPRAISAL INFORMATION 2001 V~NR.4NCE BONHAM 7 ' PARI I . 7~T (J~ f _3 p ACRES: SKE7CH for Improvement#1 (RESIDENTIAL) SALE DT PRICE GRANTOR DEED INFO 06115/1988 MERRITT RANCE & OT / 30 / 126 $UBD:S31390 100.00% NBHD:S31390 IMPROVEMENTINFORMATION I# NPE qESCRIPTION MTHD CLASS AREA UNI7 PRICE BUILT EFF YR COND. VALUE PHYS ECON FUNC COMP ADJ ADJ VALUE MA MAINAREA R F3PC 7,936.0 23.76 47,370 50% 100% 100% 100% 0.45 21,320 OP OPEN PORCH R ' 96.0 4.75 460 50% 100% 100% 100% 0.45 210 CP CARPORT R ` 408.0 4.75 1,940 SOk 700% 100% 700% 0.45 870 t. RESIDENTIAL STATE CODE: A1 2,440.0 Homesite: Y 49,770 22,400 SKETCH COMMANDS MA DU40,DR12,DU20,DR22,DD64,DL34 OP MR7I,DO8,DRI2,DU8,DL12 CP MU28,DL18,DU20,DR30,DD4,DL72,DD16 IMPROVEMENTFEATURES Plumbing 2 1,370 Construction Style CV 0 Foundation PI 0 Eaterior Wall WS 0 Interior FiniSh S 0 Roof Sryle GS 0 Flooring CA 0 Heating/Cooling CHCA 0 1,370 ;SUBDt 531390 ..100.00°.G NBHD:S31390 LAND INFORMATION IRR WeIIS:O Capaciry:0 IRR Aues:O Oil We11s:0 - LL# DESCRIPTION CLASS STATE CD HS METH DIMENSIONS UNIT PRICE GROSS VALUE ADJ FCTR MASS ADJ VAL SRC MKT VAL AG APPLY AG CLASS AG TABLE AG UNIT PRC AG VALUE 7. RESIDENTIAL SINGLE FAMILYS313905 A1 Y SQ 14,640.0000 SQ .75 10,530 1.00 7.00 F 10,530 0.00 0 2. RESIDENTIAL SINGLE FAMILY SPECIAL A1 Y SQ 13,950.00005Q .41 5,720 1.00 7.00 F 5,720 0.00 0 16,250 0 EnUtieE Values CPA 100°,6 IMPROVEMENTS 31,350 GLA 100% LAND MARKET + 16,250 JCP 100% MARKET VALUE = 47,600 SPA 100% pRODUCTIVITY LOSS - 0 APPRAISED VALUE = 47,600 HS CAP LOSS - 0 ASSESSED VALUE = 47,600 EXEMPTIONS HS HOMESTEAD Page 1 of 4 EReclive Date of Appraiul: January 1 Date Printed: 06/25/2001 0125:49PM by MWALKER -ue AWOmation, Inc. PROPERTY APPRAISAL INFORMATION 2001 Entitiea PROPERTY 20432 R OWNER ID MERRITT RANCE CPA 100% Legal Description 106594 1710 BONHAM GLA 100°h WARREN ADDITION, BLOCK 1, LOT ALL 2 161 - PARIS, TX 75460 JCP 100% /2317, 1710 BONHAM OWNERSHIP SPA 100°h 100.00% Ref ID2: R20432 ACRES: 023010-00100-0020 MapID 14 SITUS 1710 BONHAM PARIS, TX 75460 , GENERAL UTILITIES U LASTAPPR. BS,BM TOPOGRAPHY LEV LASTAPPR.YR ROAD ACCESS P LAST INSP. DATE 03/30/1999 ZONING SFR NEXT INSP. DATE NEXT REASON REMARKS DELETED 2 HOUSES FOR 1993 SKE7CH for Improvement #2 (RESIDENTIAL) DGF2 576' BUILDINGPERMITS I ,4 I ISSUEDT PERMITTYPE PERMITAREA PERMITVAL L ',$AL,k DT. PRICE GRANTOR DEED INFO 06115/1988 MERRITT R4NCE & OT I 30 / 126 ; SUBD: S37390 100.00% NBHD:S31390 IMPROVEMENT INFORMATION I# TYPE pESCRIPTION MTHD CLASS AREA UNIT PRICE BUILT EFF YR COND. VALUE PHYS DGF2 MAINAREA R FL 576.0 8.71 5,020 60% MAZG GARAGEAPT SP F2C 576.0 1724 9,930 60% 2. RESIDENTIAL STATE CODE: A1 7,152.0 Homesite: Y 14,950 _ - SUBD: 531390- L# DESCRIPTION MA2G 576 ECON FUNC COMP ADJ 100% 50% 100% 0.15 100% 50°k 100% 0.15 Values IMPROVEMENTS 37,350 LAND MARKET + 16,250 MARKET VALUE = 47,600 PRODUCTIVITY LOSS - 0 APPRAISED VALUE = 47,600 HS CAP LOSS - 0 ASSESSED VALUE = 47,600 EXEMPTIONS HS HOMESTEAD SKETCH COMMANDS DGF2 DD24,DL24,DU24,DR24 MA2G MR10,DD24,DR24,DU24,DL24 IMPROVEMENTFEATURES ADJ VALUE ConsWClion Slyle CV 0 7$0 Faunda6on PI 0 E#erior Wall MS 0 1,490 lntenor Finish S 0 2,240 Roof Style GS 0 Flooring CA 0 Heating/Cooling OT 0 Plumbing 1 0 6 100.00% NBHD:S31390 LAND INFORMATION IRR WeIIS:O Capaciry:0 IRRAcres:0 OiI WeIIS:O CLASS STATE CD HS METH DIMENSIONS UNIT PRICE GROSS VALUE ADJ FCTR MASS ADJ VAL SRC MKT VAL AG APPLY AG CLASS AG TABLE AG UNIT PRC AG VALUE Page 2 of 4 EHective Date of Appreisal: January 1 Date Printed: 06f252001 0125:49PM by MWALKER le Automalion, Inc. PROPERTY 20432 R OWNER ID :.egal Description 106594 WARREN ADDITION, BLOCK 1, LOT ALL 2 16 1 /2 3 17,1710 BONHAM OWNERSHIP 100.00°h Ref ID2: R20432 023010-00100-0020 MapID 14 SITUS 1710 BONHAM PARIS, TX 75460 . . GENERAL UTILITIES U LASTAPPR. BS,BM TOPOGRAPHY LEV LASTAPPR.YR ROAD ACCESS P LAST INSP. DATE 03130I1999 ZONING SFR NEXT INSP. DATE NEXT REASON REMARKS DELETED 2 HOUSES FOR 1993. ' BUILDING PERMITS ISSUEDT PERMITTYPE PERMITAREA PERMITVAL PROPERTY APPRAISAL INFORMATION 2001 MERRITT RANCE 1710 BONHAM PARIS, TX 75460 . ACRES: SKETCH for Improvement #3 (RESIDENTIAL) EntitieE Values CPA 100% IMPROVEMENTS 31,350 GLA 100% LqND MARKET + 16,250 JCP 100°k MARKET VALUE = 47,600 SPA 100°h pRODUCTIVITY IOSS - 0 APPRAISED VALUE = 47,600 HS CAP LOSS - 0 ASSESSED VALUE = 47,600 EXEMPTIONS HS HOMESTEAD SKETCHCOMMANDS MA DL28,DU30,DR28,DD30 SP MU30,Ml4,DU6,DL20.DD6.DR20 SALE DT , PRICE GRANTOR DEED INFO 06/1511988 MERRITT RANCE & OT / 30 / 126 2 8- SUBD: 531390 100.00% NBHD:S31390 IMPROVEMENT INFORMATION IMPROVEMENT FEATURES I#NPE DESCRIPTION MTHD CLASS AREA UNITPRICE BUILT EFFYR COND. VAWE PHVS ECON FUNC COMP ADJ ADJVALUE ConsWClionStyle CV ~ MA MAINAREA R F2C 840.0 20.17 16,890 35% 100% 100% 100% 0.26 4,730 0 SP SCREENPORCH R ' 720.0 4.63 560 35% 700% 100% 100% 0.28 160 3. RESIDENTIAL STATE CODE: A1 . 960.0 Homesite: Y 17,450 4,890 `SUBD:S31390~ 100.00% NBHD:S31390 UINDINFORMATION IRRWeIIs:O Capaciry:0 IRRAcres:0 OiIWeIIs:O 19 DESCRIPTION CLASS STATE CD HS METH DIMENSIONS UNIT PRICE GROSS VALUE ADJ FCTR MASS AOJ VAL SRC MKT VAL AG APPLY AG CLASS AG TABLE AG UNI7 PRC AG VALUE Page 3 of 4 Effeclive Date of Appreisal: January 1 Date Printed: 06/2512001 0725:49PM by MWALKER -le Automation, Inc. PROPERTY 20432 R OWNER ID "gal Description 106594 WARREN ADDITION, BLOCK 1, LOT ALL 2 16 1 /2 317, 1710 BONHAM OWNERSHIP 100.00°k Ref ID2: R20432 023010-00100-0020 MapID 14 SITUS 1710 BONHAM PARIS, TX 75460 GENERAL UTILITIES U LASTAPPR. BS,BM TOPOGRAPHY LEV LAST APPR. YR ROAD ACCESS P LAST INSP. DATE 03/30/1999 20NING SFR NEXT INSP. DATE NEXT REASON REMARKS DELETED 2 HOUSES FOR 1993. BUILDING PERMITS ISSUEDT PERMITTYPE PERMITAREA PERMITVAL ..SALE DT PRICE GRANTOR DEED WFO 06/1511988 MERRITT RANCE & OT / 30 / 126 PROPERTY APPRAISAL INFORMATION 2001 MERRITT RANCE 1710 BONHAM PARIS, TX 75460 ACRES: eonues vama. CPA 100°h IMPROVEMENTS 31,350 GLA 100°k LqND MARKET + 16,250 JCP 100°k MARKET VALUE = 47,600 SPA 100°h pRODUCTIVITY LOSS - 0 APPRAISED VALUE = 47,600 HS CAP LOSS - 0 ASSESSED VALUE = 47,600 EXEMPTIONS HS HOMESTEAD SKETCH COMMANDS MA OL24,DU24,DR24,DD24 . SUBD: 531390 100.00% NBHD:S31390 IMPROVEMENT INFORMATION I# NPE DESCRIPTION MTHD CLASS AREA UNIT PRICE BUILT EFF YR COND. VALUE PHYS ECON FUNC COMP ADJ ADJ VALUE MA MAINAREA R F2C 576.0 21.08 12,140 30% 100% 100% 100k 0.15 1,820 4. RESIDENTIAL STATE CODE: A1 576.0 Homesite: Y 12,740 1,820 IMPROVEMENT FEATURES SUBD: 531380: 100.00% NBHD:S31380 LAND INFORMATION IRR WeIIs:O Capacity:0 IRRAcres:0 OiI WeIIs:O ' L# DESCRIPTION CLASS STATE CD HS METH DIMENSIONS UNIT PRICE GROSS VALUE ADJ FCTR MASS ADJ VAL SRC MKT VAL AG APPLY AG CLASS AG TABLE AG UNIT PRC AG VALUE Page 4 ot 4 EHective Date ot Appreisal: January 1 Date Printed: 06252001 0125:50PM by MWALKER ve Automa6on, Inc. SKETCH for Improvement #4 (RESIDENTIAL) APPRAISAL s • ~ AN APPRAISAL OF A 68,460 SF Lot 1726-1746 Bonham & 1735-1753 Maple Paris, Lamar County, Texas (Kammer) Prepared For Mr. Pat Bassano First Federal Community Bank 630 Clarksville Street Paris, Texas 75460 File #Kammer.801 PAT MURPHY & ASSOCIATES • SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS Location: 1726-46 Bonham Street and 1735-53 Maple, Paris, Texas Buyer: Rights Appraised: Property Description: Highest and Best Use: Estimate of Property Value: Sales Comparison: Final Opinion of Value: Date of Value: Kenneth L. Kammer Fee Simple Four old single family dwellings (no value) on an 68,460 SF commercial site Subdivision for General Retail Use $55,000 $55,000 August 14, 2001 PAT MURPHY & ASSOCIATES Client: Mr. Pat Bassano First Federal Community Bank 630 Clarksville Paris, TX 75460 Ap rp aiser: Pat Murphy and Associates 712 19th SE Paris, TX 75460 Identification of the Propertv The subject was essentially six platted lo[s and two half lots comprising some 68,460 SF of commercial ]and situated on the north side of Bonham street and the south side of Maple Avenue some 160' west of 17'h NW street in the western portion of Paris, Lamar County, Texas. The street addresses were 1726 and 1746 Bonham stree[ and 1735 [hrough 1753 Maple Avenue, Paris, Texas. History of the Subject The lots have belonged to R. C Nance and his estate for many years. Some of the four dwellings have been rented but all were vacant at the inspection. The buyer will raze two dwellings and sell the two others to be moved. The subject has been listed for sale since December 1, 1999, as two Iots, a 210' x I56' facing Bonham and a 210' x 155' lot facing Maple for a total list price of $50,000. The buyer offered $45,000 and the seller accepted the offer. The two halves were separated by a IS' dedicated but undeveloped alley and they were zoned Two Family. Since the contract was signed on June 22, 2001, the property was re-zoned General Retail and the alley has been approved [o be closed. It will formally be closed on September 6, 2001, but aIl adjacent property owners have signed the petition and it has received approval by the Director of Public Works, City Atrorney, and the City Engineec The buyer offered $45,000 and the seller accepted the offer. The appraiser was unaware of any other con[racts or offers to sell or purchase the property. Purpose of [he Appraisal The purpose of this appraisal was to develop an opinion of the market value of the fee simple estate as of August 14, 2001. Intended Use of the Appraisal The intended use of this appraisal was to aid the client and intended user, First Federal Community Bank in underwriting a mortgage loan on the subject. Its use by others or for any other use was not intended by the appraiser. L.eeal Description The subject is legally described as L,ots 4, 5, 6 18, 19, 20 and the west half of Lots 3 and 17, Block 1, Warcen Addition to the City of Paris. As a result of the IS' alley closing, the each lot will have an additional 7.5' of depth. PAT MURPHY & ASSOCIATES 2 Scope of the Appraisal I The scope of an appraisal involves the extent of the research and analysis necessary to arrive at a credible, supportable opinion of value. The scope may vary with the differences in complexity, size, types, and value sought. The final value estimate was developed as a Complete Appraisal and reported in this Summary Report format. This Complete Appraisal has been made in conformity with the Uniform Standards of Professional Prac[ice. The old improvemen[s have essential ly no value and the cost approach was omitted. The income approach is not relevant to vacant land in this area and it too was omitted. Thus, the sales comparison approach was [he only meaningful approach to use in appraising property of this type. The subject is essentially a large tract of vacant commercial land on one of the major corridors entering Paris. As such, the market research was limited to the Bonham street corridor. The appraiser has appraised numerous vacant and improved tracts in Paris and on Bonham street and no steps were necessary to fulfill the competency provision of the Uniform Standards of Professional Appraisal Practice. During [he conduct of this appraisal, the appraiser personally inspected the subject property and its neighborhood, conducted research into the present land use trends, compar.able land sales and listings, inspected those sales and listings, confirmed the sales data wi[h one of the principals involved, developed an analysis of highest and best use, analyzed the sales in comparison to the subject property, formed an opinion of value and produced this appraisal report. In the analysis of the area, neighborhood, highest and best use, supply and demand, and the gathering of comparable data, the appraiser surveyed the brokers active in the local commercial market; lenders; governmental statistics and public records; several local commercial investors and property owners on this strip; as well as the files of Pat Murphy and Associates. The subject was inspected on the date of value and the date of this report was August 25, 2001. No personal property was included in the opinion of value. PAT MURPHY & ASSOCIATES 3 ~ ~ Assumptions and Limiting Conditions This is a Summary Appraisal report which is intended to comply with the reporting requirements set forth under Standard Rule 2-2 ( b) of the Uniform Standards of Professional Appraisal Practice for a Summary Appraisal Report. As such, it includes summarized discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. The legal description was assumed correct. No survey of the property has been made by the appraiser and no responsibility is assumed in connection with such ma[[ers. It should be noted that the metes and bounds calls from the description provided were not complete. Sketches in this report are included only to assist the reader in visualizing the property. No responsibility is assumed for matters of a legal nature affecting tide ro the property nor is an opinion of tide rendered. The title is assumed to be good and merchantable. Information furnished by o[hers is assumed to be true, correct, and reliable. A reasonable effort has been made to verify such information; however, no responsibility for its accuracy is assumed by the appraiser All mortgages, liens, encumbrances, leases, and servitude have been disregarded unless so specified within the report. The property is appraised as though under responsible ownership and competent management. Unless otherwise s[a[ed in this report, the existence of hazardous substances, including without Iimitation, asbestos, polychlorinated biphenyls, petroleum leakage, or agricultural chemicals, which may or may not be present on the property, or other environmental conditions, were not called to the attention of, nor did the appraiser become aware of such, during the appraiser's inspection. The appraiser has no knowledge of the exis[ence of such ma[erials on or in the property unless otherwise stated. The appraiser, however, is not qualified to test such substances or conditions. If the presence of such substances as asbestos, urea formaldehyde foam insulation, or other hazardous substances or environmental conditions may effect [he value of [he property, the value estima[e is predicated on the assumption that there is no such condition on or in the property or in such proximity therero, that it would cause a loss in value. No responsibility is assumed for any such conditions, nor for uny expertise or engineering knowledge required to discover them. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures which would render it more or less vlluable. No responsibi(ity is assumed for such conditions or for engineering which may be required to discover them. These items include but are not limited to such things as foundation failure, asbestos, radon gas, covered landfills or toxic dumping sites, underground storage tanks, cemeteries, and rare and endangered plants and animals. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless non-compliance is stated, defined and considered in the appraisal report. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, PAT MURPHY & ASSOCIATES 4 ~ unless a non-conformity has been stated, defined and considered in the appraisal report. It is assumed that all required licenses, consents or other legislative or administrative authority from any local, state or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted within the report. The appraiser will not be required ro give testimony or appear in court because of having made this appraisal, with reference to the property in question, unless arrangements have been previously made therefor. A valuation relating to an estate in ]and that is less than the whole fee simple estate related to a fractional interest only in the real estate involved in the value for this fractional interest plus value of all other fractional interests may or may not equal the value of the entire fee simple considered as a whole. The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisai and are invalid if so used. One or more of the signatories of this appraisal report is a Member or Candidate of the Appraisal Institute. The Bylaws and Regulations of the Institute require each member and Candidate to control the use of distribution of each appraisal report signed by such Member or Candidate. Therefore, except as hereinafter provided, the party for whom this appraisal report was prepared may distribute copies of [his appraisal report, in its entirety, to such third parties as may be selected by the party for whom this appraisal report was prepared; however, selec[ed portions of this appraisal report shall not be given to third parties without the prior written consent of the signatories of this appraisal report. Further, neither all nor any part of this appraisal report shall be disseminated to the general public by the use of advertising media, public relations media, sales media or other media for public communications without the prior written consent of the signatories of this appraisal report. PAT MURPHY & ASSOCIATES ~ Definitions Market Value The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently and knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of tide from seller to buyer under conditions whereby: a. Buyer and seller are typically motivated; b. Both parties are well informed or well advised, and acting in what they consider their own best interests; c. A reasonable time is allowed for exposure in the open market; d. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangetnents comparable thereto; and e. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. I Fee Simnle An absolute fee; a fee without limitations to any particular dass of heirs or restrictions, but subject to the ]imitations of eminent domain, escheat; police power, and taxation. An inheritable estate. 2 Leased Fee An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others; usually consists of the right to receive rent and [he right of repossession at the termination of the lease. 3 Going Concern Value The value created by a proven property operation; considered as a separate entity to be valued with a specific business establishment. 4 Business Value A value enhancement that results from items of intangible personal property such as marketing, and management skill, an assembled workforce, working capitol, trade names, franchises, patents, trademarks, conteacts, leases, and operating agreements. 5 1 Department of Treasury, Office of the Comptroller of the Currency, 12 CFR Par[ 34.42. 2 American Institute of Real Estate Appraisers, Ist ed. The Dictionarv of Real Estate Appraisal Chicago, Illinois: AIREA, 1984) p. 123. 3 Ibid, p. (79 4Ibid, p. ]60 5 Ibid, p. 44 PAT MURPHY & ASSOCIATES r ~ Citv and Neiizhborhood Description ~ The subject is located in western Paris, the county seat and the principal metropolitan area of Lamar County, Texas. The city is the retail, employment, cultural and medical center for a trade area that exceeds 150,000 people and includes some or all of the surrounding five counties in Texas and the three counties in southeastem Oklahoma. The city had a population of 25,998 persons according ro the 2000 census which was a 4.8% gain in population from 1990 to 2000. The county as a whole grew 10.4% to 48,499 persons over the same period. The primary growth direction of the city is east and the mos[ popular area of the county for residential rural growth is nor[h and east. The city annexed some 10,000 acres mosNy to the nor[h and east, be[ween 1997 and 1999 and its popula[ion growth was primarily due to that annexation. Paris and Lamar County have a stable economic future based on the diversity of jobs in the medical, industrial, retail, and agricultural fields coupled with a strong local financial base and a wide trade area. These fac[ors insure a steady economy and a very slow but positive growth much like they have experienced in the past. The immediate neighborhood is defined as a two block wide corridor froml7'h street on the east to 19°i street intersection on the west. This a mixed use with commercial, retail, multi family and ecclesiastical uses mixed with oider single family dweilings. Zoning is mixed with Commercial, General Retail, Multi Family, Two Family and Single Family in these twelve blocks. The subject has a large, old, single family dwelling just east on the Bonham street frontage and in both directions on Maple Avenue; there is a large automobile repair and service center and a churchjust south across Bonham street; the church parking lotjust west on Bonham street with older residential uses ro its north across Maple. The Hick Tire and Muffler Center and the campus of the Immanuel Baptist Church are the largest land users in the immediate strip but several other churches are within three blocks. The traffic count in front of the subject according to the last published survey (1999) was about 7,400 cars per day. The latest new construction induded an ATM pad for Liberty National B1nk on the corner of Bonham and 19"'street and a 32 unit self storuge facility in the 1800 Block of Bonham street in 1999 and a complete renovation of a five bay carwash at 19"' and Bonham in 2000. Just beyond the immediate strip, a twelve unit apartment complex comprising the first phase of a 36 unit complex of privately subsidized apartments was completed in late 1999 at the corner of Bonham and 25°i NW and seven units at Bonham.and 23' SW were completed in 2000. An 18 unit complex is currendy planned just three blocks east at I3"' NW and Bonham if financing can be arranged, and a two bay fast lube is soon [o be built 90' east of [he subject a[ 17'h NW and Bonham. Overall, development along the strip usually lags well behind the other major highways into Paris except for SH 19, and ~ unlike the others, it is usually of mixed use. That trend should continue on the future. PAT MURPHY & ASSOCIATES 7 r-, Propertv Description and Zoning The overall site including the closed alley contained approximately 68,460 SF and had 210' of frontage on Bonham and Maple and 326' of depth according to the city plaL Both streets were two lane, asphalt surfaced with concrete curb and gutter. There may have been some typical utility easements along the streets. It was a[ street grade on both sides but sloped very gently to the north wi[h most of the run off in that direction. None of the property was in the 100 year flood plain. I[ was almost entirely open but had a few large trees. The subject was zoned General Retail which allows a wide variety of uses including all the lesser classifications of office, neighborhood service, and multi family. There is 20' front back but no specific side or set back requirements except that a gasoline pump must be at leas[ 12' off the property line. It had a 40% Iot coverage ratio. The general parking requirements are one space per 400 square feet of floor area for offices and one space per 200 square feet for retail and personal service uses. It is one of the most unrestrictive ciassifications available and should satisfy most feasible uses for the subject. The dwellings at 1726 Bonham and 1735 Maple were beyond feasible repair. A 28.2' x 28.2' frame dwelling at 1749 Maple was liveable wi[h some minor repairs. It was probably 50 years old and had four rooms, two bedrooms, and a single bath, 6' x 6, added to a rear corner. Its wood siding needed paint, the shingled roof needed recovering and the interior finish needed updating bu[ it appeared to be sound enough to withstand a move ro another site. The dwellingjust west at 1753 Maple was exacdy the same except that it measured 28.2 x 30.2 and had its single bath inside the main perimeter. There was also an old detached garage between the two that had no value. There is a demand for these small dwellings to be moved to other sites but overall, they added nothing to the value of the land as now zoned. The possible salvage value of $ 1,000 to $2,000 per house shouldjust about offset the cost of razing the other two dwellings. Ad Valorem Tax Data Presently, the subject was assessed in three accounts. The total land was assessed at $30,080 with unit assessments ranging from $0.53 PSF for the vacant land on Bonham to $0.43 PSF for the lo[s as residential tracts. The smaller commercial zoned tract at 1704 Bonham was assessed at $0.75 PSF and the 53,350 SF site across the street under the Hick's MufFler and Tire Shop was assessed at $0.73 PSF. The present improvements were assessed at $11,360. Thus, the total assessment was only $41,440 and the real estate taxes for 2000 were $ I,102. ~ Next year, the improvements should be dropped and the land raised to reflect the zoning change. This the land assessment was estimated at $0.75 PSF or $51,345 which is very closer to market. The 2002 rate was estima[ed to be 4% higher or $2.77 for a total tax burden of $ 1,420. The tax assessments are based on mass appraisal techniques and are not necessarily indicative of market value and do not effect sales prices. PAT MURPHY & ASSOCIATES 8 r-- ~ Hiehest and Best Use i Highest and best use is defined as that reasonable and probable use tha[ supports the highest present value, as defined, as of the effective date of the appraisal. This use must be physically possible, legal, financially feasible and result in the highest land value. As Vacant: The General Retail zoning would legally allow almost any feasible use and its size and desirable topography will accommodate many different uses. The larger sales will show this trend. It probably has greater utility as one or two large lots than as six smaller lots. The dual access is positive for its appeal. The immediate neighborhood has traditionally been a mixed use strip with the older residen[ial uses gradually giving way to retail and service oriented businesses. Mos[ commercial uses have been concentrated on or near the 19°istreet intersection but that development is slowly spreading. Usually, when a lot of this size is developed in this strip, it has been for multi family use. The data presented in the area and neighborhood analysis showed that the type of new construction in this strip is varied wi[h multi family keeping pace wi[h the odd commercial use. Most new commercial construction involves a 2,000 SF to 4,000 SF metal building with or without brick veneer, constructed for some type of owner occupied use. The typical mul[i family project is a six ro twetve unit complex with small modestly finished units. Given the location and the characteristics of the neighborhood, and the planned construction of 18 units at 13`h and Bonham, the subdivision of the subject inlo two lots for development in[o some type of retail or service type use was most likely. There is a fair amount oF vacant land in this strip; thus, it would most likely remain vacant until such time as an owner/occupan[ purchased the sites. The subject has been purchased forultimate development into a 39 unit assisted living complex. The feasibility of that use is beyond the scope of this appraisal but when such centers have been constructed locally in [he past, they have competed with this same mixture of uses. PAT MURPHY & ASSOCIATES 9 ~ ~ Sales Comvarison Ap ro oach This approach is based on the principle of substitution; that is, the value of the property is governed by the prices generally obtained for similar properties. In this approach, various sales of similar properties are compared to the subject and adjusted for the major differences. They were compared on a price per square foot (PSF) basis which is a commonly quoted indicator between the participants. The motivation for purchasers in this rype property is usually from individuals desiring their business location. The most recent similar neighborhood sales in [his size range are listed in the analysis below. The sales were all on Bonham street. All the sales were all cash or conventional financing; thus, no financing adjustment was warranted. They were ali arm's length transactions. No. Grantor Date Size/SF Sales Price SP/SF Zonine As Compared to Subject 1 BrownBuster 01/95 18,527 $15,000 $0.81 C Corner, sloping 2 Ingram/St. Josephs 03/95 43,502 $44,400 $1.02 GR Similar 3 Ford/Pshigoda 03/99 74,705 $50,000 $0.67 MF Corner 4 Savage/Noble 08/99 12,520 $6,500 $0.52 MF Corner 5 Stillwell/Clarkson 04/0I 33,323 $25,000 $0.75 C Smaller, corner 6 Conrad/Miller 08/01 19,060 $30,000 $1.57 G2F Corner, old imprv. 7 Nance/Kammer 08/01 65,310 $45.000 $0.69 2F Interior, street to street Subject 08/01 68,460 GR Interior, street to street Sales 1 through 2 are dated and sales 3 and 4 are slightly dated but all four show the same range of raw prices as do most of the more recent sales. Sale I was a mush smaller, corner site with sloping topography. Other than time, i[ was superior to [he subject. Sale 2 was a slighdy stnaller tract that also had dual frontage on Bonham and Maple. It was high sale for its time period. Sale 3 was inferior in zoning but a similar size and had comer access. Sale 4 was a small corner lot tha[ was superior in size. Sale 5 was a recen[ sale of a larger corner lot that had inferior topography. It was purchased as the site for 18 to 25 apartment units but the financing for the overall project has not yet been arranged due to the low rent levels in comparison to the costs of construction. The sale was inferior in topography with a sharp slope but it was also about half the size. Those two factors were offsetting and i[ indicated about $0.75 PSF for the subject. Sale 6 is the last closed sale in the neighborhood. It was clearly in a price level all its own for this s[rip at $1.57 PSF. That price seemed over marke[, especially when considering the cost of the demolition of a 320 SF inasonry buiiding and some concrete paving on the site. It had a sharp slope ro its rear but for its intended use, a fast lube, the slope was not a detriment. The corner location was offset by its demolition costs and the dual access of the subject. Size was its primary adjustment and it was -30%. It indicated about $1.10 PSF. Sale 7 was the current contract on the subject's parent tracts. It is inferior to Ihe actuai subject due to zoning and the I S' alley bisection. The alley closing will add another 3,150 SF to this property and give it increased utility as a entirely useable tract of land with dual access. Considering the added PAT MURPHY & ASSOCIATES 10 utility of a raw site that is not encumbered by old improvements or bisected by an alley, and zoned for General Retail use, itnvas adjusted about IS% or $0.10 PSF and the sale indicated about $0.79 PSF. The majority of the sales data suggested a value between $0.75 and $1.10 and a value in low center of that range or about $0.80 PSF seems most reasonable. Thus, the estimated value of the subject was, in round figures, $55,000 Reconciliation and Final Value Estimate In this appraisal, the subject was valued using the sales comparison approach. It estimated the value of the fee simple estate at $55,000 which was a$10,000 increase over the contract price. This increase was earned through the added utility of closing the alley and re-zoning to a higher classification. Consequendy, my opinion of the market value of the fee simple estate in the subject property as of August 14, 2001 was, FIFTY FIVE THOUSAND DOLLARS ($55,000) Exposure Period The opinion of value assumed the subject was properly exposed to the marke[ for nine to twelve months prior to the date of value. Marketiniz An al vs is The actual marketing history of some of the sales has been quite long as the subject itself shows. Properly listed at $50,000 or within 5% of the sales price, it s[ill [ook over 18 months to reach contract. The present overall demand for real estate in this strip is the best in several years, mortgage money ~ is plentiful and as new construction rates show, numerous individuals are interested in an entrepreneurial effort. Therefore, the estimated future marketing time necessary for the subject to command the appraised value was about nine to twelve months from the date oF value if properly exposed to the market. PAT MURPHY & ASSOCIATES i i i-- CERTIFICATION I certify Ihat, to the best of my knowledge and belief: The statements of fact contained in this report are we and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. I have no present or prospective interest in the property that is the subject of this report and I have no personal interest or bias with respect [o the parties involved. I have no bias with respect to the property that is the subject of this report or to the parties involved, with this assignment. My engagement in this assignment, was no[ contingen[ upon developing or reporting predetennined results. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the opinion, the attainment of a stipulated result, or the occurrence of a subsequent event direcUy related [o the intended use of this appraisal. The appraisal assignment was not based on a requested minimum valuation, a specific valuation, or predicated in any way on the approval of the loan. My ana(yses, opinions, and condusions were developed, and this report hus been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice; the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute; and the Code of Ethics of the American Society of Farm Managers and Rural Appraisers. The use of Ihis report is subject to the requirements of the Appraisul Instimte and the American Society of Farm Managers and Rural Appraisers relating to review by its duly authorized representatives. As of the date of this report, W. P. Murphy has completed the requirements of the continuing education program of the Appraisal Institute. The American Society of Farm Managers and Rural Appraisers conducts a manda[ory program of continuing education. W. P. Murphy is current with the requirements of the program. The appraiser has made a personal inspection of the property that is the subject of this report. No one provided significant professional assistance to the person signing the report. My opinion of the market value of the subject property as of Augus[ 14, 2001, was FIFTY FIVE THOUSAND DOLLARS ($55,000) CO~-1-7- 0 L Date W. P. (Pa[) Murphy, AR , MAI TX-1320215- PAT MURPHY & ASSOCIATES 12 CASH FLOW PRELIMINARY DRAFT MONTHLY CASH FLOW PROJECTION NAME OF BUSINESS: The Lartar Colon ADDRESS: 1746 Bonham Sf Pans TX OWNER: KG LLP TrPE oF suswess: Pssisted Livin PREPARED BY: Kenn Kamer DATE: 91412001 Pre-Start-up Posilion MONTH: 1 2 3 4 5 6 7 8 9 10 11 12 TOTAL YEAR MONTM Column5l-72 Estimate Estimate Estimate Eslimale Estimate Estimate Estimate Estimate Estimale Estimate Estimale Estimate Estimate Estimate 'I.CASHONHAND (beginning of month 0 76,180 58,129 57,249 55,520 70,942 97,515 136,239 773,963 277,687 249,411 287,735 324,859 76,760 1 2. CASH RECEIPTS a. CaSh 5a1e5 62,000 74,400 86,800 99,200 117,600 124,000 124,000 124,000 124,000 124,000 724,000 124,000 1,302,OD0 Z a 6. Collec{ions hom Credi1 AccounLS 0 0 0 0 0 0 0 0 0 0 0 0 0 b c. Loan or Olher Cash in'eclion S eci 100,000 0 0 0 0 0 0 0 0 0 0 0 0 0 c 3. TOTAL CASH RECEIPTS 2a+2b*2c=3 70G,000 62,000 74,400 88,800 99,200 711,600 724,000 124,000 126,000 724,000 724,000 724,000 124,000 1,302,000 3 4. TOTAL CASH AVAILABLE Before cash out 1•3 100,000 138,160 132,529 738,049 154,720 182,542 221,515 260,239 297,963 335,687 373,411 417,735 448,859 1,378,160 4 5. CASH PAID OUT a. Purcha5e5 MerCh3rbi5e 4,000 6,245 7,494 8,743 9,992 17,241 12,490 12,490 12490 12,d90 12,490 72,490 131,745 5 a b. GroSSWa es Ezcludesw0hdrawals 33,250 33,250 33,250 33,250 33,250 33,2W 33,250 33,250 33,250 33,250 33,250 399,000 b c. P rollEz nses axes,NC. 3,325 3,325 3,325 3,325 3,325 3,325 3,325 3,325 3,325 3,325 3,325 39,900 c tl. Outsitle Services P 500 500 500 500 500 SDO 500 00 5Q0 500 500 r 6,000 E e. Su ies OfficeBo eratin 1,500 1,500 1,W0 1,SU0 1,500 1,500 1,500 1,500 1,500 1,500 7,500 18,000 e f. Re airs&Mainlenance 0 0 0 0 0 0 1,000 1,000 1,000 1,000 1,000 6,000 t . Adverti5in 1 000 1,000 1,000 1,000 1,000 0 0 0 0 . 0 ' 0 5,000 h.Car,Delive ,BTravel 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1000 1,000 1,000 1,000 l 12,000 M1 I. Acmuntin & L al 800 300 300 300 300 300 300 300 300 300 300 300 300 3,600 I J. Rent 0 0 0 0 0 0 0 0 0 0 0 0 0 0 200 200 200 200 200 200 200 200 200 200 200 200 2,400 k 1. UttlHies 1,200 2,732 2,732 2,732 2,732 2,732 2,732 2,732 2,732 2,732 2,732 2,732 2,732 32,784 1 m.lnsuance 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000 n n. Tazes Real Estate.etc 4.214 4,214 4.214 4.214 4.274 4.214 4.270 4.214 4.214 4.214 4.214 41274 50.568 m o. Irrteresl 14,741 14,693 14,645 14,596 14,546 14,498 14,448 14,398 14,347 14,297 14,246 14,194 773,650 0 . WherEn enses 5 ecifi each 0 Aulolease 950 950 950 950 950 950 950 950 ' 950 950 950 950 11,400 0 . Miscellaneous Uns cified 500 SW 500 500 500 500 500 500 500 500 500 500 6,000 f. Subtotal 23,840 72,957 74,158 75,359 76,559 77,758 77,959 78,909 78,859 78,808 78,758 78,707 78,655 927,447 r s. LoanPrinci IPa ment 7,074 7,122 7,770 7,219 7,269 7,317 7,367 7,417 7,468 7,518 7,569 7,621 88,130 5 L Ca ilal Pumhases (Specify) ' 0 t U. Olh¢rStartu Cqsts 0 u v. Reserve and/or Excrow (Specify) 0 v w. Ownefs W3hdrawal 0 w 8. TOTAL CASH PAID OUT 23,840 80,031 81,280 82,529 83,778 85,027 85,276 86,276 86,276 66,276 86,276 86,276 88,276 7,015,577 6 olal 5a ihN 5w 7. CASHPOSITION End of month 4 minus 6 76,160 58,129 51,249 55,520 70,942 97,515 136,239 173,963 277,687 249,411 287,1% 324,859 362,583 362,583 7 ESSENTIAL OPERATING DATA (Noncash Pow infarmalion) A. SaleS Vdume Dollars 62,000 74,400 86,800 99,200 111,600 724,000 124,000 124,000 124,000 124,000 724,000 124,000 7,302,000 A B. Accwnts Receivable End of monlh 0 0 0 0 0 0 0 0 0 0 0 0 0 0 B C. BaA DeDt Entl of moMh 0 0 0 0 0 0 0 0 0 0 0 0 0 0 C D. InveMO on Hand En0 of month 4,000 4,000 4,000 4,000 4, 00 4,000 4,000 4,000 4,000 4,000 4,000 4,000 41000 4 000 O E. AxouMS Pa ade Entl of rtaMh 0 0 0 0 0 0 0 0 0 0 0 0 0 0 E F. De tetia[ion 0 0 0 0 0 0 0 0 0 0 0 0 0 0 F ASSUMPTIONS: Revenue: 29 Unils @ 2 BeAS Q$3500 10 UnNs @ 1 Be0 (aJ $2250 MONTHLV REVENUE AVAILABLE OcwpanryPercenlage 101,500 22,500 124,000 50% 60No 70% 80% 90% 100% 100% 100°h 100% 100% 100% 700% Financing Tertns: BudEing $2,067,200 @ 8% far 15 years Fum/Equip $128,000 @ e% for 7 years