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18 - TAX ABATEMENT AGREEMENT FOR TURNER INDUSTRIES GROUP, L.L.C.Item No. 18 memorandum TO: City Council John Godwin, City Manager FROM: Kent McIlyar, City Attorney SUBJECT: Tax Abatement Agreement for Turner Industries Group, L.L.C. DATE: September 9, 2015 BACKGROUND: On May 11, 2015, the City Council enacted City Ordinance No. 2015 -016 creating Reinvestment Zone No. 2015 -2 over property owned by Turner Industries Group, L.L.C. in Paris, Lamar County, Texas. Turner Industries plans to build a $6,000,000.00 office building in the Reinvestment Zone and is requesting a ten (10) year tax abatement on 100% abatement on these improvements. The Tax Abatement Advisory Committee has reviewed the proposal and recommends same to City of Paris and Lamar County. STATUS OF ISSUE: Pending City Council approval of tax abatement agreement. BUDGET: Ten year abatement on new building. RECOMMENDATION: Motion to approve tax abatement agreement between City of Paris and Turner Industries Group, LLC. Draft RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS; APPROVING AND AUTHORIZING A TAX ABATEMENT AGREEMENT WITH TURNER INDUSTRIES GROUP, L.L.C.; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, on May 11, 2015, the City Council of the City of Paris enacted City Ordinance No. 2015 -016 creating Reinvestment Zone No. 2015 -2 over property owned by Turner Industries Group, L.L.C. in Paris, Lamar County, Texas; and WHEREAS, the City Council of the City of Paris has been presented a proposed agreement by and between the City of Paris, Texas and Turner Industries Group, L.L.C., providing for a tax abatement for a proposed new office building in Reinvestment Zone 2015 -2, a copy of which is attached hereto as Exhibit "A ", and incorporated herein by reference hereinafter called "Agreement "; and, WHEREAS, upon review and consideration of the Agreement, and all matters attendant and related thereto, the City Council is of the opinion that the terms and conditions thereof meet the Guidelines and Criteria for Tax Abatement and should be approved, and that the Mayor should be authorized to execute it on behalf of the City of Paris, Texas. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS, THAT: Section 1. The findings set out in the preamble to this resolution are hereby in all things approved. Section 2. That the terms of the Tax Abatement Agreement and the property the subject thereof meet the City's Guidelines and Criteria for Tax Abatement adopted by the City Council by Resolution No. 2015 -023. Section 3. That the terms and conditions of the proposed Agreement attached hereto as Exhibit "A ", having been reviewed by the City Council of the City of Paris and found to be acceptable and in the best interests of the City of Paris and its citizens, be, and the same are hereby, in all things approved. Section 4. That the Mayor is hereby authorized to execute the Agreement and all other documents in connection therewith on behalf of the City of Paris substantially according to the terms and conditions set forth in the Agreement attached hereto as Exhibit "A ". Section 5. That the planned use of the property the subject of the tax abatement will not constitute a hazard to public safety, health, or morals. Section 6. That this approval and execution of the agreement on behalf of the City is not conditioned upon approval and execution of any other tax abatement agreement by any other taxing entity. DULY PASSED AND APPROVED this 14�h day of September, 2015. A.J. Hashmi, M.D.., Mayor ATTEST: Janice Ellis, City Clerk APPROVED AS TO FORM: W. Kent Mcllyar, City Attorney THE STATE OF TEXAS ) COUNTY OF LAMAR ) TAX ABATEMENT AGREEMENT This agreement is entered into by and between the CITY OF PARIS, TEXAS, a home - rule municipal corporation, situated in Lamar County, Texas, acting by and through its authorized officer whose signature appears below (hereinafter called "City "), and TURNER INDUSTRIES GROUP, L.L.C., acting by and through its authorized officer whose signature appears below (hereinafter referred to as "Owner "). WITNESSETH: WHEREAS, on May 11, 2015, following notice and a public hearing, the City Council of the City of Paris, Texas enacted Ordinance No. 2015 -016 creating Reinvestment Zone No. 2015 -2 on land owned and occupied by Turner Industries inside the city limits of the City of Paris, Texas as further described in a copy of said Ordinance attached hereto and incorporated herein as Exhibit A in accordance with Chapter 312 of the Texas Tax Code; and WHEREAS, on May 11, 2015, the City Council of the City of Paris, Texas approved Resolution No. 2015 -023 reaffirming the City's intent to be eligible to participate in tax abatement Agreements in order to maintain and enhance the commercial and industrial economic and employment base of the Paris area for the long term interest and benefit of the City and its citizens; and, WHEREAS, through Resolution No. 2015 -023, the City Council also approved and adopted new Guidelines and Criteria for commercial and industrial Tax Abatement in the City of Paris, Texas as required by the Property Redevelopment and Tax Abatement Act, Chapter 312, Texas Tax Code; and WHEREAS, the Improvements to be constructed by Owner in Reinvestment Zone No. 2015 -2, in the capital amounts referenced in this Agreement and attached Exhibits and upon and within the Property (the Improvements and the Property together herein called the "Project ") and the other terms hereof are consistent with encouraging development of said Reinvestment Zone in accordance with the purposes for which it was created and are in compliance with the City's policy on tax abatement incentives and the ordinance creating such Reinvestment Zone adopted by the City and all applicable laws. NOW, THEREFORE, The Parties hereto do mutually contract and agree as follows: 1 I. Term 1.1 The effective date of this AGREEMENT is the 10 day of September, 2015, with tax abatement beginning with the tax year commencing January 1, 2016, and expiring on December 31, 2025. II. Area to be Improved 2.1 The Project consists of a new office building to be constructed on Owner's land inside Reinvestment Zone No. 2015 -2 a copy of which is attached hereto and incorporated herein as Exhibit A. The land and proposed building are hereinafter referred to as the "Property." III. Improvements 3.1 Owner shall construct a first class office building on the Property, no less than 26,000 square feet in size, at a minimum capital investment of SIX MILLION AND NO /100 DOLLARS ($6,000,000.00) (hereinafter "Improvements "). The office building will be constructed in compliance with all local, state and federal codes and regulations; all required permits shall be obtained by Owner prior to beginning construction of the Improvements and all required inspections shall be timely scheduled and completed by Owner in accordance with City Building Codes, International Building Codes and all other applicable state and federal laws and regulations. 3.2 The Office Building described herein as the "Improvements" shall be completed, furnished, and occupied within twenty -four (24) months of the effective date of this Agreement. Owner shall provide City with a Certificate of Completion along with supporting documents as described in Section 10.1 of this Agreement within sixty (60) calendar days of completion of the Improvements. IV. Consideration 4.1 Owner agrees and covenants that it will diligently and faithfully, in a good and workmanlike manner pursue the completion of the Improvements as described herein. As good and valuable consideration for this Agreement, Owner further covenants and agrees that all construction of the Improvements will be in accordance with all applicable state and local laws, codes and regulations or will procure a valid waiver thereof. In further consideration for this Agreement, Owner shall continue to operate an active and vibrant pipe fabrication, coating, design and engineering and construction plant at Owner's current location in Paris, Texas throughout the term of this Agreement. 2 V. Default 5.1 In the event that (a) the Improvements for which an abatement has been granted are not completed in accordance with this Agreement or the capital expenditure for the Improvements does not meet the amount required herein; or (b) Owner fails to continuously maintain and operate a vibrant and active pipe fabrication, coating, engineering, design and construction plant in Paris, Texas during the term of this Agreement; or (c) Owner allows its ad valorem taxes owed the City to become delinquent and fails to timely and properly follow the legal procedures for protest or contest of any such ad valorem taxes; or (d) Owner materially breaches any of the other terms and conditions of this Agreement, then Owner shall be in default of this Agreement. In the event the Owner defaults in its performance of either (a), (b), (c) or (d) above, then the City shall give the Owner written notice of such default and if the Owner has not cured such default within sixty (60) days of said written notice, this Agreement may be modified or terminated by the City. Notice shall be in accordance with paragraph 12.3. 5.2 As liquidated damages in the event of default, and in accordance with the requirements of Section 312.205(a)(4) of the Tax Code of the State of Texas, all taxes which otherwise would have been paid to the CITY without the benefit of abatement, together with interest to be charged at the statutory rate for delinquent taxes as determined by Section 33.01 of the Property Tax Code of the State of Texas, with all penalties permitted by the Property Redevelopment and Tax Abatement Act and the Property Tax Code of the State of Texas, shall be recaptured and will become a debt to the City and shall be due, owing, and paid to the City within sixty (60) days of the expiration of the above - mentioned applicable cure period as the sole remedy of the City, subject to any and all lawful offsets, settlements, deductions, or credits to which Owner may be entitled. The parties acknowledge that actual damages in the event of default and termination would be speculative and difficult to determine. VI. Real and Personal Property Tax Abatement 6.1 Subject to the terms and conditions of this Agreement, and subject to the rights and holders of any outstanding bonds of the City, one hundred percent (100 %) of the ad valorem property taxes which are assessed on the Improvements described herein and otherwise owed to the City for the tax years 2016 through and including 2025 shall be abated. Said abatement shall be one hundred percent (100 %) of the taxes assessed upon the completed value of the Improvements to be constructed in accordance with this Agreement. There shall be no abatement of City taxes on Owner's Real or Personal Property in existence prior to the effective date of this Agreement. 6.2 Subject, however, to Owner's rights to protest such value of Improvements and cause it to be adjusted as is provided for under the applicable laws of the State of Texas. The ad valorem taxes assessed against the Improvements described herein shall continue to be abated at 100% of their assessed value for each year of the ten (10) year term of this Agreement (i.e. calendar years 2016 through 2025). This tax abatement shall be implemented and enforced in accordance with all applicable state and local laws and regulations or valid 3 waiver thereof; provided that the Owner shall have the right to protest or contest any assessment of the Property, and said abatement shall be applied to the amount of taxes finally determined to be due as a result of any such protest or contest. 6.3 The tax abatement granted herein is in compliance with the City's Guidelines and Criteria for Tax Abatement as amended by City Resolution No. 2015 -023, a copy of which is attached hereto as Exhibit B. In the event of a conflict between this Agreement and the City's Guidelines and Criteria for Tax Abatement, this Agreement shall control. VII. No Conflict of Interest 7.1 The Owner represents and warrants that neither the Property nor the Improvements include any real or personal property that is owned or leased by a member of the Planning and Zoning Commission of the City of Paris, nor by a member of the City Council approving, or having responsibility for the approval of this Agreement. VIII. Conditions 8.1 The terms and conditions of this Agreement are binding upon the parties hereto and their successors and assigns. 8.2 It is understood and agreed between the parties that the Owner, in performing its obligations hereunder, is acting independently, and the City assumes no responsibility or liability in connection therewith to third parties; and Owner agrees to indemnify and hold harmless the City, it's elected officials, officers and employees therefrom. It is further understood and agreed among the parties that the City, in performing its obligations hereunder, is acting independently, and the Owner assumes no responsibility or liability in connection therewith to third parties and, to the extent permissible by law, the City agrees to indemnify and hold harmless the Owner therefrom. IX. Compliance Provisions 9.1 The Owner agrees that the City, its agents and employees, shall have the reasonable right of access to records concerning the Owner's investment in the Improvements for the purpose of conducting an audit of the Project improvements and Project costs. Any such audit shall be made only after giving the Owner notice at least fourteen (14) days in advance and will be conducted in such a manner as to not unreasonably interfere with the operation of the facility. Upon request, the Owner will provide the City with a detailed Asset Report with an itemized list of assets placed into service from the date of execution of this Agreement through the date that City issues a final certificate of occupancy to Owner for the Improvements. The Asset Report will provide the date on which the asset was capitalized, the acquisition amount, and the accumulated depreciation amount. At the City's request, the Owner will provide actual invoices to support the amounts shown on the Asset Report. rd 9.2 The Owner further agrees that the City, its agents and employees, shall have reasonable right of access to the Property to inspect the Irnprovements in order to insure that the construction of the Improvements are in accordance with this Agreement and all applicable state and local laws and regulations or valid waiver thereof. After completion of the Improvements, the City shall have the continuing right to inspect the Property to insure that it is thereafter maintained and operated in accordance with this Agreement during the term of the Agreement. All inspections will be made only after giving the Owner notice at least seventy - two (72) hours in advance and such inspections shall be conducted in such a manner so as not to interfere with the operation of the facility. Representatives of the City inspecting the Property and improvements shall be accompanied by one (1) or more representatives of the Owner and shall sign an agreement promising to maintain the confidentiality of any information they obtain in connection therewith except for the purposes of assessing and collecting ad valorem taxes and verifying or enforcing compliance with this Agreement. Said representative shall also be required to observe any facility rule and regulation applicable to the Property. Nothing herein shall be construed as limiting the City's ability to perform inspections or to enter the Property which is the subject of this Agreement. X. Initial and Annual Reporting 10.1 Owner shall within sixty (60) calendar days of completion of the Improvements, provide the City with a sworn report, written on Owner's letterhead and sworn to by an authorized officer of Owner, which contains the following information: (a) A copy of the printout from the Lamar County Appraisal District showing the market value of the Property prior to the construction of the Improvements; (b) Owner's capital investment in the Improvements and all supporting spreadsheets and documentation setting out the cost of the Improvements; (c) Detailed description of the completed Improvements, including photos, architectural renderings, drawings, plans, specifications, appraisal reports or other documentation establishing the value of the completed Improvements; (d) A copy of the As -Built plans and specifications for the completed Improvements, or access to the location where said plans and specifications are maintained for inspection and /or copying by City's certification team and/or the Chief Appraiser for the Lamar County Appraisal District; (e) A detailed list of all furniture, office equipment and other taxable personal property purchased and placed in the office building, including documentation of the cost of the furniture and office equipment which is subject to personal property taxation by Lamar County Appraisal District; (f) The date of substantial completion of the Improvements and date that Improvements are occupied by Owner. 5 10.2 The Owner further agrees that it will provide City with an annual sworn report which shall certify, in writing, that Owner is in compliance with each applicable term of this Agreement. Such annual report shall be furnished to City by February 15 of each year during the term of this Agreement on forms provided by the City. The first annual report shall be due to the City on or before February 15th of the year following completion of the Improvements. 10.3 In addition to the annual report required under Section 10.2 hereof, Owner further agrees that it will provide City a copy of its Texas Workforce Commission Employer's Quarterly Report within thirty (30) days of its filing of the same with the Texas Workforce Commission throughout the term of this Agreement. XI. Authority to Contract 11.1. This Agreement was authorized by resolution of the City Council at its regularly scheduled meeting on the 14th day of September, 2015, authorizing the Mayor to execute the Agreement on behalf of the City. 11.2 This Agreement was entered into by Turner Industries Group, LLC pursuant to the authority granted to the authorized official whose signature appears below. 11.3. This Agreement shall constitute a valid and binding Agreement between the City and Owner when executed in accordance herewith, regardless of whether any other taxing unit executes a similar agreement for tax abatement. XII. Legal 12.1 No officer, official or agent of the City has the power to amend, modify or alter this Agreement or waive any of its conditions or to bind the City by making any promise or representation not contained herein. 12.2 This Agreement, except by operation of law, shall not be assigned or transferred by Owner, without the prior written consent of City, which consent shall be at the sole discretion of the City. 12.3 Any written notice required or permitted under the terms of this Agreement shall be given and be deemed to have been duly served if either (1) delivered in person, or (2) deposited certified mail, return receipt requested, postage prepaid in the United States mail, addressed to the designated representative of the respective parties which are designated as follows: OWNER: Turner Industries Group LLC 1200 19' Street S.W. Paris, Texas 75460 31 CITY: City of Paris, Texas Attn: City Manager P. O. Box 9037 Paris, TX 75461 -9037 12.4 If any term or provision of this Agreement shall be declared unconstitutional or void by any court of competent jurisdiction, the constitutionality and validity of the remainder of said Agreement shall not be affected thereby, and to this end the terms and provisions of this Agreement are declared to be severable. 12.5 This Agreement sets forth the entire understanding between the parties, and any other understandings or agreements shall be canceled and superseded by this Agreement upon the date of execution hereof. None of the terms of this Agreement shall be waived, discharged, altered or modified in any respect, except by an Agreement in writing signed by both parties and specifically referring to this Agreement. The captions in this Agreement are included for convenience only and shall not be taken into consideration in any construction or interpretation of this Agreement or any of its provisions. This Agreement is performable in Lamar County, Texas, and shall be governed by, construed and enforced in accordance with the laws of the State of Texas. The provisions of this Agreement shall apply to, bind and inure to the benefit of the City, Owner, and their respective successors, and permitted assigns, if any. 12.6 Venue for any actions arising under this Agreement shall lie exclusively in the courts of Lamar County, Texas, for any State Court action, and in the U.S. District Court for the Eastern District of Texas for any federal court action. WITNESS our hands this 14a` day of September, 2015. THE CITY OF PARIS, TEXAS In ATTEST: Janice Ellis, City Clerk APPROVED AS TO FORM: W. Kent McIlyar, City Attorney A. J. Hashmi, M. D., Mayor 7 By: Title: ATTEST: Secretary TURNER INDUSTRIES GROUP, L.L.C. LIST OF EXHIBITS TO THIS AGREEMENT: A = City Ordinance No. 2015 -016 creating Turner Industries Reinvestment Zone No. 2015 -2 B = City's Guidelines and Criteria for Tax Abatement as amended by City Resolution No. 2015 -023 w