HomeMy WebLinkAboutResolution 2002-097
GUIDELINES AND CRITERIA FOR GRANTING TAX ABATEMENT
IN REINVESTMENT ZONES CREATED IN THE
CITY OF NORTH RICH LAND HILLS
RESOLUTION NO. 2002-097
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND
HILLS, TEXAS ADOPTING GUIDELINES AND CRITERIA FOR GRANTING TAX
ABATEMENT IN REINVESTMENT ZONES CREATED IN THE CITY OF NORTH
RICH LAND HILLS.
WHEREAS, the future economic viability of the City of North Richland Hills
depends on the County's ability to attract new investment through the location of new
industry and the expansion and modernization of existing businesses; and
WHEREAS, the creation and retention of job opportunities that result from new
economic development is the highest civic priority; and
WHEREAS, the City of North Richland Hills must become and remain
competitive with other localities across the nation in the expansion of their existing
commercial base and the attraction of new commercial and industrial investment; and
WHEREAS, any tax incentives offered by the City of North Richland Hills should
be limited to those companies that create new wealth within the City; and
WHEREAS, no tax incentive offered by the City of North Richland Hills should
adversely affect the competitive position of existing companies operating in the city;
and
WHEREAS, effective September 1,1987, Texas law requires counties and
municipalities, which elect to participate in tax abatement programs, to establish
guidelines and criteria governing the designation of reinvestment zones and tax
abatement program prior to granting any future tax abatement; and
NOW, therefore be it resolved that the North Richland Hills City Council does
hereby adopt the attached "Guidelines and Criteria" for granting tax abatement in
reinvestment zones created within the City of North Richland Hills, Texas.
Section 1
DEFINITIONS
(a) "Abatement" means the full or partial exemption from ad valorem taxes of certain
improvements to real property or personal property in a reinvestment zone
designated for economic development purposes.
(b) "Agreement" means a contractual agreement between a property owner and/or
lessee and an eligible jurisdiction for the purposes of tax abatement.
(c) "Base Year Value" means the assessed value of eligible property on January 1
preceding the execution of the agreement plus the agreed upon value of eligible
property improvements made after January 1 but before the execution of the
agreement.
(d) "Deferred Maintenance" means improvements necessary for continued
operations which do not improve productivity or alter the process technology.
(e) "Economic Life" means the number of years a property improvement is expected
to be in service in a facility.
(f) "Eligible Jurisdiction" means the City of North Richland Hills, the Birdville
Independent School District, Tarrant County, or other special taxing districts that
levy ad valorem taxes upon and provide services to property located within a
proposed or existing reinvestment zone.
(g) "Expansion" means the addition of buildings, structures, fixed machinery or
equipment for purposes of increasing production capacity.
(h) "Facility" means property improvements completed or in the process of
construction which together comprise an integral whole.
(i) "Manufacturing Facility" means buildings, structures, fixed machinery or
equipment, the primary purpose of which is or will be the manufacture of tangible
goods or materials or the processing of such goods or materials by physical or
chemical change.
0) "Modernization" means the upgrading of existing facilities which increased the
productive input or output, updates the technology or substantially lowers the
unit cost of the operation. Modernization may result from the construction,
alternation, or installation of buildings, structures, fixed machinery or equipment.
It shall not be for the purposes of reconditioning, refurbishing or repairing.
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(k) "New Facility" means a property previously undeveloped which is placed in
service by means other than or in conjunction with expansion, modernization, or
redevelopment.
(I) "Other Basic Industry" means buildings and structures including fixed machinery
and equipment not elsewhere described, used or to be used for the production of
products or services, from which a majority of revenues generated by activity at
the facility are derived from outside Tarrant County.
(m) "Redevelopment" means to add significant value to an existing facility by
changing the use of the facility in order to maximize the use of the facility,
improve the city image, and make the facility fully operational.
(n) "Regional Distribution Center Facility" means buildings and structures including
fixed machinery and equipment, used or to be used primarily to receive, store,
service or distribute goods or materials owned by the facility, from which a
majority of revenues generated by activity at the facility are derived from outside
Tarrant County.
(0) "Regional EntertainmentITourism Facility" means buildings and structures,
including fixed machinery and equipment, used or to be used to provide
entertainment and/or tourism related services, from which a majority of revenues
generated by activity at the facility are derived from outside North Richland Hills.
(p) "Regional Retail Facility" means buildings and structures including fixed
machinery and equipment, used or to be used to provide retail services from
which a majority of revenues generated by activity at the facility are derived from
outside North Richland Hills.
(q) "Regional Service Facility" means buildings and structures, including fixed
machinery and equipment, used or to be used to provide a service from which a
majority of revenues generated by activity at the facility are derived from outside
Tarrant County.
(r) "Reinvestment Zone-Municipality Designated" means any area which lies within
the taxing jurisdiction or extra-territorial jurisdiction of the City of North Richland
Hills and has been designated a reinvestment zone for tax abatement purposes.
It is the intent of the North Richland Hills City Council to provide tax abatement
within municipality designated reinvestment zones as long as the municipality
granted tax abatement is in concert with the tax abatement guidelines contained
herein.
(s) "Research Facility" means buildings and structures, including fixed machinery
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and equipment used or to be used primarily for research and experimentation to
improve or develop new tangible goods or materials or to improve or develop the
production processes thereto.
(t) "Regional Health Care Facility" means buildings and structures, including fixed
machinery and equipment, used or to be used to provide health care services,
from which a majority of revenues generated by activity at the facility are derived
from outside North Richland Hills.
Section 2
ABATEMENTAUTHOR~ED
(a) Authorized Facility. A facility may be eligible for abatement if it is a :
Regional Health Care Facility,
Manufacturing Facility,
Research Facility,
Regional Distribution Center Facility,
Regional Service Facility,
Regional EntertainmentITourism Facility
Regional Retail Facility, or
Other Basic Industry.
(b) Authorized Date. A facility shall be eligible for tax abatement if it has applied for
such abatement prior to the commencement of construction, provided, that such
facility meets the criteria granting tax abatement in reinvestment zones created
in the City of North Richland Hills pursuant to the guidelines and criteria adopted
by the City Council.
(c) Creation of New Value. Abatement may only be granted for the additional value
of eligible real or personal property improvements made subsequent to and
listed in an abatement agreement between the City of North Richland Hills and
the property owner and/or lessee, subject to such limitations as the City Council
may require.
(d) New and Existing Facilities. Abatement may be granted to new facilities and
improvements to add value to existing facilities for purposes of modernization,
expansion, or redevelopment.
(e) Eligible Property. Abatement may be extended to either real property
improvements including the value of buildings, structures, and site
improvements, or personal property improvements including the value of
movable machinery, equipment, and other personal property, necessary to the
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operation and related to the new facility or proposed expansion, modernization
or redevelopment authorized as eligible under these guidelines.
(f) Ineligible Property. The following classes of property shall be fully taxable and
ineligible for abatement:
Land.
Inventories.
. Supplies.
Vehicles, vessels, or aircraft.
Deferred maintenance investments.
Residential property.
Property that is associated with any activity that is illegal under federal,
state or local law.
Property owned or used by the State of Texas or its political subdivisions.
Property owned by any organization which is owned, operated or directed
by a political subdivision of the State of Texas.
(g) Leased Facilities. If an authorized facility eligible for tax abatement is leased,
the agreement shall be executed with both the lessor and the lessee.
(h) Value and Term of Abatement. Abatement shall be granted effective with the
January 1 valuation date immediately following the date of execution of the
agreement. The value and term of abatement on new eligible property shall be
determined as follows:
The value of the abatement shall be equal to a 500 percent of investment
by the business in eligible property described in Section 2(e), above. The
City Councilor its designated representative, shall work with the
applicant, prior to the execution of an abatement agreement, to determine
the exact schedule for the abatement.
Under no circumstances shall the value of the abatement exceed 50
percent of the value of eligible property in a single year, and the duration
of an abatement agreement shall not exceed 10 years or one-half (1/2)
the economic life of the eligible property, whichever is less.
(I) Economic Qualification. In order to be eligible to receive tax abatement the
applicant must meet the following qualifications.
(1) For a new facility (with the exception of a regional retail or regional
entertainment/tourism facility), be reasonably expected to invest not less
than three million dollars ($3,000,000) in the facility (including both
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eligible and ineligible property) within three years from the
commencement of construction and be expected to create employment for
not less than 1 0 persons associated with the production of goods and
services as the authorized facility on a full-time permanent basis in the
City of North Richland Hills.
(2) For an expanded, modernized facility, or redeveloped facility (excluding
regional retail facilities), be reasonably expected to invest not less than
one million five hundred thousand dollars ($1,500,000) in the facility
(including both eligible and ineligible property) within three years from the
commencement of construction, and be expected to create or retain
employment for not less than 10 persons associated with the production
of goods and services at the authorized facility on a full-time, permanent
basis in the City of North Richland Hills.
(3) For regional retail and regional entertainment/tourism facilities, be
reasonably expected to invest not less than five million ($5,000,000) in
the facility (including both eligible and ineligible property) within three
years from the commencement of construction and be expected to create
employment for not less than 10 persons associated with the production
of goods and services at the authorized facility on a full-time, permanent
basis in the City of North Richland Hills.
(4) Two or more part-time, permanent employees totaling an average of not
less than 40 hours per week may be considered as one full-time,
permanent employee.
(5) Companies seeking to qualify for tax abatement on the basis of job
retention shall document that without the creation of a reinvestment zone
and/or tax abatement, the company will either reduce or cease operation.
(6) Not be expected to solely and primarily have the effect of transferring
employment from one part of the City of North Richland Hills to another.
(j) Taxability. From the execution of the abatement agreement to the end of the
agreement period, taxes shall be payable as follows:
(1) the value of ineligible property as provided in Section 2(f), above, shall be
fully taxable,
(2) the base year value of existing eligible property as determined each year
shall be fully taxable, and
(3) the additional value of new eligible property shall be taxable in the
manner described in Section 2(h), above.
(k) Conflict of Interest. Property that is in a reinvestment zone and that is owned or
leased by a member of the governing body or the Planning and Zoning
Commission of the City of North Richland Hills shall be excluded from property
tax abatement.
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Section 3
APPLICATION
(a) Any present or potential property owner of taxable property in North Richland
Hills may request the creation of a reinvestment zone and tax abatement by
filing a written request with the Mayor or his designated representative.
(b) The application shall consist of a completed application form accompanied by
the following:
(1) A general written description of the proposed use and the general nature
and extent of the new facility or modernization, expansion, rede
velopment or new improvements to be undertaken.
(2) A descriptive list of the improvements that will be a part of the facility.
(3) A map and property description.
(4) A time schedule for undertaking and completing the planned
improvements.
(5) Such financial and other information as deemed appropriate by the City
Council for purposes of evaluating the application.
(c) Upon receipt of a completed application, the Mayor shall notify, in writing, the
presiding officer of the governing body of each affected jurisdiction. Before
acting upon the application, the City Council shall through public hearing, afford
the applicant, designated representatives of any affected taxing jurisdiction and
the general public opportunity to show cause why the abatement should or
should not be granted. Notice of the public hearing shall be clearly identified on
a City Council Agenda to be posted in accordance with the Texas Property
Redevelopment and Tax Abatement Act and the Texas Open Meetings Act.
(d) After receipt of an application for creation of a reinvestment zone and application
for tax abatement, the City Council, or its designee, shall prepare a feasibility
study setting out the impact of the proposed reinvestment zone and tax
abatement. The feasibility study shall include, but not be limited to, an estimate
of the economic effect of the creation of the zone and the abatement of taxes
and the cost/benefit to the City and other affected jurisdictions.
(e) A request for a reinvestment zone for the purpose of tax abatement shall not be
granted if the City Council finds that the request for abatement was filed after the
commencement of construction, alternation, or installation of improvements
related to a proposed expansion, modernization or new facility authorized as
eligible under these guidelines.
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(f) Variance. Request for variance from provisions of these guidelines may be
made in written form to the Mayor, or his designated representative, provided,
however, that the term and value of abatement described in Section 2(h), above,
may not be increased. Such request shall include a complete description of the
circumstances explaining why the applicant should be granted a variance.
Approval of a request for variance requires a three-fourths (3/4) vote of the
governing body.
Section 4
PUBLIC HEARING
(a) Should any affected jurisdiction be able to show cause in the public hearing why
the grant of abatement will have a substantial adverse effect on its bonds, tax
revenue, service capacity or the provision of services, that showing shall be
reason for the City to deny any designation of the reinvestment zone, the grant
of abatement, or both.
(b) Neither a reinvestment zone nor an abatement agreement shall be authorized if
it is determined that:
(1) there would be a substantial adverse effect on the provision of
government services or tax base,
(2) the applicant has insufficient financial capacity,
(3) planned or potential use of the property would constitute a hazard to
public safety, health or morals, or
(4) planned or potential use of the property violates other codes or laws.
Section 5
AGREEMENT
(a) After approval, the City shall formally pass a resolution and execute an
agreement with the owner of the facility and/or lessee, which shall include the
following:
(1) Estimated value to be abated and the base year value.
(2) Percent of value to be abated each year as provided for in Section 2(h),
above.
(3) The commencement and termination dates of the abatement.
(4) The proposed use of the facility, nature of the construction, time schedule
for construction and commencement of operations, map, property
description, and improvements as listed in the application under Section
3(b), above.
(5) Contractual obligations in the event of default, violation of terms and
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conditions, delinquent taxes, recapture, administration and assignment as
provided for in Section 2(a), 2(g), 2(h), S, 7 and 8 or other provisions that
may be required for uniformity or by state law, and
(S) amount of investment in, and average number of jobs associated with, the
facility during the abatement period.
(b) Such agreement shall normally be executed within SO days after the applicant
has forwarded all necessary information and documentation for evaluation of the
application to the City.
Section 6
RECAPTURE
(a) In the event that the facility is completed and begins producing goods and/or
services, but subsequently discontinues such production for any reason
excepting fire, explosion or other casualty or accident or natural disaster for a
period of one year during the abatement period, then the agreement shall
terminate and so shall the abatement of taxes for the calendar year during which
the facility no longer produces. The taxes otherwise abated for the calendar
year shall be paid to the City within sixty (SO) days from the date of termination.
(b) Should the City determine that the company or individual is in default according
to the terms and conditions of the abatement agreement, the City shall notify the
company or individual, in writing, at the address stated in the agreement, and if
such non-compliance is not resolved within sixty (SO) days from the date of such
notice, then the agreement shall be terminated.
(c) In the event that the company or individual:
(1) Allows its ad valorem taxes owed the City or other affected jurisdiction to
become delinquent and fails to timely and properly follow the legal
procedures for their protest and/or contest, or
(2) violates any of the terms and conditions of the abatement agreement and
fails to resolve such violations within sixty (SO) days from the date of
written notice of such violations.
the agreement then may be terminated and all taxes previously abated by virtue
of the agreement will be recaptured and paid within sixty (SO) days of the
termination.
Section 7
ADMINISTRATION
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(a) The Chief Appraiser of the County shall, as a normal consequence of his duties,
annually determine an assessment of the real and personal property comprising
the reinvestment zone. Each year, the company or individual receiving
abatement shall furnish the assessor with such information as may be necessary
for the abatement, including the number of new or retained employees
associated with the facility. Once the value has been established, the Chief
Appraiser shall notify the affected jurisdictions which levy taxes of the amount of
the assessment.
(b) The agreement shall stipulate that employees and/or designated representatives
of the City will have access to the reinvestment zone during the term of the
abatement agreement to inspect the facility to determine if the company or
individual is in compliance with the terms and conditions of the abatement
agreement. All inspections will be made only after notification of not less than
twenty four (24) hours and will only be conducted in such manner as not to
unreasonably interfere with the construction and/or operation of the facility. All
inspections will be made with one or more representatives of the company or
individual present and in accordance with the company's safety standards.
(c) Upon completion of construction, the City shall annually evaluate each facility
receiving abatement to ensure compliance with the agreement and report
possible violations to the City Council and City Attorney.
(d) All proprietary information required by the City for purposes of monitoring
compliance by a company with the terms and conditions of an abatement
agreement shall be considered confidential.
Section 8
ASSIGNMENT
(a) Abatement may be transferred and assigned by the holder to a new owner or
lessee of the same facility upon the approval by resolution of the City Council
subject to the financial capacity of the assignee and provided that all conditions
and obligations in the abatement agreement are guaranteed by the execution of
a new contractual agreement with the City of North Richland Hills.
(b) The expiration date of the new contractual agreement shall not exceed the
termination date of the abatement agreement with the original owner and/or
lessee.
(c) No assignment or transfer shall be approved if the parties to the existing
agreement, the new owner or new lessee are liable to the City of North Richland
Hills or any affected taxing jurisdiction for outstanding taxes or other obligations.
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(d) Approval of a transferred and assigned agreement shall not be unreasonably
withheld.
Section 9
SEVERABILITY AND LIMITATION
In the event that any section, clause, sentence, paragraph or any part of these
Guidelines and Criteria shall, for any reason, be adjudged by any court of competent
jurisdiction to be invalid such invalidity shall not affect, impair, or invalidate the
remainder of these Guidelines and Criteria.
PASSED AND APPROVED this 9th day of December, 2002.
CITY OF NORTH RICHLAND HILLS
By:
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Oscar Trevino, Mayor
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Patricia Hutson, City Secretary
Approved as to form and legality:
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