City Council

Agenda Request

Agenda Of:

05/06/08

Agenda Request No:

III B

Initiated By:

Regina Morales

Responsible Department:

Economic Development

Presented By:

Regina Morales

Director of Economic Development

Department Head:

Regina Morales

Director of Economic Development

 

 

Additional Department. Head (s):

 

Subject / Proceeding:

consideration of and action on resolution 08-15 adopting guidelines and criteria governing Tax Abatement agreements in the city of sugar land.

Exhibits:

Resolution No. 08-15

Clearances

Approval

Legal:

Joe Morris, city attorney

Executive Director:

Joe Esch, Business & Intergovernmental Relations

Purchasing:

n/a

Asst. City Manager:

n/a

Budget:

n/a

City Manager:

Allen Bogard/for AB

Budget

Expenditure Required:  $

na

Current Budget:  $

na

Additional Funding:  $

na

Recommended Action

Approve Resolution 08-15 adopting guidelines and criteria governing tax abatement agreements in the City of Sugar Land.

Executive Summary

The City of Sugar Land is required by Chapter 312 of the Texas Tax Code to adopt guidelines and criteria governing tax abatement agreements every two years if the City Council elects to be eligible to participate in tax abatement.  The City’s current guidelines were adopted on May 16, 2006 setting minimum qualifications and factors considered in granting abatements.   The guidelines also establish the abatement agreement requirements and a defined application and specific process for consideration.

 

Resolution 08-15 restates and adopts the same guidelines and criteria set forth in our current resolution.  The Business Incentive Committee reviewed the proposed guidelines and recommends that the City maintain the status quo for tax abatement incentive consideration and process.

Exhibits

 

RESOLUTION NO.  08-15

 

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SUGAR LAND, TEXAS, ADOPTING GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS IN THE CITY OF SUGAR LAND.

 

WHEREAS, Chapter 312 of the Texas Tax Code requires the City Council to adopt guidelines and criteria governing tax abatement agreements every two years if the council elects to be eligible to participate in tax abatement; and

 

WHEREAS, the guidelines and criteria may only be amended or repealed by a vote of three-fourths of the members of the city council during the two year period; and

 

WHEREAS, the City Council wishes to readopt the current guidelines and criteria, without amendment, to continue to provide for tax abatement; NOW, THEREFORE;

 

BE IT RESOLVED BY THE CITY COUNCIL

OF THE CITY OF SUGAR LAND, TEXAS:

 

Section 1.  That it elects to remain eligible to participate in tax abatement as provided for in Chapter 312 of the Texas Tax Code, as amended, by adoption of these guidelines and criteria.  

 

Section 2.  That it adopts the following guidelines and criteria for granting tax abatement in the City of Sugar Land:  

 

A.  Definitions.

 

Abatement means the full or partial exemption of property from ad valorem taxes.

 

District means the Fort Bend County Appraisal District.

 

Ineligible Property includes:  

 

1.   Land;

 

2.   Real property used for residential purposes;

 

3.   Real property with a productive life of less than 10 years;

 

4.   Real property used primarily to provide retail sales or services to the public;

 

5.   Tangible personal property that the District classifies as inventory or supplies;

 

6.   Tangible personal property located on the Real Property Improvements prior to the effective date of the applicable tax abatement agreement; 

 

7.   Any property owned or leased by a member of the city council or the planning and zoning commission on the effective date of a tax abatement agreement; and

 

8.   Any other property for which Abatement is not allowed by state law.

 

Owner means the Owner of the real property to which the abatement agreement applies.

  

Personal Property means any property classified as tangible personal property by the District that is not Ineligible Property.

 

      Real Property Improvement or Improvements means any new facility or structure or the expansion or modernization of an existing facility or structure classified as real property by the District that is not Ineligible Property.    

 

Targeted Business or Industry means a type of business or industry that the city council determines would primarily fall into one or more of the following classifications:     

 

            1.    Corporate Headquarters (national, regional or division);

 

2.    Software development;

 

3.    Electronics development and manufacturing;

 

4.    Biotechnology research and application;

 

5.    Pharmaceutical development and manufacturing;

 

6.    Medical technology research and application;

 

7.    Petrochemical research and product development;

 

8.    Companies engaged in the development or manufacturing of measuring, analyzing or controlling instruments;   

 

9.    Advanced material development;

 

            10.  Companies whose primary source of income is engineering services;

 

            11.  Aerospace development and manufacturing.

 

Value means the appraised value as shown on the records of the District.

 

B.  Minimum Qualifications for Abatement. 

 

1.   The city council may grant Abatement for Real Property Improvements if:

 

 (a)  Upon completion:

 

        (i) the Improvements will add at least $2,500,000 of value to the tax rolls; or

 

        (ii) the Improvements will be used by a Targeted Business or Industry; or

 

        (iii) the cumulative value of the Improvements and Personal Property will exceed 3.25 million dollars; and

 

                  (b) A building permit for the Improvements has not been issued.

 

2.         The city council may grant Abatement for Personal Property if: 

 

(a)       Either:

                          (i) the Personal Property has a cumulative value of at least $750,000; or

                         

                    (ii) the cumulative value of the Improvements and Personal Property will exceed  3.25 million dollars;

 

(b)    It is located on the same property as the Improvements for which abatement is granted; and

 

(c)       The Abatement is for the same year or years as the Abatement of the Improvements.

 

            3.   Any property abated must meet all the requirements of State law. 

 

C.  Factors Considered in Granting Abatement.  To determine whether to grant Abatement, the types of property to be abated, the percentage and the duration of the abatement, the city council may consider any factor that could have an impact on the community, including, but not limited to, the following: 

 

1.   The type, value, and productive life of the property to be abated;

 

2.   The number of jobs that will likely be retained or created; 

 

3.   The amount of local payroll that will be created;

 

            4.   The amount of local sales taxes that will be generated;

 

5.   The increase in the tax base during and after abatement; and

 

6.      The amount applicant proposes to expend on public infrastructure, whether on or off-site, to provide for or serve the Improvements.  

 

D.  Conditions.  The Business Incentives Committee (BIC) may recommend and the city council may impose any other conditions in a tax abatement agreement that the city council deems necessary to promote the purposes of these guidelines.  

 

E.   Abatement Agreement Requirements.  To receive abatement, the Owner of the Real Property Improvements must enter into the City’s standard tax abatement agreement that provides for:

 

            1.   The kind, number, and location of the Improvements; 

 

            2.   The annual percentage of Abatement for property receiving Abatement;

 

            3.   The duration of the agreement, but not exceeding ten years;

 

            4.   Recapture of abated taxes if the Owner breaches the agreement;   

 

            5.   A city council finding that abatement agreement complies with these guidelines; 

 

            6.   Limiting the use of the Improvements to the purpose for which Abatement is granted;

 

            7.   The construction of Improvements by “separated contracts,” as defined by State law or regulations, so that the City receives municipal sales taxes on the materials incorporated into the Improvements;   

 

            8.  The Owner to certify annually that the Owner is in compliance with the abatement agreement and that the Owner will provide, upon the City’s request, any information reasonably necessary for the City to determine if the Owner has complied with the abatement agreement;   

 

            9.   City access to the Improvements during regular business hours to determine if the Owner is in compliance with the abatement agreement; 

 

            10. The recording of a copy of the abatement agreement in the Fort Bend Real Property Records by the land Owner; and

 

            11. Any other provisions required by law or required by the city council. 

 

F.   Application and Processing.

 

1.         Any person may request Abatement by filing a written application with the City on forms provided by the City for that purpose.

 

2.         The City’s Economic Development Department will review the application and make its recommendation to the BIC. The BIC is responsible for reviewing abatement applications and making recommendations to the city council. The BIC may develop policies and procedures for processing abatement applications that are not inconsistent with these guidelines or State law.    

 

3.      The BIC will review all abatement applications it receives.  If the BIC believes the City should grant Abatement to the applicant, it will submit the application to the city council along with its recommendation of the terms and conditions under which Abatement should be granted.  If the

 

BIC believes Abatement should not be granted to the applicant, no further action will be taken on

the abatement application unless the applicant requests in writing that the BIC submit the application and its negative recommendation to the council. 

 

4.   Notice of any proposed abatement agreement to be presented to the city council shall be given to other taxing jurisdictions, as required by State law.

 

5.      A tax abatement agreement must be approved by the affirmative vote of four or more city council members at a regularly scheduled meeting. 

 

      G.  City Discretion.  The City’s adoption of these guidelines and criteria does not:

 

            1.  limit the City’s discretion in deciding whether to enter into a specific tax abatement agreement; or

 

            2. create any property, contract or other legal right in any person to have the City consider or grant a specific application or request for tax abatement.

 

Section 3.  That these guidelines and criteria are effective upon the date of their adoption and remain in force for two years, unless amended by a vote of three-fourths of the members of the city council of the City of Sugar Land.     

 

APPROVED on _______________________, 2008.

 

 

 

                                                                                    _____________________________

            David G. Wallace, Mayor

 

ATTEST:                                                                     Reviewed for Legal Compliance:

 

                                                                                   

_____________________________ 

Glenda Gundermann, City Secretary