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HomeMy WebLinkAboutRES 92-185 • � f�ot"-Oc�� RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the Uniform Tax Abatement policy of the City of Beaumont, substantially in the form attached hereto as Exhibit "A", be, and the same is hereby, adopted by the City Council of the City of Beaumont and such policy shall be the Uniform Tax Abatement Policy for the City of Beaumont. PASSED BY THE CITY COUNCIL of the City of Beaumont this the day of 1992. - Mayor - �/� _67-7 > d�- 1 � UNIFORM TAX ABATEMENT POLICY - 1992 A. The City of Beaumont herein ("Governmental Entity") adopts this policy of tax abatement " (Policy) for a manufacturer who owns real property ("Real Property Owner") who proposes a project ("Project") to develop, redevelop and improve taxable qualifying real property ("Real Property") . The Governmental Entity is willing to provide a subsidy to a Real Property Owner in the form of a special exemption from certain taxes provided the Real Property Owner agrees to accept and abide by this Policy. B. Subject to the remaining terms of this Policy, the abatement of ad valorem taxes on Real Property shall be according to the following formula: NO. OF NEW FULLTIME PERCENT OF CREATED CAPITAL COST OF (NOT CONSTRUCTION) VALUE TO BE ABATED THE PROJECT OR JOBS CREATED 0% 0 - 1, 000, 000 Not Applicable 300 1, 000, 001 - 2 ,500, 000 26 - 50 40% 2, 500, 001 - 5, 000, 000 51 - 75 50% 5, 000, 000 - 10, 000, 000 76 - 100 Weighted Average 10, 000, 001 or more Not Applicable C. With respect to Weighted Average, the percentages of taxes abated for Created Value with respect to a Project with a minimum construction cost of $10, 000, 001 are: One Hundred percent abatement until the project is complete not to exceed the first and second Tax Year; ninety percent abatement for the third Tax Year or the first Tax Year next following the timely and successful completion of the Project; seventy-five percent abatement for the 1 EX' IBIT "A" second Tax Year next following the timely and successful completion of the Project; sixty percent abatement for the third Tax Year next following the timely and successful completion of the Project; forty-five percent abatement for the fourth Tax Year next following the timely and successful completion of the Project; and twenty percent for the fifth Tax Year next following the timely and successful completion of the Project. With respect to a Project under $10, 000, 000, the Abatement Period is seven years; limited, however, to no more than five Tax Years next following the timely and successful completion of the Project. The period of time that the Taxes are abated will be referred to as the "Abatement Period" . The "first Tax Year" is defined as the first full calendar year next following the commencement of construction of the Project. The term "Tax Year" is defined as a calendar year. D. Prior to beginning the actual construction work on the Project proposed for tax abatement, the Real Property Owner requesting tax abatement within a lawfully created reinvestment zone must: First: Provide the Governmental Entity with (i) a description of the Project clearly defining and delineating the work to perform; (ii) a statement agreeing to expend a designated amount ("Project Cost") for the Project and, if the abatement is based on Required Jobs, a separate statement agreeing that the required minimum number of fulltime jobs will be created ("Required Jobs") and maintained during the term of the Contract; (iii) an 2 explanation as to how the Project will provide long term significant positive economic benefit to the community, the Governmental Entity and its taxpayers; (iv) information as to what attempt will be made to utilize Jefferson County contractors and workers; and (v) information as to what attempt will be made to utilize Jefferson County minority contractors and workers. Second: Furnish the Governmental Entity with a written statement that tax abatement will be a significant factor in determining whether the Project for the development, redevelopment or improvement of the Real Property will take place. Third: Agree to execute a Contract with the Governmental Entity containing the covenants and conditions required by the Governmental Entity. E. Should the Governmental Entity agree to grant an abatement to the Real Property Owner after compliance with the procedure outlined above, then: (1) Subject to the terms and conditions of the Contract, a stipulated percentage as set forth above of those particular ad valorem real property taxes ("Taxes") which are generated by virtue of fair market value created ("Created Value") solely due to the construction and completion of the Project on the Real Property will be abated. (2) The period of construction ("Construction Period") for the Project shall not go beyond the end of the third Tax Year. During the Construction Period the Real Property Owner must actually expend the Project . Cost and within six months next 3 following the completion of the Project, when applicable, the Real Property Owner must submit a statement to the Governmental Entity that the Required Jobs have been created. On January 1st of each Tax Year following completion of the Project, the Real Property Owner must submit a statement to the Governmental Entity that the Required Jobs are being maintained. (3) Within six months next following the end of the Construction Period, the Project must be operational; i.e. , it must actively serve the purpose for which it is designed. (4) In the event the Project is either: (a) Not complete at the Minimum Cost by the end of the Construction Period; or (b) Is timely completed at the Minimum Cost but is not operational within six months next following the end of the Construction Period; or (c) Is timely completed at the Minimum Cost of less than $10, 000, 000 but the Required Jobs are not created or maintained as set forth in paragraph (2) ; or (d) Is timely completed at the Minimum Cost, is operational within six months next following the end of the Construction Period and, if applicable, meets the Job requirements, but its operations are discontinued for a continuous period of twelve months, then the Contract shall terminate with respect to the Project and so shall the abatement of Taxes for the Created Value of the Project. The Taxes otherwise abated with respect to the Project shall be paid to the Governmental Entity on the date 4 specified by law, or, if such date has passed, then within sixty (60) days of the accelerated termination of the Abatement Period. (5) Employees and/or designated representatives of the Governmental Entity will have access to the Project during the term of the contract for inspection purposes so as to determine if the terms and conditions of the Contract are being met. All inspections will be made only after the giving of twenty-four (24) hours prior notice and will only be conducted in such a manner as to not unreasonably interfere with the construction and/or operation of the Project. All inspections will be made with one or more representatives of the Real Property Owner, and in accordance with its safety standards. (6) In the event that (a) The Real Property Owner allows its ad valorem taxes owed the Governmental Entity to become delinquent and fails to timely and properly follow the legal procedures for their protest and/or contest; or (b) The Real Property Owner violates any of the terms and conditions of the Contract, and fails to cure during the Cure Period (as hereafter provided) , then the Contract may be terminated by the Governmental Entity, and all taxes otherwise abated by virtue of the Contract will be recaptured and paid to the governmental Entity by the Real Property Owner within sixty (60) days of the termination. (7) If on January 1st of any Tax Year the legally determined fair market value of all realty improvements owned by the Real Property Owner within the jurisdiction of the Governmental Entity ("Realty Improvements") is less than the legally determined fair 5 P f market value of all Realty Improvements as of January 1st of the calendar year in which the Contract is executed ("Base Value") and/or in the event that the Real Property Owner reduces their ad valorem taxes on personal property otherwise payable to the Governmental Entity by participating in foreign trade zone or by having otherwise taxable property exempted pursuant to special legislation; e.g. , the "Freeport Amendment" ("Special Treatment") , then the abatement otherwise available shall be reduced for each dollar that the fair market value of Realty Improvements is less than the Base Value and, also, for each dollar of tax reduction attributable to Special Treatment; provided, however, that in no event shall the offset exceed the Created Value of the Project otherwise subject to the Abatement of Taxes. (8) Notwithstanding any other provision herein to the contrary in the event that the Governmental Entity adopting this Policy is required to adopt a tax rate which would subject the Entity to a tax rollback election under Section 26. 07 of the Property Tax Code, and this increase is caused by requirements set forth by the State; mandated by the judiciary; expenses required to repair, rebuild or rehabilitate improvements which are damaged or destroyed; or due to a significant decline in value of a major industrial complex located in the jurisdiction of the Entity, then the Entity may allocate the taxable value necessary to reduce the actual rate below the rollback rate to the Owners of abated property based on the Owner's prorata share of the total abated value for the current tax year.. 6 (9) Should the Governmental Entity determine that the Real Property Owner is in default in the terms and conditions of the Contract, then the Governmental Entity will notify the Real Property Owner at the address stated in the Contract of such claimed default, and if such is not cured within sixty (60) days from the date of such notice ("Cure Period") , the Contract may be terminated by the Governmental Entity. Any notice of default shall be in writing and shall be given by personal delivery or by certified mail, return receipt requested. In the event the notice is effected by personal delivery, the date and hour of actual delivery shall be the time and date of such notice to the Business. Absent a postal strike or the stoppage of the mails, in the event of delivery of notice by registered or certified United States mail, the date and hour following 48 hours after the date and hour at which the sealed envelope containing the notice is deposited in the United States mail, properly addressed, and with postage prepaid, shall be the time and date of such notice to the Real Property Owner. F. The Governmental Entity adopting this Policy shall have the final decision with respect to its interpretation and, also, as to whether the minimum standards set forth above have been met by the Real Property Owner. G. The Policy shall terminate on the second anniversary from the date of its adoption by the Governmental Entity. 7 COUNCIL LETTER SUMMARY JULY 10, 1992 ACTION REQUESTED: Readoption of a uniform tax abatement policy for manufacturing industries. DISCUSSION: This agenda item seeks Council approval of a resolution readopting a uniform tax abatement policy for manufacturing industries consistent with policies adopted for Jefferson County, the Beaumont Independent District and other taxing entities in the county. The policy will expire on July 24, 1992 unless, readopted by Council. The policy is the same one adopted by the Council in 1990. It provides for abatement of a portion of the taxes on the value added to the property of manufacturing industries by improvements constructed under tax abatement contracts. It is under this policy that Cargill Steel and Wire began an expansion project in Beaumont in September, 1991, with a projected capital expenditure of $7,200, 000, and anticipated creation of at least seventy (70) permanent positions. It is estimated that the post-construction annual property tax abatement shall be $56, 000 under their status as a State Enterprise Project. Additionally in 1991, Helena Laboratories began an expansion project with an estimated capital expenditure of between $1,500, 000 and $2 , 500, 000. It is estimated that the post-construction maximum annual property tax abatement shall be $15, 632 , under their status as a Reinvestment Zone. Attached is a copy of the proposed policy.