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RESO 1989-10 - Tax AbatementRESOLUTION NO 89-10 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTSVILLE, TEXAS, ADOPTING A TAX ABATEMENT POLICY. Be it resolved by the City Council of the City. of Huntsville, Texas, that: The City of Huntsville adopts this "TAX ABATEMENT POLICY ": I. POLICY BASIS The City of Huntsville recognizes the need for greater economic development within the City and its extraterritorial jurisdiction, expanding existing industry, diversifying the economic base, and creating new jobs. In this regard, the City of Huntsville adopts a Tax Abatement Policy that will encourage growth to qualified property owners. This tax abatement Policy shall apply to approved present or potential owners of taxable property in the City, who: (1) own or are in the process of acquiring eligible real property in a Reinvestment Zone approved by the City; (2) are willing to execute tax abatement agreements on real property improvement and development designed to provide benefit to the eligible property and to utilize area contractors and work force to the maximum extent feasible; and (3) are operators of new or modernized manufacturing, research distribution, service, administrative, corporate or other business or industry facilities on the subject real property. II. APPLICATION Any present or potential taxable property owner in the City or its ETJ may request a tax abatement on particular real property improvements within a Reinvestment Zone by submitting a written request to the City Manager. The application shall be on form approved by the Council, and shall include: (1) a general description of the proposed use and the general nature and extent of the proposed improvements; (2) an estimate of the number of jobs which will be created by the proposed improvements; (3) a time schedule for undertaking and completing construction of the proposed improvement; (4) a statement of the assessed values of the property, separately stated for real and personal property, for the then current tax year; (5) a financial statement of each )applicant showing financial capacity to compete the proposed improvement; and (6) a profile of each of the individual applicant(s) or its officers and directors. Each tax abatement application will be individually reviewed by the City Council and approved or disapproved based on the merits of the application and the guidelines and criteria set forth herein. In addition, in its discretion, the City Council may appoint a Tax Abatement Review Board including residents of major taxing entities within the City, • to review and make suggested recommendations to the Council regarding each application. The City, upon the sole approval of the Council, shall by resolution either approve or disapprove each application for tax abatement. The City Manager shall notify the applicant of approval or disapproval. Any disapproved applicant may re -apply for tax abatement. The City Manager shall notify in writing the presiding officer of the governing body of each affected taxing jurisdiction of the receipt of an application, and effort shall be made to coordinate the requested tax abatement with such other taxing jurisdictions, if the abatement is approved by the City Council. GUIDELINES AND CRITERIA Before approving an application for tax abatement, City Council must determine that the proposed improvements meet the following guidelines and criteria: A. The proposed abatement will support economic development by expanding existing business or industry, diversifying the economic base of the City, creating new jobs, and /or substantially increasing City tax revenue after the abatement period ends. B. The proposed tax abatement shall not have a substantially adverse effect on City tax base or City budget. C. The proposed improvements and use shall not be adverse to public health, safety or welfare. D. Abatement shall only be granted for the additional value resulting from proposed improvements to eligible property constructed after Janaury 1 of the year in which the tax abatement is granted by official action of City Council. E. Abatement shall be extended only to the improved value of land, building, structures, fixed machinery and equipment and site improvement. F. Abatement shall not be granted for any property on which total or partial ad valorem tax exemption or devaluation currently applies, or is granted during the term of tax abatement. Granting of total or partial ad valorem tax exemption or devaluation to any part of the property during the tax abatement period shall cancel any and all tax abatement on the property, and render the terms of any tax abatement agreement on the property null and void. IV. DISCRETIONARY CONSIDERATION The following matters should be consider by City Council in its discretionary approval or disapproval of each tax abatement application: A. The proposed project should increase City property valuations at least $1,000,000.00. B. The proposed improvement should create a minimum of 15 new permanent jobs in the City upon opening for business, and should promote further employment in the City; or should increase City property valuations substantially over the minimum $1,000,000.00. C. Tax abatement will normally be considered for manufacturing or distribution facilities, corporate office, research parks, or similar facilities, if it can be demonstrated that their development would create substantial capital improvements or jobs. Generally, tax abatement is not designed to encourage speculative office development, retail development, or other service industries that market primarily in Walker County. D. The proposed improvement should not have the sole or primary effect of transferring employment from one part of the City to another. E. Non compliance with this policy shall cause the applicant(s) to repay the taxes abated as per the signed agreement. V. TAX ABATEMENT PLAN Tax abatement shall be granted effective with the January 1 valuation date immediately following the date of completion of improvements. Taxes on improvements shall be abated according to the following schedule: Year of Abatement Percentage of Taxes Abated First Second Third Fourth Fifth Sixth and following 100% 100% 100% 100% 100% 0% Additionally, one hundred percent (100%) of the value of eligible improvements shall be abated for no more than two (2) years during the period of construction of such improvement. Upon completion of improvements, as determined solely by City Council, the five (5) year abatement period shall begin as set forth above. If the period of construction exceeds two (2) years, improvements shall be considered completed for purposes of beginning the five (5) year abatement period. In no event shall the combined construction period and five (5) year period of abatement exceed seven (7) years of tax abatement. VI. AGREEMENT After approval and resolution, the City, through the Cit , shall execute an agreement with the present or potential property owner on standard form as approved by the City Attorney's Office. All tax abatement agreements shall be in writing, and conform to the provisions of Chapter 312 of the Texas Tax Code. VII. SUNSET PROVISION This policy is effective as of April 25 , 1989 and will remain in force until , 1991, at which time all reinvestments zones and tax abatement contracts created by City Council will be reviewed by the City Council to determine whether the goals have been achieved, and whether the policy should be continued. PASSED AND APPROVED this 25th day of April APPROVED AS TO FORM: Scott Bounds, City Attorney , 1989. CITY ;F HUNTSVILLE, TEXAS By Ja Monday, ayor