HomeMy Public PortalAboutOrdinance No. 949-03 01-14-2003
• ORDINANCE NO. 949-03
AN ORDINANCE ADOPTING GUIDELINES AND CRITERIA FOR TAX
ABATEMENT AGREEMENTS WITffiN THE CITY OF RICHLAND HILLS;
PROVIDING THAT TffiS ORDINANCE SHALL BE CUMULATIVE OF ALL
ORDINANCES; PROVIDING A SEVERABII.ITY CLAUSE; PROVIDING
FOR PUBLICATION A5 REQUIRED BY LAW; AND PROVIDING AN
EFFECTIVE DATE.
WHEREAS, economic development through the creation of a new industry and expansion
of existing industry that results in new wealth and/or job opportunities is important for the well being
and health of the local economy; and
WHEREAS, the City of Richland Hills must compete with other localities throughout the
United States currently offering tax incentives to attract new facilities and plant modernization
projects; and
WHEREAS, the abatement of property taxes, when offered to attract businesses which bring
in money from outside a community instead of merely recirculating dollars within a community, has
been shown to be an effective method of enhancing and diversifying an area's economy; and
WHEREAS, Chapter 312 of the Texas Tax Code requires any eligible taxing jurisdiction to
• establish Guidelines and Criteria as to eligibility for tax abatement agreements prior to granting of any
future tax abatement or creation of a reinvestment zone; and
WHEREAS, the City Council last adopted appropriate guidelines and criteria on March 23,
1999; and
WHEREAS, Chapter 312 of the Texas Tax Code provides that such guidelines and criteria
are effective for at most two years, so that the guidelines and criteria adopted on March 23, 1999
have expired; and
WHEREAS, the City Council now desires to adopt new tax abatement guidelines and
criteria;
NOW, THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF RICHLAND HILLS, TEXAS:
SECTION 1.
ESTABLISHMENT OF GUIDELINES AND CRITERIA
The City Council hereby establishes the guidelines and criteria governing property tax
abatement agreements as set forth on Exhibit "A" to this ordinance as the City of Richland Hills Tax
• Abatement Guidelines and Criteria.
• SECTION 2.
TIME LIMITATION
The guidelines and criteria shall be effective for two (2) years from the date of adoption,
provided, however, that the guidelines and criteria may be earlier amended, modified or repealed as
allowed by state law.
SECTION 3.
EFFECTIVE DATE
This ordinance shall be in full force and effect from and after its passage and it is so ordained.
SECTION 4.
PROVISIONS CUMULATIVE
This ordinance shall be cumulative of all provisions of ordinances and of the Code of
Ordinances of the City of Richland Hills, Texas, as amended, except where the provisions of this
ordinance are in direct conflict with the provisions of such ordinances and such Code, in which event
the conflicting provisions of such ordinances and such Code are hereby repealed.
SECTION 5.
PROVISIONS SEVERABLE
• It is hereby declared to be the intention of the City Council that the phrases, clauses,
sentences, paragraphs, and sections of this ordinance are severable, and if any phrase, clause sentence,
paragraph or section of this ordinance shall be declared unconstitutional by the valid judgment or
decree of any court of competent jurisdiction, such unconstitutionality shall not affect any of the
remaining phrases, clauses, sentences, paragraphs and sections of this ordinance, since the same
would have been enacted by the City Council without the incorporation in this ordinance of any such
unconstitutional phrase, clause, sentence, paragraph or section.
SECTION 6.
EFFECTIVE DATE
This ordinance shall be in full force and effect from and after its passage and publication as
required by law, and it is so ordained.
PASSED AND APPROVED ON THIS 14 DAY OFJanuary ~ 2.
2003
G2'~~U
THE ONORABLE NELDA STRODER, MAYOR
• ATTEST:
•
TERRI WII.,LIS, CITY SECRETARY
EFFECTIVE:
APPROVED AS TO FORM AND LEGALITY:
TIM G. SRALLA, CITY ATTORNEY
•
CITY OF RICHLAND HILLS
TAX ABATEMENT GUIDELINES AND CRITERIA
Section 1
POLICY STATEMENT
The City of Richland Hills is committed to the promotion of quality development in all parts
of the City and to the ongoing improvement in the quality of life for its citizens. Insofar as these
objectives are generally served by the enhancement and expansion of the local economy, the City of
Richland Hills will, on a case-by-case basis, give consideration to providing tax abatement as a
stimulation for economic development in Richland Hills. It is the policy of the City that said
consideration will be provided in accordance with the procedures and criteria outlined in this
document. However, nothing herein shall imply or suggest that the City is under obligation to provide
any incentive to any applicant. All applications shall be considered on a case-by-case basis.
Section Z
DEFINITIONS
For purposes of these Guidelines and Criteria, the terms below will have the following
meanings:
(a) "Abatement" means the full or partial exemption from ad valorem taxes of certain
• improvements on real property and/or tangible personal property in a reinvestment zone designated
by the City of Richland Hills for economic development purposes.
(b) "Agreement" means a contractual agreement between a property owner and a taxing
jurisdiction for the purpose of tax abatement.
(c) "Base Year Value" means the assessed value of either the applicant's subject real property
and improvements on January 1 of the year of the execution of the agreement plus the agreed upon
value of any property improvements made after January 1 but before execution of the agreement,
and/or the assessed value of any tangible personal property located on the owner's real property at
any time prior to the abatement period covered by the agreement.
(d) "Deferred Maintenance" means improvements necessary for the continued operation 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) "Enterprise Zone" means an area designated pursuant to the Texas Enterprise Zone Act
(Chapter 2303 of the Texas Government Code).
• (g) "Expansion" means the addition of buildings, structures, fixed machinery, equipment, or
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• tangible personal property for the purpose of increasing production capacity.
(h) "Facility" means property improvements completed or in the process of construction which
together comprise an integral whole.
(i) "Lease" means a relationship whereby the business applying for a tax abatement has a contract
for exclusive possession of either the real property on which improvements are to be made and/or
movable personal property to be used for the operation of the business for a defined period of time.
(j) "Modernization" means the replacement and upgrading of existing facilities which increase
the productive input or output, updates the technology, or substantially lowers the unit cost of
operation and/or extends the economic life of the facility. Modernization may result from the
construction, alteration or installation of buildings, structures, fixed machinery, or equipment. It shall
not be for the purpose of reconditioning, refurbishing, repairing, or completion of deferred
maintenance.
(k) "New Facility" means a property previously undeveloped which is placed into service by
means other than, or in conjunction with, expansion or modernization, as defined herein.
(1) "Personal Property" means equipment and/or tools used, or bought or leased for use, in the
operation of the business applying for tax abatement, other than that which was located on the real
property at any time before the period covered by the tax abatement agreement, and other than
• inventory, supplies, and/or office equipment.
(m) "Real Property" means the area of land defined by legal description as being owned or leased
by the business applying for a tax abatement, including any improvements thereto, which is to be
improved and valued for property tax purposes, and which is to be included in the Reinvestment
Zone.
(n) "Reinvestment Zone" means an area designated as such for the purposes of tax abatement as
authorized by the City in accordance with the Texas Tax Code Chapter 312, as amended.
(o) "Value to be Abated" means that portion of the assessed value of the eligible facilities which
are by agreement to be exempted from taxation pursuant to the agreement, whether expressed as
either a percentage of the assessed value of the eligible facilities, a percentage of the assessed value
of the eligible facilities in excess of the base year value, or as an amount expressed in monetary terms.
Section 2
ABATEMENT AUTHORIZED
(a) Abatement Authorized on Eligible Facilities. Upon application, eligible facilities shall be
considered for tax abatement as hereinafter provided.
(b) Creation of New Value. Abatement may only be granted for the additional value of eligible
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• property improvements made subsequent to and specified in an abatement agreement between the
City of Richland Hills and the property owner or lessee, subject to such limitations as the City of
Richland Hills may require.
(c) New and Existing Facilities. Abatement may be granted to the taxable value of the new
facilities and improvements to existing facilities for the purpose of modernization or expansion.
(d) Elisible Property. Abatement may be extended to the value of buildings, structures, fixed
machinery and equipment, site improvements, related fixed improvements, and tangible personal
property, and the increased value of the real property.
(e) Ineligible Property. The following types of property shall be fully taxable and ineligible for
tax abatement: residential property of any type, land, supplies, inventory, deferred maintenance, ,
vehicles, property to be rented or leased (except as provided in Section (f)), property that is
associated with any activity which is illegal under federal, state and local law, and propertyowned by
an organization owned, operated, or directed, in whole or in part, by a political subdivision of the
State.
(f) OwnedlLeased Facilities. If a leased facility is granted abatement, the agreement shall be
executed with the owner and lessee. Prior to any tax abatement agreement being executed, a copy
of the lease shall be provided to the City.
• (g) Economic Qualification. In order to be eligible for designation as a reinvestment zone
and receive value added tax abatement, the planned improvement:
(I) must be expected to have an increased appraised ad valorem tax value of at least
$500,000 based upon the Tarrant County Appraisal District's assessment of eligible
property. However, this requirement may be waived at the discretion of City Council;
or
(2) must be expected to prevent the loss of payroll, or retain, increase, or create payroll
in Richland Hills, Texas.
(h) Standards and Procedures for Tax Abatement. Any request for tax abatement shall be
reviewed by the Board of the City of Richland Hills Industrial Development Corporation. This
committee serves as a recommending body to the City Council whether tax abatement should be
offered in each individual case. Their recommendation shall be based upon the subjective evaluation
of the criteria described herein, as well as any other factors and criteria deemed by the Board to be
significant. The Board's recommendation is non binding. After the Board makes its
recommendation, the City Council shall determine, in its sole discretion, whether to grant tax
abatement, on what conditions, and, if abatement is granted, the percentage of value to be abated and
the duration of the tax abatement.
In making their decisions, the Board and City Council shall consider the following factors:
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• (1) value of land and existing improvements, if any;
(2) type and value of proposed improvements;
(3) economic life of proposed investments;
(4) number of existing jobs to be retained by proposed improvements;
(5) number of type of new jobs to be created by proposed improvements;
(6) amount of local payroll to be created;
(7) whether the new jobs to be created will be filled by persons residing or projected to
reside within the City of Richland Hills;
(8) amount of local sales taxes to be generated directly;
(9) amount property tax base valuation will be increased during the term of abatement
and after the expiration of the abatement;
(10) whether the applicant is qualified for a freeport exemption, and if so, what percentage
of inventory valuations qualify and the dollar value of exemption each year for each
• taxing entity;
(11) the costs to be incurred by the City of Richland Hills to provide infrastructure or
services directly resulting from the new improvements;
(12) the amount of ad valorem taxes to be paid to the City of Richland Hills during the
abatement period considering (a) the existing valued base year; (b) the percentage of
new value abated; (c) the abatement period; and (d) the value after expiration of the
abatement period;
(13) the population growth of the City of Richland Hills that occurs directly as a result of
the proposed improvements and how this will effect the infrastructure needs of the
City;
(14) the types and values of public improvements, if any, to be made by applicant seeking
abatement;
(15) whether the proposed improvements compete with existing businesses to the
detriment of the local economy;
(16) the impact on the business opportunities of existing businesses;
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• (17) the attraction of other new businesses to the area;
(18) the overall compatibility with the zoning ordinance and comprehensive plan for the
City Council;
(19) whether the project is environmentally compatible with no negative impact on quality
of life perceptions;
(20) any other factor(s) related to the proposed improvements that may have an effect,
positive or negative, on the City of Richland Hills and other affected taxing entities.
Each application shall be reviewed on its merits utilizing the factors provided above. After such
review, abatement may be denied entirely or may be granted to the extent deemed appropriate after
evaluation.
(i) Denial of Abatement. Neither a reinvestment zone nor abatement agreement shall be
authorized if it is determined that:
(1) there would be a substantial adverse effect on the provision of government service 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;
(4) violation of other codes or laws; or
(5) any other reason deemed appropriate by the City Council of the City of Richland
Hills.
(j) Taxabilitv. During the term of the abatement agreement, taxes shall be fully payable on the
following property as provided by law:
(1) the assessed value of the ineligible property; and
(2) the base year value of existing eligible property as determined each year; and
(3) that portion of the value of the eligible property which is not included in the value to
be abated.
(k) Lapse of Agreement. All taxable property shall be fully taxable at the end of the abatement
period.
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• (1) Value and Term of Abatement. Upon execution of an abatement agreement, abatement shall
be effective as provided therein, or, if no effective date is provided therein, upon January 1
immediately following the date of execution of the agreement. The term of the agreement shall be
as provided in the agreement, provided, however, that if the term expressed in the agreement would
be contrary to law, the term of the agreement shall be deemed to be that period of time which is
closest to the expressed term of the agreement which would be consistent with prevailing law.
Likewise, the value to be abated shall be as provided in the agreement, provided, however, that if the
value to be abated as expressed in the agreement would be contrary to law, the value to be abated
shall be deemed to be that amount which is closest to the value to be abated expressed in the
agreement which would be consistent with prevailing law. Under no circumstances, however, shall
the value to be abated in any year exceed the assessed value of the eligible property in said year.
(1) Discretion not Limited. The adoption of these guidelines and criteria for tax abatement shall
not limit the discretion of the City Council to decide whether to enter into a specific tax abatement
agreement and shall not create any property, contract or other legal right in any person to have the
City Council consider or grant a specific application or request for tax abatement, except to the
extent, if any, that such specific guidelines and criteria are mandated by then prevailing state or federal
law.
(m) Conflict of Interest Prohibited. Property that is owned or leased, in whole or in part, by a
member of the City Council or member of the Planning and Zoning Commission is excluded from
property tax abatement.
• Section 3
APPLICATION
(a) Application Reduired Any present or potential owner of taxable property in Richland Hills,
Texas may request the creation of a reinvestment zone and tax abatement by filing a written request
with the City of Richland Hills. The application shall consist of a completed application form which
shall provide detailed information on the items described in Section 2(h) hereof, a map and legal
description, an estimated time schedule for undertaking and completing the planned improvements,
and such financial and other information as the City Manager or his designee may deem appropriate
for evaluating the financial capacity of the applicant and other relevant factors. A statement of the
assessed value of the property and facilities for the tax year immediately preceding the application,
separately stated for real and personal property, shall also be provided. The applicant shall state the
value and account numbers used by the Tarrant County Appraisal District as of the January 1
valuation date prior to the date of the execution of a Tax Abatement Agreement as follows:
Account Number:
Personal Property $
Account Number:
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• Land $
Improvements $
In addition to any information requested by the City Manager or his designee, the Planning and
Zoning Commission or the City Council may request such additional information as they deem
relevant during the review process described herein.
(b) Review by Economic Development Corporation. The application shall then be forwarded to
the Richland Hills Economic Development Corporation for review by the Board of said Corporation
and possible recommendation to the City Council of the City of Richland Hills for that final
disposition, provided, however, that the City Council may elect to act upon any application without
prior review by the Board of the Richland Hills Economic Development Corporation in its discretion.
(c) Review by the City Council. After the Board of the Richland Hills Economic Development
Corporation has made its recommendation, the application shall be placed upon the City Council
agenda, provided, however, that the City Council may elect to act upon any application without prior
review by the Board of the Richland Hills Economic Development Corporation in its discretion.
(d) Deficient Application. Neither the absence of any required information in the application nor
any other deficiencies shall prohibit either the Board of the Richland Hills Economic Development
• Corporation or the City Council from acting on the application, should they decide, in their discretion,
to proceed.
(e) Notice and Hearing_ Prior to taking any action provided for herein, the City Manager shall
provide for the giving of any notice to those parties entitled to receive notice as provided by Chapter
312 of the Texas Tax Code and other prevailing law, and the City shall provide for any public
hearings required by prevailing law.
(f) Feasibility Studv and Staff Recommendations Before taking the application under
consideration, any member of either the Board of the Richland Hills Economic Development
Corporation or the City Council may request the City Manager to prepare a feasibility study and/or
to make recommendations regarding the application. In addition, the City Manager or his designee
may, on his own initiative, prepare a feasibility study and/or to make recommendations regarding the
application, provided, however, that the absence of such a feasibility study and/or recommendations
shall not prohibit either the Board of the Richland Hills Economic Development Corporation or the
City Council from acting on the application, should they decide, in their discretion, to proceed, even
if one or more members thereof has requested such information.
(g) Pro np~y Information. All proprietary information of the applicant required by the City for
the purposes of the application shall be considered confidential to the extent provided by law,
provided, however, that by making application for tax abatement, the applicant waives any claim for
damages for disclosure of such information to the public or another third party by any representative
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• of the City.
Section 4
AGREEMENT
If the City Council approves the creation of the reinvestment zone encompassing the
applicant's property, the City Council may enter into a tax abatement agreement with the applicant
as described herein and as permitted by prevailing law. In such event, the City of Richland Hills shall
formally pass a resolution and execute a written agreement with the owner of the Facility and/or
lessee, in full compliance Chapter 312 of the Texas Tax Code and other prevailing law.
Section 5
ADMINISTRATION
(a) Procedure for Assessment. Each year, the company or individual receiving abatement shall
furnish the Appraiser and the City of Richland Hills with such information as may be necessary to
calculate the abatement. The Chief Appraiser for the Tarrant County Appraisal District will annually
determine the an appraised value of the real and personal property comprising the reinvestment zone.
Once the appropriate values have been established, the Chief Appraiser will notify the City Richland
Hills of the amount of the assessment pursuant to the agreement.
(b) Verification of Compliance. Upon completion of construction, the City Manager or his
• designee shall annually evaluate each facility receiving abatement to insure compliance with the
agreement, and a formal report shall be made to the City Council of Richland Hills regarding the
findings of each evaluation. Such evaluation may include a physical inspection of the facility. If the
owner or operator of the facility denies the City Manager or his designee reasonable and prompt
access, such denial may be deemed to be non-compliance authorizing termination of the agreement.
(c) Enforcement. In the event that the facility receiving abatement is not in compliance with the
agreement, the City Council may elect to terminate the agreement on the terms and conditions
permitted therein and/or under applicable prevailing law. In the event the agreement is terminated,
the abatement of taxes for the tax year of such termination shall be void, and the property fully
taxable as if the agreement had lapsed or expired on its own terms. In addition, the City Council may
elect to recapture all taxes previously abated pursuant to the agreement to the fullest extent allowed
by prevailing law.
(d) Proprie~ry Information. All proprietary information of the recipient of a tax abatement
required by the City for the purposes of compliance and enforcement shall be considered confidential
to the extent provided by law, provided, however, that by making application for tax abatement, the
applicant waives any claim for damages for disclosure of such information to the public or another
third party by any representative of the City.
Section 6
• STATE ADMINISTRATION
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The City Manager may designate the Director of Economic Development for the City or other
person as the City Liaison with the State for the purpose of meeting all reporting requirements
imposed by Chapter 312 of the Texas Tax Code or other state law.
Section 7
EFFECT ON OTHER REGULATIONS
The existence of a tax abatement agreement does not affect or modify the applicant's
obligation to satisfy all other obligations, duties and responsibilities imposed by any other law,
regulation, code or ordinance.
Section S
SUNSET PROVISIONS
These Guidelines and Criteria are effective upon the date of their adoption and will remain
in force for two years thereafter, unless amended by three-quarters vote of the City Council of the
City of Richland Hills, at which time all reinvestment zones and tax abatement agreements created
pursuant to these provisions will be reviewed to determine whether the goals have been achieved.
Based on that review, these Guidelines and Criteria maybe modified, renewed, or eliminated.
•
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