HomeMy Public PortalAboutResolution No. 109-99 03-23-1999
• CITY OF RICHLAND HILLS
GUIDELINES AND CRITERIA
FOR
THE ECONOMIC DEVELOPMENT INCENTIVES PROGRAM
RESOLUTION NO. 109-99
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RICHLAND HILLS,
TEXAS ADOPTING GUIDELINES AND CRITERIA FOR GRANTING INCENTIVES
AND/OR TAX ABATEMENT IN REINVESTMENT ZONES CREATED IN THE
CITY OF RICHLAND HILLS.
WHEREAS, the future economic viability of the City of Richland Hills depends
on the City's ability to attract new investment through the location of new businesses and
the expansion and modernization of existing businesses; and
WHEREAS, the City of Richland Hills must become and remain competitive with
other localities across the nation in the expansion of their existing industrial base and the
attraction of new commercial and industrial investment; and
WHEREAS, any incentives offered by the City of Richland Hills should be
limited to those companies that create new wealth within the City; and
WHEREAS, no incentive offered by the City of 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 graving any future tax abatement; and
NOW, therefore be it resolved that the Richland Hills City Council does hereby
adopt the attached "Guidelines and Criteria" for granting incentives and/or tax abatement
in reinvestment zones created in the City of Richland Hills, Texas.
PASSED AND APPROVED by vote of 5 ayes, 0 nayes, and 0 abstentions
on this the 23rd day of March, 1999.
APPROVED:
C. F. KELLEY, MAYOR
• ATTEST:
TERRI WILLI_ ,CITY SECRETARY
CITY OF RICHLAND HILLS
• GUIDELINES AND CRITERIA
FOR
THE ECONOMIC DEVELOPMENT INCENTIVES PROGRAM
Section 1
PURPOSE
(a) The City of Richland Hills is committed to the promotion and retention of high quality
development within the City of Richland Hills and to better the quality of life for its citizens.
These objectives can often be attained by the enhancement and expansion of the local
economy. To meet these objectives, the City of Richland Hills will, on a case-by-case basis,
consider providing tax abatements or other economic development incentives to aid in the
stimulation of economic development in Richland Hills. The City of Richland Hills will give
said consideration in accordance with this Guidelines and Criteria document. Nothing herein
shall imply or suggest that the City of Richland Hills is under any obligation to provide tax
abatements or incentives to any applicant. All applicants shall be considered on a case-by-
case basis.
(b) Participation in an abatement or incentive agreement does not remove any obligation to
satisfy all codes and ordinances issued by the City or any affected taxing jurisdiction that
may be in effect and applicable at the time this project is implemented.
• Section 2
DEFINITIONS
(a) "Abatement" means the full or partial exemption from ad valorem taxes of certain eligible
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 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) "City" means the City of Richland Hills, Texas.
(e) "Deferred Maintenance" means improvements necessary for continued operations that do
not improve the productivity or alter the process technology.
(f) "Economic Life" means the number of years a property improvement is expected to be in
service in a facility, as determined by City Council.
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(g) "Eligible Jurisdiction" means the City of Richland Hills, the Birdville Independent School
. District, Tarrant County, o:,ther special taxing districts that levy ad valorem taxes upon and
provide services to property located within a proposed or existing reinvestment zone.
(h) "Expansion" means the addition or enlargement of buildings, structures, fixed machinery, or
equipment for purposes of increasing production capacity.
(i) "Facility" means property improvements completed or in the process of construction which
together comprise an integral whole.
(j) "Manufacturing Facility" means buildings and structures including machinery and
equipment, the primary purpose of which is or will be the manufacture of tangible goods or
material or the processing of such goods or materials by physical or chemical change,
including the assembly of goods and materials from multiple sources in order to create a
finished or semi-finished product.
(k) "Modernization" means the replacement and upgrading of existing facilities which increases
the productivity input or output, updates the technology or substantially lowers the unit cost
of the operation. 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, or repairing except as may be integral to or in direct connection
with an existing expansion.
• (1) "New Facility" means a property previously undeveloped that is placed into service by
means other than or in conjunction with expansion or modernization.
(m)"Other Basic Industry" means buildings or structures including fixed machinery and
equipment not elsewhere described, used or to be used for the production of products or
services which serve a market primarily outside the City and result in the creation of new
permanent jobs and create new wealth in the City.
(n) "Productive Life" means the number of years a property improvement is expected to be in
service.
(o) "Project" means any property improvement including expansions, modernization, and new
facilities; but excluding any deferred maintenance.
(p) "Regional Distribution Center Facility" means buildings and structures, including
machinery and equipment, used primarily to receive, store, service, or distribute goods or
materials owned by the facility operator where a majority of the revenues generated by
activity at the facility are derived from outside Tarrant County.
(q) "Regional Entertainment/Tourism Facility" means buildings and structures, including
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 Richland Hills.
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(r) "Regional Retail Facility" means buildings :::d 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 of Richland Hills.
(s) "Regional Service Facility" means buildings and structures, including machinery and
equipment, used or to be used to provide services from which a majority of revenues
generated by activity at the facility are derived from outside of Richland Hills.
(t) "Reinvestment Zone" means any area of the City that has been designated a reinvestment
zone for tax abatement purposes and which is located within the taxing jurisdiction of the
City. It is the intent of the City to designate reinvestment zones on a case-by-case basis in
order to maxi_mi~.e the potential incentives for eligible enterprises to locate or expand in the
City.
(u) "Research Facility" means buildings and structures including fixed machinery and
equipment, used or to be used primarily for research or experimentation to improve or
develop new tangible goods or materials or to improve or develop the production processes
thereto.
SECTION 3
ABATEMENT AUTHORIZED
• (a) Authorized Facility. A facility may be eligible for abatement if it is a:
• Regional Retail Facility,
• Manufacturing Facility,
• Research Facility,
• Regional Distribution Center Facility,
• Regional Service Facility,
• Regional EntertainmentlTourism 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 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 val~:e of eligible
property improvements made subsequent to and listed in an abatement agreement between
the City of 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 existing facilities for purposes of modernization and expansion_
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(e) Eligible Property. Abatement may be extended to the value of buildings, structures, fixed
• machinery and equipment, site improvements plus that office space and related fixed
improvements necessary to the operation and administration of the facility.
(f) Ineligible Property. The following classes of property shall be fully taxable and ineligible
' for abatement: land, inventories, supplies, furnishings or other forms of moveable personal
property, vehicles, 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, or property owned by an 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:
(1) The value of the abatement shall not exceed 700 percent of investment by the business in
eligible property described in Section 3(e), above, or such other value as permitted by
' law. The City Council, or its designated representative, shall work with the applicant,
prior to the execution of an abatement agreement, to determine the exact schedule for the
abatement.
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(2) Under no circumstances shall the value of abatement exceed 100 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 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 two million
dollars ($2,000,000) 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 Richland
Hills.
(2) For an expanded or modernized facility, be reasonably expected to invest not less than
seven hundred fifty thousand dollars ($750,000) 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 Richland Hills.
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(3) For regional retail and regional entertainment/tourism facilities, be reasonably expected
• to invest not less than three million dollars ($3,000,000) in the facility (including i,uth
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 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 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 3(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 3(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
Richland Hills shall be excluded from property tax abatement.
Section 4
APPLICATION
(a) Any present or potential property owner of taxable property in Richland Hills may request
the creation of a reinvestment zone and tax abatement by filing a written request with the
'vlayor or his/her 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
modernization, expansion, or new improvements to be undertaken,
(2) A descriptive list of the improvements that will be part of the facility,
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(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 heazing 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 prepaze 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, alteration, or installation of improvements related to a proposed expansion,
modernization, or new facility authorized as eligible under these guidelines.
(f) Variance. Request for variance from provisions of these guidelines may be made in written
form to the Mayor, or hislher designated representative. 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 majority vote of the governing body.
Section 5
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 affect on its bonds, tax revenue, service capacity,
or the provision of services, that showing shall be reason for the City to deny any designation
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ofthe reinvestment zone, the grant of abatement; or , t.l.
(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,
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r • (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 6
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 3(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 4(b), above.
(5) Contractual obligations in the event of default, violation of terms and conditions,
delinquent taxes, recapture, administration and assignment as provided for in Section
3(a), 3(g), 3(h), 7, 8, and 9 or other provisions that may be required for uniformity or by
state law, and
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(6) 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 60 days after the applicant has forwarded
all necessary information and documentation for evaluation of the application to the City.
Section 7
RECAPTURE
' (a) In the event that the facility is completed and begins producing goods andlor services, but
subsequently-discontinues'such production for`anyreason 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 (60) days from the date of termination.
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(b) Should the City determine that the company or individual is in default according to the temps
• and conditions of the abatement agreement, the Ci~y 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 (60) 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 (60) 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 si.~cty (60) days of the termination.
Section 8
ADMINISTRATION
(a) The Chief Appraiser of the County shall, as a normal consequence of his/her 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 that 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 a
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 standazds.
(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.
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Section 9
• 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
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, or the
new owner or new lessee are liable to the City of Ricl-eland Hills or any affected taxing
jurisdiction for outstanding taxes or other obligations.
(d) Approval of a transferred and assigned agreement shall not be unreasonably withheld.
Section 10
OTHER ECONOMIC DEVELOPMENT INCENTIVES
(a) Economic Development Incentives. The City by resolution may enter into an economic
development incentive agreement as permitted by Chapter 380.001 of the Texas Local
• Government Code. An incentive may include but is not limited to:
(1) Sales Tax Rebates. Rebates will be considered only on new or increased sales tax
dollazs generated due to new business and/or the relocation or expansion of existing
businesses within the City of Richland Hills. The basic criteria for consideration is an
investment of not less than two million dollars ($2,000,000) in fully taxable real and
personal property, and the generation or addition of not less than three million dollars
($3,000,000) in taxable sales.
(2) Loans and Grants. The City may provide subsidized loans or grants upon approval of
the City Council.
(3) Provide Personnel. The City may provide personnel and services of the municipality
upon approval of the City Council.
(4) Waiving of Fees. Permit application, utility tap and similar fees may be waived upon
approval of the City Council.
(5) Infrastructure. Extension, construction or reconstruction of infrastructure necessary for
the development of a targeted enterprise may be made upon approval of the City Council.
(b) Any agreement will include, but not be limited to, the following specific items:
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(1) All appropriate stipulations included in the application, as outlined by the document, for
. an economic development incentive agreement,
(2) The amount and type of incentive,
(3) A method for determining the qualifications of meeting the criteria and applicant's
promise to meet and maintain these qualifications over the term of the agreement. This
may require the submission of an annual report to the City Manager demonstrating that
the terms and conditions required to receive an incentive have been met, and the City
will be allowed, upon written request and reasonable notice, to inspect and audit such
records of the applicant as are necessary to substantiate that the applicant is meeting the
criteria agreed upon during the term of the incentive,
(4) A provision for recapturing City expenditures and/or cost of labor associated with the
agreement, in the event the company or individual is found to be in default according to
the terms and conditions of the incentive agreement.
(5) All proprietary information required by the City for purposes of monitoring compliance
by a company with the terms and conditions of an incentive agreement shall be
considered confidential.
Section 11
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.
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APPLICATION FOR T:~X ABATEMENT
• OR ECONOMIC DEVELOPMENT INCENTIVE
(Please type application or prim neatly with black pen)
1. Property Owner:
Mailing Address:
_ 2. Property Owner's
Representative:
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Mailing Address:
3. Property Address:
• Property Legal Description:
(Provide attachment if by metes and bounds)
(Include Map(s), if required)
4. Description of Project:
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5. If requesting incentive, describe incentive, reason for requesting incentive, and the
• impact on the project if incentives aze not granted:
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4 6. Date projected for occupation of project initiation of operations:
7. Other information applicable to this project and other qualifying factors:
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