G-08-02-28-10A1 - 2/28/2008 ORDINANCE NO. -�-d Z•Z�j- (O
AN ORDINANCE AMENDING CHAPTER 1, SECTION 1.704, CODE
OF ORDINANCES (1995 EDITION), CITY OF ROUND ROCK,
TEXAS TO AMEND AND RE-ADOPT GUIDELINES AND
CRITERIA GOVERNING REINVESTMENT ZONES AND TAX
ABATEMENT AGREEMENTS WITHIN THE CITY LIMITS OR
EXTRATERRITORIAL JURISDICTION OF ROUND ROCK, TEXAS;
PROVIDING A SAVINGS CLAUSE AND REPEALING
CONFLICTING ORDINANCES AND RESOLUTIONS.
WHEREAS, the City of Round Rock must compete with other
state and local governments across the nation currently offering
tax abatements and other incentives to attract new industry and
economic development; and
WHEREAS, new jobs and industries will benefit the local
economy, strengthen the real estate market, and generate future
tax revenue; and
WHEREAS, pursuant to Section 312 . 002 of the Tax Code,
V.A.T. S . , the city may not designate an area as a reinvestment
zone and may not enter into a tax abatement agreement unless the
City Council has established guidelines and criteria governing
tax abatement agreements; and
WHEREAS, the City Council previously adopted such
guidelines and criteria governing tax abatement agreements by
Ordinance No. G-06-03-09-8B1, which ordinance will expire on
March 9, 2008; and
WHEREAS, the City Council wishes to re-adopt such
guidelines and criteria; Now Therefore
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ROUND
ROCK, TEXAS THAT:
080228AI
I.
Section 1 . 704 of the Code of Ordinances (1995 Edition) of
the City of Round Rock, Texas is hereby readopted to read as
follows :
1.704 TAX ABATEMENT GUIDELINES AND CRITERIA GOVERNING
REINVESTMENT ZONES AND TAX ABATEMENT AGREEMENTS
(1) Authorization of Abatement
(a) Economic Qualifications In order for the owner of property within a
reinvestment zone to be eligible to receive tax abatement, the owner must show
that the planned project will benefit the City in some or all the following six
categories:
(i) primary and non-primary jobs;
(ii) improvements to real property and/or investment in personal property;
(iii) sales tax;
(iv) employee payroll;
(v) diversity in the economic base; and
(vi) synergy for additional economic development and/or intangible benefits
to the City.
The planned project will be awarded points in the aforesaid categories to
determine whether or not it is eligible for consideration for an abatement and
what level of abatement is available. The criteria for awarding points and the
various levels of tax abatement available are shown in subsections (7), (8) and
(9).
(b) Creation of New Value. Abatement may be granted for real property in each
year covered by an agreement only to the extent its value for that year exceeds
its value for the year in which the agreement is executed. Abatement may be
granted for tangible personal property located on the real property in each year
covered by the agreement other than tangible personal property that was
located on the real property at any time before the period covered by the
agreement with the City and other than inventory and supplies.
(c) Agricultural Exemptions Denied. No tax abatement shall be granted for any
real property unless and until full market value taxes have been paid for five
years prior to the execution of a tax abatement agreement.
(d) Industrial Districts. No tax abatement shall be granted for any property
included in an Industrial District.
(e) Eligible Proper Tax abatement agreements may exempt from taxation a
portion of the value of the real property and/or of tangible personal property
located on the real property, or other property, as provided by Section 312 of
the Tax Code.
(f) Owned/Leased Facilities. If a leased facility is granted an abatement, the tax
abatement agreement shall be signed by both the lessor and the lessee.
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(g) Value and Term of Abatement. Abatement shall be granted effective on
January 1 of the year following the date of execution of the tax abatement
agreement. The percentage of the increase abated shall be specified in each tax
abatement agreement, however, no tax abatement agreement shall exceed ten
(10) years.
(2) For the purposes of this section, the following terms shall have the meanings stated
herein:
Primary Job means a job that is available at a company for which a majority of the
products or services of that company are ultimately exported to regional,
statewide, national, or international markets infusing new dollars into the local
economy.
Synergism means that a business will have a mutually advantageous compatibility
with other businesses in the City.
Intangibles means that a business will provide indirect, but important benefits to
the City such as name recognition, tourism promotion, etc.
(3) Public Hearing and Approval
(a) Prior to entering into any tax abatement agreement, the City may, at its option,
hold a public hearing at which interested persons shall be entitled to speak for
or against the approval of the tax abatement agreement.
(b) Before approving any tax abatement agreement, the City must find that the
terms of the proposed agreement meet these Guidelines and Criteria and that:
(i) there will be no substantial adverse affect on the provision of city
services or on its tax base; and
(ii) the planned use of the property will not constitute a hazard to public
safety, health, or welfare.
(4) Agreement
In addition to the specific requirement of Section 312.205, Tax Code, the tax
abatement agreement shall include the following:
(a) an estimated increase to be abated and the current assessed value of property;
(b) a percent of increase to be abated each year;
(c) a commencement and expiration date of abatement;
(d) a proposed use of improvement, nature of construction, time schedule, map,
and property description; and
(e) if the tax abatement is requested for a commercial or industrial project, the
projected number of primary and non-primary jobs created per year for the life
of the tax abatement agreement.
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(5) Assignment
(a) Tax abatement agreements may be assigned to a new owner or lessee of the
improvements with the written consent of the City of Round Rock. Any
assignment shall provide that the assignee shall irrevocably and unconditionally
assume all duties and obligations of the assignor as set out in the agreement.
No assignment shall be approved if the assignor or assignee are indebted to the
City for ad valorem taxes or other obligations.
(6) Amendments to Guidelines
These Guidelines and Criteria are effective upon the date of their adoption and will
remain in force for two (2) years, at which time all Reinvestment Zones and tax
abatement agreements created pursuant to its provisions will be reviewed by the City to
determine whether the goals have been achieved.
(7) Criteria for Eligibility for Tax Abatement for New Business
Category Points Maximum Points
(a) Primary Jobs 1 point per 2 jobs
Non-primary Jobs 1 point per 3 jobs n/a
(b) 1 point per $100,000
(i) Improvements to of new n/a
Real Property improvements to real property
(ii) Investment in 1 point per$200,000 of new
Personal Property investment in personal property n/a
(c) Projected Sales Tax 1 point per $500,000
in annual taxable sales n/a
(d) Payroll 1 point per $60,000 in
annual payroll
(e) Economic Diversity Is'business of its type 50
2'business of its type 25
3'business of its type 10
(f) Synergism/Intangibles To be determined by City200
(8) Criteria for Eligibility for Tax Abatement for Existing Business
Category Points Maximum Points
(a) Existing Primary Jobs 1 point per 4 jobs n/a
Existing Non-primary Jobs 1 point per 6 jobs n/a
New Primary Jobs 1 point per 2 jobs n/a
New Non-primary Jobs 1 point per 3 jobs n/a
(b) (i) Improvements to 1 point per$100,000
Real Property of new improvements n/a
to real property
(ii) Investment in 1 point per $200,000 of new
Personal Property investment in personal property n/a
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(c) Additional Projected 1 point per $500,000
Sales Tax in additional annual taxable sales n/a
(d) Payroll 1 point per $60,000 in
additional annual payroll n/a
1 point per $120,000 in
existing annual payroll n/a
(e) Synergism/Intangibles To be determined by City200
(9) Standard Abatement Offer
In order to receive an abatement, an applicant must score at least 175 points from the
list of criteria.
The standard abatement offer is 1% of abatement for each point scored. An abatement
of 200% or less will be spread over three years. An abatement of between 200% and
500% will be spread over at least five years. An abatement of more than 500% will be
spread over between a minimum of five years, but no more than ten years. The
following are examples of typical abatement offers for the three levels of scores:
Example 1: 175 points
Year 1 = 100%
Year 2 = 50%
Year 3 = 25%
TOTAL 175%
Example 2: 450 points
Year 1 = 100%
Year 2 = 100%
Year 3 = 100%
Year 4 = 75%
Year 5 = 75%
TOTAL 450%
Example 3: 650 points
Year 1 = 100%
Year 2 = 100%
Year 3 = 100%
Year 4 = 75%
Year 5 = 75%
Year 6 = 75%
Year 7 = 75%
Year 8 = 50%
TOTAL 650%
II.
A. All ordinances, parts of ordinances, or resolutions in
conflict herewith are expressly repealed.
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B. The invalidity of any section or provision of this
ordinance shall not invalidate other sections or provisions
thereof .
C. The City Council hereby finds and declares that
written notice of the date, hour, place and subject of the
meeting at which this Ordinance was adopted was posted and that
such meeting was open to the public as required by law at all
times during which this Ordinance and the subject matter hereof
were discussed, considered and formally acted upon, all as
required by the Open Meetings Act, Chapter 551, Texas Government
Code, as amended.
Alternative 1.
By motion duly made, seconded and passed with an
affirmative vote of all the Council members present, the
requirement for reading this ordinance on two separate days was
dispensed with.
READ, PASSED, and ADOPTED on f i rs t reading this &6
day of 2008 .
Alternative 2 .
READ and APPROVED on f irst reading this the day of
2008 .
READ, APPROVED and ADOPTED on second reading this the
day of 2 8 .
NYL EL ,, ayor
ATTEST: City of Round Rock, Texas
aoA��
SARA L. WHITE, City Secretary
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DATE: February 21, 2008
SUBJECT: City Council Meeting - February 28, 2008
ITEM: 10A1. Consider an ordinance re-adopting guidelines and criteria governing
reinvestment zones and tax abatement agreements within the city
limits or extraterritorial jurisdiction of the City of Round Rock. (First
Reading)
Department: Administration
Staff Person: David Kautz, Assistant City Manager/CFO
Steve Sheets, City Attorney
Justification:
The state requires that cities utilizing tax abatement as an incentive for new investment in
the community adopt criteria that guide the council in their decision-making.
Funding:
Cost: N/A
Source of funds: N/A
Outside Resources: N/A
Background Information:
The criteria remain unchanged in this agenda item.
Public Comment: N/A