G-12-11-08-G3 - 11/8/2012ORDINANCE NO. 6— 12,-11, O O - J
AN ORDINANCE AMENDING CHAPTER 38, SECTION 38-22, CODE OF
ORDINANCES (2010 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 -10-03-11-9C2; 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:
O:\wdox\SCC Ines\0112\ 1204\MUNICIPAU00261320. DOC
Section 38-22 of the Code of Ordinances (2010 Edition) of the City of Round Rock, Texas is
hereby readopted to read as follows:
38-22 Tax abatement guidelines and criteria governing reinvestment zones and tax abatement
agreements.
(a) Authorization of abatement.
(1) Economic qualifications. In order for the owner of property within a reinvestment
zone to be eligible to receive a tax abatement, the owner must show that the
planned project will benefit the city in some or all of the following six categories.-
a.
ategories:
a. Primary and nonprimary jobs;
b. Improvements to real property and/or investment in personal property;
C. Sales tax;
d. Employee payroll;
e. Diversity in the economic base; and
f. 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 (g), (h) and (i)
of this section.
(2) 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.
(3) 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.
(4) Industrial districts. No tax abatement shall be granted for any property included in
an industrial district.
(5) Eligible property. 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 V.T.C.A., Tax Code ch. 312.
(6) OwnedAeased 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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(7) 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 years.
(b) Definitions. The following words, terms and phrases, when used in this section, shall
have the meanings ascribed to them in this subsection, except where the context clearly
indicates a different meaning:
Intangibles means that a business will provide indirect but important benefits to the city,
such as name recognition, tourism promotion, etc.
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.
(c) Public hearing and approval.
(1) 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.
(2) Before approving any tax abatement agreement, the city must find that the terms
of the proposed agreement meet these guidelines and criteria and that:
a. There will be no substantial adverse effect on the provision of city
services or on its tax base; and
The planned use of the property will not constitute a hazard to public
safety, health, or welfare.
(d) Agreement. In addition to the specific requirements of V.T.C.A., Tax Code § 312.205, the
tax abatement agreement shall include the following:
(1) An estimated increase to be abated and the current assessed value of property;
(2) A percent of increase to be abated each year;
(3) A commencement and expiration date of abatement;
(4) A proposed use of improvement, nature of construction, time schedule, map, and
property description; and
(5) If the tax abatement is requested for a commercial or industrial project, the
projected number of primary and nonprimary jobs created per year for the life of
the tax abatement agreement.
(e) Assignment. Tax abatement agreements may be assigned to a new owner or lessee of
the improvements with the written consent of the city. 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.
(f) Amendments to guidelines. These guidelines and criteria are effective upon the date of
the adoption of the ordinance from which they are derived and will remain in force for two
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.
(g) Criteria for eligibility for tax abatement for new business.
(h) Criteria for eligibility for tax abatement for existing business.
Category
Points
Maximum
Points
(1)
Primary jobs
1 point per 2 jobs
n/a
Nonprimary jobs
1 point per 3 jobs
n/a
(2)
Improvements to real property
1 point per $100,000.00 of new
n/a
New nonprimary jobs
improvements to real property
n/a
(2)
Investment in personal property
1 point per $200,000.00 of new
n/a
investment in personal property
(3)
Projected sales tax
1 point per $500,000.00 in annual
n/a
taxable sales
(4)
Payroll
1 point per $60,000.00 in annual
n/a
payroll
(5)
Economic diversity
Vt business of its type
50
2nd business of its type
25
3'd business of its type
10
(6)
Synergism/intangibles
To be determined by city
200
(h) Criteria for eligibility for tax abatement for existing business.
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Category
Points
Maximum
Points
(1)
Existing primary jobs
1 point per 4 jobs
n/a
Existing nonprimary jobs
1 point per 6 jobs
n/a
New primary jobs
1 point per 2 jobs
n/a
New nonprimary jobs
1 point per 3 jobs
n/a
(2)
Improvements to real property
1 point per $100,000.00 of new
n/a
improvements to real property
Investment in personal property
1 point per $200,000.00 of new
n/a
investment in personal property
(3)
Additional projected sales tax
1 point per $500,000.00 in additional
n/a
annual taxable sales
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(4)
Payroll
1 point per $60,000.00 in additional
n/a
Year 2
50%
annual payroll
25%
Total
175%
1 point per $120,000.00
n/a
Year 1
100%
in existing annual payroll
100%
(5)
Synergism/Intangibles
To be determined by city
200
(i) Standard abatement offer.
(1) In order to receive an abatement, an applicant must score at least 175 points
from the list of criteria.
(2) The standard abatement offer is one percent of abatement for each point scored.
An abatement of less than 300 percent will be spread over three years. An
abatement of between 300 percent and 500 percent will be spread over at least
five years. An abatement of more than 500 percent will be spread over a
minimum of five years, but not 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%
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 first reading this &h day of
g 0 V eTRb9- C , 2012.
Alternative 2.
READ and APPROVED on first reading this the day of
2012.
READ, APPROVED and ADOPTED on second reading this the day of
12012.
U►
A MCGRAW, Mayor
City of Round Rock, Texas
o6 •
ROUND ROCK, TEXAS City Council Agenda Summary Sheet
PURPOSE. PASSION. PROSPERITY.
Item No. G3.
Consider an ordinance re -adopting guidelines and criteria governing reinvestment zones
and tax abatement agreements within the city limits or extraterritorial jurisdiction of the
Agenda Caption: City of Round Rock. (First Reading)
Date: November 8. 2012
Department: Planning and Development Services Department
Staff Person making presentation: Peter Wysocki
Planning and Development Services Director
Item Summary:
Every two years the City must review and re -adopt its tax abatement criteria. The criteria was last adopted in 2010
so it must be re -adopted again in 2012. Upon review of the criteria by the City Manager, Chamber of Commerce VP
for Economic Development Ben White and city staff, there are no changes proposed to the guidelines and criteria
adopted in 2010.
Cities are authorized to grant tax abatements and establish reinvestment zones by Texas Tax Code Section 312.002,
provided that guidelines and criteria are adopted. The guidelines and criteria are used by the City's economic
development team to evaluate businesses seeking tax abatement based on various benefits including job creation,
employee payroll and sales tax. Businesses are scored objectively based on point values. A minimum score of 175 is
necessary in order to qualify.
Cost: N/A
Source of Funds: N/A
Recommended Action: Approval