O-2015-2251 - 3/12/2015 ORDINANCE NO. 0-2015-2251
AN ORDINANCE AMENDING CHAPTER 38, SECTION 38-22, CODE OF
ORDINANCES (2010 EDITION), CITY OF ROUND ROCK, TEXAS
RE-ADOPTING 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-12-11-08-G3; 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:
0112.1504;00330274
1.
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. 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) 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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(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
b. 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.
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(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.
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
improvements to real property
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 1st business of its type 50
2nd business of its type 25
V business of its type 10
(6) Synergism/intangibles To be determined by city 200
(h) Criteria for eligibility for tax abatement for existing business.
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
annual payroll
1 point per$120,000.00 n/a
in existing annual payroll
(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%
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 first reading this A day of
N'VAv t) , 2015.
Alternative 2.
READ and APPROVED on first reading this the day of
) 2015.
READ, APPROVED and ADOPTED on second reading this the day of
12015.
r l —
ALAN MCGRAW, Mayor
City of Round Rock, Texas
ATTEST:
SARA L. WHITE, City Clerk
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