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The City is committed to the promotion of high quality commercial and industrial development in all parts of the City, and an ongoing improvement of the quality of life of its citizens. These objectives may be served by the enhancement and expansion of the local economy. The City will consider, on a case?by?case basis granting property tax abatement as a stimulus for economic development in accordance with the criteria and guidelines established herein. Nothing herein shall imply or suggest that the City is under any obligation to provide tax abatement to any applicant, that any applicant has a property right or interest in tax abatement, or that the City is precluded from considering other options which may be in the best interest of the City.
A. Definitions
1."Abatement" means the full or partial exemption from ad valorem taxes of certain real property in a reinvestment zone designated by the City for economic development purposes.
2."Agreement" means a contract between a property owner or lessee and the City.
3. "Base year value" means the assessed value of eligible property on January 1st of the year of the execution of the tax abatement Agreement, plus the agreed upon value of eligible property improvements made after January 1 but before the execution of the Agreement.
4. "Deferred Maintenance" means those improvements necessary for continued operation but which do not improve productivity or alter any process technology. Exterior improvements (e.g., painting, installing, repairing, removing or replacing a facade) to the exteriors of buildings in the Downtown Development Area which are designed to improve visual appearance of property are not deferred maintenance.
5. "Downtown Development Area" is an approximately 43 block area of downtown Temple as shown by the map and description attached hereto as Exhibit "A."
6. "Eligible Facilities" means those new, expanded or modernized buildings and structures, including fixed machinery and equipment, which are reasonably likely as a result of granting abatement, to contribute to the retention or expansion of primary employment or to attract major investment in the reinvestment zone that would be a benefit to the property and that would contribute to the economic development within the City Eligible Facilities in all commercial/industrial tax abatement reinvestment zones include manufacturing, distribution and storage facilities, office buildings, transportation facilities, and entertainment complex. Additional Eligible Facilities in reinvestment zones established in the Downtown Development Area include retail stores, apartment buildings, restaurants and entertainment facilities (excluding sexually oriented businesses) facilities.
7. "Expansion" means the addition of buildings, structures, machinery, equipment or payroll for purposes of increasing production capacity.
8. "Facility" means property improvements completed or in the process of construction which together comprise an integral whole.
9. "Modernization" means a complete or partial demolition of Facilities and the complete or partial reconstruction or installation of a Facility of similar or expanded production capacity. Modernization may result from the construction, alteration, or installation of buildings, structures, machinery or equipment, or both. Modernization in the Downtown Development area includes painting of exterior walls, restoring, removing or installing a facade and related exterior improvements designed to visually improved the exterior or a building or block.
10. "New Facility" means a property previously undeveloped which is placed into service by means other than or in conjunction with Expansion and Modernization.
11. "Productive Life" means the number of years a property improvement is expected to be in service for a facility.
B. Statement of Purpose
The City is committed to the promotion of high quality commercial and industrial development in all parts of the City, and an ongoing improvement of the quality of life of its citizens. These objectives may be served by the enhancement and expansion of the local economy. The City will consider, on a case?by?case basis granting property tax abatement as a stimulus for economic development in accordance with the criteria and guidelines established herein. Nothing herein shall imply or suggest that the City is under any obligation to provide tax abatement to any applicant, that any applicant has a property right or interest in tax abatement, or that the City is precluded from considering other options which may be in the best interest of the City.
C. Designation of Tax Abatement Reinvestment Zones
The City will consider designating areas within the City limits or extraterritorial jurisdiction of the City as commercial?industrial tax abatement reinvestment zones which meet one or more of the criteria for designation of a reinvestment zone under Section 312.202 of the Tax Code, and where the property owner meets the minimum qualifications to qualify for a tax abatement under Part I.D. 1.b. of this Policy. Designation of an area as a tax abatement reinvestment zone is a prerequisite to entering into a tax abatement agreement with the owner of the property in a particular area. Property located within a City created (and State?approved) Enterprise Zone or within the City's Tax Increment Financing Reinvestment Zone is eligible for consideration for tax abatement agreements without the necessity of separate designation as a tax abatement reinvestment zone.
D. Abatement Authorized.
1. Eligible Facilities. Upon application, the City will consider granting tax abatement on Eligible Facilities as hereinafter provided.
a. Creation of New Value. The City will consider granting tax abatement only for the additional value of eligible property improvements made subsequent to, and specified in, an abatement agreement between the City and the property owner or lessee, subject to such limitations as the City may require.
b. New and Existing Eligible Facilities. The City will consider granting abatement for new Eligible Facilities and for improvements to existing Eligible Facilities for purposes of Modernization and Expansion.
c. Eligible Property. The City will consider granting abatement to the value of real property improvements (buildings, structures, fixed [permanently attached] machinery and equipment, site improvements, related fixed improvements necessary to the operation and administration of the Facility), and personal property (excluding inventory or supplies) with a Productive Life of ten years or more.
d. Ineligible Property. The following types of property shall remain fully taxable and ineligible for tax abatement: land, supplies, inventory, housing, Deferred Maintenance, property to be rented or leased except as provided in subpart (5) below, and other property which has a Productive Life of less than ten years.
e. Owned/Leased Facilities. If a Leased Facility is granted abatement, the agreement shall be executed with the lessor and the lessee.
2. Standards for Tax Abatement.
a. Minimum Standards. The City will consider tax abatement only on eligible facilities which meet at least two of the following criteria.
(1) The project involves a minimum increase in property value of three hundred percent (300%) for construction of a new facility, or fifty percent (50%) for expansion of an existing facility, with an overall new investment of at least $1 million in taxable assets. For eligible facilities in any reinvestment zone within the Downtown Development Area, the project must involve either a minimum increase in property value of one hundred and fifty percent (150%) for construction of a new facility, or twenty-five percent (25%) for expansion of an existing facility, with an overall new investment of at least $50,000 in taxable assets.
(2) The project makes a substantial contribution to redevelopment efforts, special area plans, or strategic economic development programs by enhancing either functional or visual characteristics, e.g., historical structures, traffic circulation, parking facades, materials, signs.
(3) The project has high visibility, image impact, or is of a significantly higher level of development quality.
(4) The project is an area which might not otherwise be developed because of constraints of topography, ownership patterns, site configuration, etc.
(5) The project can serve as a prototype and catalyst for other development of a higher standard.
(6) The project stimulates desired concentrations of employment or commercial activity.
(7) The project generates greater employment than would otherwise be achieved, e.g., commercial/industrial versus manufacturing versus warehousing.
(8) For eligible facilities in any reinvestment zone within the Downtown Development Area, the project improves the aesthetic appearance of the neighborhood, brings new jobs to the Downtown area, increases the availability of public parking, or increases the amount of green space (landscaping).
b. Minimum Required Investment. An applicant requesting tax abatement shall agree as a condition of any tax abatement ultimately approved by the City Council to expend a certain minimum amount of funds on real or personal property improvements, or to provide a certain number of jobs, as provided below:
| Minimum Required Real or Personal Property Investment or Job Creation |
Percentage
of increased value
to be abate |
Eligible Real Property
Improvements |
Eligible Personal Property* |
Job Creation |
| 25% |
$250,000 - $400,000 |
$1,000,000 - $1,600,000 |
25-30 jobs |
| 30% |
400,001 - 550,000 |
1,600,001 - 2,200,000 |
31-40 jobs |
| 35% |
550,001 - 700,000 |
2,200,001 - 2,800,000 |
36-40 jobs |
| 40% |
700,001 - 850,000 |
2,800,001 - 3,400,000 |
41-45 jobs |
| 45% |
850,001 - 1,000,000 |
3,400,001 - 4,000,000 |
46-50 jobs |
| 50% |
1,000,001 - 1,300,000 |
4,000,001 - 5,200,000 |
51-55 jobs |
| 55% |
1,300,001 - 1,600,000 |
5,200,001 - 6,400,000 |
56-60 jobs |
| 60% |
1,600,001 - 1,900,000 |
6,400,001 - 7,600,000 |
61-65 jobs |
| 65% |
1,900,001 - 2,200,000 |
7,600,001 - 8,800,000 |
66-70 jobs |
| 70% |
2,200,001 - 2,500,000 |
8,800,001 - 10,000,000 |
71-75 jobs |
| 75% |
2,500,001 - 3,500,000 |
10,000,001 - 14,000,000 |
76-85 jobs |
| 80% |
3,500,001 - 4,500,000 |
14,000,001 - 18,000,000 |
86-95 jobs |
| 85% |
4,500,001 - 5,500,000 |
18,000,001 - 22,000,000 |
96-105 jobs |
| 90% |
5,500,001 - 6,500,000 |
22,000,001 - 26,000,000 |
106-115 jobs |
| 95% |
6,500,001 - 7,500,000 |
26,000,001 - 30,000,000 |
116-125 jobs |
| 100% |
7,500,001 - 10,000,000 |
30,000,001 - 40,000,000 |
126-175 jobs |
|
Inside the Downtown Development Area
Minimum Required Real or Personal Property Investment or Job Creation
|
Percentage
of increased value
to be abated |
Eligible Real Property
Improvements |
Eligible Personal Property* |
Job Creation |
| 100% |
$25,000 or more |
$100,000 or more |
5-25 jobs |
Projects involving an investment in real property in excess of $10,000,000 ($250,000 in the Downtown Development Area) in eligible personal property of more than $40,000,000 ($1,000,000 in the Downtown Development Area), or the creation of more than 175 (25 in the Downtown Development Area) new full time jobs, or requests for tax abatement for more than 5 years, will be individually negotiated.
If a request for tax abatement is justified on the basis of the purchase and maintenance of eligible personal property or on the creation of jobs, the applicant must agree to maintain the personal property or jobs for a period of not less than twice the period for which tax abatement is granted. For example, if an applicant requests and receives 75% tax abatement for five years based on the purchase and maintenance of eligible personal property, the applicant must agree in the tax abatement agreement, subject to recapture of all abated taxes, to maintain the personal property on the property tax roll for not less than ten years.
*Personal property with a useful life of less than ten years is not eligible for tax abatement.
Personal property on site prior to the effective date of the tax abatement agreement is not eligible. Supplies and inventory are ineligible for tax abatement under this policy and State law.
† As used herein, the creation of jobs refers to the creation of a job paying not less than $10 per hour, the approximate median salary for employees in Bell County. To qualify for a level of tax abatement, e.g., 25%, based on the creation of a specific number of jobs, you must commit to hiring the required effective number of employees by the end of year 2 of the agreement. To calculate the effective number of jobs created: (1) calculate the total annual payroll created (based on the number of employees you will hire at various annual salaries); (2) divide this annual payroll by $20,640 (our calculated annual salary for a $10/hr employee); and (3) round this figure to the nearest whole integer.
c. Additional or Enhancement Factors. In addition to the minimum investment or job creation criteria listed in (2) above, the following factors, among others, shall be considered in determining whether to grant Tax Abatement, and if so, in what percentage of value to be abated and the duration:
(1) value of land and existing improvements, if any;
(2) type and value of proposed improvements;
(3) productive life of proposed improvements;
(4) number of existing jobs to be retained by proposed improvements;
(5) number, salary, and 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;
(8) amount of local sales taxes to be generated directly;
(9) the costs, if any, to be incurred by the City to provide facilities or services directly resulting from the new improvements;
(10) the amount of ad valorem taxes to be paid the City during the Abatement period considering the existing values, the percentage of new value abated, the Abatement period, and the projected property value after expiration of the Abatement period;
(11) population growth that occurs directly as a result of new improvements;
(12) the types and value of public improvements, if any, to be constructed and paid for by the applicant seeking Abatement;
(13) the extent to which the proposed improvements compete with existing businesses;
(14) the positive or negative impact on the opportunities of existing businesses;
(15) the attraction of other new businesses to the area;
(16) the overall compatibility with the City's zoning and subdivision regulations, and over?all comprehensive plan; and
(17) whether the project is environmentally compatible with the community (no appreciable negative impact on quality?of?life perceptions).
Each Eligible Facility 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 full evaluation.
3. Abatement barred in certain circumstances.
Neither a reinvestment zone nor an abatement agreement shall be authorized, if the City Council determines that:
a. there would be a substantial adverse effect on the provision of government service or tax base;
b. the applicant has insufficient financial capacity to meet the requirements of the proposed abatement agreement;
c. planned or potential use of the property would constitute a hazard to public safety, health, or morals;
d. approval of a reinvestment zone or abatement agreement would violate State or Federal laws or regulations; or
e. there exists any other valid reason for denial deemed appropriate by the City.
4. Property subject to Taxation.
From the execution of an Abatement Agreement to the end of the effective abatement period under the Agreement, taxes shall be payable as follows:
a. the value of ineligible property (Part I.D.1.d.) shall be fully taxable;
b. the base year value of existing eligible property as determined each year shall be fully taxable;
c. the additional value of new eligible property shall be taxed in the manner and for the period provided for in the Abatement Agreement; and
d. the additional value of new, eligible property shall be fully taxable at the end of the Abatement period.
5. Application for Tax Abatement.
a. Any present or potential owner of taxable property in the City of Temple, Texas, may request the creation of a tax abatement reinvestment zone and tax abatement by filing a written request with the City. The application shall then be forwarded to the City Manager for review. After processing the application, the City Manager shall make a recommendation to the City Council of the City for final disposition.
b. The application shall consist of a completed application form, which shall provide detailed information on the items described in Part I.D.2. above; a map and property description; and a time schedule for undertaking and completing the planned improvements. In the case of Modernization, a statement of the assessed value of the facility, separately stated for real and personal property, shall be given for the tax year immediately proceeding the application. The application form may require such financial and other information as may be deemed appropriate for evaluating the financial capacity and other factors of the applicant.
c. The City shall give notice as provided by the Tax Code, i.e., written notice to the presiding officer of the governing body of each taxing unit in which the property to be subject to the agreement is located, no later than the seventh day before the date the City Council considers approval of a tax abatement agreement.
d. The City shall not establish a reinvestment zone for the purpose of Abatement if it finds that the request for the abatement was filed after the commencement of construction of a New Facility, or alteration, Modernization, Expansion of an existing Facility.
6. Tax Abatement Agreements
a. After preliminary approval of an application, the City shall formally pass a resolution authorizing an Agreement with the owner (and lessee, where applicable) of the Facility, which Agreement shall include, but not be limited to:
(1) The kind, number, and location of all proposed improvements of the property;
(2) A provision for access to and authorize inspection of the property by municipal employees to ensure that the improvements or repairs are made according to the specifications and conditions of the Agreement;
(3) Limits for the uses of the property consistent with the general purpose of encouraging development or redevelopment of the zone during the period the property tax exemptions are in effect;
(4) Provide for recapturing property tax revenue lost as a result of the Agreement if the owner of the property fails to make the improvements or repairs as provided by the Agreement;
(5) Each term agreed to by the owner of the property;
(6) A requirement that the owner of the property annually certify to the governing body of each taxing unit that the owner is in compliance with each applicable term of the Agreement;
(7) Provide that the City Council may cancel or modify the Agreement if the property fails to comply with the Agreement;
(8) The percentage of value to be abated each year; and
(9) The commencement date and the termination date of Abatement.
b. To be effective, a tax abatement agreement must be approved by the affirmative vote of a majority of the members of the City Council at a regularly scheduled meeting of the City Council.
c. Agreements shall normally be approved or disapproved within sixty (60) days from the date the applicant filed a properly completion application for tax abatement with the City Manager.
7. Recapture of Abated Taxes Upon Default.
a. In the event that the company or individual:
(1) allows its ad valorem taxes owed the City to become delinquent and fails to timely and properly follow the legal procedures for their protest or contest, or
(2) violates any of the terms and conditions of the Abatement Agreement, and fails to cure during the Cure Period hereinafter described,
(3) the Agreement then may be terminated, and the company or individual whose Agreement is terminated shall repay, as liquidated damages, all taxes previously abated by virtue of the Agreement to the City within thirty (30) days of the termination.
b. Should the City determine that the company or individual is in default according to the terms and conditions of its Agreement, the City shall notify the company or individual of such default in writing at the address stated in the Agreement, and if such is not cured within thirty (30) days from the date of such notice ("Cure Period"), then the Agreement may be terminated.
8. Administration.
a. The Chief Appraiser of the Bell County Appraisal District will 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 Appraiser with such information as may be necessary for the Abatement. Once value has been established, the Chief Appraiser will notify the City of the amount of the assessment.
b. An abatement agreement shall stipulate that employees or designated representatives of the City will have access to the reinvestment zone during the term of the Abatement to inspect the Facility to determine if the terms and conditions of the agreement are being met. All inspections will be made only after the giving of twenty?four (24) hours prior notice and will only be conducted in such manner as to not unreasonably interfere with the construction or operation of the Facility. All inspections will be made with one or more representatives of the company or individual and in accordance with its safety standards.
c. Upon completion of construction, the designated representative of the City shall annually evaluate each Facility receiving Abatement to insure compliance with the agreement, and a formal report shall then be made to the City Council of Temple regarding the findings of the evaluation.
9. Assignment of Tax Abatement Agreements.
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 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. No assignment or transfer shall be approved if the parties to the existing Agreement, the new owner or new lessee, are liable to any jurisdiction for outstanding taxes or other obligations. Approval of assignments will not be unreasonably withheld.
10. Sunset Provision.
These tax abatement criteria and guidelines are effective upon the date of their adoption and will remain in force for two years, unless amended by three?quarters vote of the City Council, 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, the criteria and guidelines may be modified, renewed or eliminated.
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