The Galveston County Tax Abatement Guidelines 

 Adopted December 2006

RESOLUTION

Notice: These guidelines are currently expired.

New guidelines will be considered for the 2008 fiscal year

 

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RESOLUTION

Amending the Guidelines and Criteria

for Granting Tax Abatement in Reinvestment Zones

Designated Within the Boundaries of the County of Galveston, Texas

On this the 20th day of December, 2006, the Commissioners Court of Galveston County, Texas convened in a regular session with the following members thereof present:

JAMES D. YARBROUGH, County Judge;

PATRICK DOYLE, Commissioner, Precinct 1;

EDDIE JANEK, Commissioner, Precinct 2;

STEPHEN D. HOLMES, Commissioner, Precinct 3;

KEN CLARK, Commissioner, Precinct 4; and,

MARY ANN DAIGLE, County Clerk

when the following proceedings, among others, were had, to-wit:

WHEREAS, the creation and retention of job opportunities that bring new wealth is of the highest civic priority; and


WHEREAS, new jobs and investment will benefit the area economy, provide needed opportunities, strengthen the real estate market, and generate tax revenue to support local services; and

WHEREAS, the County of Galveston must compete with other localities across the nation currently offering tax inducements to attract new businesses and industries and modernization projects; and

WHEREAS, any tax incentives offered in the County of Galveston would reduce needed tax revenue unless strictly limited in application to those new and existing businesses and industries that bring new wealth to the community; and

WHEREAS, the abatement of property taxes, when offered to attract new jobs created by additional industrial and business investments will enhance the local economy and provide a base to encourage improved diversification in the County of Galveston; and

WHEREAS, V.T.C.A., Tax Code § 312.002 requires the establishment of Guidelines and Criteria governing tax abatement agreements by the County before entering into a tax abatement agreement or designation of an area as a reinvestment zone and adoption of a resolution stating that the County elects to become eligible to participate in tax abatement; and

WHEREAS, to assure a common, coordinated effort to promote the economic development of the County of Galveston, Guidelines and Criteria should be in form and content acceptable to and in concert with the Guidelines and Criteria of governing bodies of every other taxing unit exercising ad valorem taxing authority within the County of Galveston.

Now therefore, the following Guidelines and Criteria for granting tax abatement in reinvestment zones designated within the County are hereby promulgated.

Article I

Generally Applicable Provisions

SECTION 1: DEFINITIONS

  1. "Abatement" means the full or partial exemption from ad valorem taxes of certain real property in a reinvestment zone designated for economic development purposes.

  2. "Affected jurisdiction" means the County of Galveston and every other taxing unit that includes within its boundaries real property that is to be included in a proposed or existing reinvestment zone.

  3. "Agreement" means a contractual agreement between a property owner and the County of Galveston or between a property owner and a municipality in Galveston County for the purposes of tax abatement.

  4. "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.

  5. "Deferred maintenance" means improvements necessary for continued operations which do not improve productivity or alter the process technology.

  6. "Expansion" means the addition of buildings, structures, machinery, or equipment for purposes of increasing production capacity.

  7. "Facility" means property improvements completed or in the process of construction which together comprise an integral whole.

  1. "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 materials or the processing of such goods or materials by physical or chemical change.

  2. "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. Modernization shall include improvements for the purpose of increasing productivity or updating the technology of machinery and equipment, or both. It shall not be for the purpose of reconditioning, refurbishing or repairing.

  3. "New Facility" means a property previously undeveloped which is placed into service by means other than or in conjunction with expansion or modernization.

  4. "Other Basic Industry" means buildings and structures including fixed machinery and equipment not elsewhere described, used or to be used for the production of products or services which primarily serve a market outside the Local Economic Zone. Corporate Home Office is included in this definition.

  5. "Productive Life" means the number of years a property improvement is expected to be in service in a facility.

  6. "Research Facility" means buildings and structures, including 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.

  7. "Regional Service Facility" means buildings and structures, includ­ing machinery and equipment, used or to be used to service goods where a majority of the goods being serviced originate outside of the Local Economic Zone.

  8. "Regional Distribution Center Facility" means buildings and struc­tures, including fixed machinery and equipment, used or to be used primarily to receive, store, service or distribute goods or materi­als owned by the facility operator where a majority of the goods or services are distributed to points at least 100 miles from any part of Galveston County.

  9. "Regional Entertainment Facility" means buildings and structures, including fixed machinery and equipment, used or to be used to provide entertainment through the admission of the general public where the majority of users reside at least 100 miles from any part of Galveston County.

  10. "Regional Office Facility" means a building of at least 100,000 square feet in construction excluding related parking facilities, constructed specifically for use by private companies whose scope of business is in the State of Texas and beyond and not limited to the Local Economic Zone.

  11. "Local Economic Zone" means Galveston County and neighboring counties.

  12. County Vendor” means any business organization for which sales taxes collected benefit a municipality located wholly or partially in Galveston County.

  13. Proximate Relocations” means moving a business within the current Local Economic Zone.

SECTION 2: ELIGIBILITY

 

  1. Authorized Facility. A facility may be eligible for tax abatement if it is a business or Manufacturing Facility, Research Facility, Distribution Center, Regional Service Facility, Regional Entertainment Facility. Regional Office Facility or Other Basic Industry and meets the other requirements of this section.

  2. Creation of New Value. Tax abatement may only be granted for the additional value of eligible property improvements made subsequent to and specified in a tax abatement agreement between the County of Galveston and the property owner, subject to such limitations as Galveston County may require.

  3. New and Existing Facilities. Tax abatement may be granted for new facilities and improvements to existing facilities for purposes of modernization or expansion.

  4. In order to be eligible for and receive tax abatement the planned improvement, excepting the Regional Office Facility, must be expected to create employment for at least 15 additional people on a permanent basis in Galveston County or provide at least 15 retained jobs.

  5. Abatement for a Regional Office Facility is terminated at the end of the abatement period or sixty days following the date that the City has issued Certificates of Occupancy for at least 80% of the total leasable space in the building, which ever occurs first.

  6. The total expenditure for the construction and addition of eligible, taxable property must exceed $3,000,000.

  7. Taxes may be abated for a period of up to seven (7) years. The Commissioners' Court reserves the right to set the proportion and length of the abatement, but will first consider adopting the proportion and term established by the municipality. See Section 5 (e) below.

  8. If the Court determines by way of the application that the project is within a concentration of tourist related business activities and that the project would enhance neighboring tourist related businesses, including existing hotel rooms, the Court may consider a base total expenditure for construction of eligible property of $2,000,000, provided that the total of the new construction abated does not include hotel rooms.

  9. Applicant agrees to forgo any protest, application, negotiations or other procedures ordinarily available to tax payers that would challenge or dispute the assessed value annually determined by the Galveston Central Appraisal District.

  10. Eligible Property. Tax abatement may be extended to the value of buildings, structures, fixed machinery and equipment, site improve­ments plus the office space and related fixed improvements necessary to the operation and administration of the facility at the discretion of the Commissioners' Court.

  11. Ineligible Property. The following types of property shall be fully taxable and ineligible for tax abatement:

 

Land

Property on which back taxes to Galveston County are owed

Inventories

Supplies

Tools

Furnishings and other forms of movable personal property

Vehicles

Vessels

Aircraft

Housing

Hotel accommodations

Furniture

Deferred maintenance investments

Property to be rented or leased except as provided in SECTION 2(h) or as defined under SECTION 1(q)

Any improvements, including those to produce, store or distribute natural gas, fluids or gases, which are not integral to the operation of the facility

Property which has productive life of less than 15 years

And property owned or used by the State of Texas or its political subdivisions or by any organiza­tion owned, operated or directed by a political sub­division of the State of Texas

 

  1. Owned/Leased Facilities. If the lessee of a leased facility is granted tax abatement the agreement shall be executed by both the lessor and the lessee.

  2. Reinvestment Zone. To be eligible for tax abatement the owner of taxable real property must enter into a written agreement with the County, wherein the owner agrees to make specified improvements or repairs to the property in conformity with the County's comprehensive plan, where applicable; and the property must be within a reinvestment zone designated by City ordinance or by an order of the County Commissioners Court.

  3. Applicant agrees to allow access to books and records related to the facts of this application by the Galveston County Auditor.

 

SECTION 3: OBJECTIONS TO THE ABATEMENT

 

  1. Neither a reinvestment zone can be created nor a tax abatement agreement authorized if it is determined that:

 

  1. there would be a substantial adverse affect on the provisions of government service or tax base;

  2. the applicant has insufficient financial capacity;

  3. planned or potential use of the property would constitute a hazard to public safety, health or morals; or,

  4. violation of laws of the United States or State of Texas or policies of Galveston County would occur.

  5. there is no significant increase in economic activities (e.g. jobs created or protected, sales tax generated, purchases made) due to proximate relocations within the Local Economic Zone.

  1. The Commissioners Court shall make the determination of objection, if any, provided for in this section.

SECTION 4: TERM OF TAX ABATEMENT

Tax abatement shall be granted effective with the January 1 valuation date immediately following the date of execution of the agreement. The term of the abatement of the value of new eligible properties shall be for up to seven (7) years, inclusive of construction as determined by the Commissioners' Court.

Article II

Pertaining to Joining Approved Municipal Agreements

SECTION 5: JOINING MUNICIPAL ABATEMENTS

 

  1. Galveston County will consider joining in approved municipal abatements for a term of up to seven (7) years upon application by the municipality to the Commissioners' Court.

  2. A certified copy of the municipal abatement application, and approved municipal agreement constitute application to Galveston County.

  3. Determination of County participation will be contingent upon the applicant meeting the eligibility criteria (Section 2) and definitions (Section 1) in these Guidelines and Criteria.

  4. Galveston County will participate in municipal abatement agreements through the vehicle of an amendment to the municipal abatement.

  5. The amendment to the municipal abatement will state the term of the County's participation and the proportion of value to be abated. Said term and proportion of value to be established as described in the municipal abatement insofar as the length of term does not exceed seven years.

  6. The amendment to the municipal abatement shall state the date upon which the abatement ends and the date that taxes shall be due and payable.

  7. The County will not approve any amendment to a municipal abatement agreement unless that agreement includes provisions considering the issues outlined in Sections 7, 8, 9 and 10 below.

Article III

Regarding County Initiated Abatements

SECTION 6: COUNTY ABATEMENTS

 

  1. Galveston County will consider the creation of a Tax Reinvestment Zone for the purposes of tax abatement in the unincorporated areas of the County.

  2. Determination of County participation will be contingent upon the applicant meeting the eligibility criteria (Section 2) and definitions (Section 1) in these Guidelines and Criteria.

  3. The total proportion of value to be abated shall be provided on the following schedule based on per cent of Galveston County hires:


 


 

Per Cent Galveston County Hires


 

Proportion of value

Allowable

0 - 05%

20%

06 - 15%

30%

16 - 25%

40%

26 - 35%

50%

36 - 45%

60%

46 - 55%

70%

56 - 66%

80%

66 - 75%

90%

76%+

100%

  1. In the event the Applicant plans the removal in whole or in part of existing improvements in connection with the construction of new eligible properties, tax abatement shall be reduced from the percentage level provided for herein. The percentage to be abated shall be found as follows:

  1. ascertain the appraised value of the improvements to be removed as of January 1, immediately preceding the date of the application.

  2. subtract said appraised value from the amount of the eligible properties to be constructed.

  3. divide the remainder by the said amount of eligible properties to be constructed to find the percentage of abatement of the value of such eligible properties and multiply that result by the total of allowed percentage abatement.

  1. Taxability. From the execution of the abatement to the end of the agreement period taxes shall be payable as follows:

  1. the value of ineligible property as provided in SECTION 2(g) shall be fully taxable;

  2. the base year value of existing eligible property as determined each year shall be fully taxable.

  3. the additional value of new eligible property shall be taxable in the manner described in SECTION 6 (d).

  1. Galveston County Employment. Where desired, applicant and his contractors may employ in the construction phase and afterwards in facility operations, supervisory and administrative personnel as deemed most suitable, wherever located. Preferential treatment shall be given to hiring operators and construction workers residing in Galveston County, not only in the construction phase of the facility, but also during operations thereafter.

  2. Galveston County Vendors. The applicant and his contractors shall make every effort to utilize the services of Galveston County vendors where applicable during construction and operations.

SECTION 7: APPLICATION

 

  1. Any owner of taxable property in Galveston County may request the designation of a reinvestment zone and a tax abatement agreement by filing a written application with the County of Galveston

  2. The application shall be signed by the owner accompanied by:

  1. a general 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 which will be a part of the facility;

  3. an estimate of the cost of the improvements;

  4. an estimate of the number of employees during construction, and thereafter, to operate the facility;

  5. a map, metes and bounds or other valid legal property description of the property proposed as a reinvestment zone;

  6. a time schedule for undertaking and complet­ing the planned improvements; and a proposed program for the recruitment of local employees in the construction and operation of the facility together with a statement affirming the applicants commitment to equal opportunity hiring, at all levels, and

  7. a plan to implement and ensure such hiring.

  8. an application fee of $1,000 to defray cost of administration and maintenance of these guidelines is required for projects in the unincorporated areas of the County.

  1. 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 preceding the application.

  2. The application shall provide such financial and other information as required by the County to enable it to evaluate the financial capacity of the applicant. In the case of an application based on job retention, the applicant shall include sufficient information to verify the potential of job loss that would occur without abatement.

  3. If the County intends to act favorably on the application and enter into an agreement, it shall do so in writing with the owner of the taxable real property located in an area designated as a reinvest­ment zone to exempt from taxation all of the increase in the value of the property over its value in the year in which the agreement is executed, subject to the provisions of SECTION 6 (d).

  4. The County may not enter into a tax abatement agreement unless it finds that the terms of the agreement and the property subject to the agreement meet the applicable provisions of these "Guidelines and Criteria". Not later than the seventh day before the date on which the County enters into such an agreement the County Judge, or an officer or employee of the County designated by him, shall deliver to the presiding officer of the governing body of each other taxing unit in which the property to be subject to the agreement is located a written notice that the County intends to enter into an agreement. The notice shall be placed in the mail, postage paid, properly addressed, and sent by certified mail with return receipt requested.

  5. A resolution designating an area as a reinvestment zone may not be adopted by the County until the Commissioners Court has held a public hearing on the designation.

    1. The County must find that the improve­ments sought are feasible and practical and would be a benefit to the land to be included in the zone and to the County after the agreement entered with the owner has expired.

    2. It also must be found that the area of the proposed reinvestment zone is reasonably likely as a result of the designation to contribute to the retention or expansion of primary employment or to attract major investment in the zone that would be a benefit to the property and would con­tribute to the economic development of the County.

    3. At the hearing, interested persons are entitled to speak and present evidence for or against the designation.

    4. Not later than the seventh day before the date of such hearing, notice of the hearing must be published in a newspaper having general circulation in Galveston County; and said notice shall be delivered in writing to the presiding officer of the governing body of each taxing unit that includes in its boundaries real property that is to be included in the proposed reinvestment zone.

    5. The notice shall be placed in the mail, postage paid, properly addressed, and sent by certified mail, return receipt requested.

    6. The County shall not establish a reinvestment zone for the purpose of tax abatement if it finds that the request for the abatement was filed after the commencement of construction, alteration, or installation of improvements related to a proposed modernization, expansion or new facility.

 

SECTION 8: AGREEMENT

After the hearing the Commissioners Court shall adopt a resolution finding: that the proposed agreement filed with the resolution, a copy of which is to be attached thereto, meets the applicable provisions of these "Guidelines and Criteria". The resolution shall also authorize the execution of the agreement with the owner, to include provisions for:

  1. The exemption from taxation of all the increases in value of the property, over its value in the year in which the agreement was executed for the period of time provided.

  2. A listing of the kind, number, and location of all proposed improve­ments of the property;

  3. Access to and inspection of property by County employees to ensure that the improvements or repairs are made according to the specifications and conditions of the agreement;

  4. Limiting the uses of the property consistent with the general purpose of encouraging development or redevelopment of the zone during the period that property tax exemptions are in effect;

  5. 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.

  6. A map showing proposed improvements and uses in the reinvestment zone.

  7. Total estimated cost of the improvements and employment estimates.

  8. The commencement date, the termination date of the tax abatement and the date taxes are first due the County.

  9. The nature of the construction, time schedule, property description and improvement list as provided in the application in accordance with SECTION 7(b) parts 1 through 8; and

  10. A provision that the agreement shall be effective when executed by all parties and upon the final passage of an ordinance designating the reinvestment zone.

  11. A provision that the applicant is required to file an annual report to the County describing the efforts of the applicant toward local hires and using local vendors and subsequent to completion, progress on construction.

SECTION 9: RECAPTURE

 

  1. In the event that the facility is completed and begins producing product or service, but subsequently discontinues producing product or service for any reason 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 the taxes for the calendar year during which the facility no longer produces. The taxes otherwise abated for that calendar year shall be paid to the affected jurisdiction and other taxing agencies within sixty days from the date of termina­tion.

  2. Should the County of Galveston determine that the company or individual is in default according to the terms and conditions of its agreement, the County shall notify the company or individual in writing at the address stated in the agreement, and if the default is not cured within sixty (60) days from the date of such notice ("Cure Period"), the agreement may be terminated.

  3. In the event that the company or individual (1) allows any ad valorem taxes owed the County of Galveston or affected jurisdictions 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 cure any default within the Cure Period, the agreement then may be terminated and all taxes previously abated by virtue of the agreement shall be recaptured and paid within sixty (60) days of the termination.


SECTION 10: ADMINISTRATION

 

  1. Each year, the company or individual receiving abatement shall furnish the Chief Appraiser of Galveston County with such information as may be necessary for the abatement. The Chief Appraiser will annually determine the assessment of the real and personal property comprising the reinvestment zone and notify the affected jurisdic­tions of the amount of the assessment.

  2. Upon completion of construction, the County shall annually evaluate each facility receiving abatement to insure compliance with the agreement.

SECTION 11: ASSIGNMENT

Tax 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 Commissioners Court, subject to the financial capacity of the assignee, and provided all conditions and obligations in the tax abatement agreement are guaranteed by the execution of a new contractual agreement with the County of Galveston. No assignment or transfer shall be approved if the parties to the existing agreement, the new owner or new lessee are liable to the County of Galveston or any affected jurisdiction or other taxing agency for outstanding taxes or other obligations. Approval shall not be unreasonably withheld.


 

SECTION 12: SUNSET PROVISION


 

These Guidelines and Criteria are effective for two years from the date adopted. During that period, the "Guidelines and Criteria" may be amended or repealed only by a vote of three-fourths of the members of the Commissioners Court.


 


 

SECTION 13: LEGAL NOTICE TO POTENTIAL APPLICANTS


 

The adoption of these guidelines and criteria by the County do not:

  1. Limit the discretion of the County to decide whether to enter into a specific tax abatement agreement;

  2. Limit the discretion of the County to delegate to its employee the authority to determine whether or not the County should consider a particular application or request for tax abatement; or

  3. Create any property, contract, or other legal rights in any person to have the County consider or grant a specific application or request for tax abatement.


 

UPON MOTION DULY MADE, SECONDED AND CARRIED, the above Resolution was unanimously passed on this the 20th day of December 2006.


 


 

GALVESTON COUNTY COMMISSIONERS COURT

THE COUNTY OF GALVESTON, TEXAS


 

___________________________________

JAMES D. YARBROUGH

County Judge

___________________________________

PATRICK DOYLE

Commissioner, Precinct 1


___________________________________

EDDIE JANEK

Commissioner, Precinct 2

___________________________________

STEPHEN D. HOLMES Commissioner, Precinct 3

 

__________________________________

KEN CLARK

Commissioner, Precinct 4

ATTEST:

______________________________

MARY ANN DAIGLE

County Clerk

Document History

_ WordPerfect 5.1

as created on August 10, 1996

and amended for the Commissioners' Court

modified December 19, 1996 prior to court

Approved at Court on December 19, 1996.

Amended for Commissioners' Court on October 5, 1998

Microsoft Word Document

October, 99 tax abatement guidelines

Adopted October 18, 1999

Reviewed for form and content Thursday, July 20, 2000

Adopted December 17th, 2001 and renamed \Guidelines2001.doc

Adopted January 22nd , 2004 and renamed Guidelines2004.doc

Open Office 2.0 Document

Adopted December 20th, 2006 and renamed Guidelines2006.doc


 


 

   

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