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Information for Applicants about Galveston County and Tax Abatements
for the Citizens of Galveston County
Tax Increment Reinvestment Zones
Guidelines and Criteria
Tax Abatement in Reinvestment Zones
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
YARBROUGH, County Judge;
Commissioner, Precinct 1;
Commissioner, Precinct 2;
HOLMES, Commissioner, Precinct 3;
Commissioner, Precinct 4; and,
DAIGLE, County Clerk
following proceedings, among others, were had, to-wit:
creation and retention of job opportunities that bring new wealth is of
the highest civic priority; and
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
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
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
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
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
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.
the following Guidelines and Criteria for granting tax abatement in
reinvestment zones designated within the County are hereby promulgated.
"Abatement" means the full or partial exemption from ad valorem
taxes of certain real property in a reinvestment zone designated for
economic development purposes.
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.
"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.
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.
maintenance" means improvements necessary for continued operations
which do not improve productivity or alter the process technology.
"Expansion" means the addition of buildings, structures, machinery,
or equipment for purposes of increasing production capacity.
means property improvements completed or in the process of
construction which together comprise an integral whole.
"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.
"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
Facility" means a property previously undeveloped which is placed
into service by means other than or in conjunction with expansion or
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.
"Productive Life" means the number of years a property improvement
is expected to be in service in a facility.
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.
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
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.
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
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" means Galveston County and neighboring counties.
Vendor” means any business organization for which sales taxes
collected benefit a municipality located wholly or partially in
Relocations” means moving a business within the current Local
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.
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.
Existing Facilities. Tax abatement may be granted for new facilities
and improvements to existing facilities for purposes of
modernization or expansion.
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
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.
expenditure for the construction and addition of eligible, taxable
property must exceed $3,000,000.
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.
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.
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.
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.
Property. The following types of property shall be fully taxable and
ineligible for tax abatement:
Property on which back taxes to Galveston County
Furnishings and other forms of movable personal
Deferred maintenance investments
Property to be rented or leased except as
provided in SECTION 2(h) or as defined under
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
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
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.
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.
Applicant agrees to allow access to books and records related to the
facts of this application by the Galveston County Auditor.
3: OBJECTIONS TO THE ABATEMENT
reinvestment zone can be created nor a tax abatement agreement
authorized if it is determined that:
would be a substantial adverse affect on the provisions of
government service or tax base;
applicant has insufficient financial capacity;
planned or potential use of the property would constitute a
hazard to public safety, health or morals; or,
violation of laws of the United States or State of Texas or
policies of Galveston County would occur.
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.
Commissioners Court shall make the determination of objection, if
any, provided for in this section.
TERM OF 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
to Joining Approved Municipal Agreements
SECTION 5: JOINING MUNICIPAL ABATEMENTS
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.
certified copy of the municipal abatement application, and approved
municipal agreement constitute application to Galveston County.
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.
County will participate in municipal abatement agreements through
the vehicle of an amendment to the municipal abatement.
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.
amendment to the municipal abatement shall state the date upon which
the abatement ends and the date that taxes shall be due and payable.
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.
County Initiated Abatements
SECTION 6: COUNTY ABATEMENTS
County will consider the creation of a Tax Reinvestment Zone for the
purposes of tax abatement in the unincorporated areas of the County.
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.
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
0 - 05%
06 - 15%
16 - 25%
26 - 35%
36 - 45%
46 - 55%
56 - 66%
66 - 75%
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:
ascertain the appraised value of the improvements to be removed
as of January 1, immediately preceding the date of the
subtract said appraised value from the amount of the eligible
properties to be constructed.
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.
Taxability. From the execution of the abatement to the end of the
agreement period taxes shall be payable as follows:
value of ineligible property as provided in SECTION 2(g) shall
be fully taxable;
base year value of existing eligible property as determined each
year shall be fully taxable.
additional value of new eligible property shall be taxable in
the manner described in SECTION 6 (d).
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.
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.
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
application shall be signed by the owner accompanied by:
general description of the proposed use and the general nature
and extent of the modernization, expansion or new improvements
to be undertaken;
descriptive list of the improvements which will be a part of the
estimate of the cost of the improvements;
estimate of the number of employees during construction, and
thereafter, to operate the facility;
metes and bounds or other valid legal property description of
the property proposed as a reinvestment zone;
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
to implement and ensure such hiring.
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.
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.
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.
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).
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.
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.
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.
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.
the hearing, interested persons are entitled to speak and
present evidence for or against the designation.
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.
The notice shall be placed in the mail, postage paid,
properly addressed, and sent by certified mail, return
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
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:
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.
of the kind, number, and location of all proposed improvements of
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;
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;
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.
showing proposed improvements and uses in the reinvestment zone.
estimated cost of the improvements and employment estimates.
commencement date, the termination date of the tax abatement and the
date taxes are first due the County.
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
provision that the agreement shall be effective when executed by all
parties and upon the final passage of an ordinance designating the
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
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.
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.
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
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.
completion of construction, the County shall annually evaluate each
facility receiving abatement to insure compliance with the
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.
12: SUNSET PROVISION
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.
LEGAL NOTICE TO POTENTIAL APPLICANTS
of these guidelines and criteria by the County do not:
discretion of the County to decide whether to enter into a specific
tax abatement agreement;
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
property, contract, or other legal rights in any person to have the
County consider or grant a specific application or request for tax
DULY MADE, SECONDED AND CARRIED, the above Resolution was unanimously
passed on this the 20th day of December 2006.
COUNTY COMMISSIONERS COURT
THE COUNTY OF
HOLMES Commissioner, Precinct 3
as created on
August 10, 1996
for the Commissioners' Court
December 19, 1996 prior to court
Court on December 19, 1996.
Commissioners' Court on October 5, 1998
tax abatement guidelines
October 18, 1999
form and content Thursday, July 20, 2000
December 17th, 2001 and renamed \Guidelines2001.doc
Adopted January 22nd ,
2004 and renamed Guidelines2004.doc
Open Office 2.0 Document
20th, 2006 and renamed Guidelines2006.doc