Loading...
Item 6E CITY OF SOUTHLAKE MEMORANDUM May 10, 2016 To: Shana Yelverton, City Manager From: Alison Ortowski, Assistant City Manager Subject: Item 6E: Approve Ordinance No. 1151, 2nd Reading, establishing a Tax Abatement Reinvestment Zone in the City of Southlake, Texas as authorized by the Property Redevelopment and Tax Abatement Act, Chapter 312 of the Texas Tax Code. Action Requested: Approval of Ordinance No. 1151 as presented. Background Information: On September 1, 2015, the City Council directed City Manager Shana Yelverton to enter into a Memorandum of Understanding (MOU) with TD Ameritrade whose purpose was to establish the mutually-agreed upon terms of a potential future incentive agreement between the two entities. In addition to establishing infrastructure cost participation on roadway, water and sewer line construction, the terms of that MOU also included the following: "The parties desire to enter into an ad valorem tax abatement agreement pursuant to Chapter 312 of the Texas Tax Code to exempt from taxation: (i) up to 90% of the increase in the value of the Property for a period not to exceed 10 years; and (ii) up to 90% of the value of tangible personal property that is brought onto the Property after the execution of the tax abatement agreement, for a period not to exceed 10 years." In order to grant TD Ameritrade this tax abatement, the City must adopt an ordinance designating a reinvestment zone that meets the criteria for the creation of a tax abatement reinvestment zone as set forth in Section 312.202(a) of the Texas Tax Code, as amended, and in particular Section 312.202(a)(6) of the Texas Tax Code, in that it is "reasonably likely as a result of the designation to contribute to the City of Southlake Values.- Integrity alues.Integrity ♦ Innovation ♦ Accountability ♦ Commitment to Excellence ♦ Teamwork Item 6E: Ordinance No. 1151; City Council Meeting Date — May 17, 2016 Page 2 of 9 retention or expansion of primary employment or to attract major investment in the zone that would be a benefit to the property and that would contribute to the economic development of the City." The TD Ameritrade project meets this requirement with its projected development investment and job creation numbers. Ordinance No. 1151 includes as Exhibit A the plat and legal description for the TD Ameritrade site which will serve as the boundaries for the zone. City Council approved this item on 1St Reading at the May 3, 2016 meeting. Strategic Link: C4 Attract & keep top-tier businesses to drive a dynamic & sustainable economic environment Financial Considerations: The creation of this reinvestment zone does not financially obligate the City. However, it does enable the City to enter into a tax abatement agreement with TD Ameritrade as agreed upon in the MOU. The agreement will be structured to provide TD Ameritrade with a ten-year, 90% tax abatement for ad valorem and business personal property taxes. It is estimated that the value of this abatement is approximately $7.8 million. The current annual benefit the City receives from the vacant land is approximately $20,000. The annual benefit to the City during the abatement period is estimated to be $298,263, which means that the annual revenue to the City will increase an estimated $278,263 during ten year abatement period. Following termination of the abatement, the annual benefit to the City is estimated to increase, on average, to $1,242,029. Legal Review: The proposed ordinance was reviewed and approved by the City Attorney. Alternatives: As the form and content of the designation of a reinvestment zone is prescribed by Chapter 312 of the Texas Tax Code, there is very little alternative to approving the ordinance as proposed. Council can choose to not approve the designation; however, without the designation, the City cannot meet the terms of the MOU. City of Southlake Values.- Integrity alues.Integrity ♦ Innovation ♦ Accountability ♦ Commitment to Excellence ♦ Teamwork Item 6E: Ordinance No. 1151; City Council Meeting Date — May 17, 2016 Page 3 of 9 Supporting Documents: Ordinance No. 1151 City of Southlake Values.- Integrity alues.Integrity ♦ Innovation ♦ Accountability ♦ Commitment to Excellence ♦ Teamwork ORDINANCE NO. 1151 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS, DESIGNATING A CERTAIN AREA AS A TAX ABATEMENT REINVESTMENT ZONE FOR COMMERCIAL-INDUSTRIAL TAX ABATEMENT, TO BE KNOWN AS REINVESTMENT ZONE NO. 1; ESTABLISHING THE BOUNDARIES THEREOF AND OTHER MATTERS RELATED THERETO; PROVIDING A SEVERABILITY CLAUSE; PROVIDING A CUMULATIVE CLAUSE; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Southlake, Texas (hereinafter referred to as the "City") desires to promote the development or redevelopment of a certain contiguous geographic area within the City of Southlake, Texas, by the creation of a reinvestment zone for commercial-industrial tax abatement, as authorized by Chapter 312 of the Texas Tax Code, as amended; and WHEREAS, a public hearing before the City Council of the City of Southlake, Texas, was scheduled and held at p.m. on May 17, 2016, such date being at least seven (7) days after the date of publication of the notice of such public hearing, pursuant to Section 312.201(d) of the Texas Tax Code, as amended; and WHEREAS, the City Council of the City of Southlake, Texas, held such public hearing after publishing notice of such public hearing, and giving written notice to all taxing units overlapping the territory inside the proposed Reinvestment Zone No. 1; and WHEREAS, the City at such public hearing invited any interested person to appear and speak for or against the creation of Reinvestment Zone No. 1 , the boundaries of the zone, whether all or part of the territory should be included in such proposed zone, and the concept of tax abatement. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS, THAT: SECTION 1 The findings set forth above are incorporated into the body of this ordinance as if fully set forth herein. SECTION 2 The City, after conducting such public hearing and having heard such evidence and testimony has made the following findings and determinations based upon the testimony presented: (a) That a public hearing on the adoption of Reinvestment Zone No. 1 has been properly called, held and conducted, and that notice of such hearing has been published as required by law and mailed to all property taxing units overlapping the territory inside the proposed Reinvestment Zone No. 1; and (b) That the boundaries of Reinvestment Zone No. 1 should be the area as described and/or depicted in Exhibit A, which is attached hereto and incorporated herein for all purposes; and (c) That creation of Reinvestment Zone No. 1 will result in benefits to the City and to the land included within the zone, and the improvements sought are feasible and practical; and (d) That Reinvestment Zone No. 1 meets the criteria for the creation of a tax abatement reinvestment zone as set forth in Section 312.202(a) of the Texas Tax Code, as amended, and in particular Section 312.202(a)(6) of the Texas Tax Code, in that it 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 that would contribute to the economic development of the City"; and (e) That Reinvestment Zone No. 1 as described an/or depicted in Exhibit A meets the criteria for the creation of a reinvestment zone as set forth in the City of Southlake, Texas, Tax Abatement Guidelines and Criteria; and (f) That the improvements proposed for the Reinvestment Zone are feasible and practical and would be a benefit to the land to be included in the zone and to the City after the expiration of any tax abatement agreement. SECTION 3 Pursuant to Section 312.201 of the Texas Tax Code, as amended, the City hereby creates a tax abatement reinvestment zone for commercial-industrial tax abatement encompassing only the area described and/or depicted in Exhibit A, and such zone is hereby designated, and for identification shall be known as "Reinvestment Zone No. 1". SECTION 4 Reinvestment Zone No. 1 shall take effect immediately upon passage of this ordinance. Reinvestment Zone No. 1 is effective for five (5) years and may be renewed for periods not to exceed five (5) years. SECTION 5 This ordinance shall be cumulative of all provisions of ordinances and of the Code of Ordinances of the City of Southlake, Texas, as amended, except where the provisions of this ordinance are in direct conflict with the provisions of such ordinances and such Code, in which event the conflicting provisions of such ordinances and such Code are hereby repealed. SECTION 6 Should any sentence, paragraph, subdivision, clause, phrase or section of this ordinance be adjudged or held to be unconstitutional, illegal or invalid, the same shall not affect/ the validity of this ordinance as a whole, or any part or provision thereof other than the part so decided to be invalid, illegal or unconstitutional, and shall not affect the validity of the Code of Ordinances as a whole. SECTION 7 The City Secretary of the City of Southlake is hereby directed to publish this ordinance to the extent required by law. SECTION 8 This ordinance shall take effect immediately from and after its passage and approval, and it is so ordained. PASSED AND APPROVED ON FIRST READING this 3rd day of May, 2016. Laura Hill Mayor ATTEST: Lori Payne, TRMC City Secretary PASSED AND APPROVED ON SECOND READING this 17th day of May, 2016. Laura Hill Mayor ATTEST: Lori Payne, TRMC City Secretary EFFECTIVE: APPROVED AS TO FORM AND LEGALITY: City Attorney Exhibit A Legal Description Reinvestment Zone No. 1 City of Southlake, Texas clb } ti l �\ l , S�✓�Jdcy l L ` _ � 1 <, cv, �t U rL O a � C� o CL CL � � � � 4}ca N 00 `Q l � � 1 O l 1 - 1