Item 4BCity of Southlake Values:
Integrity ♦ Innovation ♦ Accountability ♦ Commitment to Excellence ♦ Teamwork
M E M O R A N D U M
March 27, 2018
To: Shana Yelverton, City Manager
From: Alison Ortowski, Assistant City Manager
Subject: Item 4B: Approve Resolution No. 18-011, adopting a tax
abatement policy; establishing guidelines and criteria for tax
abatement agreements; and, electing to continue eligibility to
participate in tax abatement.
Ac tion
Requested: Approval of Resolution No. 18-011 as presented.
Background
Information: In order to grant tax abatements, Chapter 312 of the Texas
Tax Code specifies that the City must adopt a tax
abatement policy that identifies conditions that any tax
abatement applicant must meet in order to be eligible for
abatement. The terms of the policy are at the discretion of
the City and can be specific or general but must provide for
“the availability of tax abatement for both new facilities and
structures and for the expansion or modernization of
existing facilities and structures.” Once adopted, the policy is
effective for 2 years. It may be amended or repealed during
that 2 year period only by a vote of 3/4 of the members of
the city council.
The City Council adopted Resolution No. 16-019 on May 3,
2016, establishing a tax abatement policy for the City of
Southlake. That policy was effective for two years, which is
the maximum term allowed by law and identified the following
terms:
1. New Facilities or Structures: The project must be
reasonably expected to produce a minimum added value
of Thirty Million Dollars ($30,000,000) in real and personal
property improvements within the City and create a
minimum of 1,000 full-time jobs, with an average annual
total compensation of $60,000; and,
Item 4B: Resolution No. 18-011; City Council Meeting Date – April 3, 2018
Page 2 of 7
City of Southlake Values: Integrity ♦ Innovation ♦ Accountability ♦ Commitment to Excellence ♦ Teamwork
2. Expansion or Modernization of Existing Facilities or
Structures: The project must be reasonably expected to
produce a minimum added value of Ten Million Dollars
($10,000,000) in real and personal property
improvements within the City of Southlake, and create a
minimum of 500 new full-time jobs with an average
annual total compensation of $50,000.
Additionally, the policy specifies in Section XIII. Expiration
and Guidelines, “This Policy is effective upon the date of its
adoption and will remain in force for two years, at which time
all reinvestment zones and tax abatement contracts created
pursuant to its provisions will be reviewed by the City Council
of Southlake to determine whether the goals of the
abatement program have been achieved.”
The City currently has one active tax abatement agreement
with TD Ameritrade which was approved by the City Council
in 2017. As the facility just became occupied late last year,
the first year of eligibility for tax abatement will not begin until
2018. Staff will conduct a review of eligibility for abatement in
FY 2019 following the close of the 2018 tax year and will
report at that time to City Council per the review provisions of
the tax abatement policy.
In order to preserve the C ity’s options as they related to
public investment considerations and the abi lity to negotiate
with desirable prospects, this item proposes a renewal of the
policy under the same terms and conditions as the one
adopted in 2016.
Strategic Link: C4 Attract & keep top-tier businesses to drive a dynamic &
sustainable economic environment
Citizen Input/
Board Review : N/A
Financial
Considerations: The minimum added value amounts identified in the policy
have been determined by the City’s Chief Financial Officer
Sharen Jackson who has indicated that these amounts
should generate a return sufficient to warrant public
Item 4B: Resolution No. 18-011; City Council Meeting Date – April 3, 2018
Page 3 of 7
City of Southlake Values: Integrity ♦ Innovation ♦ Accountability ♦ Commitment to Excellence ♦ Teamwork
investment.
In addition, it is important to note that the policy does not
commit the City to granting an abatement simply because
one has been requested. The granting of an abatement
remains solely at the discretion of the City Council.
Legal Review : The proposed policy was reviewed and approved by the City
Attorney.
Al ternati ves: Approve Resolution No. 18-011 with amendments or direct
staff to revise the policy and return for City Council
consideration at a future meeting
Supporting
Documents: Resolution No. 18-011
RESOLUTION NO. 18-011
A RESOLUTION OF THE CITY OF SOUTHLAKE, TEX AS, ADOPTING A
TAX AB ATEMENT POLICY; ESTABLISHING GUIDELINES AND
CRITERI A FOR T AX AB ATEMENT AGREEMENTS; ELECTING TO
CONTINUE ELIGIBILITY TO P ARTICIP ATE IN TAX AB ATEMENT; AND
PROVIDING AN EFFECTIVE DATE.
WHEREAS, the future economic viability of the City of Southlake depends on the
ability to attract new investments through the location of new businesses and the
expansion and modernization of existing businesses; and
WHEREAS, the City Council has determined that the creation and retention of
job opportunities that result from new economic development is in the best interest of
the City of Southlake; and
WHEREAS, the establishment of economic development incentives such as tax
abatements may encourage enhancement of the local economy; and
WHEREAS, the City Council wishes to adopt new guidelines and criteria
governing tax abatement agreements; and
WHEREAS, the guidelines and criteria adopted herein authorize tax abatement
for both new facilities and structures and for the expansion or modernization of exis ting
facilities and structures.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SOUTHLAKE, TEX AS, TH AT:
SECTION 1)
The City Council does hereby adopt a Tax Abatement Policy, attached hereto as
Exhibit A and incorporated herein for all purposes. This Tax Abatement Policy shall
govern all tax abatement matters considered by the City from and after the date of this
Resolution, until said policy expires or is repealed or amended as provided by law.
SECTION 2)
The Tax Abatement Policy is effective for two (2) years from the date of adoption.
During that period, the Tax Abatement Policy may be amended or repealed only by a
vote of 3/4 of the members of the City Council. Said Tax Abatement Policy is intended
as a guide for use in developing tax abatement programs and agreements under the
provisions of Chapter 312 of the Texas Tax Code.
SECTION 3)
The City of Southlake intends to consider providing tax abatements and hereby
elects to become eligible to participate in tax abatement.
SECTION 4)
The adoption of the Tax Abatement Policy and the City’s election to become
eligible to participate in tax abatement as provided herein shall not be construed to
require the City of Southlake to approve any proposed tax abatement agreement which
meets the requirements of the policy. Tax abatements shall be reviewed on a case by
case basis and shall be granted only where the City Council determines in its sole
discretion that the tax abatement is in the best interest of the citizens of Southlake.
SECTION 5)
This Resolution shall become effective upon passage.
PASSED AND APPROVED this the 3rd day of April, 2018.
Laura Hill
Mayor
ATTEST:
Carol Borges, TRMC
City Secretary
EXHIBIT A
CITY OF SOUTHLAKE TAX
ABATEMENT POLICY
I. GENERAL PURPOSE AND OBJECTIVES
The City of Southlake is committed to the attraction of high quality development in all parts of
City to expand and diversify the tax base and to provide for ongoing improvement in the
quality of life for its residential and corporate citizens. Insofar as these objectives are
generally served by the enhancement and expansion of the local economy, the City will, on a
case-by-case basis, give consideration to providing tax abatements as a stimulus for
economic development in Southlake. It is the policy of the City that said consideration will be
provided in accordance with the procedures and criteria outlined in this document. Nothing
herein shall imply or suggest that the City is under any obligation to provide tax abatements
or other f inancial incentives to any applicant.
II. APPLICABILITY
This tax abatement policy (“Policy”) establishes guidelines and criteria for tax abatement
programs and agreements under the provisions of Chapter 312 of the Texas Tax Code.
III. GUIDELINES AND CRITERIA
A. Any consideration f or tax abatement shall be reviewed by the City Council of the City of
Southlake. The City Council shall consider tax abatements for new construction, whether it is
(1) new f acilities or structures or (2) the expansion or modernization of existing facilities or
structures.
B. Specific considerations will include the degree to which the individual project furthers
the goals and objectives of the community as described in the City of Southlake Economic
Development Comprehensive Plan, as well as the relative impact on growth, employment,
expansion of the tax base, and economic development.
C. The City of Southlake may offer real and/or business personal property tax abatements
for qualif ying projects that meet the thresholds listed as follows:
1. New Facilities or Structures: The project must be reasonably expected to produce a
minimum added value of Thirty Million Dollars ($30,000,000) in real and personal property
improvements within the City and create a minimum of 1,000 full-time jobs, with an average
annual total compensation of $60,000.
2. Expansion or Modernization of Existing Facilities or Structures: The project must be
reasonably expected to produce a minimum added value of Ten Million Dollars ($10,000,000)
in real and personal property improvements within the City of Southlake, and create a
minimum of 500 new full-time jobs with an average annual total compensation of $50,000.
The thresholds as described above are considered guidelines for establishing the tax
abatement agreement terms. The City will determine amount and term of abatement for each
individual project, and nothing herein shall imply or suggest that the City is under any
obligation to provide an abatement or financial incentives to any applicant or project.
IV. EXCEPTIONS
In order to encourage the retention and/or expansion of existing business, or attract
businesses which satisfy a community goal or objective, or meet a special need of the
community, the City Council may, on a case-by-case basis, recommend an incentive which
may not comply with the values and terms contained within this Policy.
V. APPROV AL
All applicants are considered on a case-by-case basis and all abatements are subject to final
approval of the City Council. Even though a project may meet the criteria as set forth in this
Policy, an application may be denied at the sole discretion of the City.
XI. PERFORMANCE
All tax abatements provided to an applicant are performance-based. Should a project granted
tax abatement not satisfy the terms of the agreement, the City Council may terminate the
agreement and pursue all remedies available in the agreement.
XII. ANNUAL EVALUATION
Upon completion of construction, the City shall perform an annual evaluation of each
abatement agreement to ensure compliance with the agreement.
XIII. EXPIRATION AND GUIDELINES
This Policy is effective upon the date of its adoption and will remain in force for two years, at
which time all reinvestment zones and tax abatement contracts created pursuant to its
provisions will be reviewed by the City Council of Southlake to determine whether the goals
of the abatement program have been achieved. Based upon that review, the Policy may be
modified, renewed or eliminated. Prior to the date for review, as defined above, this Policy
may be modified by a three -fourths vote of the City Council, as provided for in Chapter 312 of
the Texas Tax Code.