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Item 6A M E M O R A N D U M August 27, 2022 To: Shana Yelverton, City Manager From: Alison Ortowski, Assistant City Manager Subject: Item 6A: Ordinance No. 1262, 2nd Reading, an ordinance establishing Tax Abatement Reinvestment Zone No. 2 PUBLIC HEARING Action Requested: Approval of Ordinance No. 1262 as presented. Background Information: On April 29, 2022, per City Council direction, City Manager Shana Yelverton entered into a Memorandum of Understanding (MOU) with Carillon Parc Development Partners, LP whose purpose was to establish the mutually agreed upon terms of a future public investment agreement between the two entities for the commercial portion of the Carillon Parc development. In addition to establishing terms for public investment in public infrastructure, project enhancements, and public facilities , the provisions 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) a portion of the increase in the value of the Property for a period of 10 years or until Company has had a future defined amount of taxes abated; and (ii) a portion of the value of the tangible personal property that is brought on to the Property after the execution of the tax abatement agreement, for a period of 10 years or until Company has had a future defined amount of taxes abated for a period not to exceed 10 year.” In order to grant Carillon Parc Development Partners, LP 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 Item 6A: Ordinance No. 1262 City Council Meeting Date: September 6, 2022 Page 2 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.” The Carillon Parc project meets this requirement with its projected development investment and job creation numbers. Ordinance No. 1262 includes as Exhibit A a map showing the proposed boundary for the commercial portion of the Carillon Parc site which will serve as the boundaries for the zone. City Council approved this item on 1st Reading at the August 16, 2022 City Council meeting. Financial Considerations: The creation of this reinvestment zone with the approval of Ordinance No. 1262 does not financially obligate the City. However, it does enable the City to enter into a tax abatement agreement with Carillon Parc Development Partners, LP as agreed upon in the MOU. Final details related to the tax abatement and the resulting investment of public funds will be determined and finalized with the executed economic development agreement, expected to come before City Council for consideration later in the year. Strategic Link: C4 – Attract and keep top-tier businesses to drive a dynamic and sustainable economic environment. Citizen Input/ Board Review: The Community Enhancement and Development Corporation Board of Directors, in accordance with the procedure for investment consideration outlined in the City’s Public Investment Policy Statement, reviewed the request for public investment submitted by Carillon Parc Development Partners, LP and provided comment to the City Council as to alignment with the investment consideration criteria. Legal Review: The proposed ordinance was drafted 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 Item 6A: Ordinance No. 1262 City Council Meeting Date: September 6, 2022 Page 3 designation; however, without the reinvestment zone designation, the City cannot meet the terms of the MOU in a future negotiated economic development agreement. Supporting Documents: Ordinance No. 1262, including Exhibit A: Reinvestment Zone No. 2 description Staff Recommendation: Staff recommends approval of Ordinance No. 1262. ORDINANCE NO. 1262 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 AND RESIDENTIAL TAX ABATEMENT, TO BE KNOWN AS REINVESTMENT ZONE NO. 2; 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 and residential 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 5:30 p.m. on September 6, 2022, 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. 2; 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. 2, 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. 2 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. 2; and (b) That the boundaries of Reinvestment Zone No. 2 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. 2 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. 2 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. 2 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 and residential 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. 2”. SECTION 4 Reinvestment Zone No. 2 shall take effect immediately upon passage of this ordinance. Reinvestment Zone No. 2 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 16th day of August, 2022. ___________________________________ John Huffman, Mayor ATTEST: ___________________________________ Amy Shelley, City Secretary PASSED AND APPROVED ON SECOND READING this 6th day of September, 2022. ___________________________________ John Huffman, Mayor ATTEST: __________________________________ Amy Shelley, City Secretary EFFECTIVE:_______________________ APPROVED AS TO FORM AND LEGALITY: _________________________________ City Attorney Exhibit A Reinvestment Zone No. 2 City of Southlake, Texas A portion of Carillon Parc, being a portion of Tract 1, Tracts 1D, 1E, 3A, 3A01, 3A03, 3A04, 3A04A, 3A05, and 3A01B, Larkin H. Chavers Survey, Abstract No. 300, City of Southlake, Tarrant County, Texas and located south of E. Kirkwood Blvd, along the east boundary of N. White Chapel Blvd., the west bou ndary of Riviera Ln. and the north boundary of E. SH 114.