Item 6ACity of Southlake, Texas
M E M O R A N D U M
TO: Shana Yelverton, City Manager
FROM: Sharen Jackson, Director of Finance
AN ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS, PROVIDING
SUBJECT:
FOR THE TAXATION OF GOODS-IN-TRANSIT EXEMPT UNDER
SECTION 11.253 OF THE TEXAS TAX CODE; PROVIDING A REPEALER
CLAUSE; PROVIDING A SEVERABILITY CLAUSE; AND PROVIDING FOR
SAID ORDINANCE TO TAKE IMMEDIATE EFFECT.
__________________________________________________________________________
Action Requested:
Approval of Ordinance No. 919 providing for the taxation of goods-in-transit
exempt under Section 11.253 of the Texas Tax Code.
Background
Information:
In 2001, the Texas Legislature approved Senate Joint Resolution 6, which was
subsequently approved by the eligible voters of the State of Texas authorizing
a “super freeport” property tax exemption for certain tangible personal
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property. The 80 Legislative Session approved House Bill 621 “HB 621” as
the enabling statue for the super freeport property tax exemption approved by
the voters in 2001. Super Freeport is a property tax exemption for goods that
reside temporarily in warehouses within a city while awaiting shipment to
other locations within or outside of Texas (as contrasted with the current-law
Freeport exemption, which covers only goods shipped outside of Texas).
The super freeport exemption is best described as a local option property tax
exemption of the “opt-out” variety. The exemption automatically applies to a
unlessno later than
citythe city does each of the following two things
December 31, 2007
: (1) holds a hearing at which members of the public are
allowed to speak for or against the taxation of super Freeport goods; and (2)
adopts an ordinance stating it wishes to continue taxing super Freeport goods
for tax year 2008. The hearing must take place prior to the adoption of such
ordinance.
Financial
Considerations:
Estimated annual loss of revenue $130,000.
Citizen Input/
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Board Review:
Public Hearing is scheduled for November 6 and 20, 2007.
Legal Review:
City attorney reviewed the attached ordinance.
Alternatives:
Deny
Supporting
Documents:
Ordinance No. 919
Staff
Recommendation:
Approval of Ordinance No. 919
ORDINANCE 919
AN ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS,
PROVIDING FOR THE TAXATION OF GOODS-IN-TRANSIT
EXEMPT UNDER SECTION 11.253 OF THE TEXAS TAX CODE;
PROVIDING A REPEALER CLAUSE; PROVIDING A
SEVERABILITY CLAUSE; AND PROVIDING FOR SAID
ORDINANCE TO TAKE IMMEDIATE EFFECT.
WHEREAS,
in 2001, the Texas Legislature approved Senate Joint
Resolution 6, which was subsequently approved by the eligible voters of the
State of Texas authorizing a “super freeport” property tax exemption for certain
tangible personal property; and
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WHEREAS,
the Texas Legislature in the 80 Legislative Session
approved House Bill 621 (hereinafter referred to as “HB 621”), as the enabling
statute for the “super freeport” property tax exemption approved by the voters in
2001; and
WHEREAS,
HB 621 adds section 11.253 to the Texas Tax Code and
exempts from property taxes any tangible personal property (other than oil and
gas, aircraft, dealer’s motor vehicle inventory, dealer’s boat inventory, dealer’s
heavy equipment inventory, and retail manufactured housing) that is located at a
site for less than 175 days and is not under the control of the property owner; and
WHEREAS,
Section 11.253(j) of the Texas Tax Code provides that the
City Council of the City of Southlake, Texas, may in the manner required for
official action by the governing body, provide for the taxation of goods-in-transit
exempt provided for pursuant to Section 11.253(b) of the Texas Tax Code, and
not exempt under other law. Moreover, the official action to tax the goods-in-
transit must be taken before January 1 of the first tax year in which the City
Council of the City of Southlake, Texas, proposes to tax goods-in-transit; and
WHEREAS,
Section 11.253(j) of the Texas Tax Code also provides that
“before acting to tax the exempt property, the governing body of the taxing unit
must conduct a public hearing as required by Section 1-n(d), Article VIII, Texas
Constitution. If the governing body of a taxing unit provides for the taxation of the
goods-in-transit as provided by this subsection, the exemption prescribed by
Subsection (b) does not apply to that unit. The goods-in-transit remain subject to
taxation by the taxing unit until the governing body of the taxing unit, in the
manner required for official action, rescinds or repeals its previous action to tax
goods-in-transit, or otherwise determines that the exemption prescribed by
Subsection (b) will apply to that taxing unit”; and
WHEREAS,
Section 11.253 (j) of the Texas Tax Code also provides that
a decision to continue taxing super freeport goods can be reversed for a future
tax year; and
WHEREAS,
the City Council of the City of Southlake, Texas, held a
public hearing prior to the passage of this Ordinance, consistent with HB 621 and
Section 11.253 of the Texas Tax Code; and
WHEREAS,
the City Council of the City of Southlake, Texas, find and
determines that the super freeport exemption as authorized by Section 11.253 of
the Texas Tax Code is not in the best interest of the City of Southlake, Texas.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF SOUTHLAKE, TEXAS:
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 Council of Southlake, Texas hereby provides
for the taxation of goods-in-transit which would otherwise be exempt under
Subchapter B, Chapter 11, Section 11.253(b), Tax Code and which are not
exempt under other law.
SECTION 3.
It is hereby declared to be the intention of the City
Council that the phrases, clauses, sentences, paragraphs and sections of this
ordinance are severable, and if any phrase, clause, sentence, paragraph or
section of this ordinance shall be declared unconstitutional by the valid judgment
or decree of any court of competent jurisdiction, such unconstitutionality shall not
affect any of the remaining phrases, clauses, sentences, paragraphs and
sections of this ordinance, since the same would have been enacted by the City
Council without the incorporation of this ordinance of any such unconstitutional
phrase, clause, sentence, paragraph or section.
SECTION 4.
Any provision of any prior ordinance of the City
whether codified or unmodified, which are in conflict with any provision of the
Ordinance, are hereby repealed to the extent of the conflict, but all other
provisions of the ordinances of the City whether codified or uncodifided, which
are not in conflict with the provisions of this Ordinance, shall remain in full force
and effect.
SECTION 5.
This Ordinance shall take effect immediately from and
after its passage and the publication of the caption, as the law in such cases
provides.
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PASSED AND APPROVED ON FIRST READING ON THE 6 DAY OF
NOVEMBER, 2007.
__________________________
MAYOR
ATTEST
__________________________
CITY SECRETARY
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PASSED AND APPROVED ON SECOND READING ON THE 20 DAY OF
NOVEMBER, 2007.
__________________________
MAYOR
ATTEST
__________________________
CITY SECRETARY
APPROVED AS TO FORM
_____________________________
CITY ATTORNEY
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