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Item 4UCITY OF SOUTHLAKE MEMORANDUM May 15, 2014 To: Shana Yelverton, City Manager From: Sharen Jackson, Chief Financial Officer Subject: Resolution No. 14-024, extending the number of days that aircraft parts are exempt from ad valorem taxation under Section 11.251 of the Texas Tax Code Action Requested: Consider Resolution No. 14-024 Background Information: During the 83rd Texas Legislative Session, House Bill 3121 was approved to permit taxing entities to extend the number of days that aircraft parts are exempt from ad valorem taxation. This legislation implemented a constitutional amendment (Proposition 3-HJR 133). On October 15, 2013, City Council approved Resolution No. 13- 040 in support of the passage of Proposition 3-HJR 133. Pursuant to Section 3.003 of the Texas Election Code, Governor Rick Perry ordered a special election to be held throughout the State of Texas on November 5, 2013 to consider the proposed constitutional amendments. Proposition 3-HJR 133 was approved by the eligible voters in the State of Texas to permit taxing entities to extend the number of days that aircraft parts are exempt from ad valorem taxation. Currently, merchandise, wares, and goods (including aircraft parts) may remain in the state temporarily for up to 175 days before being subject to ad valorem taxation. Approval of Resolution 14-024 would extend the exemption up to 730 days after the date that a person acquired or imported aircraft parts in the state. Financial Considerations: Currently, the City of Southlake could see a reduction, minimum if any, in tax revenue. Strategic Link: C4 Attract & keep top -tier businesses to drive a dynamic & sustainable economic environment Citizen Input/ Board Review: Non -applicable Legal Review: City Attorney reviewed Resolution 14-024 Alternatives: Deny and continue with 175 days exemption for aircraft parts Supporting Documents: Resolution No. 14-024 Staff Recommendation: Consider Resolution No. 14-024 RESOLUTION NO. 14-024 A RESOLUTION OF THE CITY OF SOUTHLAKE EXTENDING THE NUMBER OF DAYS THAT AIRCRAFT PARTS ARE EXEMPT FROM AD VALOREM TAXATION UNDER SECTION 11.251 OF THE TEXAS TAX CODE; AND PROVIDING A REPEALER CLAUSE; PROVIDING A SEVERABILITY CLAUSE. WHEREAS, the Texas Legislature in the 83rd Legislative Session approved House Bill 3121, which was subsequently approved by the eligible voters of the State of Texas to permit taxing entities to extend the number of days that aircraft parts are exempt from ad valorem taxation; and, WHEREAS, Section 11.251(I) of the Texas Tax Code provided that municipalities, may in the manner required for official action by the governing body, may extend the tax exemption up to 730 days after the date that a person acquired or imported aircraft parts in the state; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS SECTION 1. The findings set forth above are incorporated into the body of this Resolution as if fully set forth herein. SECTION 2. The City Council of Southlake, Texas hereby extends the number of days that aircraft parts are exempt from ad valorem taxation up to 730 days as provided by Texas Tax Code §11.251, and are hereby declared to be exempt for tax year 2014 and for every year thereafter, all as provided for and in accordance with Texas Tax Code §11.251. SECTION 3. It is hereby declared to be the intention of the City Council that the phrases, clauses, sentences, paragraphs and sections of this resolution are severable, and if any phrase, clause, sentence, paragraph or section of this resolution 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 resolution, since the same Page 1 would have been enacted by the City Council without the incorporation of this resolution of any such unconstitutional phrase, clause, sentence, paragraph or section. SECTION 4. This resolution is hereby effective upon passage and approval by the City Council. PASSED AND APPROVED ON THE 20TH DAY OF MAY 2014. John Terrell Mayor ATTEST: Alicia Richardson, TRMC City Secretary Page 2