2006-09-11 CITY COUNCIL PUBLIC HEARING MEETING MINUTESPUBLIC HEARING OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS,
HELD ON SEPTEMBER 11, 2006, AT 6:30 P.M. IN THE COUNCIL CHAMBERS, CITY
HALL, 3519 LIBERTY DRIVE, PEARLAND, TEXAS.
Mayor Reid called the meeting to order at 7:12 p.m. with the following present:
Mayor
Mayor Pro -Tem
Councilmember
Councilmember
Councilmember
Councilmember
City Manager
City Attorney
City Secretary
Tom Reid
Richard Tetens
Kevin Cole
Helen Beckman
Felicia Kyle
Steve Saboe
Bill Eisen
Darrin Coker
Young Lorfing
Others in attendance: Public Works Director Danny Cameron; City Engineer Doug
Kneupper; Project Director Trent Epperson; Assistant City Manager Mike Hodge;
Executive Director of Economic Development Corporation; Assistant Director of Finance
Rick Overgaard.
PURPOSE OF HEARING — TO CONSIDER THE CREATION OF A REINVESTMENT
ZONE AND TAX ABATEMENT FOR BISON BUILDING MATERIALS, LTD., IN
ACCORDANCE WITH SECTION 312.201 OF THE TAX CODE AND CITY OF
PEARLAND'S GUIDELINES FOR GRANTING TAXING ABATEMENTS. Mr. Darrin
Coker, City Attorney.
STAFF REVIEW OF THE PROPOSED CREATION OF A REINVESTMENT ZONE AND
TAX ABATEMENT FOR BISON BUILDING MATERIALS, LTD., IN ACCORDANCE
WITH SECTION 312.201 OF THE TAX CODE AND CITY OF PEARLAND'S
GUIDELINES FOR GRANTING TAXING ABATEMENTS. Mr. Darrin Coker, City
Attorney.
City Attorney Darrin Coker stated the Public Hearing is to address a request for a tax
abatement. In order to allow a tax abatement, City Council must first create a
Reinvestment Zone. The Reinvestment Zone will exist for five years and then could be
renewed for up to five years. There is an ordinance creating the Reinvestment Zone on
the Agenda for its first reading. The second reading would be on the September 25,
2006 agenda and after that is approved, the Council would consider entering into a Tax
Abatement Agreement on October 9, 2006.
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Executive Director of Economic Development Corporation Fred Welch stated there is a
representative from the company present for questions. Bison has about six locations in
Texas. This project would be on a 2.5 acre tract of land. The main business is home
building industry. Sales projections are approximately $20 million in year one ramping to
$36 million to $40 million over a five-year period of time. The terms of any abatement
are yet to be discussed with Council.
Tom Tolleson, Bison Building Materials, LTD., stated the company is excited about
moving into the Pearland area. They have not closed on the land, but are expected to
do so within the next week. Their customer base is about 90% production builder and
then the remaining 10% is split between specialized builders. They are more of a
wholesale operation than a retailer and therefore have a smaller staff. This will be a
relocation of a store that currently operates in La Marque, Texas.
CITIZEN COMMENTS:
Michael Klaus, 5016 Groveton, addressed Council and stated about two and half years
ago, he attended a meeting of the H -GAC in League City that discussed the types of
funding mechanisms a city should utilize for this type of project. There was a comment
made that the cost of this type of facility is not worth the expense to the City when it will
only provide approximately 33 jobs. Because the company is wholesale, the sales tax
revenue will be limited and there will be minimal inventory taxes.
Larry Loessin, 3406 Nottingham Road, addressed Council and stated Bison Building
Materials, Ltd., is a retail lumber dealer. It is his understanding that this type of
agreement does not allow retailers. He is with Pearland Lumber Company and in their
industry, you have contractor sales and retail sales. In both cases, the individual that
purchases the product is taxed. His company sells about 30% retail and 70% to
contractors. This is a retail company. The Lumberman Association of Texas President
is a Bison employee and in order to be President, you must be a retailer. Bison is also
listed under retail in the Lumberman Association of Texas Directory.
COUNCIL/STAFF DISCUSSION
Councilmember Cole stated there is quite a bit of sales tax coming into the City from this
project and asked if contractors are required to pay sales tax.
Tom Tolleson, Bison Building Materials, LTD., stated their primary customers are
national builders that have established themselves as tax exempt. Their company is not
comparable to a Lowes or Home Depot.
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Councilmember Kyle asked what percentage of the business is retail and what percent is
wholesale.
Tom Tolleson, Bison Building Materials, LTD., stated approximately 60% to 70% of their
sales are taxable.
Councilmember Cole stated, in addition to Pearland Lumber, there is a McCoys, two
Home Depots and a Lowes that have other than lumber products in their stores. This
company services a lot of contractors, but to his knowledge, none of these other
companies have received a tax abatement. He asked if a study been done to see if
there is an additional need that needs to be met in Pearland that isn't being met by the
companies already in the city.
Executive Director of Economic Development Corporation Fred Welch stated the City
looked at management distribution in the City but did not conduct a study.
Councilmember Kyle asked if the main reason the company wanted to relocate to
Pearland is the access to a rail site.
Tom Tolleson, Bison Building Materials, LTD., stated the rail is one reason and also, with
the growth in housing down SH 288 and southeast Houston, the location is better for
their company.
Councilmember Beckman asked if Bison has an agreement established to put in a rail
spur.
Tom Tolleson, Bison Building Materials, LTD., stated the company does have an
agreement with the railroad to establish a rail spur.
Councilmember Saboe asked, if the Council established the Reinvestment Zone, would
they be required to enter into the Tax Abatement agreement.
City Attorney Darrin Coker stated at no time would Council be required to enter into a
Tax Abatement Agreement.
Councilmember Saboe stated he would like to have a better explanation of the
company's sales tax breakdown between wholesale and retail sales. If a small
percentage of a big number of the over-all sales equates to the revenue that is retail,
then the small percentage of revenue and jobs the company is bringing to the City is not
worth granting an abatement. With the current information, he is not comfortable with
granting a tax abatement at this time
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ADJOURNMENT
Meeting was adjourned at 7:38 p.m.
Minutes approved as submitted and/or corrected this the 25th day of September, A.D.,
2006.
Tom Reid
ATTEST: Mayor
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ung g, R
ty SeVetary
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PUBLIC HEARING OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS,
HELD ON SEPTEMBER 11, 2006, AT 6:30 P.M. IN THE COUNCIL CHAMBERS, CITY
HALL, 3519 LIBERTY DRIVE, PEARLAND, TEXAS.
Mayor Reid called the meeting to order at 7:38 p.m. with the following present:
Mayor
Tom Reid
Mayor Pro -Tem
Richard Tetens
Councilmember
Kevin Cole
Councilmember
Helen Beckman
Councilmember
Felicia Kyle
Councilmember
Steve Saboe
City Manager
Bill Eisen
City Attorney
Darrin Coker
City Secretary
Young Lorfing
Others in attendance: Public Works Director Danny Cameron; City Engineer Doug
Kneupper; Project Director Trent Epperson; Assistant City Manager Mike Hodge;
Executive Director of Economic Development Corporation; Assistant Director of Finance
Rick Overgaard.
PURPOSE OF HEARING — TO CONSIDER THE CREATION OF A REINVESTMENT
ZONE AND TAX ABATEMENT FOR KEMLON PRODUCTS AND DEVELOPMENT
COMPANY IN ACCORDANCE WITH SECTION 312.201 OF THE TAX CODE AND
CITY OF PEARLAND'S GUIDELINES FOR GRANTING TAXING ABATEMENTS.
Mr. Darrin Coker, City Attorney.
STAFF REVIEW OF THE PROPOSED CREATION OF A REINVESTMENT ZONE AND
TAX ABATEMENT FOR KEMLON PRODUCTS AND DEVELOPMENT COMPANY IN
ACCORDANCE WITH SECTION 312.201 OF THE TAX CODE AND CITY OF
PEARLAND'S GUIDELINES FOR GRANTING TAXING ABATEMENTS.
Mr. Darrin Coker, City Attorney.
City Attorney Darrin Coker stated the Public Hearing is to address a request for a tax
abatement. In order to allow a tax abatement, City Council must first create a
Reinvestment Zone. The Reinvestment Zone will exist for five years and then could be
renewed for up to five years. There is an ordinance creating the Reinvestment Zone on
the Agenda for its first reading: The second reading would be on the September 25,
2006 agenda and after that is approved the Council would consider entering into a Tax
Abatement Agreement on October 9, 2006.
Executive Director Economic Development Corporation Fred Welch stated the first
project that included the City and Kemlon Products was building approximately 17,000
square feet of manufacturing space. The company planned on investing about
$3,000,000 that has changed to about $6,000,000 and the company employs about 125
employees. Kemlon just opened an expansion facility in Schulenburg, Texas and is now
Page 1 of 2 - 9/11/2006
deciding whether to expand on that current facility or expand in Pearland. The facility in
Pearland would be approximately 43,000 square feet of precision manufacturing space.
The proposed expansion in Pearland will cost approximately $5,000,000 in fixed assets
and permanent equipment. The company projects this expansion will add 150 to 175
employees over the next few years as the expansion is completed. The company has
been in business for about 55 years and has a good track record of investing in its
employees.
CITIZEN COMMENTS:
Michael Klaus, 5016 Groveton, addressed Council and stated he supports this item
because it will add approximately 300 jobs to the community and it is a growing industry.
The company is unique in its industry and identifies with Pearland. He would like to see
another Kemlon site in Pearland.
COUNCIL/STAFF DISCUSSION
Councilmember Beckman stated she is in support of this project and feels it would be a
benefit to expand their facility in Pearland.
Councilmember Cole stated Kemlon has a great product and he is glad to see the
prospect of them expanding in Pearland. The City has provided a tax abatement to the
company in the past and he would like to see a follow-up on companies that have
received a tax abatement and how they are affecting the community.
Councilmember Saboe stated he feels the opportunity for inventory tax needs to be
addressed. He would like to see more of how the company affects Pearland before he
votes on providing a tax abatement.
ADJOURNMENT
Meeting was adjourned at 7:49 p.m.
Minutes approved as submitted and/or corrected this the 25th day of September, A.D.,
2006.
Tom Reid
TTEST: Mayor
ung L R
ity Se tary
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