R2008-009 2008-01-14RESOLUTION NO. R2008-9
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO
ENTER INTO A TAX ABATEMENT AGREEMENT ISE-MAGTECH AND
JONES & JONES FLP; FINDING AND DETERMINING THAT TERMS OF
SAID AGREEMENT MEET THE REQUIREMENTS OF CHAPTER 312 OF
THE TAX CODE, V.A.T.S. AS AMENDED, ORDINANCE NO. 1335,
ESTABLISHING REINVESTMENT ZONE #18, AND THE GUIDELINES
AND CRITERIA FOR GOVERNING REINVESTMENT ZONES AND TAX
ABATEMENT AGREEMENTS SET FORTH IN RESOLUTION NO. R2006-
121.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That certain Tax Abatement Agreement, by and befinreen the
City of Pearland, ISE-MAGTECH and Jones & Jones FLP, a copy of which is attached
hereto as Exhibit "A" and incorporated herein for all purposes, is hereby authorized and
approved.
Section 2. The City Council finds and determines that the Tax Abatement
Agreement and the property subject to this agreement meet the requirements of
Chapter 312 of the Tax Code, V.A.T.S. as amended, Ordinance No. 1335, which
established Reinvestment Zone #18, and the Guidelines and Criteria for Governing
Reinvestment Zones and Tax Abatement Agreements set forth in Resolution No. R2006-
121.
Section 3. The City Manager or his designee is hereby authorized to execute, and
the City Secretary to attest, said Tax Abatement Agreement and any counterparts thereof.
RESOLUTION NO. 2008-9
PASSED, APPROVED, AND ADOPTED this the 14 day of Janu ry, A. , 2008.
�
'�G�rYO;��-. TOM REID
�� �'= MAYOR
_ .:�'
ATTEST: =y . _,;;�`
�UNG�F
TY S RET
APPROVED AS TO FORM:
` U a.c..�_ � . IAT�--
DARRIN M. COKER
CITY ATTORNEY
�a
Exhibit "A"
R2008-9 07-0097
Tax Abatement Aareement (ISE-MAGTECH)
THE STATE OF TEXAS
COUNTIES OF BRAZORIA,
FORT BEND, AND HARRIS
TAX ABATEMENT AGREEMENT
This Tax Abatement Agreement ("Agreement") is entered into by and between the City of
Pearland, Texas, a home rule city and Municipal Corporation of Brazoria, Fort Bend, and
Harris Counties, Texas, duly acting by and throu�h its City M�n ger (" '"), and IS -MAGTECH
("MAGTECH") duly acting by and thro gh its �- '-;�.�; ��� ` �' nes & Jones FLP
(Jones), duly acting by and through its x� , ' idually recognized,
MAGTECH and Jones Enterprises shall be collec ely r rred as "Companies".
WITNESSETH:
WHEREAS, on the 17th`" day of December, 2007 the City Council of the City of Pearland,
Texas, passed Ordinance No. 1335 establishing Reinvestment Zone #18 in the City of Pearland,
Texas, for general business tax abatement, as authorized by Chapter 312, Tax Code, V.A.T.S. as
amended ("Code"); and
WHEREAS, the City previously adopted Resolution No. R2006-121, which established
appropriate guidelines and criteria for governing reinvestment zones and tax abatement agreements
to be entered into by the City as contemplated by the Code; and
WHEREAS, the City's objective is to maintain and/or enhance the general business economic
and employment base of the Pearland area for the long term interest and benefit of the City, in
accordance with Resolution No. R2006-121 and the Code; and
WHEREAS, the contemplated use of the Premises, as hereinafter defined, the contemplated
improvements to the Premises in the amount as set forth in this Agreement and the other terms
hereof are consistent with encouraging development of said Reinvestment Zone in accordance with
the purposes for its creation and are in compliance with Resolution No. 2006-121 and the guidelines
and criteria adopted by the City and all applicable law; and
WHEREAS, the Improvements as defined below constitute a major investment within the
Reinvestment Zone that will substantially increase the appraised value of property within the zone
and will contribute to the retention or expansion of primary and secondary employment within the
City; and
WHEREAS, there will be no substantial adverse affect on the provision of city services or on
its tax base and the planned use of the Premises will not constitute a hazard to public safety, health,
or welfare; now,
THEREFORE:
For and in consideration of the mutual agreements and obligations set forth below, the
sufficiency of which is hereby acknowledged by the parties hereto, Companies and City mutually
agree as follows:
1. The property to be the subject of this Agreement shall be that property described by
metes and bounds and map attached hereto as Exhibit "A" ("Premises").
2. Construction of MAGTECH's Fixed Equipment on the Premises, described in
Exhibit "B" ("Fixed Equipment") will cost approximately seven hundred fifty thousand dollars
($750,000) and is to be substantially complete on or about October 1, 2008; and the construction of
Jones' Building Improvements on the Premises, also described in Exhibit "B" ("Improvements") will
cost approximately two million one hundred thousand dollars ($2,100,000.00) and are to be
substantially complete on or about October 1, 2008. However, Companies shall have such additional
time to complete their respective Improvements as may be required in the event of "farce majeure"
provided each pariy diligently and faithfully pursues completion of the Improvements. For this
purpose, "force majeure" shall mean any contingency or cause beyond the reasonable control of
Companies, without limitation, acts of God or public enemy, war, riot, civil commotion, insurrection,
governmental or de facto governmental action (unless caused by acts or omissions of MAGTECH or
Jones), fires, explosions or floods, and strikes. The date of completion of the Fixed Equipment and
Improvements shall be defined as the date a Certificate of Occupancy is issued by the City.
3. Companies agree and covenant to diligently and faithfully, in a good and
workmanlike manner, pursue the completion of the Fixed Equipment and Improvements as good and
valuable consideration of this Agreement. Companies further covenant and agree that all
construction will be in accordance with applicable state and local laws and regulations or valid
waiver thereo£ In further consideration, MAGTECH shall thereafter, from the date a Certificate of
Occupancy is issued until the expiration of this Agreement, continuously operate and maintain the
Premises, limiting the use of said Premises to that use which is consistent with the terms of this
Agreement and the general purpose of encouraging development or redevelopment of the
Reinvestment Zone during the period that the property t� exemptions evidenced herein are in effect.
4. MAGTECH agrees and covenants that it shall provide a minimum of twenty (20)
additional jobs during the period of the abatement. Accordingly, MAGTECH shall provide to the
City annual manpower reports (Exhibit "C") within sixty (60) days following the end of each
calendar year.
5. Subject to the terms and conditions of this Agreement, and subject to the rights and
holders of any outstanding bonds of the City, a portion of ad valorem property taxes assessed to the
Property and otherwise owed to the City shall be abated in the following manner:
�
(a) The abatement far MAGTECH shall be an amount equal to fifty percent
50%) of the taxes assessed upon the increased value of the Fixed
Improvements , annually for a period of five (5) years beginning January 1,
2009, and ending December 31, 2013 in accordance with the terms of this
agreement and all applicable state and local regulations.
(b) The abatement for Jones shall be an amount equal to fifty percent (50%) of
the taxes assessed upon the increased value of the Building Improvements ,
annually for a period of five (5) years beginning January 1, 2009, and ending
December 31, 2013 in accordance with the terms of this Agreement and all
applicable state and local regulations.
The taxable value shall be determined on a uniform and equal basis of assessment by
the methods used by the Brazoria County Tax Appraisal District, which information necessary for
abatement shall be provided by Companies to the chief appraiser of said district. Estimated values,
estimated abated values, and estimated base year values for the Fixed Equipment and Improvements
are listed in Companies' respective Applications for Tax Abatement (Exhibits "D" and "E").
6. Companies further agree that the City, its agents and employees shall have the right to
enter upon the Premises at any reasonable time and to inspect the Fixed equipment and
Improvements in arder to determine whether the construction is in accordance with this Agreement
and all applicable federal, state, and local laws, ordinances, and regulations or valid waiver thereof.
After completion of the Fixed Equipment and Improvements, the City shall have the continuing right
to enter upon and inspect the Premises at any reasonable time, after 24 hours' notice has been given,
to determine whether the Premises are thereafter maintained and operated in accordance with this
Agreement and all applicable federal, state, and local law, ordinances, and regulations. The City
shall conduct at least one inspection annually to ensure compliance with the guidelines contained in
Resolution No. R2006-121. Notwithstanding any other provision of this Agreement, if the City
determines that a violation of a federal, state, or local law, ordinance or regulation exists on the
Premises, the City may, in addition to any other authorized enforcement action, provide to
MAGTECH or Jones written notice of such violation. For the purposes of this Agreement, the
violating party shall have ten (10) days from the date of the notice to cure or remedy such violation.
If the violating party fails or refuses to cure or remedy the violation within the ten (10) day period,
the defaulting party is subject to the forfeiture, at the discretion of the City, of any right to any tax
abatement for a portion of the period or the entire period covered by this Agreement.
7. Companies agree and covenant that the information provided in Exhibits "D" and "E"
is true and correct and that any materially false or misleading information that is provided to the
applicable taxing jurisdictions may be grounds for termination of the agreement with possible
liability for recovery of abated taxes.
3
8. In the event that (1) the Fixed Equipment or Improvements for which an abatement
has been granted are not completed in accordance with this Agreement; or (2) Companies allow their
respective ad valorem taxes owed to the applicable taxing jurisdictions to become delinquent and fail
to timely and properly follow the legal procedures for protest and/or contest of any such ad valorem
taxes; or (3) if either MAGTECH or Jones breaches any of the terms or conditions of this
Agreement, then this Agreement shall be in default. In the event of a default under (1), (2), or (3)
above, City shall provide the defaulting party written notice of such default, which notice shall be
delivered y personal delivery or certified mail to� n n l�• Q,�. or
��( � �,a-,� If the defaulting party has not cured such de ault within sixty (60) days of
said written notice, this Agreement may be modified ar terminated by the City. Notwithstanding the
provisions set forth herein, this Agreement may be terminated at any time after the execution hereof
by agreement of all parties.
9. In the event that MAGTECH begins producing product or service, but subsequently
discontinues producing product or service for any reason except fire, explosion or other casualty or
accident or natural disaster for a period of one year during the abatement period, then this Agreement
shall be in default and shall terminate. The abatement of taxes for the calendar year during which the
facility no longer produces shall also terminate.
10. As liquidated damages in the event of default and in accordance with
Section 312.205, Tax Code, V.A.T.S., as amended, all taxes which otherwise would have been paid
to the City without the benefit of abatement (but without the addition of penalty; interest will be
charged at the statutory rate for delinquent taxes as determined by Section 33.01 of the Tax Code)
will become a debt to the City and shall be due, owing and paid to the City within sixty (60) days of
the expiration of the cure period or the termination date, whichever is applicable. The City shall
have all remedies for the recapture and collection of the lost tax revenue as provided generally in the
Tax Code for the collection of delinquent property taxes and in accordance with Resolution No.
R2006-121.
11. The City represents and warrants that the Premises does not include any property that
is owned by a member of its council or boards, agencies, commissions, or other governmental bodies
approving, or having responsibility for the approval of, this Agreement.
12. The terms and conditions of this Agreement are binding upon the successors and
assigns of all parties hereto. This Agreement may be transferred or assigned by Companies only
upon written permission by the City in accordance with Resolution R2006-121, which permission
shall not be unreasonably withheld. No assignment shall be approved if the assignor or assignee is
indebted to the City for ad valorem taxes or other obligations.
13. It is understood and agreed between the parties that Companies, in performing their
obligations hereunder, are acting independently from one another or from the City, and the City
assumes no responsibilities or liabilities in connection therewith to third parties.
4
14. COMPANIES, THEIR RESPECTIVE OFFICERS, AGENTS, SUCCESSORS
AND ASSIGNS HEREBY RELEASE, ACQUIT, AGREE TO INDEMNIFY, AND HOLDS
HARMLESS THE CITY, ITS OFFICERS, AGENTS, EMPLOYEES, SUCCESSORS, AND
ASSIGNS, FROM ANY AND ALL KINDS OF CLAIMS, DEMANDS, LOSSES, DAMAGES,
INJURIES, RIGHTS, CAUSES OF ACTION, OR JUDGMENTS OF WHATSOEVER
CHARACTER OR NATURE, INCLUDING ATTORNEYS' FEES, WHICH MAY ARISE AS
A RESULT OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION REFLECT
THE EXPRESSED INTENTIONS OF COMPANIES AND THE CITY AND SHALL
SURVIVE THE TERMINATION, EXPIRATION, OR CANCELLATION OF THIS
AGREEMENT.
15. It is understood and agreed by the City and Companies that if the Premises has been
designated and taxed as agricultural land pursuant to Chapter 23, Subchapter C, Tax Code, V.A.T.S.,
that this Agreement shall not be effective and no abatement granted until Companies have removed
the agricultural use designation and all taxes due pursuant to Section 23.55, Tax Code, V.A.T.S., as
amended, (roll back taxes) have been paid.
16. This Agreement was authorized by Resolution of the City Council at its council
meeting on the ��` of caa►'., 2008, authorizing the City Manager to execute the Agreement on
behalf of the City.
18. This shall constitute a valid and binding Agreement between the City and Companies
when executed in accordance herewith.
19. This Agreement is performable in Brazoria County, Texas.
20. Companies agree and covenant to certify annually to the City, while this Agreement is
in effect, that Companies are in compliance with each applicable term of this Agreement.
f�'
Witness our hands this 'L �
AT
C
day of Fe_ �.� �.� , o a�
CITY OF PEARLAND
By:
Bill Eisen
City 1�lanager
APPROVED AS TO FORM:
gy: (�aw,. / ` , 11�✓
Darrin M. Coker
City Attorney
ATTEST:
By:
Printed Name:
Title:
ISE-MAGTECH
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Jones & Jones FLP
By:
Printe �� � o —
Title:
�
THE STATE OF TEXAS
COUNTY OF BRAZORIA
BEFORE ME, the undersigned Notary Public, on this day personally appeared Bill Eisen,
City Manager far the City of Pearland, known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same for the purposes and
consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS �Is+ DAY OF
F , A.D., 20�.
`�pYO��� KATHERINE E. BITT!CK
;''+°,�' �°�' Notary Pubiic, State of Texas
3 �,�r My Commission Explres
��%;�foFt;;;��� December 06, 2011
�„���„
1'in��,�•� L �, ' ,i�:J� .
NOTARY PUBLIC, STATE OF TEXAS
Printed Name: �j�Qs'� nQ, L ���:,��_
Commission Expires: �� , (o �'
THE STATE OF TEXAS
COUNTY OF
BEFO E, the undersig d Notary Public, on this day personally appeared
�'�_�_ of ISE-MAGTECH, known to me to be the person whose
is subscri d t the foregoing instrument and acknowledged to me that he executed the same
; purpos d consideration therein expressed.
�., GIVEN UNDER MY HAND AND
Uc.. , A.D., 20 �$ .
/� ,,,RT 14, �
, . e �... .,� SHANEI A. HURLBERT
•�: :° = Notary Public, State of Texas
=.,r.�,r,�: My Commission Expires
`:;; ��;;;�' November 22, 2009
SEAL OF OFFICE THIS �� DAY OF
, � �
�
NOTARY PUB STATE OF T XAS
`. / � (
Printed Name: ��q.Y� �, � � - �ir� 1�Q�"
My CommissionExpires: �� � 2�� t��
��
7
THE STATE OF TEXAS
COUNTY OF
�
BEFORE E, the, undersigned Notary Public, on this day personally appeared
, of Jones & Jones FLP, known to me to be the person whose
i e is subs ibed to foregoing instrument and acknowledged to me that he executed the same
the purposes and sideration therein expressed.
�^G�IVEN UNDER MY HAND AND
C-VJ�f t� , A.D., 20(�.
� oa::"H!1;s*.,_ SHANEI A. HURIBERT
�?�� � "= Notary Public, State of Texas
; ;: f +��r My Commission Expires
'''"'� November 22, 2009
�'•�; nna`
SEAL OF OFFICE THIS co� I`� DAY OF
� ��t�-� � �-1 • �-sk�� �
NOTARY PUBLIC, STATE OF T XA
� n Ji
Printed Name: �'1 � T�t • � �'1Y�f
My Commission Expires: �� I 2?- � C� `�
i
EXHIBIT
� . .
Jones & Jones, FLf�
0.23'f AC�es
STATE UF TEXAS �
COUNTY t?� BRAZ(3RIA §
�
H.T. & B.R.R. CO. Survey
Rbstract No. 508
ME'�ES AND BDUNDS aESCRIP7I�N of a 0.231 acre tract of land in the H.T. & B.R.R.
�C�. auroey, Abstrack No. 5ti8 in Srazorfa County, Texas. Said 0.�31 ac;r� tract is in a 35.152
ac� tract d�cribed in a deed to A.R. Hixson as recorded in Cle�ic's Fite No. 01-Op9725 ir� the
Brazoria Courrty Gerk's OfFoe and is more partfculariy desaibed by metes and bqunds as
folkn+vs:
COMMENCING af a lanch iron pipe found at the point af irrtersection of the soufh r'sgh#-of-
uyay Iine of Magnolia Road, 4variable widttt right-of-wey) with ttte west right-of-way fine of the
G.C. & S.F. Rallraad, (trased �n a virtdih of 400 feet), same baing tl�e northeast comer af said
3�.452 acxe fr�ct, said pair�t is in a curve to the right;
THENCE, $tong the south line of sa€d Maanolia Ro�d and with sa►d �urve to #tte right having
a radius of 319.64 feet, a oenfraE ang[a of 24°22'S4", (dtard bears South 77°05'35" West,
143.11 feet), for an arc distance of 113.�0 feet fo a 1!2-inch iron rod found for the pc>1nt ofi
t�►��Y;
THENCE, South 87°'19'49' West, on�tinuing along the souEh line af said Magno[ia Road for a
distance af 414.64 feet to a��trh iron rod set far the I�QINT QF BEGlNNING and
nartheast � af the heriein descxlbed ttac�;
THENC�, South Q1°4i'33° East, for a distance of fi�.0'! feet to a po{nt f�or comer, said poirrt
being the soutifeast comer of tfie herein desaibed tract;
1'HENCE, Sauth 87°989'49" West, €or a distanoe of 727.77 fe�t to the pnirtt of curvature of a
daNe to me �;
THENCE, with said curve to the left, ha�ing a radius of 'f,p18.{!� feet, a cerrtrat an�le of
03°55'3B", {ch�rd beat� �� 7$ W�t, 73.87 feet), for an ar� diatance of 73.$9 feet
to a pdint in the west line of the aforemer�ione� 35.152 acre bacl, said point being the
souHtu�rest comer of !he herein described trect;
7HENCE, Narth 01°41'33° West, aEong the weat tine af sald 35.152 acre tract for a distance
of 50.84 feet to a pairrt in the south Itne�of the aforemen�aned Magnolia Road antl be�tnnirx�
ot a curve to the right;
THENC�, afang the north tfne of sald llllagnolia Road, and with said curve to t3�e right, having
a radius of 1,028.d0 (eet, a central angte of a3°�4'34'� (chord Bears North 75°44'02° East,
67.14 #eet), for an arc distance of 67.1 � feet ta #h� (�tr�t of tangertcy,
TH�NCE, Narth S7°19'49" Eest, corrtinuing along the soutF� fine of Magnolia Road for �
distartce of 134.�t8 feet ta fhe POWT QF s�GiNNING, cgntaining a computed ar�a of 0.23i
�r�res (1Q,O�Z �quare feet).
Notes:
1. 8�2►rir�s shoum herean ac�e based on the Texas State Plene Coordinate System,
South Certhal Zorte, {NAD83}.
2. This easement has not been staked on the grountl at the request of the dient.
The Wilson Sunrey Group, Enc.
20t3� East Broadway, Suit� 105
Pea�iand, Texas, 77581
(281) 485-3999
Job No.[l7�112
, --
Michael . Wilsor� R.P.L.S.
R�gistration No. 4822
�¢ f � �o�
C. Other Es#imated Taxes Generated hy Proiect
(1) Sales Taxes:
20
20
20
20
20
aa
Zo
20
Zo
20
:$
:$
:$
:$
:$
:$
:$
:$
:�
:�
EXHIBIT
� ,. � r
�
(2) Other Taxes or fees (if known, impact fees, building fees, etc.):
D. Estimated A�praised Value on Site:
Building Bus. PersonRl
Land & Fixed Property
Equipment & Inventory
I. Total of pre-eacisting value
(Jao 1 preceding abatement)
II. Estimated value of NEW Iand added � �'Q� ��T _�_ ��
� �
Estimated value of NEW improvements �
Estimated value of NEW fixed equipment �� D�v '�" �-�
- T -
Estimated value of NEW personal
property and inventory added � ��
Total of NEW value added
(Total columns in Sec. II above)
III. Total value at end of Tax Abatement
(Total Part I & It}
TAX A.BATEMENT REQUESTED
% of eligible property for a term of years (Or)
(} Requesting Staggered Tax Abatement Terms as follows:
EXHfBIT
� ` t,
� �
MANPOWER REPORT
I,
Company, do certify that on
of Kemlon Products and Development
20 there were individuals employed
full time at Kemlon Products and Development Company.
Printed Name:
Title:
Date;
THE STATE OF TEXAS
COUNTY OF
BEFORE ME, the undersigned Notary Public, on this day personally appeared
, of Kemlon Products and Developrnent
Company, being by me duly sworn on his/her oath deposed and said that he/she is duly qualified and
authorized in a11 respects to make this affidavit; and fihat every statement contained in the Manpawer
Report is within his/her knowledge at�.d true and correct.
SUBSCRIBED AND SWORN TO BEFORE ME on the day of
, to certify which witness my hand and official seal.
NOTARY PUBLIC, STATE OF TEXAS
Printed Name:
My Commission Expires:
APPLICATION FOR TAX ABATEMENT IN T
CITY OF P�ARLAND
EXHIBIT
$ ,• , .
�
It is recommended that this application be f led at least 90 days prior to the beginivng af
construction of the installation of equipment. The filing of this dacument acknowledges
familiarity and conformance with Guidelines and Criteria for Granting Tax Abatement in a
Reinvestrnent Zone Created in the City of Pearland (attached). Please review Instructions
attached befare executing this application. This application will become part of the agreement
and any knowingly false representations will be grounds for the City to void the agreement.
Original copy of this request should be submitted to the Pearland Economic Develapment Corp.
Executive Director, City of Pearland, 3519 Liberty Drive, Pearland, Texas 77'S81. Please attach
exhihits and additional information.
__-------------------------------------•
APPLICANT INFORMATION
-------------------�---------------------------
Application Date �' � "�' d 7
Company Name l �j � � m �`�'3-���r � !�
Address � Q �+��
�s��,yz �-� %��°
Consecutive years in business
Corporation� Partnership ( )
Number of Current Employees 'j� �
Annual Sales � i'�� l�� t� �
Proprietorship ( )
Please subrnit f nancircl statements for the prior hvo years.
--------------------------------------------------------------------------------------------------------------------
PROJECT INFORMATION
Type of faciiity: Manufacturing `(�
(See Instr•uctions) Regional Service ( )
Reg. Distribution Center ( }
Reg. Entertainment Center ( )
Other Basi� Industry ( }
Location address and description of area t� be designated as reinvestment zone (attach map
showing site and Iega1 description): ���Q ���rt,1Q��,, t/.�
------------------------------------------------------------------�-----------------------------___-------------
Description of eligible improvements (real praperty}, to be co structed Tlus includes fixed
equipment, buildings, parking Iots, etc.}; ; °� . �' ; �., � %1. �1�. � � . �� �, � �: �, ;�r, � F ,: , l
.. �'
� �. e . ..� �-
^��--.•___......_�-__�..��..���^--_�..��'���^__-_��' ��_���^-__^__--__�__..'��_�� _--_'___
Descriptian of ineligible property to be included ' projec�. (This i
property.): � / � !lr on ��,,�� .�, .., ra.,�.� �, �.��e�t .
/2n. c7�� F��t�-0.,t'
�o� a��? 4�'--�t�... �au«�?'
inventory and personal
r ►� , •�'
--------------------�---.------------------------- --- -- I -- - -- ------____-----°---°-------------
Will this praject require any permits by other federal, state 4r county agencies? If so, please list
the name of the permit, the permitting agency and a description of why and what the permit is
needed for:
----------------------------------------
The proposed reinveshnent zone is located in:
C�� P-�-� ��
county _ a � r_
School District �� .� � �1 � .. .;�
College District ` �
Other T�ing Jurisdictions
Tax ID number �"7 ti a i S� �G � "�
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Description of product(s) or service to be
----�------------------------------------------------------------------------------------
ATTACH A STATEMENT explaining the general nature and extent of the project, describing
existing site and impravements; describe all proposed improvements and provide list of
improvements and equipment for which abatement is requested. Tnclude a proposed time
schedule for undertaking and completing the pianned improvements as well as the company
officials and agents vvho will oversee the construction. Describe other sites that are under
consideration.
NEW PLANT ( } EXPANSION ( ) MODERNIZATION ( )
---------------------------------------------------------------------------------------�--------------------------
ECONOMIC INrORMATION
A. Construction Estimates
IF MODERNTZATION:
Commencement Date: D�T, � Z-�o �? Estimated Economic Life of
Construction Man Years: Existing Plant: Years
Completion Date: Added Economic Life from
Peak Construction Jobs Modernization: Years
B. Permanent Emplovment Estimates (FTE's)
Current Employment •
Current Annual Payroll Z., � m� '��V�- average annual or hourly salary__��"8
Number of jobs retained (�� ) created (/o )
at startlopening of tlus project in year `
S years into operation �� � in year Zo � Z--
Local Transfer Tota.l Est. Salaries
���..�
20
20
24
Description of operations, processes involved, general overview:
C. Other Estimated Taxes Generated by Project
(1} Sales Taxes: 20 : $
20 : $
� 20 $
20 :$
20 : $
20 : $
20 : $
20 : $
20 : $
20 :$
(2} Other Taxes or fees (if known, impact fees, building fees, etc.):
D. Estimated Appraised Value on Site:
Building Bus. Personal
Land & Fixed Property
Equipment & Inventory
I. Total of pre-existing value
{7an 1 preceding abatement�
II. Estimated value ofNEW land added � ��� �1 �(� ��
� �i
Estimated value of NEW iinpravements
Estimated value of NEW fixed equipment I��' �t� �.�___
�stimated value of NEVV personal
property and inventory added � ��
Total of NEW value added
(Total colwnns in Sec. lI above)
III. Total value at end of Tax Aba#ement
(Total Part 1 & Il)
---------------------------------------------------------------------------------------
TAX ABATEMENT REQUESTED
% of eligible properly for a term of years (Or}
O Requesting Staggered Tax Abatement Terms as follows:
v��vcE
Is the applicant seeking a variance under Section 3{�
of the Guidelines?
If "YES" attach required supplementary information.
YES ( )
OTHER ABATEMENTS: Has company naade application
for abatement of this project by another taxing
jurisdiction or nearby counties? YES ()
If "YES" provide dates of application, hearing dates,
if held or scheduled, name of jurisdictions and
contacts, and letters of intent.
NO()
NO()
COMPANY REPRESENTAT TO BE CONTACTED
�
Name: D D 1 L. ���
Title:
Address:
Telephone:
� L.� �
��5�9g
A oriz Company cial: ,
By:
Printe e: , G � �
Title: � 2- � � rJ G �JT
Revised November 21, 2000
INSTRUCTIONS
Applicants and projects must meet the requirements established by the City of Pearland
Guidelines and Criteria for Granting Tax Abatement rn a Reinvestment Zone found in Resolution
No. R98-59 (aftached) in order to receive positive consideration. Section 2 of the Guidelines, for
example, se#s out regulations goveming eligible facilities, eligible and ineligibie improvements,
terzns and economic qualifications. Conformance with a11 sections, however, is required for
eligibility.
APPLICANT INFORMATION
The taxing unit may consider applicant financial capacity in determining whether to enter into an
abatement agreement. Established companies far which public information is available, or the
wholly owned businesses of such companies, should include with the application a copy of their
�atest annual report to stockholders. Other applicants and new companies should attach a
staten�ent showing when the company was established, business references (name, contact and
tetephone number of principal bank, accountant and attorney) and may be required to submit an
audited fmancial statement and business plan.
PRQJECT INFORMATION
Only facilities listed in Section 2(a) of the Gutdelines may receive abatement without applying
for a variance. Check guideline definitions in Section 1 to see if project qualifies. If project is a
Regional Entertainment Facility, Regional Service Facility, Regional Distribution Center Facility
or Other Basic Industry, the application should include market studies, business plans,
agreements or other materials demonstrating that the facility is intended to serve a market the
majority of which is outside of the City of Pearland region.
ECONONIIC INFURMATION
Permanent Emplovment Estimates - In estimating the permanent employment, include the total
number of jobs retained or created at this site hy your firm as well as known permanent jobs of
service contractors required for operation,
Estimated A�praised Value on Site - The value as of Januaiy 1 immediately preceding abatement
should be the value established by the Brazoria County Appraisal District. If the applicant must
estimate value because the taxable value is not known or is conabined with other properkies under
a single t� account, please so state. I'rojectians of value shauld be a"best estimate" based on
taxability in Texas. The projection of project values not abated should include personal property
and iueligible project-related improvements such as office space in excess o#'thax used for plant
administration, housing, etc.
SAM�'LE PROJECT DESCRIPTION
The project will be the construction of a new manufacturing facility that will also include our
sales a.nd engineering staff. We expect to have approximately 150-160 employees on site. We
expect the project will require the construction of a buiiding of approximately 70,000 square feet
at a cast of approximately $2.6-$2.8 million. It is anticipated that fixed manufacturing
equipment of approximately $1,500,000 will be i_ncluded in the project. Ta�c abatement will be
sought on all items allowed by law.
SAMPLE TIME SCHEDULE
September - Dec 31, 2001
January 1- Jan 30, 2002
February 1-February 28, 2002
March 1- March 30, 2002
Apri11-Navernber 15, 20Q2
November 16 - December 25, 2002
December 30, 2002
l.
2.
3.
4.
5.
6.
7.
8.
9.
10.
il.
12.
13.
14.
15.
Legal work, conceptual phase, contractor setection
Wetlands study, l phase architecture, soils engineering,
topographical mapping, detention pond engineering
Architectural drawings, final engineering, permits and
applications
Bids arad initial site work
Construction
Move-in, start up
Completion
DO NOT WRITE IN THIS AREA -- FOR PRUCESSING PURPOSES ONLY
EDC contact
I'recinct
Jurisdictions notified
Initial review completed
Review circulated
ISD concurrence?
College concurrence?
City concarrence?
Letter of Intent
Hearing noticed on agenda
Public hearing
ISD ac�ion
College action
City actian
Ag�reement signed
/ /
/ /
/ /
/ /
/ /
/ /
/ /
/ /
! /
/ !
innovatars not !mi#ators
Thursday, September 6, 20Q7
Mr. Fred Welch, Executive Director
Pearland Economic Development Corporation
3519 Liberty Drive
Pearland, TX 775$7
Dear Mr. Welch,
907 Bay Star Blvd
Websfier {Ho�ston), TX 77598
Phone: 281-488-0788
FAX: 281-488-7080
E-mail: maa��chCc�fsemaQtech.com
Website: www.isemagtech.cam
We are pleased to infarm you we have purchased 1 Q acres in the 3900 block of Magnolia for the
future site of Magtech. AI1 assessments and surveys have been comp[eted and we have received
comments back from the City of Pearland on the re-platting. Ground breaking is expected the first
week in Juiy with building completion by March 20Q8.
Magtech has pfanned a 30,000 square foot manufacfuring plant (fight industrial} to house the welding,
fabrication anci electronics assembly. En addition to our line of �industrial level gages and transmitters,
Magtech manufactures custom instrument bridles and assemblies for power, pracessing and
petrochemical plants.
Founded in 1876, Magtech started as an instrumentation distributor and began its manufacturing
division in 1985-1986. Sales have grown to almost $9 million in 2n06-2007. We currently have 48
employees haused in three buildings totaling about 18,000 square feet and we have no room to
expand. We have been averaging about three to four new employees per year #or the last four to five
years.
The property on Magnolia is owned by Jones & Jones �.L.P., who also owns stock in Magtech. We
will be mQVing about $750,000 in capital equipment and $1,1Q.Q,000 in inventory. The cost of land
and new bui[ding represents more than a$2,150,000 investment, with an additional $300,000 in new
equipment and office furnishings. We look forward to our rnove to the City of Pearland.
' cerely,
�"-'�l
Jadie Bernier
President
fSE-Magtech
Federal Tax Identification No. 1-76-0154466-3
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October 24, 2006
Mrs. dodie Bertuer
ISE Magtech
907 Bay Star Blvd.
Webster (Houston) TX, 7759�
RE: New Site Facility:
Dear Joclie:
First, Let me cangratulate you on the award from the PEDC last night. The Board was
very impressed by your company and your desire to locate i.n Pearland. The Board
recommended that Magtech be awarded $135,0OO.Oa as a cash incentive to relocate to
Pearland. The brea�Cdown wouid be as follows: A$50,000.00 cash award to be presented
to you at your obtaining your certificate pf occupancy. A$35,000.00 cash award at the
end of your first year (with satisfactory employment of at least 30 people). A$25,000.00
cash award at the end of the second year and another $25,0�0.00 at the end of your third
year of operalaan (with the same level of employment stated above or more).
This recornmendation will go to the city cnuncil fox approval and you will be notified
when this wiil happen and they will request your presence at that time. Additionaliy the
Board is recommending tax abatement for seven (7} years at SO% af allowable
improvements with the city and Brazoria Cout�zty. This is a recommendation only and you
must file a reguest with the city first and then with the county. This should be relatively
simple and seamless. I will help you wlxen this needs ta happen.
I have thoroughly enjoyed meeting you and working with you on this project. T am
hopeful and confident that this will be the beginning of great things for Magtech.
Sincerely:
�
Gregg A. Albritton
Director Business Development
City of Pearland
3519 LIIIERTY DRIVE•PEAFtLAND, T'EXAS 77581 •(281) 652-1627•FAK (281} 652-1704�TOLL FREE (800) 240-3684
���
To: Randy Ferguson
From: Fred INelch
CC:
PEbC Board
Date: '10/20/2006
Re: Incentive Agreement Project 0613 (Magtech}
Randy:
The company (Magtech} has asked PEDC to consider an incentive package that would assist in the
relocation and expansion from their existing facili#y near Webster to Pear[and. Assistance is requesfed
for relocation of equipment, infrastructure needed to support the faciliry (drainage and detention) and in
recruitment and training of their work force. Afl areas are o�es that fit wifhin the cri#eria established by
PEDC and the Sfate of Texas to assist qualified businesses.
Background: The firm (MagTech) is a manufacturer of level insfrumentation for the process fndustry.
The firm has cantinued to grow and prosper over the past several years and currently has sales in
excess of $l million dollars annually.
The manufacturing facility contemplated by Wesmor will be approximately 25,000 square feef with
room to expand to 4d,000 square feef. Esfimated cosf for the facifity and improvements is at $2 miliion
dollars with an additionaf $900,000 in machfnery and inventory rr�oving to the site. The firm employs 40
persons and expects to expand to 50 wlthin two years. Current payroll of $1.8 million dollars indicates
their average wage rate is $20.00 per hour or more. Competition for this praject includes the city of
Webster and City of Houston.
The PEDC staff has examined the request far assistance from Magtech and recommends the following
Incentive package far Magtech
Cash Incentive - $100,000
$50,000 payable upon receipt of CO by city
$25,000 payable in two annual installments provided employment and investment {evels in
Psa�land are maintained as statec( above
Recommend seven-year tax abatement with the City of Pearland and Brazoria County at the rate of
50%
Combined impact of all incentives praposed by CEty of Pearland
Cash Incentives $100,Q00
Taxes Abated (city for 7 years) 6$ s,000
�
Total lncentive $168,000
This works out to about $3400 per employee. The board might consider a slightiy higher cash incentive
in the range of $132,000 pius the value of the abatement, which would bring the value of the incentive
to around $4000 per employee. Our range for manufacturing related jobs has been in this range in the
past.
There have been no imputed values. calculated for indirect jobs and net impact of payroll flowing
through the city. If past history were accurate i would expect a net payback ta the city in iess than five
years on a package o# this size. Staff recommends favorable action by the PEDC Board on this project.
Any incentive package of $100,OOQ or more wlll also require approval of city council. PEDC may
recommend tax abatemenf on a praject but that lies at the sole discretion of City Council
i��G'�'�G,%
� Fred Welch
• Page 2
APPLIC.�T�ON FOR TAX ABATEMENT IN
CITY OF PEARLAND
EXHIBIT
: �••
It is recommended that this application he filed at least 90 days prior to the beginiiu�g of
construction of the installation of equipment. The filing of � this documenf acknowledges
familiarity and conformance with Guidelines and Criteria for Gra�zting Tax Abatement in. a
Reinvestrnent Zone Created in the City of Pearland (attached}. Please review �rrsiructions
attached hefoxe executing this application. This application wi11 become part of the agreement
and any knowingly false representations will be grounds for the City to void the agreement,
Original copy of this request should be submitted to the Pearland Economic Development Corp.
Executive Director, City of Pearland, 35I9 Liberty Drive, Pearland, Texas '175$1, Please attach
exhibits and additional information. �
APPLICANT INFORMATICIN
Applicatian Date ~- � �
Company Name ��� ���� �� � Ntunbe� of Current Employees
�
Address � `� � �� ' � ��.; Annual Sales � ���1�i c��
Consecutive years in business � � �
Corporation� Fartnership ( ) Proprietorship ( }
Please submit financial statements for flte prior lwo years.
---------------------------------------------------------------------�----------------------------------------------,
PROJECT INFORMATI�N
Type of faciiity; Manufacturing
(See Instructions) Regional Service ( )
Reg. Distribution Center ( )
Reg. Entertainment Center ( )
Other Basic �ndushy { )
------------------------�-----------------------_..-----------------
Locatian address and description of area to be designated as reinvestment zone (attach map
showing site a.nd legal descziption): ���/ �sc� �y�„uG;hfo �t o�,
� �:.C` {,f;'�.�ti� _ ��
Description of eligible improvements (real property) to be constructed (This includes fixed
equipment, buildings, pazking lots, etc.)' �� �c��p �� ��''�� P��-�..y "�" ta,r-�-�.,
.k.�t .�" h �,, I
-----------------------------------------------------------------------------------------------------------------�---
Description of ineligible property to be included in project. ('This izzcludes inventory and personal
property.):
---�----------------------------------------�__..__---_.___---------------------------------____----------�-----__
Will this project require any permits by other federal, state or county agencies? Tf so, please list
the name of the permit, the permitting agency and a descriptian of why a.nd what t; e pertuit is
needed for:
The proposed reinvestment zone is located in:
C1�
COlitl�'
School District
College District
Other Taacing 3urisdictions
Tax ID number
,,�,rGl.("� ��
.df .1 ._. � •,�~• � �„�,�
(�7� � �
� �� �
7 �C 0 ! �'��Fc�. � �.. �'
Description of product(s) or service to be provided (proposed use};
��'�-�-�����' e
Description of operations, processes involved, general
1°"/ �.�°ti��. �
� j
�e��..c,��..��: =�� �� � �`
�
M. � � ..�-�`�
ATTACH A STATEM'�NT explaining the general nature and extent of the project, describ'ing
existing site and improvements; describe all pxoposed improvements and provide list of
improvements and equipment for which abatement is requested. Include a proposed time
schedule for undertaking and compieting the planned improvements as well as the campany
officials and agents who will oversee the construction. Describe other sites that are under
consideration.
NEW PLANT EXPANSION ( } MODERNIZATION ( )
ECONOMIC INFORMATION
A. Construction Estimates
Com�nencement Date: ���' / �`��
Construction Man Years:
Completion Date: �� �� �
Peak Construct.ion Jobs
B. Permanent Em,�lovment Estitnates (FTE's)
TF' MpDERNIZATION:
Estimafed Economic Life of
Existing Plant:
Added Economic Life from
Modernization:
Years
Years
Current Employment `7' � - ,�,.
Current Annual Payroll � �'� rK4 +� c�. average annual or hourly salary j�' ,,�,.�,�:
Number of jobs retained ( �) created (`'� )
at start/opening of �s project • in year
5 years into operation �� in yeaY' '� /'�.
Local Transfer Totat Est. Salaries
20
20
20
C, Other Estin�ated Taxes Generated bv Proiect
(1) Sales Taxes: 20 : $,
20 $
24 $
20 : $
20 : $
20 : $
20 : �
20 $
20 : $
aa : $
(2) Other Taxes or fees (if known, impact fees, building fees, etc.):
D. Estimated Aupraised Value on Site:
Build�ng Bus. Personal
Land � Fixed Property
Equipment & Inventory
I. Total af pre-existing value
(Jan 1 preceding abatement)
II. Estimated value of NEW Iand added �o ��c�� ��l �i� ��
1
Estimated value ofNEW improvements
Estimated value of NEW fixed equipment 1 b1�►� ���
)
Estimated value of NEW personal
properiy and inventory added l
_��� T
TotaI of NEW vaiue added
(Total columns in Sec. II above)
III. Total vaiue at end of Tax Abatement
(Total Part I & II)
TAX ABATEMENT REQUESTED
% of eligibie pxoperty for a term of years (Or)
() Requesting Staggered Tax Abatement Terms as follows:
VAItIAN�E
Is the applicant seeking a variance under Section 3(f�
of the Guidelines? YES () NO ()
If "YES" aitach required supplementary information.
OTHER ABATEMENTS: Has company made application
fox abatement of this project by another taxing
jurisdiction or neazby counties? YES () NO ()
If "YES" provide dates of application, hearing dates,
if held or scheduled, name of jurisdictions and
contacts, and letters of intent.
COMPANY REPRESENTATIVE TO BE CONTACTED
�
l�ame: � � n � °�� ��
Title: � �-� �
Address: � � � � -� ° ��-� � �'�' � �('
� �� o � �w+�, �.��, � ����-s v�c� ``�� � � S��
Telephone: ��-�. � �� - �3��
Authori�i Company Offic�:
By: ,�-t�.r�,. ,� . �.
Printe me: �� +� �' �
Title: � ��c� � •-�
Revised November 21, 2000
INSTRUCTIONS
Applicants and projects must meet the requirements established by the City of Pearland
Guidelines and Criteria for Granting T'ax Abatement in a Reinvestment Zone found in Resolution
No. R98�59 (attached) in order to receive positive consideration. Section 2 of the Guidelines, for
example, sets out regulations governing eligible facilities, eligible and ineligible ixnprovements,
terms and economic qualifications. Canformance with all sections, however, is required for
eligibility.
.A.PPLICANT INFORMATION
The taxing unit may consider applicant ftnancial capacity in determinir,g whether ta enter into an
abatement agreement. Established companies for which public information is available, or the
wholiy ow�ned businesses o� such companies, should include with the application a copy of their
Iatest annual report to stockholders. Other applicants and new companies should attach a
statennent showing when the company was established, business references (name, contact and
telephone number of principal bank, accountant and attorney) and may be required to submit an
audited financial statement and business plan.
PROJECT INTORMATION
Only facilities listed in Section 2(a) of the Guidelines may receive abatement without applying
for a variance. Check guideline defu�itions in Section 1 to see if project quaiifies. If project is a
Regional Entertainment Facility, Regional Service Facility, Regional Distribution Center FaciliTy
or Other Basic Industry, the application should include nnarket studies, business plans,
agreements or other materials demonstrating that the faciiity is intended to serve a market the
majority of which is outside af the City of Pearland region.
ECONOMIC INTORMATION
Permanent EmploYment Estimates - In estimating the permanent employment, include the total
number of jobs retained or created at this site by your firm as well as known permanent jobs of
service contractors required for operation.
Estimated At�,�raised Value on Site - The value as of January I immediately preceding abatement
should be the value established by the Brazoria County Appraisal District. If the applicant must
estimate value because the taxable value is not known or is combined with other properties under
a single tax account, please so state. Projections of value shouid be a"best estimate" based on
taxability in Texas. The projection of project values not abated should include personal properly
and ineligible project-related improvemen#s such as office space in excess of that used for piant
administration, housing, etc.
SAMPLE PROJECT D�SCRIFTION
�
The project will be the construction of a new manufacturing facility that wiil also include our
sales and engineering staff We e�cpect to have approximately 150-160 employees on site. We
expect the project wi�l require the construction of a building of appraximately 70,000 square feet
at a cost of approximately $2.b-$2.8 million. It is anticipated that fixed manufacturing
equipment of appro�mateIy $1,50�,000 will be included in the proje�t. Tax abatement will be
sought on aIl items allowed by law.
SAMI"LE 'TIME SCHEDULE
September - Dec 31, 2001
Januazy 1- Jan 30, 2002
February 1-February 28, 2002
March 1- March 30, 2002
April 1-November 15, 2002
November 16 - December 25, 2002
December 3Q, 2002
1.
2.
3.
4.
5.
6.
7.
$.
9.
10.
11.
12.
13.
14.
15.
6
Legat work, conceptual phase, contractor selection
Wetlands study, l phase architecture, soils engineering,
topographical mapping, detention pond engineering
Architectural drawings, final engineering, pertnits and
applications
Bids and initial site work
Construction
Mov�in, start up
Cornpletion
DO NOT WRITE IN THIS AREA -- F4R PRUCESSING PURP4SE5 C)NLY
EDC contact
Precinct
3urisdictians notifed
Initiai review compteted
Review circutated
ISD concurrence?
College concurrence?
City concurrence?
Letter of Intent
Hearing noticed on agenda
Pnblic hearing
ISD action
College acrion
City action
Agreement signed
/ /
/ /
/ /
/ /
/ /
/ /
/ /
/ /
/ /
/ /
Innovators no� imi�ators
Thursday, September 6, 2007
94� B��► S�ar �Ivd
IAfebster (Houston), 'f"X 77���
Phon�: 28f.-48$-A7��
F�X: �81-488-708A
E-mai[: r��gEech isectsac�t�ch.com
It��bsite: �t�r�,�,fse�aatec#t.c�n�
Mr. Fred Welch, Executive Director
Pearland Economic Development Corporation
3519 Liberty Drive _
Pearland, TX 77581 -
Dear Mr. Welch,
We are pleased to inform yau we have purchased 10 acres in the 3900 block of Magnolia for the
future site of Magtech. AII assessments and surveys have been campleted and we have received
comments back from the City of Pearland on the re-platting. Ground breaking is expected fhe first
week in ,luly with buifding completion by March 2008.
Magtech has planned a 30,000 square foot manufacturing plant (light industrial) to house the welding,
fabrication and electronics assembly. In acfdition to our line of industrial level gages and transmitters,
Magtech manufactures custom instrument bridles and assemblies for power, processing and
petrochemical plants.
FQUnded in 1976, Magtech started as an instrumenta#ion distributor and began its manufacturing
division in 1985-1986. Sales have grown to alrnost $9 milfion in 20fl6-2007. We currenfly have 48
empfoyees housed in #hree buildings totaling about 18,000 square feet and we have no roam to
expand. We have been averaging about three to four new employees per year for the last four to five
years.
The property on Magno(ia is awned by Jones & Jones F.L.P., who also owns stock in Magtech. We
will be moving about $750,000 in capital equipment and $1,100,OOQ in inventory. The cost of land
and new buifding represents more #han a$2,150,000 investment, with an additional $300,000 in new
equipment and office fumishings. We look fotward to our move to the City of Pearland.
� cerely,
.
Jodie Bernier
President
15E-Magtech
Federal Tax Identification No. 1-76-0154466-3
J�n�� � Jone�, �LR
a.231 A�re�
STfiTE OF TEXAS
C(JUNTY OF BRA24RW §
:
H.T. �: �.IZ,R. Ca. �urvey
Aisstract islo. 5()�
ME7E5 AND B�UNDS D�SCRIPTiON of a 4_231 acre tract of tand,in ttie H.T. & B.R.R,
C�. �un+ey, Abstract No. 5E)B in 8raxorie Gou�tty, Texas. �aid Q.231 aor+�lract is In � 35.'!52
acne tract described in a rlesd ta A.R, Hfxson as recorded in Cferk's Fike No. 01-009725 in the
Bw�zaria Courtty Clerfc's Office and i� mare particuEa�iy described by metes and bounds as
fulknnrs:
COMMENCING at a 9-inc� iran p(pe found at the poirit of ir�ter�Sectian of the sauth �ight-af-
w�y lin� of Magnbfia Raad, �variabte w�dth r�ht-of-way) with the west rtght-of-way iine of the
G.C. & S.F. Reilroad, (based on a width af 100 feet), same h►eing the nnrtheast camer of said
3�.152 acre trad, said poir� is in a c�xve to tite right;
THENCE along ihe souut�► line of said Megnotia Road and wtth �aid curoe to #he rig�ht having
a cadius of 3i9.64 feet, a Certtrat angie of 24°22'54", (chord bears Saufh 77°05`36° West,
193,11 feet), for an ar+c distance ot 913.70 feet to a 1t2-inch iron rod found for fhe pairrt of
tangency;
THENCE, South 87°19'49` Wesf, c�of�tinuing alo�g the south i'uie of said Magnotta Raad for a
distance of 4Z4.64 feet to a��� ir�n rod set for the PC3i�l7' QF BEGINNtNG and
nnrt�east carner af the her�ein desaibed trac�
THENCE, 3outh 01°41'33" East, for a distance of 5U.41 fe�t ta a pafnt for camer, said paint
being the southeast wmer of the he�in described tract;
TNENCE, 9ou� 87°189'49' West, for a distanoe of 127.77 feet to the poirtt cf curvature of a
a�roe tr� tHe le#t*
THENCE, with S�id Curve ta the fe�t, having a radius af �S,U78.OQ feet, a oet�trai ar�le of
03°S5`38", {c�rd 6eau� ��ath 7$ W�.st, 73.87 feei}, f4r an arc dlsianoe aF 73.88 feet
to a point in the w�st line of the aforemeMioned 35.'i52 aae tract, said point be{rag tF�e
saufhwest c�mer of the tterein ctescribed tc�c�
THENCE, North 04 °41'33" West, ator►g the wes� f�ne of said 35.752 acre tra�t fdr � diat�nc�
of 50.Bd feet to a pairrt in fhe south 1ine�af the aforemerrtianed Ntagnofia Road and beginning
of a cxirve ta the right;
THENCE, alang the rwrth line of said Magnafie Road, and with said c�roe ta tite right, having
a radius oE 'E,02g.d0 teet, a centraf ang[e of d3°4a'34', (chard 6ears North 75°44'02" East,
G7.14 feety, for an ar+c distanae of 67.15 tee# ta 2�1+� p��.rrt of tangency�
THENCE, Ncuth 87°49'49" East, oantinuirtg atong the south line bf Ma�n�lia Rvad for a
distanc� of 1�4.46 feet fo ttte f OF BI�GIiVwIfiJG, cpnfaining a cqmputeci ar+ea of 0.231
�cr�s �1�,Q�2 �uare f�at}.
hl�tes:
1. Bearings shoum he�+aon are based on th� Texas State Pfane Coordinate System,
South Cer�tra( Zone, (NAD83}.
2. Tht� easement has not beert staked on the graund at ihe request of the client.
7he Wilsan Survey Group, fnc.
2006 East Braadway, Suife 1f?5
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October 24, 2006
Mrs. Jac�ie Bemier
ISE Magtech
907 Bay Star Blvd.
Webster (Houston) 'I'X, 77598
RE: New Site Facility:
Dear Jodie:
First, Lei me congratulate you on the award from the PEDC last nigbt. The Board was
very impressed by your company and your desire to locate in Peartand. The Board
recommended that Mag#ech be awarded $I35,000.00 as a� cash incentive to relocate to
Pearland. The brealcdown would be as follaws: A�30,000.00 cash award to be presented
to you at your obtaining your certificate of accupancy. A$35,OOQ.a�Q cash award at the
end of your first year (with satisfactary emplayment a£ at least 30 people). A$25,000.00
cash award at the end af the second year and at�other $25,�40.00 at th� end of your tivrd
year of operation (with the same level of employment stafed above ar more).
This recommendatian will ga #o the city council for approval and you will be notified
when thzs will happen and they will request your presence at that time. Additionally the
Board is recommending tax abatement for seven (7) years at SO% of allowabie
improvements with the city and Brazoria County. This is a recommendation only and you
must f le a reqtzest with the city fzrst and then with the couuty. This should be relatively
simple and searnless. I will help you when this needs to happen.
1 have thoroughly enjoyed meeting you and v►�rking with you on this praject. I am
hopeful and confidez�t that this will be #he beginning af great tlungs for Magtech.
Sincerely:
�
Gregg A. Albritton
Director Business Development
City of Pearland
3529 LIBERTY DRiVF�PBARLAND, TEXA3 77581•(281) 652-1627•FAX (281) 652-] 704�TOLL FREE (8U0) 240-3684
�,
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Ta; Randy Ferguson
From: Fred Welch
CG:
AEDC Board
Date: 10l2012006 • .
Re: Incentive Agreement Project �613 (Magtech)
Randy:
The company (Magtechj has asked PEDC to cansider an incentive package that would assist in the
relocation and expansion from their existing facility near Webster to Pearland. Assistance is requested
for relocation of equipment, infrasfructure needed to support the faciliry (drainage and detenfion} and in
recruitment and training of their work force. All areas are ones that fit within the criteria established by
PEDC and the Sfate of Texas to assisf qualified businesses.
Background: The f+rm (MagTech) is a manufacturer of level instrumentation For fhe process (ndustry.
The firtn has continued to grow anci prosper over the past several years and currently has sales in
excess of $7 million dollars annually,
The manufacturing faciliry contemplated by Wesmor will be approximately 25,000 square feet with
room to expand to 40,000 square fee€. Estimated cost for the facility and improvements Is at $2 million
dollars with an additional $900,000 in machinery and inventory moving to Ehe slte. 7he frm employs 40
persons and expects to expand to 50 within two years, Current payroli of $1.8 million dolla�s indicates
their average wage rate is $20.00 per hour or more. Competition for this project includes the cfty of
Webster and City of Wauston,
The PEDC staff has examined the request for assistance from Magtech and recommends the following
incentive package for Magtech
Cash Incentive - $100,000
$50,000 payable upon receipt of CO by city
$25,000 payable in iwo annual installrnents provided employment and investment levels in
Pea�land are maintained as stated above
Rac�mmend seven-year tax abatement with the City of Pearland and 8razoria County at the rate of
50%
Combined impact of al! incentives praposed by City of Pearland
Cesh Incentives $�00,000
Taxes Abated (city for 7 years) 68 000
�
Total lncentive $168,OOQ `
This works out to about $3400 per employee. The board mighf consider a slighfly higher eash incentive
in the range of $132,�00 plus the value of tt�e abatement, which would bring the value of the incentive
to around $4000 per employee. Our range for manufacturing related jobs has been in #his range in the
past.
7here have been no impufed values calculafed for indirect jobs and net tmpact Qf payroll flowing
through the city. tf past history were accurate I would expect a net payback to the city in fess than five
years an a package of this size, Staff recommends favorable action by the PEDC Board on fhis project.
Any incentive package �f $100,000 or more will also require approval of city council. PEDC may
recomrnend tax abatement on a project but that lies at the sole discretion of City Council
.��G!�?�G'�/
� Fred Welch -
� Page 2
Pearland EDC
Memo
To: Darrin Coker
From: Fred Welch
CC: City Manager/City Council
Date: 1/9/2008
Re: Mag Tech Tax Abatement
Darrin:
I want to clarify what has been presented to Mag Tech from the Pearland EDC vs. a staff memo that
was presented to the Pearland EDC Board when the Board took action on this project in October of
2006. The memo to the Board presented a range of incentives for the Board to consider based upon
the size of the relocation of this firm to Pearland and a recommendation for tax abatement.The range
of incentive grant from PEDC was between $100,000 and $135,000 based on the number of
employees brought to the city and the investment.The Board took action to award a grant of$135,000
to Mag Tech and a second firm WesMor Manufacturing. WesMor subsequently has elected to remain
in LaPorte and expand on existing property they own.
The tax abatement recommendation was for seven years at 50% which matches what the city has
considered in similar projects in the past—most recently Kemlon.This was a recommendation only.
In a letter to Mag Tech dated October 24, 2006 the PEDC stated the grant determined by the Board
and a recommendation for tax abatement from the city. Their were a number of circumstances that
prevented the firm from closing on their property until well into 2007. Among those items was access
from Magnolia with the new over pass being constructed and drainage issues for detention that took
longer than expected.The application for tax abatement started through the city in November after the
company had closed on the property, platted the property and began submittal of construction plans to
the city for review.
PEDC recently ran an impact analysis on this project which is enclosed for review by City Council and
Staff. This analysis was based upon the $135,000 grant provided by the PEDC. Using our normal
model for expansions and relocations the impact analysis shows a range of incentives for this project
from$158,000 to$370,000.The PEDC grant shows a positive cash flow to the city in 2.3 years.
The initial investment on this project has increased from $ 2 million to approximately $2.8 million. A
50% tax abatement would give an additional incentive of $64,582.00 over seven years bringing the
value of the city inducement to$199,582.00.This would bring the pay back to the city in approximately
3.6 years based upon the calculations in the impact analysis.The impact analysis is attached with this
memo. I would urge council to consider the seven year abatement at 50%.
Fred Welch
1
A Report ofthe
Economic Impact from
Mag Tech
in Pearland, Texas
December 29, 2007
Prepared for:
Pearland Economic Development Corporation
3519 Liberty Drive
Pearland, TX 77519
Prepared by:
Impact DataSource
4709 Cap Rock Drive
Austin, Texas 78735
(512) 892-0205
Fax (512) 892-2569
jwalker@onr.com
Impact to urn
1-
Table of Contents
The Report:
Introduction 3
Description of Possible Facility and its Operations 3
Economic Impact of the Facility and its Employees 3
Costs and Benefits for Local Taxing Entities Over the First 10 Years 4
Tax Abatement Being Considered for the Firm 5
Incentives that Could be Offered to the Firm 6
Conduct of the Analysis 7
About Impact DataSource 8
Data and Rates Used in the Analysis 9
Schedules Showing the Results of Economic Impact Calculations 16
Schedules Showing the Results of Costs and Benefits Calculations:
City of Pearland 21
Brazoria County 24
Pearland Independent School District 26
Brazoria County Drainage District#4 29
Page 2
ti
A Report of the Projected Economic Impact from
Mag Tech
Introduction
This report presents the results of an economic impact analysis performed by Impact DataSource,Austin,
Texas. The analysis was to determine the impact that Mag Tech will have on the economy of the Pearland
area and costs and benefits for the City of Pearland, Brazoria County, Pearland ISD and Brazoria County
Drainage District#4 over the next ten years.
Description of the Proposed Facility and its Operations
Mag Tech is a manufacturer of special gauges and process controls for the petrochemical industry. The
company has recently purchased 10 acres of land in Pearland and desire to move their operation to the city.
The estimated construction cost of the new facility is$2.6 million and equipment at the facility will cost$1.1
million. In addition, the company will have taxable inventories with avalue of$1.2 million.
The firm currently has 50 employees with annual payroll of$2.2 million. Further,'the company plans to add
5 to 9 workers a year for five years.
How the firm and its workers will impact the Pearland area economy is discussed next.
Economic Impact of the Facility and Its Employees
The facility, its employees and workers in spin-off jobs created in the community will have the following
economic impact on the Pearland area over the next ten years:
Economic Impact Over the
First Ten Years of Operations
Total number of new direct and indirect jobs to be created 244
Number of people who will move to the City 105
Number of new residential properties to be built in the city 4
Number of new students expected in Pearland ISD 30
Salaries to be paid to direct and indirect workers $81,648,084
Taxable sales expected in the City $25,519,488
The value, in Year 10, of new residential property to be built for $788,761
direct and indirect workers who move to the City
Taxable assets at the facility in Year 10 $5,884,430
How this economic impact translates into additional costs and benefits for local taxing entities is shown
on the following page.
Page 3
Costs and Benefits for Local Taxing Districts Over the First 10 Years
The City, County, School District and Drainage District can expect to receive the following net benefit
over the first 10 years from the facility, its employees and workers in indirect jobs created in the community:
Net Benefits Over the First Ten Years of Operations
Brazoria
County
City of Brazoria Drainage
Pearland County Pearland ISD District#4 Total
Additional revenues:
Sales and use taxes $382,792 $127,431 $510,223
Property taxes $357,909 $229,392 $881,509 $88,846 $1,557,656
Utilities $385,288 $385,288
Utility franchise fees $98,662 $98,662
Hotel occupancy taxes $4,341 $4,341
Other taxes and user fees $18,437 $18,437
Building permits and fees $0 $0
Additional state and federal school funding $1,099,245 $1,099,245
Total additional revenues $1,247,429 $356,823 $1,980,754 $88,846 $3,673,852
Additional costs:
Costs of services to new residents $153,646 $153,646
Costs of providing monthly utility $358,318 $358,318
services
Costs of educating new students $599,077 $599,077
Reduction in state school funding from $796,733 $796,733
new property being added to the
district's tax rolls
Total additional costs and reduction $511,963 $0 $1,395,811 $0 $1,907,774
in state school funding
Net benefits $735,466 $356,823 $584,943 $88,846 $1,766,078
The discounted cash flow over the first ten years for each local taxing district is as follows:
Discounted Cash Flow
Over the First Ten Years of Operations
City of Pearland $526,696
Brazoria County $259,191
Pearland ISD $433,833
Brazoria County Drainage District#4 $65,021
Page 4
"Discounted cash flow or present value of net benefits is a way of expressing in today's dollars, dollars to be
paid or received in the future. Today's dollar and a dollar to be received or paid at differing times in the
future are not comparable because of the time value of money. The time value of money is the interest rate
or each taxing entity's discount rate. This analysis uses a discount rate of 6%to make the dollars
comparable—by expressing them in today's dollars or in present value.
Tax Abatement Being Considered for the Firm
The City of Pearland and possibly Brazoria County are considering abating property taxes on the firm's
new facility at the following percentages:
Percentage of Taxes to
be Abated
City of
Pearland
Year 1 50%
Year2 50%
Year 3 50%
Year 4 • 50%
Year 5 50%
Year6 0%
Year 7 0%
Year 8 0%
Year 9 0%
Year 10 0%
If these taxes are abated as proposed, the following taxes will be abated by the City and County:
Taxes to be Abated •
City of
Pearland
Year 1 $8,680
Year 2 $8,853
Year 3 $9,030
Year 4 $9,211
Year 5 $9,395
Year 6 $0
Year 7 $0
Year 8 $0
Year 9 $0
Year 10 $0
Total $45,169
Page 5
Analysis of Incentives that PEDC is Considering for the Firm
The Pearland Economic Development Corporation has granted an incentive of$135,000 payable in four
installments of$50,000 upon the firm receiving its certificate of occupancy, $35,000 after the first year of
operation, $25,000 after the second year and$25,000 at the end of the third year.
Any incentives that PEDC may grant to the firm on behalf of the City may be considered an investment
that the City is making in the firm. The returns on that investment are the additional net benefits that the City
will receive from the firm and its direct and indirect workers. Net benefits for the City will be the additional
revenues, such as from sales, property and other taxes, less additional costs for the city.
A possible range of incentives could be between:
1. The discounted cash flow for the city over seven years--discounted at a rate of 6%--and
2. 30%of the discounted cash flow for the city over ten years--also discounted at a rate of 6%.
The discounted cash flow for the City over the first ten years is shown below.
Discounted Cash Flow for the City
Net Benefits
or Cash
Flow for the Annual Cumulative
City Discounted Discounted
(Non-discounted) Cash Flow Cash Flow
Year 1 $61,307 $57,836 $57,836
Year 2 $56,108 $49,936 $107,772
Year 3 $59,460 $49,924 $157,696
Year 4 $63,057 $49,947 $207,643
Year5 $68,862 $51,458 $259,101
Year 6 $80,185 $56,527 $315,628
Year 7 $82,218 $54,680 $370,308
Year 8 $85,077 $53,378 $423,686
Year 9 $88,050 $52,117 $475,803
Year 10 $91,142 $50,893 $526,696
Total $735,466 $526,696
Page 6
Therefore, if incentives guidelines are followed to provide incentives equivalent to the discounted cash flow
for the City(1)received over seven years and (2)30%of the discounted cash flow over ten years,then the
following are ranges of these possible incentives:
Possible Range of PEDC Incentives b.
Annual
Rate of Payback
Return on Period,
Incentive Investment in Years
Incentives granted $135,000 54% 2.3
The discounted cash flow for the city over seven years $370,308
30%of the discounted cash flow for the city over ten years $158,009
Range of possible incentives:
Low $158,009
High $370,308
Conduct of the Analysis
This analysis was conducted by Impact DataSource using data, rates and information supplied by the
Pearland Economic Development Corporation and Impact DataSource estimates and assumptions.
Using this data,the economic impact from the facility and the costs and benefits for the City of Pearland,
Brazoria County, Pearland ISD and Brazoria County Drainage District#4 were calculated for a ten year period.
In addition to the direct economic impact of the firm and its employees, spin-off or indirect and induced
benefits were also calculated. Indirect jobs and salaries are created in new or existing area firms, such
as parts suppliers,that may supply goods and services to the firm. In addition, induced jobs and
salaries are created in new or existing local businesses, such as retail stores, gas stations, banks,
restaurants, and service companies that may supply goods and services to workers and their families.
To estimate the indirect and induced economic impact of the facility and its employees on the Pearland
area, regional economic multipliers were used. Regional economic multipliers for Texas are included in the
US Department of Commerce's Regional Input-Output Modeling System (RIMS II).
Page 7
Two types of regional economic multipliers were used in this analysis: an employment multiplier and an
earnings multiplier.
An employment multiplier was used to estimate the number of indirect and induced jobs created and
supported in the Pearland area. An earnings multiplier was used to estimate the amount of salaries to
be paid to workers in these new indirect and induced jobs. The multipliers show the estimated number
of indirect and induced jobs created for every one direct job at the facility and the amount of salaries
paid to these workers for every dollar paid to a direct worker at the facility. The multipliers used in this
analysis are below:
Employment multiplier 1.8680
Earnings multiplier $1.0068
About Impact DataSource
Impact DataSource is a fourteen-year-old Austin economic consulting, research and analysis firm. The firm
has conducted economic impact analyses of numerous projects in Texas and fourteen other states. In
addition, the firm has developed economic impact analysis computer programs for clients, such as the
League of Kansas Municipalities and the New Mexico Economic Development Department.
The firm's principal, Jerry Walker, performed this economic impact analysis. He is an economist and has
Bachelor of Science and Master of Business Administration degrees in accounting and economics from
Nicholls State University,Thibodaux, Louisiana.
Data used in the analysis, along with schedules of the results of calculations, are on the following pages.
Page 8
Data and Rates Used in the Analysis
Page 9
Community information and rates:
City of Pearland sales tax rate 1.5%
Brazoria County sales tax rate 0.5%
City of Pearland hotel occupancy tax rate 7%
Property tax rates:
City of Pearland $0.6526
Brazoria County(.311396)and Road and Bridge Fund (.06) $0.371396
Pearland ISD $1.4272
Brazoria County Drainage District,#4 $0.143845
Expected inflation rate over the next 10 years 3.5%
Discount rate used in analysis to compute discounted cash flows 6%
Average taxable value of a new single family residence in the community $165,000
that will be built for individuals moving to Pearland
Percent annual increase in the taxable value of residential 2%
and commercial property on local tax rolls over the next 10 years
Marginal cost of providing municipal services, excluding $500
utilities,to each new household
Estimated other city revenues per new household-- $60
those revenues in addition to sales, hotel/motel and property taxes,
utilities, sanitation and utility franchise fees
Annual increase expected in other city revenues and marginal costs 2%
Estimated average annual water,wastewater and solid waste, per household, by $1,164
city-owned or city-provided utilities
The city's annual cost of providing water,wastewater and sanitation $1,083
collection per household (estimated at 93%of billings)
Annual increase expected in utility billings 2%
Estimated annual utility franchise fees collected from each household in the city $89.73
Page 10
Annual increase expected in utility franchise fee collections 2%
Utility franchise fee percentages for utilities provided by
outside service providers:
• Electricity 4%
Natural gas 2%
Cable 5%
Telephone:
Residential ($.77 per line charge per month)
Nonresidential ($.77 per line charge per month)
Pearland ISD rates:
Annual state aid for each new child enrolled $3,400
in the school district
Estimated average annual cost of providing services to each $8,500
child in the school district
Estimated marginal cost of providing services to each new student $2,550
for a small number of new students--estimated at 30%of average
costs for existing students
Information on the Facility and its Employees:
Value of assets at the facility to be added to local tax rolls:
Buildings and Furniture,
Related Fixtures and
Land Improvements Equipment Total
Year 1 $430,000 $2,660,000 $1,100,000 $4,190,000
Total ' $430,000 $2,660,000 $1,100,000 $4,190,000
Estimated taxable inventories:
Total Taxable
Year 1 $1,200,000 $1,200,000
Year 2 $1,260,000 $1,260,000
Year 3 $1,323,000 $1,323,000
Page 11
Year4 $1,389,150 $1,389,150
Year 5 $1,458,608 $1,458,608
Year 6 $1,531,538 $1,531,538
Year 7 $1,608,115 $1,608,115
Year 8 $1,688,521 $1,688,521
Year9 $1,772,947 $1,772,947
Year 10 $1,861,594 $1,861,594
Expected annual increase in inventory values and levels 5%
Depreciation schedule used to calculate the taxable value of furniture,fixtures and equipment:
According to the Brazoria County Appraisal District, furniture, fixtures and equipment are
depreciated using a 10 year fife and a 30%residual value. Therefore, the depreciable or
taxable value of the firm's FF&E assets will be as follows:
Percent of
Asset Cost
that will be
Taxed
Year 1 90%
Year 2 80%
Year 3 70%
Year 4 60%
Year 5 50%
Year 6 40%
Year 7 • 30%
Year 8 30%
Year 9 30%
Year10 30%
The firm's additional utilities:
Annual Monthly
Usage Usage
Water $1,800 $150
Wastewater $1,800 $150
Solid waste $12,000 $1,000
Electricity $114,000 $9,500
Natural gas $6,600 $550
Total $136,200 $11,350
Estimated annual increase in utility rates and usage:
Water 5%
Wastewater 5%
Solid waste 5%
Page 12
•
Electricity 5%
Natural gas 5%
Estimated number of telephone lines for calculating line access fees 10
that will be collected by the City
The facility's estimated local taxable purchases of supplies, materials and services:
Year 1 $45,000
Year.2 $47,250
Year 3 $49,613
Year 4 $52,093
Year 5 $54,698
Year 6 $57,433
Year 7 $60,304
Year 8 $63,320
Year 9 $66,485
Year 10 $69,810
Annual increase in local taxable purchases of supplies, materials and services 5%
after the first year
Number of workers at the facility:
Workers Total
Added Number of
At the Facility Workers at
Each Year the Facility
Year 1 57 57
Year 2 7 64
Year 3 7 71
Year 4 7 78
Year 5 7 85
Year 6 0 85
Year 7 0 85
Year 8 0 85
Year 9 0 85
Year 10 0 85
Total 85
Estimated number of workers who will move to Pearland to work
at the facility(about 20% of workers):
Year 1 •11
Year 2 1
Page 13
Year 3 1
Year 4 1
Year 5 1
Year 6 0
Year 7 0
Year 8 0
Year 9 0
Year 10 0
Total 15
Annual payroll:
Year 1 $2,508,000
Year 2 $2,914,560
Year 3 $3,346,507
Year 4 $3,805,120
Year 5 $4,291,736
Percent of expected annual increase in annual payroll after year 5 3.50%
Multipliers for calculating the number of indirect and induced jobs and earnings in the community:
Earnings $1.0068
Employment 1.8680
This cost-benefit analysis uses the above multipliers to calculate the
number of spin-off jobs created in the community and their earnings.
Percent of the employees to be hired in spin-off jobs created in the community 10%
who will move to Pearland
Percent of workers who move to the community that will require the building 20%
of new residential property in the first ten years
The number of people in a typical worker's household 3.5
The number of school children in a typical worker's household: 1.25
Percent of retail shopping by a typical worker in the city 70%
Spending during construction and purchases of furniture,fixtures and equipment:
Estimated building and other construction costs:
Year 1 $2,660,000
Year2 $0
Year 3 $0
Year 4 $0
Year 5 $0
Page 14
Year 6 $0
Year 7 $0
Year 8 $0
Year 9 $0
Year 10 $0
Percent of construction costs for:
Materials 50%
Labor 50%
Percent of construction materials that will be purchased in the city and subject 30%
to sales tax
Percent of taxable spending by construction workers in the City 30%
Out-of-town visitors to the facility:
Estimated number of out-of-town visitors to the facility each year 50
Average increase in the number of out-of-town visitors 5%
Average number of days that each of these visitors will stay in the city 1
Estimated daily visitor spending in the City, excluding spending on motels $50
Estimated number of nights that a typical visitor will stay in a motel in city 1
Average daily motel room rate of a Pearland hotel/motel $85
Page 15
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Schedules Showing the Results of Economic Impact Calculations
Page 16
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e
Number of local jobs and worker salaries:
Direct Indirect Total Direct Indirect Total
Year Jobs Jobs Jobs Salaries Salaries Salaries
1 57 106 163 $2,508,000 $2,525,054 $5,033,054
2 7 13 20 $2,914,560 $2,934,379 $5,848,939
3 7 13 20 $3,346,507. $3,369,263 $6,715,770
4 7 13 20 $3,805,120 $3,830,995 $7,636,114
5 7 13 20 $4,291,736 $4,320,920 $8,612,656
6 0 0 0 $4,441,947 $4,472,152 $8,914,099
7 0 0 0 $4,597,415 $4,628,677 $9,226,092
8 0 0 0 $4,758,324 $4,790,681 $9,549,005
9 0 0 0 $4,924,866 $4,958,355 $9,883,221
10 0 0 0 $5,097,236 $5,131,897 $10,229,133
Total 85 159 244 $40,685,711 $40,962,374 $81,648,084
Number of new direct and indirect workers and their families who will move
to the area and their children who will attend Pearland ISD schools:
Year Residents Students
1 76 22
2 8 2
3 7 2
4 7 2
5 7 2
6 0 0
7 0 0
8 0 0
9 0 0
10 0 0
Total 105 30
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Local taxable spending on which sales taxes will be collected:
The Facility's
Direct and Local Purchases
Purchases and Indirect Gross Taxable and
Spending during Workers' Visitors' Sales at the Taxable
Year Construction Spending Spending Facility Utilities Total
1 $538,650 $1,409,255 $2,500 $0 $165,600 $2,116,005
2 $0 $1,637,703 $2,704 $0 $173,880 $1,814,287
3 $0 $1,880,416 $2,924 $0 $182,574 $2,065,914
4 $0 $2,138,112 $3,162 $0 $191,703 $2,332,977
5 $0 $2,411,544 $3,420 $0 $201,288 $2,616,252
6 $0 $2,495,948 $3,699 $0 $211,352 $2,710,999
7 $0 $2,583,306 $4,000 $0 $221,920 $2,809,226
8 $0 $2,673,722 $4,326 $0 $233,016 $2,911,064
9 $0 $2,767,302 $4,679 $0 $244,667 $3,016,647
10 $0 $2,864,157 $5,060 $0 $256,900 $3,126,118
Total $538,650 $22,861,464 $36,475 $0 $2,082,899 $25,519,488
•
Local spending by visitors on lodging:
Spending
Year on Lodging
1 $4,250
2 $4,596
3 $4,971
4 $5,376
5 $5,814
6 $6,288
7 $6,801
8 $7,355
9 $7,954
10 $8,603
Total $62,008
Page 18
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Number of new residential properties to be built in the community:
New
Year Properties
1 4
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
10 0
Total 4
Taxable value of new residential property built for some direct and indirect workers who move to
community and the facility's property on local tax rolls:
New Total
Residential Property at Taxable
Year Property the Facility Property
1 $660,000 $5,280,000 $5,940,000
2 $673,200 $5,291,800 $5,965,000
3 $686,664 $5,307,836 $5,994,500
4 $700,397 $5,328,283 $6,028,680
5 $714,405 $5,353,323 $6,067,728
6 $728,693 $5,383,148 $6,111,841
7 $743,267 $5,417,957 $6,161,224
8 $758,133 $5,567,959 $6,326,092
9 $773,295 $5,723,374 $6,496,669
10 $788,761 $5,884,430 $6,673,191
Page 19
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Schedules Showing the Results of Costs and Benefits Calculations
Page 20
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Costs and Benefits for the City of Pearland:
Benefits:
Sales tax collections on spending:
•
The Facility's
Spending by Local
Purchases and Direct and Gross Taxable Purchases
Spending during Indirect Visitors' Sales at and Taxable
Year Construction Workers Spending the Facility Utilities Total
1 $8,080 $21,139 $38 $0 $2,484 $31,740
2 $0 $24,566 $41 $0 $2,608 $27,214
3 $0 $28,206 $44 $0 $2,739 $30,989
4 $0 $32,072 $47 $0 $2,876 $34,995
5 $0 $36,173 $51 $0 $3,019 $39,244
6 $0 $37,439 $55 $0 $3,170 $40,665
7 $0 $38,750 $60 $0 $3,329 $42,138
8 $0 $40,106 $65 $0 $3,495 $43,666
9 $0 $41,510 $70 $0 $3,670 $45,250
10 $0 $42,962 $76 $0 $3,853 $46,892
Total $8,080 $342,922 $547 $0 $31,243 $382,792
Hotel occupancy taxes collected from visitors to the facility:
Hotel
Occupancy
Tax
Year Collections
1 $298
2 $322
3 $348
4 $376
5 $407
6 $440
7 $476
8 $515
9 $557
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0
10 $602
Total $4,341
Costs and benefits for the City of Pearland-Continued: .
Property tax collections on:
The Facility's Property
New Residential Property Less Taxes Taxes
Year Property Taxes Abated Collected Total
1 $4,307 $34,457 $8,680 $25,778 $30,085
2 $4,393 $34,534 $8,853 $25,681 $30,074
3 $4,481 $34,639 $9,030 $25,609 $30,090
4 $4,571 $34,772 $9,211 $25,562 $30,132
5 $4,662 $34,936 $9,395 $25,541 $30,203
6 $4,755 $35,130 $0 $35,130 $39,886
7 $4,851 $35,358 $0 $35,358 $40,208
8 $4,948 $36,337 $0 $36,337 $41,284
9 $5,047 $37,351 $0 $37,351 $42,397
10 $5,147 $38,402 $0 $38,402 $43,549
Total $47,162 $355,916 $45,169 $310,747 $357,909
Utilities and utility franchise fees collected by the city from the facility and from new
residents and miscellaneous taxes and user fees collected by the city from
new residents and building permits and fees
Utility Misc.Taxes Building
Franchise and User Permits and
Year Utilities Fees Fees Fees Total
1 $26,998 $6,819 $1,299 $0 $35,116
2 $30,332 $7,125 $1,466 $38,923
3 $33,417 $7,576 $1,620 $42,614
4 $36,615 $8,044 $1,780 $46,439
5 $40,660 $10,429 $1,945 $53,034
6 $41,560 $10,837 $1,984 $54,382
7 $42,483 $11,265 $2,024 $55,772
8 $43,429 $11,712 $2,065 $57,206
9 $44,399 $12,181 $2,106 $58,686
10 $45,394 $12,673 $2,148 $60,214
Page 22
d
Total $385,288 $98,662 $18,437 $0 $502,387
Costs and benefits for the City of Pearland-Continued:
Costs for the City of Pearland:
The costs of providing municipal services to new residents and the costs of utilities:
Costs of
Providing
Services to New Costs of
Year Residents Utilities Total Costs
1 $10,824 $25,108 $35,932
2 $12,217 $28,208 $40,426
3 $13,502 $31,078 $44,580
4 $14,833 $34,052 $48,886
5 $16,212 $37,813 $54,026
6 $16,537 $38,651 $55,188
7 $16,867 $39,509 $56,377
8 $17,205 $40,389 $57,594
9 $17,549 $41,291 $58,840
10 $17,900 $42,216 $60,116
Total $153,646 $358,318 $511,963
Net Benefits for the City of Pearland:
Net Cumulative
Year Benefits Costs Benefits Net Benefits
1 $97,239 $35,932 $61,307 $61,307
2 $96,534 $40,426 $56,108 $117,414
3 $104,040 $44,580 $59,460 $176,875
4 $111,943 $48,886 $63,057 $239,932
5 $122,888 $54,026 $68,862 $308,794
6 $135,373 $55,188 $80,185 $388,979
7 $138,595 $56,377 $82,218 $471,197
8 $142,671 $57,594 $85,077 $556,274
9 $146,890 $58,840 $88,050 $644,324
10 $151,257 $60,116 $91,142 $735,466
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a
Total $1,243,088 $511,963 $735,466
Costs and Benefits for Brazoria County:
Benefits:
Sales tax collections on spending:
The Facility's
Spending by Local
Purchases and Direct and Gross Taxable Purchases
Spending during Indirect Visitors' Sales at and Taxable
. Year Construction Workers Spending the Facility Utilities Total
1 $2,693 $7,046 $13 $0 $828 $10,580
2 $0 , $8,189 $0 $0 $869 $9,058
3 $0 $9,402 $0 $0 $913 $10,315
4 $0 $10,691 $0 $0 $959 $11,649
5 $0 $12,058 $0 $0 $1,006 $13,064
6 • $0 $12,480 $0 $0 $1,057 $13,537
7 $0 $12,917 $0 $0 $1,110 $14,026
8 $0 $13,369 $0 $0 $1,165 $14,534
9 $0 $13,837 $0 $0 $1,223 $15,060
10 $0 $14,321 $0 $0 $1,284 $15,606
Total $2,693 $114,307 $16 $0 $10,414 $127,431
Property Tax Collections on:
The Facility's Property
New Residential Property Less Taxes Taxes
Year Property Taxes Abated Collected Total
1 $2,451 $19,610 - $0 $19,610 $22,061
2 $2,500 $19,654 $0 $19,654 $22,154
3 $2,550 $19,713 $0 $19,713 $22,263
4 $2,601 $19,789 $0 $19,789 $22,390
5 $2,653 $19,882 $0 $19,882 $22,535
6 $2,706 $19,993 $0 $19,993 $22,699
7 $2,760 $20,122 $0 $20,122 $22,883
8 $2,816 $20,679 $0 $20,679 $23,495
9 $2,872 $21,256 $0 $21,256 $24,128
Page 24
10 $2,929 $21,855 $0 $21,855 $24,784
Total $26,840 $202,552 $0 $202,552 $229,392
Net Benefits for the County:
Net Cumulative
Year Benefits Costs Benefits Net Benefits
1 $32,641 $0 $32,641 $32,641
2 $31,212 $0 $31,212 $63,853
3 $32,579 $0 $32,579 $96,432
4 $34,040 $0 $34,040 $130,471
5 $35,600 $0 $35,600 $166,071
6 $36,236 $0 $36,236 $202,307
7 $36,909 $0 $36,909 $239,216
8 $38,029 $0 $38,029 $277,245
9 $39,189 $0 $39,189 $316,434
10 $40,390 $0 $40,390, $356,823
Total $356,823 $0 $356,823
Page 25
Costs and Benefits for the Pearland ISD:
Property taxes to be collected on new property added to tax rolls:
Property Tax Collections on:
Total
New Residential The Facility's Property Tax
Year Property Property Collections
1 $9,420 $75,356 $84,776
2 $9,608 $75,525 $85,132
3 $9,800 $75,753 $85,554
4 $9,996 $76,045 $86,041
5 $10,196 $76,403 $86,599
6 $10,400 $76,828 $87,228
7 $10,608 $77,325 $87,933
8 $10,820 $79,466 $90,286
9 $11,036 $81,684 $92,720
10 $11,257 $83,983 $95,240
Total $103,141 $778,368 $881,509
Reduction in State Aid to the School District as a Result of New Property Being
Added to Tax Rolls:
Reduction in
Year State Aid
1 $0
2 $85,132
3 $85,554
4 $86,041
5 $86,599
6 $87,228
7 $87,933
8, $90,286
Page 26
9 $92,720
10 $95,240
Total $796,733
Costs and Benefits for Pearland ISO-Continued
Additional State Aid for New Children who Move to the District.
Additional
Year State Aid
1 $74,800
2 $84,048
3 $93,784
4 $104,028
5 $114,802
6 $118,246
7 $121,793
8 $125,447
9 $129,211
10 $133,087
Total $1,099,245
Costs of educating children of new workers who move to the district:
Costs of
Educating Children
Year of New Resident Workers
1 $44,880
2 $49,450
3 $54,106
4 $58,851
5 $63,685
6 $64,322
7 $64,965
8 $65,615
9 $66,271
Page 27
10 $66,934
Total $599,077
Costs and Benefits for Pearland ISD-Continued
Net Benefits for Pearland ISD:
Reduction in
State Aid
and
Additional Net Cumulative
Year Benefits Costs Benefits Net Benefits
1 $159,576 $44,880 $114,696 $114,696
2 $169,180 $134,582 $34,598 $149,294
3 $179,337 $139,660 $39,677 $188,972
4 $190,069 $144,892 $45,177 $234,148
5 $201,401 $150,284 $51,117 $285,265
6 $205,474 $151,550 $53,924 $339,189
7 $209,726 $152,898 $56,828 $396,018
8 $215,733 $155,901 $59,832 $455,850
9 $221,931 $158,991 $62,940 $518,790
10 $228,327 $162,173 $66,153 $584,943
Total $1,980,754 $1,395,811 $584,943
Page 28
Costs and Benefits for Brazoria Count Drainage District#4
Net Benefits:
Property Tax Collections on:
New Residential The Facility's Total Property Net Cumulative
Year Property Property Tax Collections Benefits Net Benefits
1 $949 $7,595 $8,544 $8,544$8,52 44,544
3 $7,612 $8,580 $8,580 $17,125
4 $988 $7,635 $8,623 $8,623 $25,748
5 $1,007 $7,664 $8,672 • $8,672 $34,419
6 $1,028 $7,700 $8,728 $8,728 $43,148
7 $1,048 $7,743 $8,792 $8,792 $51,939
$1,069 $7,793 $8,863 $8,863 $60,802
8 $1,091 $8,009 $9,100 $9,100 $69,902
9 $1,112 $8,233 $9,345
$9,345 $79,247
10 $1,135
$8,464 $9,599 $9,599 $88,846
Total $10,395 $78,450 $88,846 $88,846
Page 29
f
Analysis of Possible Incentives Using Rate of Return on Investment for
Mag Tech
December 29,2007
An Explanation of Possible PEDC Incentives and Rate of Return on Investment:
Any incentives that PEDC may grant to the firm on behalf of the City may be considered an investment
that the City is making in the firm. The returns on that investment are the additional net benefits that the
the City will receive from the firm and its direct and indirect workers. Net benefits for the City will be the
additional revenues, such as from sales, property and other taxes, less additional costs for the city.
Rate of return on investment is the City's average annual rate of return from additional net revenues
that the City will receive on the investment of incentives that the City will be making in the firm's
facility. Payback period is the number of years that it will take the City to recover the costs of
incentives from the additional net revenues that it will receive from the project.
Possible Level of Incentives and Rate of Return on Investment:
The Pearland Economic Development Corporation has granted an incentive of$135,000 payable in four
installments of$50,000 upon the firm receiving its certificate of occupancy, $35,000 after the first year of
operation,$25,000 after the second year and$25,000 at the end of the third year.
Therefore, if incentives guidelines are followed to provide incentives equivalent to the discounted cash flow
for the City (1) received over seven years and (2)30% of the discounted cash flow over ten years, then the
following are ranges of these possible incentives:
Possible Range of PEDC Incentives.
Annual
Rate of Payback
Return on Period,
Incentive Investment in Years
Incentives granted $135,000 54% 2.3
The discounted cash flow for the city over seven years $370,308
30% of the discounted cash flow for the city over ten years $158,009
Range of possible incentives:
Low $158,009
High $370,308