R2003-0121 08-25-03RESOLUTION NO. R2003-121
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS, UPDATING AND APPROVING THE CITY'S GUIDELINES AND
CRITERIA FOR GRANTING TAX ABA TEMENT IN A REINVESTMENT
ZONE CREA TED IN THE CITY OF PEARLAND, BRAZORIA COUNTY,
TEXAS, FOR PURPOSES OF BRINGING IT INTO COMPLIANCE WITH
CURRENT STATE LAWS; CLARIFYING THE DURATION OF TAX
ABATEMENT AGREEMENTS AND THE AMOUNT OF TAXES THAT MAY
BE ABATED; CHANGING THE MINIMUM CAPITAL INVESTMENT
REQUIRED; AND CHANGING THE NOTICE REQUIREMENTS FOR
HOLDING PUBLIC HEARINGS FOR TAX ABATEMENT; HAVING A
SAVINGS CLAUSE, A REPEALER CLAUSE, AND A SEVERABILITY
CLAUSE.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That Resolution No. R2003-121 ("Guidelines and Criteria for
Granting Tax Abatement") is hereby accepted in compliance with state law and shall
read as follows:
"RESOLUTION NO. R2003-121
GUIDELINES AND CRITERIA FOR GRANTING TAX ABATEMENT
IN A REINVESTMENT ZONE CREATED IN THE CITY OF PEARLAND,
BRAZORIA COUNTY, TEXAS
WHEREAS, the creation and retention of job opportunities that bring new wealth
is the highest civic priority; and
WHEREAS, new jobs and investment will benefit the area economy, provide
needed opportunities, strengthen the real estate market and generate tax revenue to
support local services; and
WHEREAS, the City must compete with other localities across the nation
currently offering tax inducements to attract new plant and modernization projects;
and
RESOLUTION NO. R2003-121
WHEREAS, any tax incentives offered in the City would reduce needed
tax revenue unless strictly limited in application to those new and existing industries
that bring new wealth to the community; and
WHEREAS, any tax incentives should not adversely affect the competitive
position of existing companies operating in Pearland, Texas; and
WHEREAS, the abatement of property taxes, when offered to attract primary
jobs in industries which bring in money from outside a community instead of merely
recirculating dollars within a community, has been shown to be an effective method of
enhancing and diversifying an area's economy; and
WHEREAS, effective September 1, 1987, Texas law requires any eligible taxing
jurisdiction to establish Guidelines and Criteria as to eligibility for tax abatement
agreements prior to granting of any future tax abatement, said Guidelines and Criteria
to be unchanged for a two year period unless amended by a three-quarters vote; and
WHEREAS, to assure a common, coordinated effort to promote our
communities' economic development, any such Guidelines and Criteria should be
adopted only through the cooperation of affected governmental entities; and
WHEREAS, the attached Guidelines and Criteria shall be considered as a
common policy for all jurisdictions which choose to participate in tax abatement
agreements;
Now, therefore be it resolved that the City Council of the City of Pearland does
hereby propose for consideration and adoption these Guidelines and Criteria for
granting tax abatement in reinvestment zones in the City of Pearland, as amended.
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RESOLUTION NO. R2003-121
DEFINITIONS Section I
(a)
"Abatement" means the full or partial exemption from ad valorem taxes of
certain real property in a reinvestment zone designated by the City of Pearland
for economic development purposes.
(b)
"Affected jurisdiction" means any county and any municipality or school district,
the majority of which is located in Brazoria County, that levies ad valorem taxes
upon and provides services to property located within the proposed or existing
reinvestment zone designated by the City of Pearland.
(c)
"Agreement" means a contractual agreement between a property owner and/or
lessee and the City of Pearland for the purposes of tax abatement.
(d)
"Base year value" means the assessed value of eligible property January 1
preceding the execution of the agreement plus the agreed upon value of eligible
property improvements made after January 1 but before the execution of the
agreement.
(e)
"Deferred maintenance" means improvements necessary for continued
operations which do not improve productivity or alter the process technology.
(f)
"Distribution Center Facility" means buildings and structures, including
machinery and equipment, used or to be used primarily to receive, store, service
or distribute goods or materials owned by the facility operator where a majority
of the goods or services are distributed to points at least 50 miles from its
location in Pearland.
(g)
"Expansion" means the addition of buildings, structures, machinery or equipment
for purposes of increasing production capacity.
(h)
"Facility" means property improvements completed or in the process of
construction which together compromise an integral whole.
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RESOLUTION NO. R2003-121
(i)
"Manufacturing Facility" means buildings and structures, including machinery
and equipment, the primary purpose of which is or will be the manufacture of
tangible goods or materials or the processing of such goods or materials by
physical or chemical change.
(j)
"Modernization" means the replacement and upgrading of existing facilities
which increases the productive input or output, updates the technology or
substantially lowers the unit cost of the operation. Modernization may result
from the construction, alteration or installation of building, structures, fixed
machinery or equipment. It shall not be for the purpose of reconditioning,
refurbishing or repairing.
(k)
"New Facility" means a property previously undeveloped which is placed into
service by means other than or in conjunction with expansion or modernization.
(I)
"Other Basic Industry" means buildings and structures including fixed machinery
and equipment not elsewhere described, used or to be used for the production
of products or services which serve a market primarily outside the
Brazoria Primary Metropolitan Statistical Area and result in the creation of new
permanent jobs and create new wealth in the PMSA.
(m)
"Productive Life" means the number of years a property improvement is
expected to be in service.
(n)
"Regional Entertainment Facility" means buildings and structures, including
machinery and equipment, used or to be used to provide entertainment through
the admission of the general public where the majority of users reside at least
50 miles from its location in the City of Pearland.
(o)
"Research Facility" means building and structures, including machinery and
equipment, used or to be used primarily for research of experimentation to
improve or develop new tangible goods or materials or to improve or develop the
production processes thereto.
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RESOLUTION NO. R2003-121
(p)
"Regional Service Facility" means buildings and structures, including machinery
and equipment, used or to be used to service goods where a majority of the
goods being serviced originate at least 50 miles from the facility's location in
Pearland.
ABATEMENT AUTHORIZED Section 2
(a)
Authorized Facility. A facility may be eligible for abatement if it is a:
Manufacturing Facility, Research Facility, Distribution Center or Regional Service
Facility, Regional Entertainment Facility or Other Basic Industry.
(b)
Creation of New Value. Abatement may only be granted for the additional value
of eligible property improvements made subsequent to and specified in an
abatement agreement between the City of Pearland and the property owner of
lessee, subject to such limitations as the City Council may require.
(c)
New and Existing Facilities. Abatement may be granted for new facilities and
improvements to existing facilities for purposes of modernization or expansion.
(d)
Eligible Property. Abatement may be extended to the value of building,
structures, fixed machinery and equipment, site improvements plus that office
space and related fixed improvements necessary to the operation and
administration of the facility.
(e)
Ineligible Property. The following types of property shall be fully taxable and
ineligible for abatement: land; inventories; supplies; tools; furnishings, and other
forms of movable personal property; vehicles; vessels; aircraft; housing; hotel
accommodations; retail facilities; deferred maintenance investments; property to
be rented or leased except as provided in Section 2(f); property owned or used
by the State of Texas or its political subdivisions or by any organization owned,
operated or directed by political subdivision of the State of Texas.
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RESOLUTION NO. R2003-121
(f)
Owned/Leased Facilities. If a leased facility is granted abatement, the
agreement shall be executed with the lessor and the lessee. Publicly owned
land leased to private entities shall be eligible if otherwise qualified.
(g)
Value and Term of Abatement. Abatement shall be granted effective with the
January 1 valuation date immediately following the date of execution of the
agreement. Up to one hundred percent of the value of new eligible properties
shall be abated for up to two years during the period of construction and for up
to eight years thereafter or one-half (1/2) the productive life of the improvement
whichever is less. The abatement may be extended through an initial agreement
and a subsequent agreement as may be required to comply with state law
regarding the term of a reinvestment zone. If the period of construction
exceeds two years the facility shall be considered completed for purposes of
abatement and in no case shall the period of abatement inclusive of construction
and completion exceed ten years.
If a modernization project includes facility replacement, the abated value shall be the
value of the new unit(s) less the value of the old unit(s).
(h)
Economic Qualification. In order to be eligible for designation as a reinvestment
zone and receive tax abatement the planned improvement:
(1)
Must be reasonably expected to increase the value of the property in the
amount of $500,000 or more;
(2)
must be expected to prevent loss of employment, retain or create
employment for at least 10 people on a permanent basis in the City of
Pearland; and
(3)
must not be expected to solely or primarily have the effect of transferring
employment from one part of Pearland to another; and
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RESOLUTION NO. R2003-121
(4)
must be necessary because capacity cannot be provided efficiently
utilizing existing improved property.
(i)
Taxability. From the execution of the abatement contract to the end of the
agreement period, taxes shall be payable as follows;
(1)
the value of ineligible property as provided in Section 2(e) shall be fully
taxable;
(2)
the base year value of existing eligible property as determined each year
shall be fully taxable; and,
(3)
the additional value of new eligible property shall be taxable in the
manner described in Section 2(g).
APPLICATION Section 3
(a)
Any present or potential owner of taxable property in the City of Pearland may
request the creation of a reinvestment zone and tax abatement by filing a
written request with the City of Pearland.
(b)
The application shall consist of a completed application form accompanied by: a
general description of the proposed use and the general nature and extent of the
modernization, expansion or new improvements to be undertaken; a descriptive
list of the improvements which will be a part of the facility; a map and property
description; a time schedule for undertaking and completing the planned
improvements. In the case of modernizing a statement of the assessed value of
the facility, separately stated for real and personal property, shall be given for
the tax year immediately preceding the application. The application form may
require such financial and other information as the City Council deems
appropriate for evaluating the financial capacity and other factors of the
applicant.
RESOLUTION NO. R2003-121
(c)
Upon receipt of a completed application, the City Manager shall notify in writing
the presiding officer of the legislative body of each affected jurisdiction of the
application and a public hearing, not less than 15 days prior to the hearing.
Notice of the public hearing shall also be properly posted and published in the
City's official newspaper not less than 15 days prior to the hearing. Before
acting upon the application, the City of Pearland shall through public hearing
afford the applicant and the designated representative of any affected
jurisdiction opportunity to show cause why the abatement should or should not
be granted.
(d)
After receipt of an application for creation of a reinvestment zone and
application for abatement, the City of Pearland shall prepare a feasibility study
setting out the impact of the proposed reinvestment zone and tax abatement.
The feasibility study shall include, but not be limited to, an estimate of the
economic effect if the creation of the zone and the abatement of taxes and the
benefit to the eligible jurisdiction and the property to be included in the zone.
(e)
The City Council shall not establish a reinvestment zone for the purpose of
abatement if it finds that the request for the abatement was filed after the
commencement of construction, alteration, or installation of improvements
related to a proposed modernization, expansion or new facility.
(f)
Variance. Requests for variance from the provisions of Subsections (a), (e), and
(g) of Section 2 must be made in writing to the City Manager of the City of
Pearland, provided, however, the total duration of an abatement shall in no
instance exceed ten years. Such request shall include a complete description of
the circumstances explaining why the applicant should be granted a variance.
Approval of a request for variance requires a three-fourths (3/4) vote of the City
Council.
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RESOLUTION NO. R2003-121
PUBLIC HEARING Section 4
(a)
Should any affected jurisdiction be able to show cause in the public hearing why
the granting of abatement will have a substantial adverse effect on its bonds,
tax revenue, service capacity or the provision of service, that showing shall be
reason for the City Council to deny designation of the reinvestment zone, the
granting of abatement, or both.
(b)
Neither a reinvestment zone nor abatement agreement shall be authorized if it is
determined that:
(1) there would be a substantial adverse affect on the provision of
government service or tax base;
(2) the applicant has insufficient financial capacity;
(3)
planned or potential use of the property would constitute a hazard to
public safety, health or morals; or
(4) violation of other codes or laws.
After the public hearing the City must:
(1)
find that the improvements sought are feasible and would be of benefit
the zone after expiration of the agreement;
(2)
that the zone is reasonably likely to contribute to the retention or
expansion of primary employment or to attract major investment in this
area; and
(3) the City Council must also designate property as a "reinvestment zone".
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RESOLUTION NO. R2003-121
AGREEMENT Section 5
At least 7 days before the City Council grants a tax abatement, it must deliver
written notice of its intent to enter into the tax abatement agreement to the presiding
officer of the legislative body of each affected jurisdiction. Said notice must include a
copy of the proposed tax abatement agreement.
(a)
After proper notice has been given to effected jurisdictions, the City Council
shall, at a regularly scheduled meeting, adopt the tax abatement agreement by a
majority vote and execute an agreement with the owner of the facility and
lessee as required which shall:
(1)
include a list of the kind, number, and location of improvements to the
property;
(2)
authorize inspection of the property to ensure compliance with the
agreement;
(3)
limit the use of the property consistent with the City's development
goals; and
(4)
provide for recapturing property tax revenues that are lost if the owner
fails to make the improvements.
or applicant shall be notified in writing within 60 days that his application has been
disapproved.
(b)
'312.205(b) of the Tax Code contains optional provisions that City Council may
also include in the tax abatement agreement.
Such agreement shall be executed within 60 days after the applicant has forwarded all
necessary information and documentation to the City Council.
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RESOLUTION NO. R2003-121
(c)
no later than March 31 of the year a reinvestment zone has been
designated or a tax abatement agreement has been executed, the City
Manager must deliver a report to the State Property Tax Board and the
Texas Department of Commerce, briefly describing the terms of the zone
or the agreement.
RECAPTURE Section 6
(a)
In the event that the facility is completed and 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 the agreement shall
terminate and so shall the abatement of taxes for the calendar year during
which the facility no longer produces. The taxes otherwise abated for that
calendar year shall be paid to the City of Pearland within sixty (60) days from
the date of termination.
(b)
Should the City Council determine that the company or individual is in default
according to the terms and conditions of its agreement, the City Council shall
notify the company or individual in writing at the address stated in the
agreement, and if such is not cured within sixty (60) days from the date of such
notice (Acure period@), then the agreement may be terminated.
(c)
In the event that the company or individual (1) allows its ad valorem taxes owed
to any affected taxing entity to become delinquent and fails to timely and
properly follow the legal procedure for their protest and/or contest, or
(2) violates any of the terms and conditions of the abatement agreement and
fails to cure during the Cure Period, the agreement then may be terminated and
all taxes previously abated by virtue of the agreement will be recaptured and
paid within sixty (60) days of the termination.
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RESOLUTION NO. R2003-121
ADMINISTRATION Section 7
(a)
The local Tax Assessor/Collector shall annually determine an assessment of the
real and personal property comprising a reinvestment zone. Each year, the
company or individual receiving abatement shall furnish the assessor with such
information as may be necessary for the abatement. Once value has been
established, the Chief Appraiser shall notify the affected jurisdictions which
levies taxes on the amount of the assessment.
(b)
The agreement shall stipulate that employees and/or designated representatives
of the City of Pearland will have access to the reinvestment zone during the
term of the abatement to inspect the facility to determine if the terms and
conditions of the agreement are being met. All inspections will be made only
after the giving of twenty-four (24) hours prior notice and will only be
conducted in such manner as to not unreasonably interfere with the
construction and/or operation of the facility. All inspections will be made with
one or more representatives of the company or individual and in accordance
with its safety standards.
(c)
Upon completion of construction the City of Pearland shall annually evaluate
each facility and report possible violations to the contract and agreement to the
City Council and its attorney.
ASSIGNMENT Section 8
Abatement may be transferred and assigned by the holder to a new owner or lessee of
the same facility upon the approval by resolution of the City Council subject to the
financial capacity of the assignee and provided that all conditions and obligations in the
abatement agreement are guaranteed by the execution of a new contractual agreement
with the City of Pearland. No assignment or transfer shall be approved if the parties to
the existing agreement, the new owner or new lessee are liable to any affected taxing
entity for outstanding taxes or other obligations. Approval shall not be unreasonably
withheld.
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RESOLUTION NO. R2003-121
SUNSET PROVISION Section 9
(a)
These Guidelines and Criteria are effective upon the date of their adoption and
will remain in force for two years, at which time all reinvestment zones and
tax abatement contracts created pursuant to its provisions will be reviewed by
the City Council to determine whether the goals have been achieved. Based on
that review, the Guidelines and Criteria will be modified, renewed or eliminated
providing that such actions shall not affect existing contracts.
(b)
This policy is mutually exclusive of existing Industrial District Contracts and
owners of real property in areas deserving of special attention as agreed by the
affected jurisdictions.
OBJECTIVES
TERMS
QUALIFYING
FACILITIES
QUALIFYING
INVESTMENTS
TAX ABATEMENT GUIDELINES
JOB CREATION IN EXISTING AND TARGET BASIC
INDUSTRIES
COMPETITIVE AMOUNTS AND TERMS OF ABATEMENT
LOCAL OPTION APPLICABLE
CONSENSUS OF ALL PARTICIPATING TAXING ENTITIES
FLEXIBILITY THROUGH VARIANCE PROCEDURE
UP TO 100% DURING MAXIMUM TWO YEAR
CONSTRUCTION
UP TO 100% EIGHT YEARS THEREAFTER OR 2 USEFUL
LIFE OF PROPERTY
MAXIMUM TERM - TEN YEARS
MANUFACTURING & PROCESSING
SERVICE & DISTRIBUTION
RESEARCH & DEVELOPMENT
ENTERTAINMENT (LARGE COMPLEXES)
OTHER BASIC INDUSTRY N.E.C.
NEW PLANTS
EXPANSIONS
MODERNIZATIONS
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RESOLUTION NO. R2003-121
ALLOWABLE - BUILDINGS AND STRUCTURES
ITEMS - FIXED EQUIPMENT
- SITE IMPROVEMENTS
ADMINISTRATIVE OFFICE SPACE
NON-ALLOWABLE LAND, EXISTING IMPROVEMENTS, CONSTRUCTION-IN-
PROGRESS, PERSONAL PROPERTY, HOTELS, HOUSING,
DEFERRED MAINTENANCE, RETAIL
ECONOMIC MINIMUM $500,000 INVESTMENT
RETAIN OR CREATE AT LEAST 10 JOBS
NO SERIOUS ADVERSE EFFECT ON JURISDICTIONS
CANNOT REASONABLY USE EXISTING PROPERTY
REVIEW AFTER TWO YEAR TEST PERIOD. ANY CONTRACTS MADE DURING THE
PERIOD WILL BE ENFORCEABLE.@
Section 2. Savings. All rights and remedies which have accrued in favor of the
City under this Chapter and amendments thereto shall be and are preserved for the
benefit of the City.
Section 3. Repealer. All resolutions or portions of resolutions heretofore passed
in conflict with the terms hereof are specifically repealed.
Section 4. Severability. If any section, subsection, sentence, clause, phrase or
portion of this Resolution is for any reason held invalid, unconstitutional or otherwise
unenforceable by any court of competent jurisdiction, such portion shall be deemed a
separate, distinct, and independent provision and such holding shall not affect the
validity of the remaining portions thereof.
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RESOLUTION NO. R2003-121
PASSED, APPROVED, AND ADOPTED this the 25th day of
August , A.D., 2003.
TOM REID
MAYOR
ATTEST:
ff SECTARY ~
APPROVED AS TO FORM:
DARRIN M. COKER
CITY ATTORNEY
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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 through its City Manager ('City"), and South Texas
Projects, Inc., duly acting by and through , its President ("STP").
WITNESSETH:
WHEREAS, on the 2911 day of September, 2003, the City Council of the City of Pearland,
Texas, passed Ordinance No. 1128 establishing Reinvestment Zone #11 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 has adopted Resolution No. R2003-121, 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 tern interest and benefit of the City, in
accordance with Resolution No R2003-121 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. 2003-121 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,
1
THEREFORE:
For and in consideration of the mutual agreements and obligations set forth below, the
sufficiency of which is hereby acicnowledged by the parties hereto, STP 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 STP's improvements on the Premises, described in Exhibit "B"
("Improvements") will cost approximately Three Million Dollars ($3,000,000.00) and is to be
substantially complete on or about October 31, 2004; provided, that STP shall have such additional
time to complete the Improvements as may be required in the event of "force majeure" if STP is
diligently and faithfully pursuing completion of the Improvements. For this purpose, "force majeure"
shall mean any contingency or cause beyond the reasonable control of STP including, without
limitation, acts of God or the public enemy, war, riot, civil commotion, insurrection, governmental or
de facto governmental action (unless caused by acts or omissions of STP), fires, explosions or
floods, and strikes. The date of completion of the Improvements shall be defined as the date a
Certificate of Occupancy is issued by the City of Pearland.
3. STP agrees and covenants that it will diligently and faithfully, in a good and
workmanlike manner, pursue the completion of the Improvements as a good and valuable considera-
tion of this Agreement STP further covenants and agrees that all construction of the Improvements
will be in accordance with all applicable state and local laws and regulations or valid waiver thereof.
In further consideration, STP shall thereafter, from the date a Certificate of Occupancy is issued
until the expiration of this Agreement, continuously operate and maintain the Premises as STP,
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 tax exemptions evidenced herein are in effect.
4. STP agrees and covenants that the Improvements shall provide approximately 14 jobs
during the period of the abatement, beginning with 10 employees in 2004 Accordingly, STP shall
provide to the City annual manpower reports ( Exhibit "D") 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. City hereby acknowledges that it is not
aware of any terms or conditions of any outstanding bonds which would invalidate this Agreement.
Said abatement shall be an amount equal to seventy five percent (75%) of the taxes assessed upon
the increased value of the Improvements and Fixed Equipment, annually for a period of two (2) years
beginning January 1, 2004, and ending December 31, 2005, and fifty percent (50%) of the taxes
2
assessed upon the increased value of the Improvements and Fixed Equipment, annually for a period
o f two (2) years beginning January 1, 2006, and ending December 31 2007, and twenty five percent
(25%) of the taxes assessed upon the increased value of the Improvements and Fixed Equipment,
annually for a period of one (1) year beginning January 1, 2008, and ending December 31 2008, in
accordance with the teiitis 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
u sed by the Brazoria County Tax Appraisal District, which information necessary for abatement shall
be provided by STP to the chief appraiser of said district. Estimated values, estimated abated values,
and estimated base year values for the Improvements are listed in Exhibit "B".
6. STP further agrees that the City, its agents and employees shall have the right to enter
u pon the Premises at any reasonable time and to inspect the Improvements in order to determine
whether the construction of the Improvements 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 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. In accordance with Resolution
N o. R2003-121, the City will conduct at least one inspection annually to ensure compliance.
N otwithstanding 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 STP written notice of such violation. For the
purposes of this Agreement, STP shall have ten (10) days from the date of the notice to cure or
remedy such violation If STP fails or refuses to cure or remedy the violation within the ten (10) day
period, STP 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. STP agrees and covenants that the information provided in the attached Application
for Tax Abatement (Exhibit ' C") 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.
8. In the event that (1) the Improvements for which an abatement has been granted are
not completed in accordance with this Agreement; or (2) STP allows its ad valorem taxes owed to
the applicable taxing jurisdictions to become delinquent and fails to timely and properly follow the
legal procedures for protest and/or contest of any such ad valorem taxes; or (3) STP breaches any of
the terns or conditions of this Agreement, then this Agreement shall be in default. In the event that
STP defaults in its performance of (1), (2), or (3) above, then the City shall give STP written notice
of such default, which notice shall be delivered by personal delivery or certified mail to*
. If STP has not cured such default within sixty (60) days of said
written notice, this Agreement may be modified or terminated by the City. Notwithstanding the
3
provisions set forth herein, this Agreement may be terminated at any time after the execution hereof
by agreement of both parties.
9. In the event that the facility is completed and 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 thc 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 stated in paragraph 8 or the termination date stated in paragraph 9,
whichever is applicable. The City shall have all remedies for thc recapture and collection of the lost
tax revenue as provided generally in the Tax Code for the collection ofdclinquent property taxes Ind
in accordance with Resolution No. R2003-121.
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 STP only upon
written permission by the City in accordance with Resolution R2003-121, which permission shall not
be unreasonably withheld. No assignment shall be approved lithe assignor or assignee are indebted
to the City for ad valorem taxes or other obligations.
13. It is understood and agreed between the parties that STP, in performing its obligations
hereunder, is acting independently, and the City assumes no responsibilities or liabilities in connec-
tion therewith to third parties.
14. STP RELEASES, ACQUITS, INDEMNIFIES, AND HOLDS HARMLESS TI1E
CITY, ITS OFFICERS, AGEN IS, EMPLOYEES, SUCCESSORS, AND ASSIGNS, FROM
ANY AND ALL KINDS Or CLAIMS, DEMANDS, LOSSES, DAMAGES INJURIES,
RIGHTS, CAUSES OF ACTION OR JUDGMENTS OF WHATSOEVER CI IARAC"I ER OR
NATURE, INCLUDING ATTORNEYS' FEES, WIIICII MAY ARISE AS A RESULT OF
THIS AGREEMENT. T IIE PROVISIONS or THIS SECTION REFLECT HIE
EXPRESSED IN`I ENTIONS OF S FP AND TILE CITY AND SHALL SURVIVE THE
TERMINATION, EXPIRATION, OR CANCELLATION OF TIIIS AGREEMENT.
15. It is understood and agreed by the City and STP that if the Premises has been
designated and taxed as agricultural land pursuant to Chapter 23, Subchapter C, l ax ('ode. V.iA F S .
that this Agreement shall not be effective and no abatement granted until S FP has 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 13th day o f October, 2003, authorizing the City Manager to execute the Agreement on
behalf of the City.
17. '1 his Agreement is entered into by STP pursuant to authority granted by its President,
, on the day of , 20 .
18. This shall constitute a valid and binding Agreement between the City and STP when
executed in accordance herewith.
19. 1 his Agreement is performable in Brazoria County, Texas.
20. STP agrees and covenants to certify annually to the City, while this Agreement is in
effect, that STP is in compliance with each applicable term of this Agreement.
Witness our hands this day of
ATTEST:
By:
i, i/ /L-1.•.
' oungrfi /
ity S, retary
APPROVED AS TO FORM:
Darrin M. Coker
City Attorney
By:
CITY OF PEARLAND
r
•
5
Bill Eisen
City Manager
ATTEST: SOUTH TEXAS PROJECTS, INC.
By: By:
Printed Name. Prinb F a/r/
Title: Title:
THE STATE OF TEXAS
COUNTY OF BRAZORIA
BEFORE ME, the undersigned Notary Public, on this day personally appeared Bill Eisen,
City Manager for the City of Pearland, known to me to be the person whose name is subscribed to
the foregoing insti ument 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 62 3 DAY OF
/�
�/cioA, A.D., 20 o.
yeaceswitt
PERLA N. LEHMAN
Notary Public, State of Texas 3)
My Ceramissior= Expires: \
APRIL 2, 2005
THE STATE OF TEXAS
COUNTY OF §
NOTARY PUBLIC, STATE OF TEXAS
Printed Name. /lam „A1 24,-, /4? s -c,
Commission Expires: 02c96.3'
i
BEFORE ME, the undersigned Notary Public, on this day personally appeared
President of South Texas Projects, Inc., 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 ?-A sr DAY OF
Ocro eER , A.D., 20 0 3 . - 1.
SUSAN SMITH GREEN
Notary Public, State of Texas
My Commission Expires:
December 27, 2007
NO AR ' P : LIC, 1 ATE O
Pri ted N. me: SJ AN
My Commission Expires: 12 / 27
7
EXHIBIT
PROPERTY DESCRIPTION
1
9
A 7.6525 ACRE TRACT OF LAND OUT OF LOTS 45 AND 49 OF THE W.
ZYCHINSKI SUBDIVISON OF THE El. T. AND B.R R. CO SURVRY SECTION 3;
ABSTRACT 232, BRAZORIA COUNTY, TEXAS, AND BEING PART OF AN 13.059
ACRE TRACT DESCRIBED IN DEED RECORDED IN VOLUME 1020 PAGE 856
OF THE DEED RECORDS OFS O
UNTY, TEXAS, AND BEING MORE
PARTICULARI DESCRIBED
AFOLLOWS: BEARINGSBASED ON RECORDED
DEED;
BEGINNING AT A FOUND 5/8 INCH IRON ROD FOR CORNER IN THE NORTH
RIGHT-OF-WAY LINE Or HALIK. ROAD (60 FOOT ROW) WHICH BEARS
SOUTH 89 DEG. 57 MIN. 20 SEC. WEST A DISTANCE OF 676.77 FEET FROM A
5/8 INCH IRON ROD FOUND AT THE IIND RSECTION OF THE NORTH RIGHTE -OF-WAY �,EST F W��GI-T'�F RIGHT-OF-
WAY LINE OF STATE HIGHWAY 35
OF HALIK ROAD ALSO BEING THE SOUTHEAST CORNER OF THE
AFOREMENTIONED 18.059 ACRE TRACT;
THENCE SOUTH 89 DEG. 571111N. 20 SEC. WEST ALONG THE NORTH RIGHT-
OF-WAY LINE OF HALIIC RR'�R BEING THE ISTANCE OF SOL'� HW F ST CORNER OF 7.50 FEET TO A 5/8 TCH
TI-IE
IRON ROD FOUND FOR CO
18.059 ACRE TRACT;
THNECE NORTH ALONG THE WEST LINE OF SAID 18.059 ACRE TRACT, AT A
DISTANCE OF 596 40 FEET PASSES THE COMMON LINE BETWEEN LOTS 45
AND 49, CONTAINING IN ALLY TOTAL BEtNG THE NORTHWEST CORNER NCE OF 670.04 FEET TO A OF
INCH IRON ROD FOUND FOR O R,
THE 18.059 ACRE TRACT
TH LINE OF
THENCE NORTH 89 DEG. 57 MDISTANCE OF 497.50 FEET OEA FORIND 5/8 INCH
SAID 18.059 ACRE TRACT, A
IRON ROD FOR CORNER
THENCE SOUTH AT A DISTANCE OF 75.60 FEET PASS THE COMMON LNE
BETWEEN LOTS 45 AND 49, CONTINUING IN ALL A TOAL DISTANCE OF
670.04 FEET TO THE PLACE OF BEGINNING AND CONTAINING 7.6525 ACRES
OF LAND MO' : OR LESS.
10SE H. GONZAL
JOB #306-076
Research/Roy
. # 4478
PS' CID
,7 .;..`,.SE F'Uk1EE i) GONZALEZ
,•.
\J9^�O� �SScf:• -%
Sue B'4
•
South Texas Properties
Year Investment Gross Tax Abatement%
.6860/100
1 3,000,000.00 $20,580.00
2 3,000,000.00 $20,580.00
3 3,000,000.00 $20,580.00
4 3,000,000.00 $20,580.00
5 3,000,000.00 $20,580.00
TAX ABATED
TAX GAINED
Abated Net Tax
75% $15,435.00 $5,145.00
75% $15,435.00 $5,145.00
50% $10,290.00 $10,290.00
50% $10,290.00 $10290.00
25% $5,145.00 $15,435.00
$56,595.00
$46,305.00
Tax Abatement Scenario
based on phased in taxes
EXHIBIT
1
8/11/2003
APPLICATION FOR TAX ABATEMENT IN THE
CITY OF PEARLANI
EXHIBIT
It is recommended that this application he filed at least 90 days prior to the beginning of
constnrction of the installation of equipment The filing of this document acknowledges
familiarity and conformance with Guidelines and Criteria for Granting fax Abatement in a
Reinvestment Zone Created in the City of Pearland (attached). Please review hrsIT-uctinfr,
attached before 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 Development Corp
Executive Director, City of Pearland, 3519 Liberty Drive, Pearland, Texas 77581 Please attach
exhibits and additional information.
.AP['LICAN"h INFORNIA"T1ON
Application Date August 4, 2003
Company Name South Texas Projects, Inc. Number of Current Employees
1.4__
Address 9321_..beldrum_-_Hou,_.TX_.77075 _ Annual Sales 3.6 Million
Consecutive year in husinesc 14
Corporation (X)
Partnership ( ) Proprietorship ( )
/'least' submit( financial state nent.v %nr the prior Iwo years.
PROJECT INFORMATION
-type of facility: Manufacturing ( ) Reg. Distribution Center
(Ste InsiniCholns) Regional Service ( ) Reg. Entertainment Center
Other Basic Industry
1,ocation address and description of area to be designated as reinvestment zone (attach map
showing site and legal description) Halik Road (see attached)
Description of eligible improvements (real property) to be constructed (This includes fixed
equipment, buildings, parking lots, etc ) (3) 40320 Sq Ft office warehouse buildings_
with detention pond and parking for facility.
Description of ineligible property to he included in project (This includes inventory and personal
property.) Personal property is all office furniture and equipment. The company
vehicles and forklift will be included. No inventory for jobs is maintained.
\\'ill this project require any per by other federal, state or courtly agencies') If so, please list
the name of the permit, the perntittinu, agency and ,t description of why and what the permit
needled for No
The proposed reinvestment zone is located in:
City
County Brazoria
School District Pear land ISD
College District
Other Taxing Jurisdictions
Pear land
Tax II) number
N/A
Drainage district #9
Description of product(s) or service to be provided (proposed use).
Office warehouse space that will be leased _arid house_ Sorith Texas Pxa-}ect-s -off ices.
Description of operations, processes involved, general overview.
ATTACH A STATEMENT explaining the general nature and extent of the project, describing
existing site and improvements, describe all proposed improvements and provide list of
improvements and equipment for which abatement is requested. Include a proposed time schedule
for undertaking and completing the planned improvements as well as the company officials and
agents who will oversee the construction Descnbe other sites that are under consideration
NEW PLANT (x )
ECONOMIC INFORMATION
A. Construction Estimates
Commencement Date
Construction Man Years
Completion Date
Peak Constriction Jobs
EXPANSION ( ) MODERNIZATION ( )
Oct 2003
Spring 2004
5-10
R. Permanent Employment Estimates CFTE's)
IF MODERNIZATION.
Lstimated Economic Life of
Existing Plant:
Added Economic Eire from
Modernization:
Years
Years
Current f*.mployment 14
Current Annual Payroll $770, 000.00 average annual or hourly salary N/A
Number of jobs retained ( 19 ) created ( 2-3 )
at start/opening of this project 19 in year 2003
years into operation 16+
5 in year 2008
1 meal
20 _
20
20
Transfer "Total
1:.st Salaries
Other Estimated Taxes Generated by Project
(1) Sales Taxes 20
20
20
20
20
20,
20
20
20
(2) Other Taxes or 1 es (if known, impact fees, building fees, etc.).
1) l±.stimated Appraised Value on Site
I 'Total of -pre-existing value
(Jan 1 pruJeding abatement)
11 1.stinrated value. of NEW land added
1stimated value of NEW improvements
f .stintated value of NEW fixed equipment
1:.stinrated value of NEW personal
property and inventory added
"Total of NEW value added
( Total columns in Sec. 11 above)
IIITotal value at end of "fax Abatement
(Total Part I etc II)
Land
$68, 870- 00
31068, 870
Building
ts Fixed
Equipment
00
Bus. Personal
1'ropi'rt y
Inventory
N/A
3 Million
3 Million
N/A
TA X A UA,1EMENT REQUESTED
100 °'o of eligible proper ty for a term of 7 years (Or)
( ) Requesting Staggered Fax Abatement Terms as follows
-------------------------
VARIANCE
Is the applicant seeking a variance under Section 3(f)
of the Guidelines?
If "'YES" attach required supplementary information
OTHER ABATEMENTS Has company made application
for abatement of this project by another taring
jurisdiction or nearby counties?
If "YES" provide dates of application, hearing dates,
if held or scheduled, name of jurisdictions and
contacts, and letters of intent
------------------ ------------------- ------------
COMPANY REPRI?SI?N'I A"I'IVE To BE CONTACTED
Name:
Title
Address
Telephone
Kryste Dolen
Manager
9321 Meldrum
Houston, TX 77075
711r9117_81J7 - - -
YTS ( ) NO (X)
YES( ) NO
Authorized Company Official
By:
Printed
Fide:
flle.
Manager
ste Dolen
Net ,see( Nnn•t'm/ier 1. 000
SAMPLE PROJECT DESCRIP FION
The project will be the construction of a new manufacti. ring facility that will also include our sales
and engineering staff. We expect to have approximately 150-160 employees on site. We expect
the project will require the construction of a building of approximately 70,000 square feet at a
cost of approximately $2.6-$2.8 million. It is anticipated that fixed manufacturing equipment of
approximately $1,500,000 will be included in the project. Tax abatement will be sought on all
items allowed by law.
SAMPLE TIME SCHEDULE
September - Dec 31, 2001 Legal work, conceptual phase, contractor selection
January 1 - Jan 30, 2002 Wetlands study, Is' phase architecture, soils engineering,
topographical mapping, detention pond engineering
February 1-February 28, 2002 Architectural drawings, final engineering, permits and
applications
March 1 - March 30, 2002 Bids and initial site work
April 1-November 15, 2002 Construction
November 16 - December 25, 2002 Move -in, start up
December 30, 2002 Completion
DO NOT WRITE IN TIIIS AREA — FOR PROCESSING PURPOSES ONLY
EDC contact
2. Precinct
3. Jurisdictions notified / /
4. Initial review completed / /
5. Review circulated / /
6. ISD concurrence?
7. College concurrence9
8. City concurrence?
9. Letter of Intent / /
10. Hearing noticed on agenda / /
I 1 Public hearing / /
I . ISD action / /
13. College action / /
14 City action / /
15. Agreement signed / /
I, Jeff Dolen
EXHIBIT "D"
MANPOWER REPORT
, CEO of South Texas Properties, Inc., do
certify that on October 21 , 2003 there were 9 individuals employed full time at
South Texas Properties, Inc.
Tinted Name:
Title: de --
Date:
THE STATE OF TEXAS
COUNTY OF Harris
/c
BEFORE ME, the undersigned Notary Public, on this day personally appeared
Jeff Dolen , CEO of South Texas Properties, Inc., being by me
duly sworn on his/her oath deposed and said that he/she is duly qualified and authorized in all
respects to make this affidavit; and that every statement contained in the Manpower Report is within
his/her knowledge and true and correct.
SUBSCRIBED AND SWORN TO BEFORE ME on the 21
2003, to certify which witness my hand and official al
SUSAN SMITH GREEN
Notary Public. State of Texas
My Commission Expires:
December 21, 2007
NOT 'RY`UB
Prin
ed Nam
My Cbmmi . ion Exp
day of October
ATE OF T I XAS
S , GREY
12/27/07