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HomeMy WebLinkAboutRES 121223-6.F - Tax Abatement PolicyRESOLUTION NO 1 2l Z2,3 _6 . F A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GEORGETOWN, TEXAS, REAUTHORIZING AND ADOPTING GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Georgetown has previously adopted a resolution adopting Guidelines and Criteria Governing Tax Abatement Agreements within the City of Georgetown and its Extraterritorial Jurisdiction; and WHEREAS, after conducting a public hearing on December 14, 2021, the City Council adopted Guidelines and Criteria Governing Tax Abatement Agreements pursuant to Resolution 121421-AI; WHEREAS, pursuant to Texas Tax Code Section 312.002 these guidelines need to be readopted every two (2) years; and WHEREAS, a public hearing regarding the reauthorization of the City's Guidelines and Criteria Governing Tax Abatement Agreements at which members of the public were given the opportunity to be heard was held on December 12, 2023 pursuant to Texas Tax Code Section 312.002 (c-1); and WHEREAS, the City Council desires to reauthorize the Guidelines and Criteria Governing Tax Abatement Agreements as authorized by Texas Tax Code, Chapter 312. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GEORGETOWN, TEXAS, THAT: Section 1. The meeting at which this Resolution was approved was in all things conducted in compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. Section 2. The facts and recitations contained in the preamble of this Resolution are hereby found and declared to be true and correct and are incorporated by reference herein and expressly made a part hereof, as if copied verbatim. Section 3. The City of Georgetown elects to participate in tax abatement agreements pursuant to Chapter 312 of the Texas Tax Code and that the City of Georgetown Property Tax Abatement Policy attached as Exhibit A to this resolution are hereby reauthorized and adopted. Section 4. This Resolution shall become effective and be in full force and effect on its passage. PASSED AND APPROVED on this IZ day of �� P� , 2023. CITY OF GWRGf:TOWN, TEXAS Josh ATTEST: Robyn Densmore, City Secretary APPROVED AS TO FORM: Sky asson, City Attorney 2023 Property Tax Abatement Policy City of Georgetown, Texas Goals and Objectives The City of Georgetown is committed to recruiting and retaining quality business development that diversifies the City's tax base, increases the average annual wage for residents, and improves the quality of life in the community. Economic development incentives for applicable projects in the City shall be used with council approval including, but not limited to, real and personal property tax abatements. While this policy outlines the use of property tax abatements, other incentive sources will also be taken into consideration, such as the City's Type A and B sales tax funds. This policy is intended to outline the potential use of tax abatements for the City of Georgetown only, and should not be considered as guidance for any other taxing jurisdiction. All economic development projects are considered on a case -by -case basis. This policy does not guarantee the receipt of incentives for any project from the City of Georgetown, including property tax abatements. Consideration of property tax abatement incentives shall be given based on the criteria and process outlined in this policy. The City may notwithstanding this policy provide tax abatement on a case -by -case basis that promotes economic development, creates employment opportunities, and increase sales tax and property tax revenue. The policy is valid for two (2) years following the date of adoption by the Georgetown City Council. II. Criteria for Consideration All economic development projects that request incentives, including tax abatements, will be evaluated on a case -by -case basis using an economic impact analysis. The criteria considered will be: a. Primary industry classification (NAICS Code) b. Type of operations at the site c. Size and location of the facility d. job creation and/or retention e. Salaries and benefits f. Capital investment, both real and business personal property g. Taxable sales, if any h. Infrastructure investment City of Georgetown — Property Tax Abatement Policy 2023 i. Project timeline j. Building ownership or lease structure k. Utility usage These criteria will be used to consider the employment impact, fiscal impact, and community impact of the project on the City of Georgetown. Based on the full projected impact of the project, a combination of economic development incentives may be considered. III. Incentive Value Guidelines Property tax abatements are regulated by the Property Tax Abatement Act, Texas State Tax Code_312, and are limited to a period of no more than ten (10) years. a. Option A: Flat Rate Property Tax Abatement A flat property tax abatement structure is ideal for projects of less than $100,000,000 in total assessed value to ease the administrative burden of tracking and compliance. Total Assessed Value Percent of Term of Abatement Abatement $75,000,000 - $100,000,000 ' 50% $74,999,999 - $50,000,000 1 50% b. Option B: Tiered Rate Property Tax Abatement 10 years 5 years A tiered property tax abatement structure is ideal for projects of more than $100,000,000 in total assessed value to allow for more predictable budgeting and tax estimates over the term of the agreement. :.bateinenc 100% 90% 80% Tax Year Year 1 Year 2 Year 3 City of Georgetown — Property Tax Abatement Policy 2023 2 70% 1 Year 4 60% 1 Year 5 50% 1 Year 6 40% Year 7 30% Year 8 20% Year 10% Year 10 c. Option C: Custom Property Tax Abatement The City of Georgetown may also consider and approve a custom property tax abatement rate and term based on the individual project. The criteria considered will be the same as stated in this policy. The term of the abatement shall not exceed ten (10) years for real or personal property. Additional incentives may also be considered, depending on the estimated economic impact of the project. IV. Procedural Process The current owner, or the entity under contract to purchase the property, may request the City's consideration to grant a property tax abatement to incentivize a project that meets the City's economic development goals. Consideration will be given by following the policy guidelines and selection criteria. This policy does not obligate the City of Georgetown to provide a property tax abatement to any applicant for entity. a. Application Process Any project wishing to be considered for economic development incentives, including real and personal property tax abatements, shall complete the data form to calculate the economic impact analysis through the City's Economic Development Department. This data form is provided by economic City of Georgetown — Property Tax Abatement Policy 2023 development staff and includes the criteria for consideration, as outlined in Section II of this policy. b. Review Process Following the completion of the economic impact analysis, the results will be distributed to the appropriate city staff for review. Depending on the scale of the project, review by a consultant may also be considered. Additional information from the applicant could requested as well. Following internal analysis of the project, staff will make a recommendation to the Georgetown City Council on the term and percentage of a potential tax abatement incentive. c. Consideration for Tax Abatement Final approval of a real or business property tax abatement is required by Georgetown City Council. The City must designate the project area as a reinvestment zone by ordinance following the notice and public hearing required by law. If the Georgetown City Council determines that the establishment of a zone is appropriate, the Council may consider adoption of an ordinance to designate the required reinvestment zone and a resolution to approve terms and conditions of a tax abatement. The City may then enter into a tax abatement agreement with the owner and/or tenant of the applicable property pursuant to Chapter 312 of the Texas Tax Code. The applicant shall be required to enter into an agreement for the tax abatement in a form prepared by and approved by the city attorney. The agreement shall contain the terms and conditions required by law and may provide for the repayment or recapture of abated taxes in the event of termination by the City for an uncured breach or default of the tax abatement agreement. City of Georgetown — Property Tax Abatement Policy 2023 4