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HomeMy WebLinkAboutResolution - 2012-R0086 - Notice To Enter Tax Abatement Agreement - Red River Commodities Inc. - 02_23_2012Resolution No. 2012-R0086 February 23, 2012 Item No. 6.3 RESOLUTION WHEREAS, the City Council has determined to give notice of its intent to enter into a Tax Abatement Agreement with Red River Commodities, Inc. d.b.a. SunGold Foods, Inc.; and WHEREAS, V.T.C.A. Tax Code Section 312.2041 requires notice of intent of the City Council to be given to the presiding officer of the governing body of each taxing unit in which the property to be subject to the Tax Abatement Agreement is located; NOW BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the City Secretary give notice as set forth in Exhibit "A" of the intention of the City Council to enter into a Tax Abatement Agreement with Red River Commodities, Inc., d.b.a. SunGold Foods, Inc., said notice to be given to the presiding officers of each governing body of each taxing unit having jurisdiction in assessing taxes on the property at 901 E. 66`' Street, which is further described as Crawford Industrial Block 11 West Part of Lot One and Crawford Industrial Block l I East 321.5' of Lot One, City of Lubbock, Lubbock County, Texas. Passed by the City Council on February 23 , 2012. -/ ' 1 TOM MARTIN, MAYOR ATTEST: Rebe ca Garza, City Secretar APPROVED AS TO CONTENT: Andy Blurcham, Chief Financial Officer APPROVED AS TO FORM: L- -17-� Linda L. Chamales Economic Development Attorney Resolution No. 2012-R0086 EXHIBIT "A" NOTICE OF INTENT OF THE CITY COUNCIL, OF THE CITY OF LUBBOCK TO ENTER INTO AN AGREEMENT TO ABATE TAXES ON REAL PROPERTY IMPROVEMENTS LOCATED AT 901 E. 66"" STREET WHICH IS FURTHER DESCRIBED AS CRAWFORD INDUSTRIAL BLOCK 11 WEST PART OF LOT ONE AND CRAWFORD INDUSTRIAL BLOCK I I EAST 321.5' OF LOT ONE, CITY OF LUBBOCK, LUBBOCK COUNTY, TEXAS Notice is hereby given that the City Council of the City of Lubbock intends to enter into an Agreement with Red River Commodities, Inc., d.b.a. SunGold roods, Inc. to abate taxes on improvements to real property located within Enterprise Zone 25-I created by Ordinance No. 2007-001 16 and covering all of the subject property. Notice is further given that the City Council of the City of Lubbock will consider authorizing the Mayor of the City to execute a contract between the City and Red River Commodities, Inc., d.b.a. SunGold Foods, Inc. f'or tat abatement, a draft copy of said Agreement is attached to this notice as Exhibit "A -I" and made a part hereof for all purposes. Notice is fui-thcr given that the City Council will consider this matter at its meeting held in the City Council Chamber, City Hall, 1625 13"' Street, City of* Lubbock, on the 6"' day of March, 2012, at approximately 9:30 o'clock a.m. Exhibit A-1 Resolution No. 2012-R0086 AGREEMENT STATE OF TEXAS § COUNTY OF LUBBOCK § This Agreement made this day of , 2012, by and between the City of Lubbock, Texas, a home rule municipality of the State of Texas (hereinafter called "City"), and with Red River Commodities, Inc. d.b.a. SunGold Foods, Inc. (hereinafter called "Company"); WITNESSETH: WHEREAS, on the loth day of January, 2012 City received Company's application for tax abatement for improvements to real property and tangible personal property located at 901 East 66`h Street, Lubbock, Texas which is further described in Exhibit `'A," attached hereto and made a part of this Agreement for all purposes; and WHEREAS, upon review of the above application it was determined that the facility and real property is located in Enterprise Zone 25-1 designated by the City for commercial and industrial tax abatement in Ordinance No. 2007-00116 covering the above described property; and WHEREAS, the Guidelines and Criteria Governing Tax Abatement For Industrial Projects in the City of Lubbock was adopted by Resolution No. 2011-R0471 of the City Council of the City of Lubbock. A copy of the Guidelines and Criteria Governing Tax Abatement for Industrial Projects in the City of Lubbock is attached as Exhibit " B" and incorporated herein as if fully set forth, and WHEREAS, the City complied with all the requirements set forth in V.T.C.A., Tax Code, Section 312.201 and with all the criteria and guidelines as set forth in the Guidelines and Criteria Governing Tax Abatement for Industrial Projects in the City of Lubbock; and WHEREAS, the property located at 901 E. 66`h Street, and further described in Exhibit "A" is located in Enterprise Zone 25-1 and V.T.C.A., Tax Code, Section 312.2011 provides that designation as an enterprise zone constitutes designation as a reinvestment zone without further action; and WHEREAS, the application received by City from Company is an application for the renovation and expansion of an existing facility, more specifically, building improvements to an existing facility and the addition of tangible personal property (machinery and equipment); and WHEREAS, V.T.A.C., Tax Code, Section 312.002 specifically states that such a purpose is to be included in the guidelines for tax abatement and to be eligible for such treatment; and WHEREAS, Section IV of the Guidelines and Criteria governing Tax Abatement for Industrial Projects in the City of Lubbock recognizes renovation and expansion of an existing facility and addition of personal property as being eligible for tax abatement status; and WHEREAS, the City Council does hereby find that all of the Guidelines and Criteria Governing Tax Abatement, as adopted by Resolution No. 2011-RO471 have been, or will be, met by Company; and NOW THEREFORE, for and in consideration of the premises and of the mutual terms, covenants and conditions herein contained the City and Company do hereby agree as follows: SECTION 1. Term. This Agreement shall commence January 1 of the tax year after the required improvements are substantially completed and shall expire and be of no further force and effect five (5) years after such date. SECTION 2. Base Year. The base year applicable to real and personal property, which is the subject of this Agreement, shall be 2012, and the assessed value of the real and personal property shall be the assessed value applicable to such property for said year. SECTION 3. Base Year Taxes. The taxes upon the real and personal property shall be paid in accordance with the assessed value of such property for the base year. Base year taxes upon the real property are thus not abated. SECTION 4. Abatement of Increase in Base Year Tax. In accordance with V.T.C.A., Tax Code, Section 312.204, real property taxes applicable to the real property subject to this Agreement shall be abated only to the extent said value for any given year within the term of this Agreement exceeds the base year taxes set forth above. SECTION 5. Property Ineligible for Tax Abatement. The property described and set forth in Section IV(6) of the Guidelines and Criteria Governing Tax Abatement for Industrial Projects in the City of Lubbock (Exhibit " B") is incorporated by reference herein as if fully set out in this Agreement and fully describes the property ineligible for tax abatement. AGREEMENT - RED RIVER COMMODITIES, INC. PAGE 2 SECTION 6. Exemption from Tax. The City covenants and agrees to exempt from taxation, in accordance with the appropriate Sections above, the following properties: (a) All proposed new improvements to be placed upon the property at 901 E. 66`h Street, which is further described as Crawford industrial Block 11 West Part of Lot One and Crawford Industrial Block I I East 321.5' of Lot One, City of Lubbock, Lubbock County, Texas. (b) All eligible tangible personal property, owned by Company, placed in or upon the real property set forth in Exhibit "A." after January 10, 2012. Any equipment or personal property owned by Company prior to January 10, 2012, or already located in an existing facility, shall not be considered "eligible tangible personal property" under this Agreement. (c) It is further understood that all items affixed to the new improvements placed upon the real property identified above and in Exhibit "A", including machinery and equipment shall be considered part of the real property improvement and taxes thereon shall be abated in accordance with the provisions of subparagraph (a) above set forth. SECTION 7. Economic Qualifications. Company agrees to expend funds necessary to qualify for tax abatement by renovating and expanding an existing facility, as set forth in Section IV(3)(b) of the Guidelines and Criteria Governing Tax Abatement for Industrial Projects in the City of Lubbock (Exhibit "B") on the property described in Exhibit "A". A description of the kind, number and location of all proposed improvements is attached in Company's application, Exhibit "C" and incorporated herein as if fully set forth. SECTION 8. Value of Improvements. In accordance with V.A.T.C., Tax Code, Section 312.204(a), which requires the owner of the property to make specific improvements or repairs to the property in order to be eligible for tax abatement, Company will expend approximately seven million four hundred thousand ($7,400,000) for the renovation and expansion of an existing facility and new machinery and equipment to be located within the enterprise zone created by Ordinance No. 2007- 00116. Company agrees that if the initial tax appraisal on this property does not reflect an increased value equal to or exceeding seven million four hundred thousand ($7,400,000) for the real property improvements and tangible personal property, Company will provide invoices and proof of payment for the investment in the renovation and expansion of the facility and the machinery and equipment located in the facility. AGREEMENT - RED RIVER COMMODITIES, INC. PAGE 3 SECTION 9. Job Creation. Company agrees to create 42 new jobs by December 31, 2013 and retain those jobs for the term of the tax abatement. SECTION 10. City Access to Property. Company covenants and agrees that City shall have access to the property, which is the subject matter of this Agreement, upon reasonable notice and during normal business hours, and that municipal employees shall be able to inspect the property and documents necessary to insure compliance with the terms and conditions of Company's application for tax abatement, attached as Exhibit "C", and this Agreement. SECTION 11. Portion of Tax Abated. City agrees, during the term of this Agreement, to abate taxes on eligible property according to the following schedule. Year 1: 100% Year 2: 80% Year 3: 60% Year 4: 40% Year 5: 20% SECTION 12. Type of Improvements. Company proposes to renovate and expand the existing facility as described in Exhibit "C". Company further states that the proposed improvements to the property above mentioned shall commenced on January 11, 2012, and shall be completed November 1, 2012. Company may request an extension of the above date from City in the event circumstances beyond the control of Company necessitate additional time for completion of such improvements and such consent shall not unreasonably be withheld. Company shall provide proof of completion within ten days of completion of improvements. SECTION 13. Limitation on Use. Company agrees to limit the use of the property set forth in Exhibit "A" to commercial and/or industrial uses as those terms are defined in the zoning ordinances of the City of Lubbock and to limit the uses of the property to uses consistent with the general purpose of encouraging development of the enterprise zone during the term of this agreement. SECTION 14. Recapture. Company agrees to be bound by and comply with all the terms and provisions for recapture of abated taxes in the event of default by Company pursuant to law and as set forth in Guidelines and Criteria for Tax Abatement in Exhibit "B SECTION 15. Certification. Company agrees to certify annually in writing to the governing body of each taxing unit that the owner is in compliance with the terms of the Agreement. SECTION 16. Compliance. The City may cancel or modify this Agreement if Company fails to comply with the Agreement. AGREEMENT - RED RIVER COMMODITIES, INC. PAGE 4 SECTION 17. Notices. Notices required to be given by this Agreement shall be mailed, certified mail return receipt requested, to the following addresses: CITY OF LUBBOCK Assistant City Manager Development Services P.O. Box 2000 Lubbock, Texas 79457 RED RIVER COMMODITIES, INC. 901 E. 661h Street Lubbock, TX 79404 Phone: (806) 763-9747 Fax: (806)763-0330 Email: mikew@redriv.com SECTION 19. Effective Date. Notwithstanding anything contained herein to the contrary, this Agreement shall not be effective until such time as it has been finally passed and approved by the City Council. AGREEMENT- RED RIVER COMMODITIES. INC. PAGE 5 EXECUTED this day of RED RIVER COMMODITIES, INC Bob Majkrzak, President/CEO ATTEST: Secretary 2012. CITY OF LUBBOCK A Municipal Corporation TOM MARTIN, MAYOR ATTEST: Rebecca Garza, City Secretary APPROVED AS TO CONTENT: Andy Burcham, Chief Financial Officer APPROVED AS TO FORM: Linda L. Chamales, Economic Development Attorney AGREEMENT - RED RIVER COMMODITIES, INC. PAGE 6 Resolution No. 2012-R0086 Exhibit "A" Crawford Industrial Block 11 West Part of Lot One and Crawford Industrial Block 11 East 321.5' of Lot One, City of Lubbock, Lubbock County, Texas. Proposed Tax Abatement 901 East 66th Street 0 2W 4W Feet 515 ,tn k in a 1301 z TV ory o kA in , 710 °to� in � n 1001 112s 1113 w iin 1125 poiej o AGREEMENT -RED RIVER COMMODITIES, INC. PAGE 7