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HomeMy WebLinkAboutResolution - 2010-R0575 - Commercial Tax Abatement TAO-320PSI, LP, R&N Investment II, LLC. - 11/15/2010Resolution No. 2010-RO575 November 15, 2010 Item No. 5.13 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock a Tax Abatement Agreement with TAO-320PS1, L.P. and R & N Investments II, L.L.C. and all related documents. Said Agreement is attached hereto and incorporated in this Resolution as if fully set forth herein and shall be included in the minutes of the Council. November 15 Passed by the City Council on GetebeF 14 52010. TOM/MARTIN, MAYOR ATTEST: Reber a Garza, City Secretary APPR VED AS TO CONTENT: Rob Al n, As' ity Manager Development Services APPROVED AS TO FORM: Linda L. Chamales, Economic Development Attorney LC: cityatt Linda Res -Tax Abatement- TAO, R & N September 27, 2010 AGREEMENT STATE OF TEXAS § COUNTY OF LUBBOCK § Contract: 9778 Resolution No. 2010-RO575 This Agreement is between the City of Lubbock, Texas, a home rule municipality of the State of Texas (hereinafter called "City"), and TAO-320PS1, LP (hereinafter called "TAO") & R&N Investments 11, LLC (hereinafter called "Owner"); WITNESSETH: WHEREAS, City received an application for tax abatement from TAO and Owner on the 16th day of June, 2010, for improvements to real property located at 2510 Marsha Sharp Freeway, Tract C-1, R and N Isom Addition to the City of Lubbock, Lubbock County, Texas, which is further described in "Exhibit A"; and WHEREAS, upon review of the above application it was determined that the facility and real property is located in Enterprise Zone 3.01-3 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 Commercial Projects in Designated Enterprise Zones in the City of Lubbock were adopted October 20, 2009 by Resolution No. 2009-RO444 of the City Council of the City of Lubbock. A copy of the Guidelines and Criteria Governing Tax Abatement for Commercial Projects in Designated Enterprise Zones 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 WHEREAS, the City complied with all the criteria and guidelines as set forth in the Guidelines and Criteria Governing Tax Abatement for Commercial Projects in Designated Enterprise Zones in the City of Lubbock; and WHEREAS, the property described in "Exhibit A" is located in Enterprise Zone 3.01-3 and V.A.T.C., Tax Code, and Sec. 312.2011 provides that designation as an enterprise zone constitutes designation as a reinvestment zone without further action; and WHEREAS, TAO and Owner's application is for the construction of a new facility; and WHEREAS, V.T.C.A. Tax Code Sec. 312.002 and Section IV of the Guidelines and Criteria governing Tax Abatement for Commercial Projects in Designated Enterprise Zones in the City of Lubbock recognize construction of a new facility as being eligible for tax abatement status; and WHEREAS, the City Council hereby finds that all of the Guidelines and Criteria Governing Commercial Tax Abatement, as adopted by Resolution No. 2009-RO444 have been met by TAO and Owner; and WHEREAS, the location of the facility and surrounding real property, which are to be the subject matter of this Agreement, are attached hereto as Exhibit "C" and made a part of this Agreement for all purposes; and NOW THEREFORE, for and in consideration of the premises and of the mutual terms, covenants and conditions herein contained the City, TAO, and Owner 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 five (5) years after said date. SECTION 2. Base Year. The base year applicable to real property, which is the subject of this Agreement, shall be 2010, and the assessed value of the real property shall be the assessed value applicable to such property for said year. SECTION 3. Base Year Taxes. The taxes upon the real 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. PropeM Ineligible for Tax Abatement. The property described and set forth in Section IV(5) of the Guidelines and Criteria Governing Tax Abatement for Commercial Projects in Designated Enterprise Zones in the rAX ABATEMEN I AGREEMENT TAO-32OPS1, LP and R&N Investments I1, LLC PAGE 2 City of Lubbock is incorporated by reference herein as if fully set out in this Agreement and fully describes the property ineligible for tax abatement. SECTION 6. Exemption from Tax. The City covenants and agrees to exempt from taxation, in accordance with Section 4 above, the following properties: (a) All proposed new improvements to be placed upon the property at 2510 Marsha Sharp Freeway, Tract C-1, R and N Isom Addition to the City of Lubbock, Lubbock County, Texas, which is further described in Exhibit "A". SECTION 7. Economic Qualifications. TAO agrees to expend funds necessary to qualify for tax abatement by constructing a new facility, as set forth in Section IV(9)(a) of the Guidelines and Criteria Governing Tax Abatement for Commercial Projects in Designated Enterprise Zones 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 TAO and Owner's application, Exhibit "C" and incorporated herein as if fully set forth. SECTION 8. Value of Improvements. In accordance with V.T.C.A., 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, TAO will expend one million one hundred thousand dollars ($1,100,000) for the construction of a new facility to be located within the enterprise zone created by Ordinance No. 2007-00116. Owner and TAO agree that if the initial tax appraisal on this property does not reflect a value equal to or exceeding one million one hundred thousand dollars ($1,100,000.00), Owner and TAO will provide invoices and proof of payment for the construction and equipment costs expended in the facility. SECTION 9. City Access to Property. TAO and Owner 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 or their agents shall be able to inspect the property to insure compliance with the terms and conditions of TAO and Owner's application for tax abatement, attached as Exhibit "C", and this Agreement. SECTION 10. 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% TAX ABATEMENT AGREEMENT TAO-320PS 1, LP and R&N Investments 11, LLC PAGE 3 Year 3: 60% Year 4: 40% Year 5: 20% SECTION 11. Type of Improvements. TAO proposes to construct a new facility as described in Exhibit "C". TAO further states that the proposed improvements to the property above mentioned will commence on the 15th day of July, 2010, and shall be completed June 1, 2011. TAO may request an extension of the above date from City in the event circumstances beyond the control of TAO necessitate additional time for completion of such improvements and such consent shall not unreasonably be withheld. TAO shall provide a copy of the certificate of occupancy or other proof of completion within ten days of completion of improvements. SECTION 12. Limitation on Use. TAO and Owner agree 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 13. Recapture. TAO and Owner agree to be bound by and comply with all the terms and provisions for recapture of abated taxes in the event of default by TAO and Owner pursuant to law and as set forth in Guidelines and Criteria for Tax Abatement adopted by Resolution No. 2009-RO444 of the City Council of the City of Lubbock. SECTION 14. Certification. TAO and Owner agree to certify annually in writing to the governing body of each taxing unit that TAO and Owner are in compliance with the terms of the Agreement. SECTION 15. Transfer of Propg1j. TAO and Owner acknowledges that the purpose of tax abatement is to increase the City of Lubbock tax base, and TAO and Owner therefore agree that if the property described in Exhibit "A" is sold or transferred during the term of the tax abatement agreement to any entity that is not required to pay property taxes for this property, TAO and Owner agree to reimburse the taxing jurisdictions for any tax abatement that was received on the property during the term of the agreement and to make a payment in lieu of taxes in an amount equal to the taxes that would have been due to the jurisdictions for each year remaining in this Agreement. It is understood that TAO and/or Owner may lease or license the use of all or some portion of the property described in Exhibit "A" to a tax exempt entity or entities, and such lease or leases shall not be considered a sale or transfer for TAX ABATEMENT AGREEMENT TAO-32OPS I, LP and R&N Investments II, LLC PAGE 4 purposes of this tax abatement agreement; however, if TAO or Owner convey by deed the fee simple title of the property to a tax exempt entity during the term of this agreement, then the reimbursement and payment required by this Section 15 will be required. SECTION 16. Compliance. The City may cancel or modify this Agreement if TAO and Owner fail to comply with the Agreement. 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 TAO-32OPS1, LP Clayton Isom 905 Avenue K Lubbock, Texas 79401 Phone: 806-722-0660 R & N Investments, LLC Clayton Isom 905 Avenue K Lubbock, TX 79401 Phone: 806-722-0660 TAX ABAI'EMENI' AGREEMENT "CAO-320PS1, LP and R&N Investments II, LLC PAGE 5 SECTION 18. 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 of the City of Lubbock. EXECUTED on TAO-320PS1, LP CLAYTON ISOM ATTEST: ANDREW HAUSE R & N INVESTMENTS, LLC CLAY ON ISOM ATTEST DREW HAUSE November 15 , 2010. CITY OF LUBBOCK lmv"Zm��4 TOM MARTIN, MAYOR ATTEST: Reb ca Garza City Secretary APPROVED AS TO CONTENT Rob Alli n, Assistan t Maria Development Services APPROVED AS TO FORM: Linda L. 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TEXAS c 0" r ZW Resolution No. 2009-50444 October 20, 2009 Item No. 5.13 Exhibit B Resolution No. 2010-RO575 RESOLUTION WHEREAS, in November of 2007, the City of Lubbock approved uniform guidelines and criteria for the application of incentives within the designated enterprise zones; and WHEREAS, state law requires that the guidelines and criteria approved must be re- adopted every two years, and the City of Lubbock desires to approve new guidelines for commercial tax abatement; NOW THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the City Council of the City of Lubbock hereby approves and adopts "Guidelines and Criteria Governing Tax Abatement for Commercial Projects in Designated Enterprise Zones in the City of Lubbock", which guidelines and criteria are attached as Exhibit "A" and are made a part hereof for all intents and purposes. These guidelines shall become effective upon expiration of the previously approved guidelines. THAT this Resolution in no manner effects additional local incentives which may be added or deleted by the City during the life of the enterprise zones as required to obtain the best possible mix of incentives to insure the success of the enterprise zone program. Passed by the City Council this 20th day of October, 2009. ,r� TOM MARTIN, MAYOR ATTEST: Rebecca Garza, City Secretary APP R VED S T CONTENT: Rob Alli n, ss Manager Development Services APPROVED AS TO FORM: Linda Chamales, Economic Development Attorney Lc city att/LindWResolutions/Res-Tax AbatementCommeruaiGwdelmes-2009 September 30. 2009 Exhibit B Exhibit A Resolution No. 2009 80444 Guidelines And Criteria Governing Tax Abatement For Commercial Projects In Designated Enterprise Zones In The City Of Lubbock SECTION 1. General Purpose The City of Lubbock is committed to the promotion of high quality commercial development in designated Enterprise Zones within the City; and to an ongoing improvement in the quality of life for citizens residing in designated Enterprise Zones. The Affected Jurisdictions recognize that these objectives are generally served by enhancement and expansion of the local economy. The Affected Jurisdictions will, on a case-by-case basis, give consideration to providing tax abatement, as authorized by V.T.C.A., Tax Code, Chapter 312, as stimulation for economic development within the designated Enterprise Zones in the City of Lubbock. It is the policy of the Affected Jurisdictions that said consideration will be provided in accordance with the guidelines and criteria herein set forth and in conformity with the Tax Code. Nothing contained herein shall imply, suggest or be understood to mean that the Affected Jurisdictions are under any obligation to provide tax abatement to any specific applicant (V.T.C.A. Tax Code, Section 312.002(d)). With the above rights reserved, all applicants for tax abatement will be considered on a case-by-case basis. SECTION 11. Definitions: As used within these guidelines and criteria, the following words or phrases shall have the following meaning: 1. Abatement of Taxes: To exempt from ad valorem taxation all or part of the value of certain Improvements placed on land located in a designated Enterprise Zone for commercial development purposes for a period of time not to exceed five (5) years. 2. Affected Jurisdiction: The City of Lubbock 3. Abatement Agreement: A contract between a property owner and the Affected Jurisdiction for the abatement of taxes on qualified property located within a designated Enterprise Zone as authorized by V.T.C.A., Tax Code, Section 312.204(a). 4. Base Year Value: The assessed value of property eligible for tax abatement as of January I preceding the execution of an Abatement Agreement as herein defined. 5. Commercial: Retail, service, or office 6. Designated Enterprise Zones: Enterprise zones in which the Affected Jurisdictions will, on a case-by-case basis, give consideration to providing commercial tax abatement, as authorized by V.T.C.A., Tax Code, Chapter 312, as stimulation for economic development. The eligible designated enterprise zones are: EZ Block Groups: Census Tract 1.0 Block Group I Census Tract 1.0 Block Group 4 Exhibit B 2009 Commercial Tax Abatement Guidelines October 20. 2009 Census Tract 2.01 Block Group I Census Tract 2.02 Block Groups I and 2 Census Tract 3.01 Block Groups 1, 2 and 3 Census Tract 3.02 Block Groups I, 2, 5, 7, and 9 Census Tract 6.07 Block Groups I and 2 Census Tract 9.00 Block Groups I, 4 and 5 Census Tract 10.00 Block Groups I, 2, and 4 Census Tract 12.00 Block Group I and 7 Census Tract 13.00 Block Groups I Census Tract 14.00 Block Groups 1,2 Census Tract 24.00 Block Groups I, 2, and 3 Census Tract 25.00 Block Group I 7. Expansion of Existing Facilities or Structures: The addition of buildings, structures, machinery or equipment to a Facility. 8. Existing Facility or Structure: A Facility as of the date of execution of the Tax Abatement Agreement, located in or on Real Property eligible for tax abatement. 9. Facility: The improvements made to Real Property eligible for tax abatement and including the building or structure erected on such Real Property and/or any Tangible Personal Property to be located in or on such property. 10. Improvements to Real Property or Improvements: Shall mean the construction, addition to, structural upgrading of, replacement of, or completion of any facility located upon, or to be located upon, Real Property, as herein defined, or any Tangible Personal Property placed in or on said Real Property. U. Modernization/Renovation of Existing facilities: The replacement or upgrading of existing facilities. 12. New Facility: The construction of a Facility, that has not previously existed within the affected jurisdiction on previously undeveloped real property eligible for tax abatement. 13. New Permanent Job: A new employment position created by a business that has -Provided employment to an employee of at least 1,820 hours annually and intended to be an employment position that exists during the life of the abatement. 14. Owner: The record title owner of Real Property or the legal owner of Tangible Personal Property. In the case of land leased from an Affected Jurisdiction or buildings leased from a private party or tax exempt property, the lessee shall be deemed the owner of such leased property together with all improvements and Tangible Personal Property located thereon. 15. Productive Life: The number of years a Facility is expected to be in service. 16. Real Property: Land on which Improvements are to be made or fixtures placed. 17. Tangible Personal Property: Any Personal Property, not otherwise defined herein, and which is necessary for the proper operation of any type of Facility. Exhibit B 2009 Commercial Tax Abatement Guidelines October 20, 2009 SECTION III. Intent of Criteria and Guidelines: The intent of the criteria and guidelines, as herein set forth, is to establish the minimum standards which an applicant for tax abatement must meet in order to be considered for such status by the Affected Jurisdictions. SECTION IV. Criteria and Guidelines for Tax Abatement: Any type of Facility will be eligible for tax abatement consideration provided such Facility meets the following guidelines and criteria: 1. A business must clearly add to the Lubbock economic base. Compliance with this criterion must show that if the company is qualifying on the jobs requirement that the jobs being proposed will not simply displace other similar jobs in the community. 2. Creation of new value: Abatement may only be granted for the additional value resulting from any of the following: (a) modernization/renovation of existing facilities of any type as herein defined; (b) construction of a new facility of any type as herein defined; (c) expansion of existing facilities of any type as herein defined. 3. New or existing facilities, of any type herein defined, located in a designated Enterprise Zone, (Designated Enterprise Zones are automatic reinvestment zones) or upon Real Property eligible for such status will be eligible for consideration for tax abatement status provided all other criteria or guidelines are satisfied. 4. Improvements to Real Property are eligible for tax abatement status. 5. The following types of property shall be ineligible for tax abatement status and shall be fully taxed: (a) Real Property; (b) inventories or supplies; (c) tools; (d) furnishings and other forms of movable personal property; (e) vehicles; (f) aircraft; (g) housing; (h) boats; .3 Exhibit B 2009 Commercial Tar Abatement Guidelines October 20. 2009 (i) property owned by the State of Texas or any state agency; and, (j) property owned or leased by a member of the affected Jurisdiction that did not have an active tax abatement in place before they became a member of the governing body or commission. 6. In order for a Facility to qualify for abatement, the following conditions must apply: (a) The owner or leaseholder of real property must make eligible improvements to the real property; and, (b) In the case of lessees, the leaseholder must have a lease commitment of at least five (5) years. (c) Property must be properly zoned for the use stated by the owner in the application. (d) It is recommended that facilities located within the certificated territory of the City's municipally owned electric utility, Lubbock Power and Light (LP&L), utilize LP&L for electrical services during the term of the abatement. 7. The amount and term of abatement shall be determined on a case-by-case basis, however, in no event shall taxes be abated for a term in excess of five (5) years. The amount of the taxable value of Improvements to be abated and the term of the abatement shall be determined by the Affected Jurisdiction in all cases. The authority of all other taxing units shall be as set forth in V.T.C.A., Tax Code, Section 312.206. 8. No commercial property shall be eligible for tax abatement under these guidelines and criteria unless such property is located in a designated Enterprise Zone in accordance with Government Code, Chapter 2303.101, and as defined in Section 11(6), and the tax abatement application is filed with the taxing jurisdiction before constriction begins. 9. The minimum economic qualification for tax abatement shall be as follows: (a) $100,000 investment, or (b) Ten (10) new permanent jobs and at least 30% of the business' new employees in the zone are residents of any zone within the governing body's or bodies' jurisdiction. 10. Notwithstanding any of the requirements set forth in Subsection 9 above, the governing body of an Affected Jurisdiction upon the affirmative vote of three-fourths (314) of its members may vary any of the above requirements when variation is demonstrated by the applicant for Tax Abatement that variation is in the best interest of the Affected Jurisdiction to do so, and will enhance the economic development of the Affected Jurisdiction. By way of example only, and not by limitation, the governing body of an Affected Jurisdiction may consider the following or similar terms in detennining whether a variance shall be granted: (a) That the increase in productivity of the Facility will be substantial and hence directly benefit the economy. Exhibit B 2009 Commercial Tax Abatement Guidelines October 20, 2009 (b) That the increase of goods or services produced by the Facility will be substantial, and directly benefit the economy. (c) That the employment maintained at the Facility will be increased. (d) That the waiver of the requirement will contribute, and provide for the retention of existing jobs within the Affected Jurisdiction. (e) Any other evidence tending to show a direct economic benefit to the Affected Jurisdiction. Il. Taxability: (a) The portion of the value of Improvements to be abated shall be abated in accordance with the terms and provisions of a Tax Abatement Agreement executed between the Affected Jurisdiction and the owner of the Real Property and/or Tangible Personal Property, (which agreement shall be) in accord with the provisions of V.T.C.A., Tax Code, Section 312.205. (b) All ineligible property, if otherwise taxable as herein described, shall be fully taxed. 12. The governing body of each Affected Jurisdiction shall have total discretion as to whether tax abatement is to be granted. Such discretion, as herein retained, shall be exercised on a case- by-case basis. The adoption of these guidelines and criteria by the governing body of an Affected Jurisdiction does not: (a) Limit the discretion of the governing body to decide whether to enter into a specific tax abatement agreement; (b) Limit the discretion of the governing body to delegate to its employees the authority to determine whether or not the governing body should consider a particular application or request for tax abatement; or, (c) Create any property, contract, or other legal right in any person to have the governing body consider or grant a specific application or request for tax abatement. 13. The burden to demonstrate that an application for tax abatement should be granted shall be upon the applicant. Each Affected Jurisdiction to which the application has been directed shall have full authority to request any additional information from the applicant that the governing body of such Affected Jurisdiction deems necessary to assist it in considering such application. SECTION V. Tax Abatement A¢reement: I. The Tax Abatement Agreement may be executed between the owner and the municipality. A Tax Abatement Agreement shall: (a) Establish and set forth the Base Year assessed value of the property for which tax abatement is sought. Exhibit B 2009 Commercial Tax Abatement Guidelines October 20. 2009 (b) Provide that the taxes paid on the Base Year assessed value shall not be abated as a result of the execution of said Tax Abatement Agreement. (c) Provide that ineligible property as subscribed in Section 1V, Subsection 5, hereinabove shall be fully taxed. (d) Provide for the exemption of Improvements in each year covered by the agreement, only to the extent the value of such Improvements for each such year exceeds the value for the year in which the agreement is executed. (e) Fully describe and list the kind, number and location of all of the improvements to be made in or on the Real Property. (f) Set forth the estimated value of all improvements to be made in or on the Real Property. (g) Clearly provide that tax abatement shall be granted only to the extent: (1) The improvements to Real Property increase the value of the Real Property for the year in which the Tax Abatement Agreement is executed; and, (2) That the Tangible Personal Property improvements to Real Property were not located on the Real Property prior to the execution of the Tax Abatement Agreement. (h) Provide for the portion of the value of the improvements to Real Property or improvements to be abated. This determination is to be made consistent with the provisions of Section IV, Subsection 5, of these guidelines and criteria as hereinabove set forth. (i) Provide for the commencement date and the termination date. In no event shall said dates exceed a period of five (5) years. (j) Describe the type and proposed use of the improvements to Real Property or improvements including: (1) The type of facility. (2) Whether the improvements are for a new facility or renovation of a facility. (3) The nature of the construction, proposed time table of completion, a map or drawings of the improvements above mentioned. (4) The amount of investment and the commitment for the creation of new jobs. (5) A list containing the kind, number and location of all proposed improvements. (6) Any other information required by the Affected Jurisdiction. (k) Provide a legal description of the Real Property upon which improvements are to be made. 6 Exhibit B 2009 Commercial Tax Abatement Guidelines October 20. 2009 (1) Provide access to and authorize inspection of the Real Property or improvements by employees of the Affected Jurisdiction, who have executed a Tax Abatement Agreement with owner to insure improvements are made according to the specifications and conditions of the Tax Abatement Agreement. (m) Provide for the limitation of the uses of the Real Property or improvements consistent with the general purpose of encouraging development or re -development of the zone during the period covered by the Tax Abatement Agreement. (n) Provide for contractual obligations in the event of default by owner, violation of the terms or conditions by owner, recapturing property tax revenue in the event the owner defaults or otherwise fails to make improvements as provided in said Tax Abatement Agreement, and any other provision as may be required or authorized by State law. (o) Contain each term agreed to by the owner of the property; (p) Require the owner of the property to certify annually to the governing body of each taxing unit that the owner is in compliance with each applicable term of the agreement; and (q) Provide that the governing body of the municipality may cancel or modify the agreement if the property owner fails to comply with the agreement. 2. Not later than the seventh day before the City of Lubbock (as required by V.T.C.A., Tax Code, Section 312.2041 or Section 312.402) enters into an agreement for tax abatement under V.T.C.A., Tax Code, Section 312.204, the governing body or a designated officer or employee thereof shall deliver to the presiding officer of the governing body of each of the taxing units in which the property to be subject to the agreement is located, a written notice that the City intends to enter into the agreement. The notice must include a copy of the proposed Tax Abatement Agreement. 3. A notice, as above described in Subparagraph 2, is presumed delivered when placed in the mail, postage paid and properly addressed to the appropriate presiding officer. A notice properly addressed and sent by registered or certified mail for which a return receipt is received by the sender is considered to have been delivered to the addressee. 4. Failure to deliver the notice does not affect the validity of the agreement. SECTION Vi. ADDllcatlon: I. Any present owner of taxable commercial property located within the designated Enterprise Zone of the City of Lubbock may apply for tax abatement by filing an application with the City of Lubbock. 2. The application shall consist of a completed application form accompanied by: (a) A general description of the improvements to be undertaken. (b) A descriptive list of the improvements for which tax abatement is requested. Exhibit B 2009 Commercial Tax Abatement Guidelines October 20. 2009 (c) A list of the kind, number and location of all proposed improvements of the Real Property Facility of Existing Facility. (d) A map indicating the approximate location of improvements on the Real Property Facility or Existing Facility together with the location of any or all Existing Facilities located on the Real Property or Facility. (e) A list of any and all Tangible Personal Property presently existing on the Real Property or located in an existing facility. (f) A legal description of property. (g) Address of property. (h) A proposed time schedule for undertaking and completing the proposed improvements. (i) A general description stating whether the proposed improvements are in connection with: (1) the renovation of facility; or, (2) construction of a new facility. (j) A statement of the additional value to the Real Property or Facility as a result of the proposed improvements. (k) A statement of the assessed value of the Real Property, Facility or Existing Facility for the Base Year. (1) Information concerning the number of new jobs that will be created or information concerning the number of existing jobs to be retained as result of the improvements undertaken. (m) Any other information which the City of Lubbock deems appropriate for evaluating the financial capacity of the applicant and compatibility of the proposed improvements with these guidelines and criteria. (n) Information that is provided to an Affected Jurisdiction in connection with an application or request for tax abatement, and which describes the specific processes or business activity to be conducted or the equipment or other property to be located on the property for which tax abatement is sought is confidential and not subject to public disclosure until the Tax Abatement Agreement is executed. Information in the custody of an Affected Jurisdiction after the agreement is executed is not confidential. (V.T.C.A., Tax Code, Section 312.003). (o) The City of Lubbock shall determine if the property described in said application is within a designated Enterprise Zone. If the City determines that the property described is not within a current Enterprise Zone, then they shall so notify the applicant and said application shall then be returned to the applicant. Exhibit B 2009 Commercial Tax Abatement Guidelines October 20, 2009 SECTION V11. Default Options 1. In the event that the applicant, owner or lessee has entered into a tax abatement agreement to make improvements as defined in Section IV.2 above, but fails to undertake or complete such improvements; fails to create all or a portion of the new jobs provided by the Tax Abatement Agreement; or is in default of any of the terms or conditions contained in the Tax Abatement Agreement; then in such event the Affected Jurisdiction to whom the application for tax abatements was directed shall give the applicant or owner sixty (60) days notice of such failure. The applicant or owner shall demonstrate to the satisfaction of the Affected Jurisdiction above mentioned that the applicant or owner has commenced to cure such failure within the sixty (60) days above mentioned. In the event the applicant owner, or lessee fails to demonstrate that he is taking affirmative action to cure his failure, the Affected Jurisdiction shall have three options: (a) The Affected Jurisdiction may renegotiate the Agreement with the applicant, owner or lessee, in which case the current Guidelines and Criteria Governing Tax Abatement for Commercial Projects in Designated Enterprise Zones shall apply to the new Agreement; or (b) The Affected Jurisdiction may determine that good cause exists to cancel the Agreement and all abatement of taxes shall terminate immediately; or (c) The Affected Jurisdiction may terminate the Agreement and recapture taxes abated under Section VIII. Recapture. In any of the three options in subparagraph I above, the Affected Jurisdiction to which the application for tax abatement was directed shall determine whether default has occurred by the applicant, owner or lessee in the terms and conditions of the Tax Abatement Agreement and shall so notify all other Affected Jurisdictions. Cancellation or termination of the Tax Abatement Agreement by the Affected Jurisdiction to which the application for tax abatement was directed shall constitute simultaneous action to all Tax Abatement Agreements of all other Affected Jurisdictions. SECTION Vill. Recapture In the event that any type of facility, (as defined in Section II, Subparagraphs 5, 6, 7, 8, 9) is completed and begins producing goods or services, but subsequently discontinues producing goods or services for any reason, excepting fire, explosion or other casualty or accident or natural disaster or other event beyond the reasonable control of applicant or owner for a period of 180 days during the term of a tax abatement agreement, then in such event the Tax Abatement Agreement shall terminate and all abatement of taxes shall likewise terminate. Taxes abated during the calendar year in which termination takes place shall be payable to each Affected Jurisdiction by no later than January 31 st of the following year. Taxes abated in years prior to the year of termination shall be payable to each Affected Jurisdiction within sixty (60) days of the date of termination. The burden shall be upon the applicant or owner to prove to the satisfaction of the Affected Jurisdiction to whom the application for tax abatement was directed that the discontinuance of producing goods or services was as a result of fire, explosion, or other casualty or accident or natural disaster or other even beyond the control of applicant or owner. In the event the applicant or owner meets this burden, and the Exhibit B 2009 Commercial Tax Abatement Guidelines October 20, 2009 Affected Jurisdiction is satisfied that the discontinuance of the production of goods or services was the result of events beyond the control of the applicant or owner, then such applicant or owner shall have a period of one XM in which to resume the production of goods and services. In the event that the applicant or owner fails to resume the production of goods or services within one year, then the Tax Abatement Agreement shall terminate and the Abatement of all taxes shall likewise terminate. Taxes abated during the calendar year in which termination takes place shall be payable to each Affected Jurisdiction by no later than January 31st of the following year. Taxes abated in years prior to the year of termination shall be payable to each Affected Jurisdiction within sixty (60) days of the date of termination. The one year time period, hereinabove mentioned, shall commence upon written notification from the Affected Jurisdiction to the applicant or owner. 2. In the event that the applicant, owner or Lessee has entered into a tax abatement agreement to make improvements to a facility of any type described in Section I above, but fails to undertake or complete such improvements or fails to create all or a portion of the number of new jobs provided by the Tax Abatement Agreement, then in such event the Affected Jurisdiction to whom the application for tax abatement was directed shall give the applicant or owner sixty (60) days notice of such failure. The applicant or owner shall demonstrate to the satisfaction of the Affected Jurisdiction, above mentioned, that the applicant or owner has commenced to cure such failure within the sixty (60) days above mentioned. In the event that the applicant or owner fails to demonstrate that he is taking affirmative action to cure his failure, then in such event the Tax Abatement Agreement shall terminate and all abatement of taxes shall likewise terminate. Taxes abated during the calendar year in which termination takes place shall be payable to each Affected Jurisdiction by no later than January 31 st of the following year. Taxes abated in years prior to the year of termination shall be payable to each Affected Jurisdiction within sixty (60) days of the date of termination. 3. In the event that the Affected Jurisdiction to whom application for tax abatement was directed determines that the applicant or owner is in default of any of the terms or conditions contained in the Tax Abatement Agreement, then in such event the Affected Jurisdiction shall give the applicant or owner sixty (60) days written notice to cure such default. In the event such default is not cured to the satisfaction of the Affected Jurisdiction within the sixty (60) days notice period, then the Tax Abatement Agreement shall terminate and all abatement of taxes shall likewise terminate. Taxes abated during the calendar year in which termination takes place shall be payable to each Affected Jurisdiction by no later than January 31st of the following year. Taxes abated in years prior to the year of termination shall be payable to each Affected Jurisdiction within sixty (60) days of the date of termination. 4. In the event that the applicant or owner allows ad valorem taxes on property ineligible for tax abatement owed to any Affected Jurisdiction, to become delinquent and fails to timely and properly follow the legal procedures for their protest or contest, then in such event the Tax Abatement Agreement shall terminate and all abatement of taxes shall likewise terminate. Taxes abated during the calendar year in which termination, under this subparagraph, takes place shall be payable to each Affected Jurisdiction by no later than January 31st of the following year. Taxes abated in years prior to the year of termination shall be payable to each Affected Jurisdiction within sixty (60) days of the date of termination. 5. In the event that the applicant or owner, who has executed a tax abatement agreement with any Affected Jurisdiction, relocates the business, for which tax abatement has been granted, to a 10 Exhibit B 2009 Commercial Tax Abatement Guidelines October 20. 2009 location outside of the designated reinvestment zone, then in such event, the Tax Abatement Agreement shall terminate after sixty (60) days written notice by the Affected Jurisdiction to the Owner/Applicant. Taxes abated during the calendar year in which termination, under this subparagraph takes place shall be payable to each Affected Jurisdiction by no later than January 31 st of the following year. Taxes abated in years prior to the year of termination shall be payable to each Affected Jurisdiction within sixty (60) days of the date of termination. 6. The date of termination as that term is used in this Subsection VIII shall, in every instance, be the 60th day after the day the Affected Jurisdiction sends notice of default, in the mail to the address shown in the Tax Abatement Agreement to the Applicant or Owner. Should the default be cured by the Owner or Applicant within the sixty (60) day notice period, the Owner/Applicant shall be responsible for so advising the Affected Jurisdiction and obtaining a release from the notice of default from the Affected Jurisdiction, failing in which, the abatement remains terminated and the abated taxes must be paid. 7. In every case of termination set forth in Subparagraphs I, 2, 3, 4 and 5 above, the Affected Jurisdiction to which the application for tax abatement was directed shall determine whether default has occurred by Owner (Applicant) in the terms and conditions of the Tax Abatement Agreement and shall so notify all other Affected Jurisdictions. Termination of the Tax Abatement Agreement by the Affected Jurisdiction to which the application for tax abatement was directed shall constitute simultaneous termination of all Tax Abatement Agreements of all other Affected Jurisdictions, 8. In the event that a tax abatement agreement is terminated for any reason whatsoever, and taxes are not paid within the time period herein specified, then in such event, the provisions of V.T.C.A., Tax Code, Section 33.01 will apply. SECTION IX. Miscellaneous: I. Any notice required to be given by these criteria or guidelines shall be given in the following manner: (a) To the Owner or Applicant: written notice shall be sent to the address appearing on the Tax Abatement Agreement. (b) To an Affected Jurisdiction: written notice shall be sent to the address appearing on the Tax Abatement Agreement. 2. The Chief Appraiser of the Lubbock Central Appraisal District shall annually assess the Real and Personal Property comprising the reinvestment zone. Each year, the Applicant or Owner receiving tax abatement shall furnish the Chief Appraiser with such information as may be necessary for the abatement. Once value has been established, the Chief Appraiser shall notify the Affected Jurisdictions which levy taxes of the amount of assessment. Upon the completion of improvements made to Facility as set forth in Section VII, Subparagraph I of these criteria and guidelines, a designated employee or employees of any Exhibit B 2009 Commercial Tac Abatement Guidelines October 20, 2009 Affected Jurisdiction having executed a tax abatement agreement with Applicant or Owner shall have access to the Facility to ensure compliance with the Tax Abatement Agreement. 4. A Tax Abatement Agreement may be assigned to a new owner, but only after written consent has been obtained from all Affected Jurisdictions which have executed such an agreement with the Applicant or Owner. 5. These guidelines and criteria are effective upon the date of their adoption by an Affected Jurisdiction and shall remain in force for two years. At the end of the two-year period, these guidelines and criteria may be re -adopted, modified, amended or re -written as the conditions may warrant. 6. Each Affected Jurisdiction shall determine whether or not said Affected Jurisdiction elects to become eligible to participate in tax abatement. In the event the Affected Jurisdiction elects by resolution to become eligible to participate in tax abatement, then such Affected Jurisdiction shall adopt these guidelines and criteria by separate resolution forwarding a copy of both resolutions to all other Affected Jurisdictions. 7. In the event of a conflict between these guidelines and criteria and V.T.C.A., Tax Code, Chapter 312, then in such event, the Tax Code shall prevail, and these guidelines and criteria interpreted accordingly. 8. The guidelines and criteria, once adopted by an Affected Jurisdiction, may be amended or repealed by a vote of three-fourths of the members of the governing body of an Affected Jurisdiction during the two-year term in which these guidelines and criteria are effective. I? Exhibit C Resolution No. 2010—RO575 APPLICATION FOR COMMERCIAL TAX ABATEMENT IN LUBBOCK COUNTY, TEXAS FILING INSTRUCTIONS: An application must be filed with the City of Lubbock prior to the anticipated commencement of construction of improvements or the installation of equipment. An application must be filed AND a tax abatement agreement executed with Lubbock County prior to the commencement of construction of improvements or the Installation of equipment. This filing acknowledges familiarity and assumed conformance with "GUIDELINES AND CRITERIA GOVERNING COMMERCIAL TAX ABATEMENT" (Copy attached). This application will become a part of any later agreement or contract, and knowingly false representations thereon will be grounds for the voiding of any later aureement or contract. ORIGINAL COPY OF THIS APPLICATION AND ATTACHMENTS SHOULD BE SUBMITTED TO: City of Lubbock Business Development P.O. Box 2000 162513' Street, Suite 105 Lubbock, TX 79457 (806)775-2019 1— Date of Application: 6/10/2010 Lubbock County Lubbock County Commissioners' Court P.O. Box 10536 904 Broadway, Suite 101 Lubbock, TX 79408 (806) 775-1595 Y Applicant Name: Clayton Isom Company Name: TAO-320PS1. LP (Building) R&N Investments II, LLC (Land) Address: 905 Ave. K. Lubbock, TX 79401 Phone: (806)722-0660 Fax: (806)796-1920 Cell Phone: Email: Applicants Representative on this project: Clayton Isom Name: Address: 905 Ave. K Lubbock TX 79401 Phone: (806)722-0660 Fax: Cell Phone: Tax Abatment Apptication.doc Email: Exhibit C Commercial Tax Abatement Application Page 2 Type of Ownership: O Corporation X Partnership 0 Proprietorship Total Current Number Employees: 0 Corporate Annual Sales Per Year: Start-up Company If any leases are involved, provide copies of each. Section 11 - FACILITY INFORMATION (a) This application is for a: X New Facility 0 Expansion 0 Modernization ORelocation (b) Type of Commercial Facility for which abatement is requested: Office/Retail Building (c) Minimum economic qualification for tax abatement - place a check beside the statement that applies to your project: X Minimum investment at least $100,000 or 0 Creation of at least 10 new permanent jobs and at least 30% of the new employees to be hired by the business will be residents of any enterprise zone within the governing body's jurisdiction (d) 0 The existing facility to be modernized, expanded or moved or the property where the new facility is to be built is located in a designated Reinvestment or Enterprise Zone. (d) Address of proposed facility: 2510 Marsha Sharp Freeway (e) Legal description of real property: Tract C-1, a reolat of Tract C. R$N Isom addition to the city of Lubbock. Lubbock County. TX (f) Describe product or service to be provided: Newly constructed building will consist of 15,921 so. ft. of office and retail space L - Please attach the following: I Attachment 1 (a) A general description of the improvements to be undertaken (example: build new retail store at 4501 Peach Street and install new furniture and fixtures). (b) A descriptive list of the improvements for which tax abatement is requested, including: (1) cost and description of construction and location of all proposed improvements of the Real Property or Existing Facility, and; (2) list of new equipment and cost of the equipment. (c) A list of any and all Tangible Personal Property presently existing on the Real Property or located in an existing Exhibit C Commercial Tax Abatement Application Page 3 facility. (d) A proposed time schedule for undertaking and completing the proposed improvements. Attachment 2 (a) A site map indicating the approximate location of improvements on the Real Property or Existing Facility together with the location of any or all Existing Facilities located on the Real Property. Attachment 3 (a) A statement of the additional value to the Real Property or Facility as a result of the proposed improvements. (b) A statement of the assessed value of the Real Property, Facility or Existing Facility for the base year (attach tax assessment for property from the Lubbock Central Appraisal District). (c) Information concerning the number of new jobs that will be created or the number of existing jobs to be retained as a result of the improvements undertaken. Part A — Current Value of Real Property & Existing Facility: 223,500 Part B — Permanent Employment Estimates: (1) If existing facility, what is the current permanent plant employment: 0 (2) Estimated number of new permanent jobs to be created and time frame for creation of jobs: New Jobs 0 Time Frame NA (3) Estimated number of retained jobs: 0 (4) Opening of improvements: (Month) Jan. 15 of (Year) 20_10v. Part C — Permanent Payroll Estimates: (1) If existing facility, what is the current plant payroll: NA (2) Estimated amount of new payroll: 0 (3) Estimated amount of retained payroll: 0 Part D — Construction and Employment Estimates: (1) Construction start: Month July Year 20 10 (2) Number of construction jobs: At Start 30 Peak 100 Finish 60 (3) Number of months of construction: 6 months Exhibit C Commercial Tax Abatement Application Page 4 Part E — School District Impact Estimates: Give Estimated number of Children added to ISD's 0 Part F — City Impact Estimates: (For City of Lubbock Tax Abatements) (1) Volume of treated water required from City gallons per day. (2) Volume of effluent to be treated by City gallons per day. - To be determined due to retail tenants Part G — Estimated Appraised Value on Site: LAND PERSONAL IMPROVEMENTS PROPERTY Value of Existing Facility Before New Construction (From Central Appraisal District) 223.500 0 NA Value of New Improvements 558.500 0 1.100.000 Estimated Total Value After Improvements 782.000 0 1.100.000 Part H — Variance: (a) Is a variance being sought under Section IV 11 of the "Guidelines"? [ ] Yes [X ] No (b) If "Yes", attach any supplementary information required, including the provision or provisions under which the variance is being sought. To the best of my knowledge, the above information is an accurate description of project details. I understand that any knowingly false representations are grounds for voiding any tax abatement agreements which are based upon this application and an implicate the Recapture provisions of the Commercial Tax Abatement Guidelines. ompany Official Signature C/:G f'74- 'J 1s rss Printed Name of Company Official C E't3 Title of Company Official Exhibit C Attachment 1 a) TAO — 320PS 1, LP will develop a commercial building at the northwest comer of Marsha Sharp Freeway and University with 15,921 sq ft of space. The building will be split with 9,000 sq ft of office space and 6,921 sq ft of retail space. b) 1) The construction cost of the shell building and site work is budgeted at $1,100,000. This does not include the cost to finish out the interior of the office and retail space. This cost will be solely the responsibility of the tenants. 2) TAO — 320PS 1, LP will not purchase any equipment related to this building. Tenants will purchase equipment as needed. C) The property is currently raw land, due to the expansion of Marsha Sharp Freeway and the demolition of the Town and Country shopping center. The entire 8.653 acre tract was purchased by R&N Investments 11, LLC. R&N Investments will retain ownership of the land through a ground lease signed by TAO — 320PS 1. At the end of construction TAO — 320PS 1, LP will purchase 55,874 sq ft of land from R&N Investments. This ownership structure was necessary to obtain financing through a local lender. This property will be considered Tract C-1 of the R&N Isom Addition. d) Construction will begin close to July 15, 2010 and run for 6 months ending January 15, 2010. This timeline includes the finish -out process by the office tenant. Exhibit C Attachment 2 ufx i]Y:Jf YYi Ma:'iiri:L .3:Nf10 fap� GVY3a'OfriL ' urtls AY nfS:a�1'i ltbt�a�NJtha. eMs ieMi Kali OHIe4aaiJ�3 a]Y3]iFX]Y S�YiG Dl 'dICIOND NOIM MAID NO1ST3911d 1; Exhibit C S V X31 '143088!111 SON1011110 3JIddO / 'I1V19' 1 Noi.LYaad Wosi N GN`d d `D . 3VS.L gq.I U njj " 2;3 5N LUp�K L8=� k�? air 5Y r—� ^ ^ j L_J ggat' KwY -0a Sn]. IqJ aiGam 9 ILaYI]40 Sr. •-•i011>IIYJG+%O) iUi lOJ.- N V'1d iOH LNOJ 7 V-40MIGW l0 -:6- It r r r ^Ix FiNV.iQ aW4d�r0�� � '�`I� MJ. Y 3IA Werl Ylarlw fih3Atl ALSY3nl!f1 J — i —v 4 A — -J i-�� � 8A i ggat' KwY -0a Sn]. IqJ aiGam 9 ILaYI]40 Sr. •-•i011>IIYJG+%O) iUi lOJ.- N V'1d iOH LNOJ 7 V-40MIGW l0 -:6- It r r r ^Ix FiNV.iQ aW4d�r0�� � '�`I� MJ. Y 3IA Werl Ylarlw fih3Atl ALSY3nl!f1 J 'k —v 4 A — -J i-�� n a LU f S Exhibit C a 8 CLOS s r s 'g zz,4 $ o O N NVCC= z a O r °��� Wad ss a a. N N S �pp"O� B ipp •' ��� o 's CC_ o ddd a ��� ay gs N �- Ztt 'd 'L9SS 'A of Puo _ 91Z -d LCt 'A CI fold _ r �ao19 'OZ uon»g a+n ioo3 — g uo �D'M %�14eIa!! }uio fPY — oll nd 4/PfhJo 1 lqDA u anueAV N! yo4lun I , Igo I pp O O• p N I a; is I < O� I ate � I>� kill'§ M g I ��d •E�� I — — M ti U� O � P� 0 .9eW I M ,tr. Iaaa S I _ i .►ZYZt 3 .90.19ZD N 96Z10001OZ isgwnN !umnoo0 "r I v� uof{IPPY tuna a .e poi f N puo t 8 f a Exhibit C Attachment 3 a) The construction of this office/retail building will add value of $1,100,000 in improvements to the real property as well as $558,500 in land value currently associated with the site. The property will also produce tax income with personal property brought by the businesses within. b) The entire 8.653 acre tract that includes this site was appraised in 2010 at $4/ft by Lubbock Central Appraisal District. TAO — 320PS1, LP will purchase 55,884 sq ft of land by January 1, 2011 and add roughly $10/ft to the value of the land. Once construction is complete the land will be worth roughly $782,000. c) TAO — 320PS1, LP will construct 15,921 sq ft of retail and office space. At this point in the development it is very hard to project the number of employees that each tenant will hire. It depends on the types of businesses that will come to the area.