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HomeMy WebLinkAboutResolution - 4973 - Joint Resolution-Lubbock County & LISD-Industrial Tax Abatement Guidelines - 09/28/1995Resolution No. 4973 September 28, 1995 Item #37 RESOLUTION JOINT RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LUBBOCK, THE COUNTY COMMISSIONERS OF LUBBOCK COUNTY AND THE BOARD OF TRUSTEES OF LUBBOCK INDEPENDENT SCHOOL DISTRICT TO ADOPT GUIDELINES AND CRITERIA FOR INDUSTRIAL TAX ABATEMENT AGREEMENTS IN ACCORDANCE WITH THE PROPERTY REDEVELOPMENT AND TAX ABATEMENT ACT. WHEREAS, in October of 1993, Guidelines and Criteria Governing Tax Abatement for all Taxing Units within Lubbock County were approved; and WHEREAS, the guidelines and criteria approved will expire under the terms of the Property Redevelopment and Tax Abatement Act upon the second anniversary of their adoption; NOW THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK, THE COUNTY COMMISSIONERS OF LUBBOCK COUNTY AND THE BOARD OF TRUSTEES OF LUBBOCK INDEPENDENT SCHOOL DISTRICT: THAT the City Council of the City of Lubbock, the County Commissioners of Lubbock County and the Board of Trustees of Lubbock Independent School District hereby approve and adopt Guidelines and Criteria Governing Tax Abatement for all Taxing Units within Lubbock County, 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 the expiration of the previously approved guidelines. Passed by the City Council of the City of 1995. ATTEST: Betty A Johnson ity Secretary Passed by the Lubbock County Commissioners this 9th day of October , 1995. DON M BEATH, COUNTY JUDGE ATTEST: Ann Davidson, Secretary Pas ed by the Board of Trustees of Lubbock Independent School District this day of V )2fl huti , 1995. -2- WeG� WILLIAM MILLER, PRESIDENT EM1 IT "A" GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT FOR ALL TAXING UNITS CONTAINED WITHIN LUBBOCK COUNTY SECTION I. General P=ose: The Affected Jurisdictions located wholly within or partially within the County of Lubbock, Texas, are committed to the promotion of high quality development in all parts of Lubbock County, Texas; and to an ongoing improvement in the quality of life for the citizens residing within the Affected Jurisdictions. 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 Affected Jurisdictions. 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 applicant and attention is called to V.T.C.A., Tax Code, Section 312.002(d). With the above rights reserved all applications for tax abatement will be considered on a case by case basis. SECTION II. Definitions: As used within these guidelines and criteria, the following words or phrases shall have the following meaning: Abatement of Taxes: To exempt from ad valorem taxation all or part of the value of certain Improvements placed on land located in a reinvestment zone designated for economic development purposes as of the date of execution of the Tax Abatement Agreement for a period of time not to exceed ten (10) years. 2. Affected Jurisdiction: The County of Lubbock, any municipality or any other governmental taxing unit located totally within or partially within the County of Lubbock. 3. Abatement Agreement: (1) A contract between a property owner and an Affected Jurisdiction for the abatement of taxes on qualified property located within the reinvestment zone; or, (2) a contract for the abatement of taxes between an Affected Jurisdiction and a certified air carrier who owns or leases Real Property located within the reinvestment zone or Personal Property or both as authorized by V.T.C.A., Tax Code, Section 312.204(e). 4. Base Year Value: The assessed value of property eligible for tax abatement as of January 1 preceding the execution of an Abatement Agreement as herein defined. 5. Distribution Center Facility: A building or structure including Tangible Personal Property used or to be used primarily to receive, store, service or distribute goods or materials. 6. Expansion of Existing Facilities or Structures: The addition of buildings, structures, machinery or equipment to a Facility after the date of execution of an Abatement Agreement. 7. 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. 8. 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. 9. 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. 10. Manufacturing Facility: A Facility which is or will be used for the primary purpose of the production of goods or materials or the processing or change of goods or materials to a finished product. 11. Modernization of Existing Facilities: The replacement or upgrading of existing facilities. 12. New Facility: The construction of a Facility on previously undeveloped real property eligible for tax abatement. 13. Other Basic Industry: A Facility other than a distribution center facility, a research facility, a regional service facility or a manufacturing facility which produces goods or services or which creates new or expanded job opportunities and services a market either within or outside of Lubbock County, Texas. 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 the lessee shall be deemed the owner of such leased property together with all improvements and Tangible Persnnal 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. Regional Services Facility: A Facility, the primary purpose of which is to service or repair goods or materials and which creates job opportunities within the Affected Jurisdictions. 18. Reinvestment Zone: Real Property designated as a Reinvestment Zone under the provisions of V.T.C.A., Tax Code, Section 312.202. 19. Research Facility: A Facility used or to be used primarily for research or experimentation to improve or develop new goods and/or services or to improve or develop the production process for such goods and/or services. 20. Tangible Personal Property: Any Personal Property, not otherwise defined herein and which is necessary for the proper operation of any type of Facility. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT --- PAGE 2 -- 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: 1. Any type of Facility will be eligible for tax abatement consideration provided such Facility meets the following guidelines and criteria: 2. Creation of new value: Abatement may only be granted for the additional value resulting from any of the following: (a) modernization of a facility of any type herein defined; (b) construction of a new facility of any type as herein defined; (c) expansion of a facility of any type as herein defined. 3. New or existing facilities, of any type herein defined, located in a reinvestment zone 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; (i) hotel accommodations; 0) motel accommodations; (k) retail businesses; GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT -- PAGE 3 -- (1) property owned by the State of Texas or any State agency; and, (m) property owned or leased by a member of the affected Jurisdiction. 6. In order for a Facility to qualify for abatement, one of the following conditions must apply: (a) The Real Property and eligible improvements and Tangible Personal Property must be owned by the same person, corporation, partnership or other business entity; or, (b) In the case of Real Property leased from Affected Jurisdiction all improvements placed thereon together with all Tangible Personal Property used in conjunction with said improvements must be owned by the same person, corporation, partnership or other business entity and said owner must have a lease commitment of at least 15 years. 7. In reinvestment zones, 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 ten (10) years. The amount of the taxable value of Improvements to be abated and the term of the abatement shall be determined by the municipality in all cases where the property for which tax abatement is applied for is within the City limits of the City or by the County of Lubbock in all cases where the property for which tax abatement is applied for is outside of the City limits of a municipality, but within the County of Lubbock, except that a reinvestment zone that is a state enterprise zone is designated for the same period as a state enterprise zone as provided by Chapter 2303, Government Code. The authority of all other taxing units shall be as set forth in V.T.C.A., Tax Code, Section 312.206. 8. ZI In enterprise zones, the governing body of each taxing jurisdiction may execute a written agreement with the owner of the property not later than the 90th day after the date the municipal or county agreement, whichever is later. The agreement may, but is not required to, contain terms that are identical to those contained in the agreement with the municipality, county, or both, whichever applies, and the only terms of the agreement that may vary are the portion of the property that is to be exempt from taxation under the agreement and the duration of the agreement. No property shall be eligible for tax abatement unless such property is located in a reinvestment zone in accordance with V.T.C.A., Tax Code, Section 312.202. The economic qualification for tax abatement shall be as follows: (a) New Facility: 1. The creation of a new Facility, which has not previously existed within the Affected Jurisdiction, and will be a totally new business operation; and, 2. The improvements and Tangible Personal Property to be erected or affixed in or on the Real Property for which tax abatement is sought must be at a minimum value of one millon dollars and the new Facility must create and retain at least 10 new jobs during the entire term established in the Tax Abatement Agreement executed by applicant and the Affected Jurisdiction; or, GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT --- PAGE 4 -- 3. The new Facility, regardless of the value as mentioned in Subparagraph 2 above, will create and retain a minimum of 25 new jobs during the entire term established in the Tax Abatement Agreement executed by applicant and the Affected Jurisdiction. (b) Expansion of existing Facility: The structural addition to a Facility in the amount of at least $500,000 and the creation and retention of new jobs equaling 10% of the prior work force at said Facility during the entire term established in the Tax Abatement Agreement executed by applicant and the Affected Jurisdiction; or, 2. In the event the value of the structural addition is less than $500,000, the expansion will cause an increase in and retention of the existing work force at said Facility by at least 25% during the entire term established in the Tax Abatement Agreement executed by applicant and the Affected Jurisdiction. (c) Modernization of existing Facility: The replacement and upgrading of an existing Facility and the value of such improvements will be at a minimum value of one million dollars. In addition, such replacement and upgrading must create and retain at least 10 new jobs during the entire term established in the Tax Abatement Agreement executed by applicant and the Affected Jurisdiction; or, 2. In the event the value of the replacement or upgrading is less than one million dollars, the modernization will cause an increase in and retention of the existing work force at such Facility by at least 25% during the entire term established in the Tax Abatement Agreement executed by applicant and the Affected Jurisdiction. (d) Notwithstanding any of the requirements set forth in Section 9, the governing body of an Affected Jurisdiction upon the affirmative vote of three-fourths 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 determining whether a variance shall be granted: 1. That the increase in productivity of the Facility will be substantial and hence directly benefit the economy. 2. That the increase of goods or services produced by the Facility will be substantial and directly benefit the economy. 3. That the employment maintained at the Facility will be increased GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT --- PAGE 5 -- 4. That the waiver of the requirement will contribute and provide for the retention of existing jobs within the Affected Jurisdiction. 5. That the applicant for tax abatement has demonstrated that if tax abatement is granted to his Facility even though his Facility will not employ additional personnel that nevertheless due to the existence of said Facility new jobs will be created as a direct result of his Facility in other facilities located within the Affected Jurisdiction. 6. Any other evidence tending to show a direct economic benefit to the Affected Jurisdiction. 10. 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. 11. 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. 12. 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. MUM 0, Me "M 41MMIMMIMM MIN M-SIOL63116,14 - MIM 1. No property shall be eligible for tax abatement unless such property is located in a reinvestment zone designated as such in accordance wlth V.T.C.A., Tax Code, Section 312.202. To be designated as a reinvestment zone an area must meet one of the following: GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT -- PAGE 6 --- (a) Substantially arrest or impair the sound growth of the municipality or county creating the zone, retard the provision of housing accommodations, or constitute an economic or social liability and be a menace to the public health, safety, morals, or welfare in its present condition and use because of the presence of: (1) a substantial number of substandard, slum, deteriorated, or deteriorating structures; (2) the predominance of defective or inadequate sidewalks or streets; (3) faulty size, adequacy, accessibility or usefulness of lots; (4) unsanitary or unsafe conditions; (5) the deterioration of site or other improvements; (6) tax or special assessment delinquency exceeding the fair value of the land; (7) defective or unusual conditions of title; (8) conditions that endanger life or property by fire or other cause; or, (9) any combination of these factors; (b) Be predominantly open and, because of obsolete platting, deterioration of structures or site improvements, or other factors, substantially impair or arrest the sound growth of the municipality; (c) Be in a federally assisted new community located in a home rule municipality or in an area immediately adjacent to a federally assisted new community located in a home rule municipality; (d) Be located entirely in an area that meets the requirements for federal assistance under Section 119 of the Housing and Community Development Act of 1974 (42 U.S.C. Section 5318); (e) Encompass signs, billboards, or other outdoor advertising structures designated by the governing body of the municipality for relocation, reconstruction, or removal for the purpose of enhancing the physical environment of the municipality, which the legislature declares to be a public purpose; or, (f) Be reasonably likely as a result of the designation to contribute to the retention or expansion of primary employment or to attract major investment in the zone that would be a benefit to the property and that would contribute to the economic development of the municipality. 2. For purposes of this Section, federally assisted new community is a federally assisted area: (a) That has received or will receive assistance in the form of loan guarantees under Title X of the National Housing Act (12 U.S.C., Section 1749aa et seq.); and, GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT -- PAGE 7 -- (b) A portion of which has received grants under Section 107(a)(1) of the Housing and Community Development Act of 1974, as amended. 3. The governing body of a municipality, as required by Section 312.201, or a county, as required by V.T.C.A., Tax Code, Section 312.401, shall hold a public hearing on the designation of an area within its jurisdiction as a reinvestment zone. The burden shall be on the owner of the property sought to be included in the zone or applicant for the creation of the reinvestment zone to establish the following: (a) That the requirements of Subsection 1 of this Section have been met. (b) That the improvements sought are feasible and practical. 4. No later than the seventh day before the date set for the above public hearing notice of such hearing shall be: (a) Published in a newspaper having general circulation in the Affected Jurisdiction. (b) Delivered in writing to the presiding officer of the governing body of each taxing unit that includes in its boundaries Real Property that is to be included in the reinvestment zone. At the public hearing above described in Subsection 3 above, any interested person is entitled to speak and present evidence for or against the designation of such reinvestment zone. 6. At the conclusion of the hearing described in Subparagraph 3 above, the governing body shall enter its findings as follows: (a) That the applicant or owner has or has not met his burden as hereinabove set forth, and/or, (b) That the improvements sought are or are not feasible and practical. (c) That the proposed improvements sought will or will not be a benefit to the land to be included in the reinvestment zone and to the Affected Jurisdiction after the expiration of an agreement entered into under V.T.C.A., Tax Code, Section 312.204. 7. An application for the creation of a reinvestment zone shall not be granted unless the Affected Jurisdiction considering such application enters affirmative findings to Subparagraphs a, b, and c of Subsection 6 above set forth. 8. At the conclusion of the public hearing herein required and upon the affirmative finding of the governing body as required by Subsection 7 above set forth, the governing body may designate a reinvestment zone in accordance with the provisions of V.T.C.A., Tax Code, Sections 312.201 or 312.401, whichever Section shall be applicable under the premises. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT -- PAGE 8 -- 9. The designation of a reinvestment zone expires five years after the date of the designation and may be renewed for periods not to exceed five years, except that a reinvestment zone that is a state enterprise zone is designated for the same period as a state enterprise zone as provided by Chapter 2303, Government Code. The expiration of the designation does not affect an existing tax abatement agreement made in accordance with V.T.C.A., Tax Code, Section 312.201 through Section 312.209. 10. Designation of an area as an enterprise zone under the Texas Enterprise Zone Act, Chapter 2303, Subchapter C, Texas Government Code, constitutes designation of the area as a reinvestment zone under Subchapter B of the Property Redevelopment and Tax Abatement Act without further hearing or other procedural requirements other than those provided by the Texas Enterprise Zone Act, Chapter 2303, Subchapter C, Texas Government Code. SECTION VI. Tax Abatement Agreement: After the creation of a reinvestment zone as hereinabove authorized a Tax Abatement Agreement may be executed between the owner and any Affected Jurisdiction. A Tax Abatement Agreement shall: (a) Establish and set forth the Base Year assessed value of the property for which tax abatement is sought. (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 IV, 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. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT --- PAGE 9 -- (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 ten 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, modernization of a facility, or expansion 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 contaning 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. (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 redevelopment 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 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. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT --- PAGE 10 -- (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 a municipality or the County 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 of a municipality or a designated officer or employee thereof or the governing body of the County of Lubbock 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 municipality or the County of Lubbock as the case may be, 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 VII. Application: Any present owner of taxable property located within an Affected Jurisdiction may apply for tax abatement by filing an application with the County of Lubbock, when the Real Property or Tangible Personal Property for which abatement is sought is located within the County of Lubbock but outside of the City limits of any City or with the appropriate City when the Real Property or Tangible Personal Property for which abatement is sought is located within the City limits of a municipality located wholly or partially within Lubbock County. 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. (c) A list of the kind, number and location of all proposed improvements of the Real Property Facility or 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 proposed time schedule for undertaking and completing the proposed improvements. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT - PAGE 11 -- (g) A general description stating whether the proposed improvements are in connection with: (1) the modernization of a facility (of any type herein defined); or, (2) construction of a new facility (of any type herein defined); or, (3) expansion of a facility (of any type herein defined); or, (4) any combination of the above. (h) A statement of the additional value to the Real Property or Facility as a result of the proposed improvements. (i) A statement of the assessed value of the Real Property, Facility or Existing Facility for the Base Year. (j) 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. (k) Any other information which the Affected Jurisdiction, to which the application has been directed, deems appropriate for evaluating the financial capacity of the applicant and compatibility of the proposed improvements with these guidelines and criteria. (1) 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). (m) The Affected Jurisdiction to whom the application for tax abatement has been directed shall determine if the property described in said application is within a designated reinvestment zone. If the Affected Jurisdiction determines that the property described is not within a current reinvestment zone then they shall so notify the applicant and said application shall then be considered both as an application for the creation of a reinvestment zone and a request for tax abatement to be effective after the zone is created. SECTION VIII. Recapture: In the event that any type of facility, (as defined in Section II, Subparagraphs 5, 6, 7, 8, 10, 11, 12, 13, 17, 19) 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 GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT -- PAGE 12 -- 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 event beyond the control of applicant or owner. In the event the applicant or owner meets this burden and the 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 = year 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 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 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 or owner has entered into a tax abatement agreement to make improvements to a facility of any type described in Section 1 above, but fails to undertake or complete such improvements, 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 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. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT -- PAGE 13 -- 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 termmation. 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 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 1, 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. In the event that a tax abatement agreement is terminated for any reason what so ever 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: 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. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT --- PAGE 14 -- (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. 3. Upon the completion of improvements made to any type of Facility as set forth in Section VIII, Subparagraph 1 of these criteria and guidelines a designated employee or employees of any Affected Jurisdiction having executed a tax abatement agreement with applicant or owner shall have access to the Facility to insure 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 readopted, modified, amended or rewritten 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. 9. The Property Redevelopment and Tax Abatement Act is subject to review as provided by the Texas Sunset Act (Section 325.0082 Government Code). If not continued in effect this statute expires September 1, 2001. JCR: js/rAXABATE.DOC Dsk-Guidelines & Criteria.. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT — PAGE 15 ---