HomeMy WebLinkAbout22-35622-356RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXASAPPROVING THE ESTABLISHMENT OF POLICIES, GUIDELINES, AND CRITERLAGOVERNING TAX ABATEMENTS; AND DECLARING AN EFFECTIVE DATE.
WHEREAS, the City Council desires to promote economic development within Denton;
WHEREAS, the Property Development and Tax Abatement Act (“the Act”), Chapter 3 12,
and
Texas Tax Code allows the City to establish its own criteria for tax abatements; and
WHEREAS, the Act requires the City to establish guidelines and criteria prior to entering
into a tax abatement agreement; and
WHEREAS, guidelines and criteria adopted under the Act are effective for two years from
the date adopted; and
WHEREAS, on June 6, 2000, the City Council approved guidelines and criteria, known as
the Denton Policy for Tax Abatements and Incentives (“Policy”); by passing Resolution No.
R2000-28; and
WHEREAS, the City previously adopted, amended, and reauthorized guidelines and
criteria for tax abatement by passing Resolution Nos. R90-18, R98-004, R2000-028, R2001-020,
R2003-021, R2005-057, R2008-003, R2010-009, R2012-009, R2014-016, R2015-042, R2016-
009; R2018-148 and
WHEREAS, on March 17, 2020, the City Council of the City of Denton approved the
current Policy by passing Resolution No. R20-504; and
WHEREAS, the current Policy expired on March 17, 2022; and
WHEREAS, the City Council held a public hearing on April 5, 2022, as required by the
Act, to receive public feedback regarding the proposed adoption of the Policy attached hereto as
Exhibit A and incorporated herein for all purposes; and
WHEREAS, the City Council deems it in the public interest to continue to be eligible for
participation in tax abatements and to adopt policies, guidelines, and criteria for tax abatements by
adopting the Policy attached hereto as Exhibit A and incorporated herein for all purposes; NOW,THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY RESOVLES:
SECTION 1. The policies, guidelines, and criteria, set forth in Exhibit A, which is made a
part of this Resolution and incorporated herein for all purposes, is approved and adopted, and shall
be known as the Denton Texas Abatement Policy.
SECTION 2. From and after the effective date of this Resolution, the attached Denton Tax
Abatement Policy shall constitute the policies, guidelines, and criteria for tax abatement
agreements for the City of Denton in accordance with Chapter 3 12 of the Texas Tax Code.
SECTION 3. Pursuant to Texas Tax Code Section 312.002(c), the Denton Tax Abatement
Policy approved herein shall be effective for two (2) years from the date of the approval of this
Resolution, during which time it may amended or repealed by a vote of % of the members ofCouncil.
SECTION 4. The City Council reasserts its decision to become eligible to participate intax abatements. The City Council provides certain tax abatements to applicable business
enterprises in various reinvestment zones which are established in the City in accordance with the
applicable provisions of Chapter 312 of the Texas Tax Code and in accordance with the Denton
Tax Abatement Policy.
SECTION 5. The Denton Tax Abatement Policy shall be filed in the official records with
the City Secretary and posted on the City’s website in accordance with Texas Tax Code Section
3 12.002(c-2).
SECTION 6. This resolution shall become effective immediately upon its passage and
approval.
Th, m,ti,„ t, ,pp„„, thi, „„1„ti,„ w„ m,d, by BriM Be& m
seconded by Jesge bHS , the red bythe following vote U_ - a] :
AyeIZ
/
Nay Abstain Absent
Mayor, Gerard Hudspeth:
Vicki Byrd, District 1 :
Brian Beck, District 2:V/
Jesse Davis, District 3 :V
V/
V/
V/
Alison Maguire, District 4:
Deb Armintor, At Large Place 5 :
Paul Meltzer, At Large Place 6:
PASSED AND APPROVED this the 3rA dayof Ma 2022
gKg
ATTEST:
ROSA RIOS, CITY SECRETARY
,\\ tIll III/I/
APPROVED AS TO LEGAL FORM:
MACK REINWAND, CITY ATTORNEY
B III(pr : H1S!)Hr{iEprI•i% !! ! ) =!TOn; 2 6 r 1: S :1 : [ ay
Deputy City Attorney
EXHIBIT A
Denton Tax Abatement Policy
;;City of Denton
. . V I __=InUMUn\I
I Tax Abatement
&R;•icy
2022 - 2024
ip tj
;\
PJ*,,=4b 1 Pol
+ = T
:.+-
!
R,
31•ll•
Unn litatea
Statement of Policy
The City of Denton is committed to promoting economic growth and redevelopment that expands
and diversifies the tax base; creates quality jobs; enhances the quality of life for residents; protects
human health and the environment; and secures new customers for municipal utilities. The City is
a national model for public power through Denton Municipal Electric (DME), which incorporates
100 percent renewable energy into its portfolio. Local economic development incentives serve as
a tool for the City to accomplish those objectives. To provide a framework for the consideration
of the use of public resources to stimulate economic activity, the City has established this policy
to align the use of tax abatement incentives with the City’s strategic focus areas and ensure a
positive return on investment for the community. Tax incentives, as described in this policy, will
be available for new and/or existing facilities and structures and for businesses wanting to locate,
expand, upgrade or modernize existing or new facilities and structures in the City of Denton. These
tax incentives, as described herein, are governed by Chapter 312 of the Texas Tax Code. This
policy is adopted under the authority of the Constitution and Laws of the State of Texas and the
City Charter of the City of Denton.
The City of Denton has adopted the core values of Integrity, Transparency, Inclusion, Fiscal
Responsibility, and Outstanding Customer Service. These values are exemplified in our operations
and are considered when contemplating any request for incentives.
The 2020 Economic Development Strategic Plan has five guiding principles that provide a
framework for economic development in Denton: Core Resiliency, Future Focused, Inclusive
Growth, Entrepreneurial Spirit and Cultural Vitality. The plan is also built around three major
goals: Accelerate Recovery, Foster Growth, and Strengthen Community Inclusion.
Tax abatements offered by the City of Denton are not entitlement programs and the City is not
under any obligation to provide an incentive to any applicant. The City considers incentives to be
strategic investments in organizations, developments, or projects that benefit the community, are
in alignment with the economic development strategic plan, and must comply with all program
criteria, policies, and guidelines adopted by the City Council.
All applications or requests are considered on a case-by-case basis by the Economic Development
Partnership Board (EDPB) and the City Council. The City will conduct significant due diligence
when an application is submitted, which could include reviewing an applicant’s submission,
requesting information to verify any claims, reviewing any other incentives received by the
applicant from other jurisdictions and conducting an independent economic and fiscal analysis for
any proposed project. Incentives may not be considered if a building permit for new construction
has been issued, a permit for commercial alterations has been issued, or purchase of an existing
building has been executed (excluding existing businesses seeking to expand).
The City has strategic growth areas and related industries, organized by North American Industry
Classification System (NAICS) codes. These industries have been identified in the Strategic Plan
for cultivation and recruitment and will be given priority consideration. The strategic growth areas
include: Connectivity, Creativity, Sustainability, and Competitiveness. Exhibit A provides
additional information on the industry by strategic growth areas. While these growth area
Denton Tax Abatement Policy Page 2
ecosystems will be given priority consideration, not being in a strategic growth area or relatedindustry does not disqualify a business from applying for an incentive if it meets other
requirements under the policy.
All incentives offered will be evaluated through a cost-benefit analysis. The economic impacts
evaluated may include net new jobs, wages, and contributions through property tax, sales taxes,
hotel occupancy taxes, mixed beverage taxes, or other significant public benefit. Applicants for
tax abatement must make specific repairs or improvements to the property that provide a benefit
both to the property and City that will last beyond the expiration of a tax abatement agreement.
All agreements will be based on performance. Successful applicants must demonstrate
performance with agreed upon metrics to continue to receive funding. Failure to meet performance
standards will result in recapture, reduction of abatement(s), or termination of agreement(s).
Grantees will also be responsible for making periodic reports on their investments, hiring and
provide the City access to records to verify their reports.
Guidelines for various incentive programs have been adopted by the Denton City Council. These
include objectives, qualification criteria, reporting requirements, and other key program elements.
Grantees are responsible for ensuring they meet the requirements of the overall policy and the
program guidelines.
The Denton County Tax Abatement Policy states that applicants whose projects will be located in
or are currently located in a municipality within the county must have an approved and executed
Tax Abatement Agreement with that municipality prior to applying for a Denton County tax
abatement. Denton County will not utilize Chapter 381 of the Texas Local Government Code to
administer a community and economic development program to provide grants as a form of
economic development.
Definitions
“Agreement” means a contract between an Incentive recipient and the City clarifying the terms,
performance measures, and obligations of the parties.
“Assessed Taxable Value” means the value of the real and business personal property, as appraised
by the Denton Central Appraisal District (“DCAD“/or “District”), after any exemptions have been
applied.
“Base Year Value” means the Assessed Taxable Value as of January 1 preceding the execution of the
agreement, excluding land value, inventory, vehicles and supplies, as determined by the DCAD.
“Business Park” is defined as a multi-building, multi-tenant, master planned complex of
approximately one million square feet or more under roof, constructed to house manufacturing,
distribution, assembly, and office facilities.
Denton Tax Abatement Policy Page 3
“Business Personal Property” means property associated with a Project other than Real Property and
excluding inventory, vehicles and supplies.
“Capital Investment” means the total actual capital cost to grantee for the acquisition of land,
development, and construction of the Project, including a reasonable capital operating reserve, and
the furniture and equipment installed at the Project.
“City” means the City of Denton, Texas, and its governing and operating bodies.
“Community Support and Involvement” may include but is not limited to monetary or active
investment in local nonprofits, public institutions or community organizations.
“Council” is the City Council of the City of Denton, Texas.
“Default” is an event in which a party to an Agreement has failed to meet Performance Measures and
to perform under prescribed cures.
“Ecosystem” incorporates a number of elements, which include: anchor institutions, major emerging
players, competitions and events, building blocks, local capital and public awareness.1
“Expansion” means an investment in fixed assets that will result in an increase in occupied building
areas, increased employment, or higher Assessed Value of Real Property or Business Personal
Property by a firm already located in the City.
“Facility” means combined Real and Business Personal Property Improvements that house an
economically purposeful activity.
“Higher wage” means having an average annual wage of $65,000 or greater for all positions or at
least 25% of the positions have an annual wage of $75,000 or greater.
“Improvement” means a building, structure, or fixture erected on or affixed to land.
“Incentive” means any inducement for economic activity given by the City such as a tax abatement
or rebate or any other incentives not prohibited by state or federal law.
“Job” means a permanent, full-time employment position that has provided or will result in
employment of at least 2,080 hours per position per year. Part-time positions may be aggregated to
create a full-time position for consideration in this policy.
“Knowledge-based jobs” are defined as occupations which require specialized and theoreticalknowledge, usually acquired through a college education or through work experience or other
training which provides comparable knowledge; require some research, analysis, report writing
and presentations; or require special licensing, certification, or registration to perform the job task.
1 TIP Strategies. Economic Development Strategic Plan: City of Denton Texas. 2020.
Denton Tax Abatement Policy Page 4
“Leadership in Energy and Environmental Design" (LEED) certification is a voluntary
internationally recognized green building certification system, with verification by a third party
that a building or community was designed and built using strategies aimed at improvingperformance across the following metrics: energy savings, water efficiency, CO2 emissions
reduction, improved indoor environmental quality, and stewardship of resources.
“Living Wage” is the wage necessary to provide the basic family expenses “basic needs budget”
plus all relevant taxes.2
“Local Contractors” and “Local Sub-Contractors” refers to vendors that have their “principal office
or place of business,” as reported to the Texas Secretary of State Office, located within Denton
City Limits or Extraterritorial Jurisdiction (ETJ).
“Modernization” means the replacement and upgrading of existing facilities which increases the
productive input or output, updates the technology, or substantially lowers the unit cost of operation,
and extends the economic life of the facility. Modernization may result from the construction,
alteration, or installation of buildings, structures, fixed machinery, or equipment.
“North American Industry Classification System (NAICS)” is the standardized system utilized for
the publication of statistical data by the federal government and other entities to classify businesses
by the type of economic activity.3
“Performance Measures” are the performance indicators for a Project established by Agreement and
reported to the City annually using a certificate of compliance provided in the Agreement or as
otherwise prescribed by the Agreement.
“Primary Employer” refers to employers that produce products or services which are sold outside of
the community or region.
“Project” means the combination of proposed investment, improvements, and economic activity that
is submitted in an application for an economic incentive.
“Real Property” means land or an improvement affixed thereto.
“Reinvestment Zone” is a geographic area designated as blighted and in need of revitalization for the
purpose of granting incentives as authorized by law.
“Tax Abatement” means the full or partial exemption of ad valorem taxes for eligible properties in a
reinvestment zone designated as such for economic development purposes for new or expanded
business development for a period of up to 10 years. Abatement may be granted for real property
improvements and/or business personal property.
2 Online Internet. Massachusetts Institute of Technology’s (MIT) Living Wage Calculator for Denton County
https://livingwage.mit.edu/counties/48121
3 Online Internet. NAICS Association. 2022. NAICS.com.
Denton Tax Abatement Policy Page 5
“Sustainable materials” or products related to manufacturing may include but are not limited to:
biobased; recyclable; pollution reduction equipment or systems; and reclaimed goods.
Public Benefit
If, upon initial application, a project qualifies for tax abatement under the guidelines set forth in
this Policy, the City may consider the following factors in evaluating its public benefit:
•Expands the tax base through property, sales, Hotel Occupancy Tax (HOT), or other taxes to
the City, County, DISD, and DCTA through the development of property, facility or by making
improvements to an existing property or facility, through the development of a new business
or expansion of an existing business, through the development of a new multi-tenant complex
where businesses can locate, or through the addition or increase in jobs available in the City.
Community Investment demonstrates a commitment to community support or involvementthrough monetary or in-kind support of local nonprofits, public institutions, or community
organrzatlons;Public Private Partnerships include development of public infrastructure or public
amenities that City deems beneficial, or developer assumes responsibility for development
of infrastructure or other public facilities beyond what is required. Project will involve a
significant relationship with a public school district or institution of higher education.
25% of local contractors used in construction or 25% of new jobs filled by Denton residents
Other priorities or considerations as determined by City Council
•
•
•
•
Application Procedure
To ensure fairness, accountability, and compliance with all applicable regulations, every incentive
request must proceed through a uniform application process. Nothing within these guidelines implies
or suggests that the City is under any obligation to provide an incentive to any applicant.
1. Applicant shall complete the attached Incentive Application (Exhibit B). The
application will not be considered until it is administratively complete. The
Economic Development Director or the City Manager, or their designee, may
amend the Application at their discretion from time to time. Applicant shall be
responsible for obtaining and submitting the most recent Application form from theCity
2. Applicant shall prepare a map or other documents providing the following: precise
location of the property and all roadways within 500 feet of the site; existing uses and
conditions of real property; proposed improvements and uses; zoning changes;
compatibility with the Denton 2040 Plan and applicable building codes and City
ordinances; and a complete legal description as provided in the deed granting title to
the owner of the property. This information will be submitted with the completed
Incentive Application or the application may be considered incomplete.
3 . Applicant shall provide metes and bounds, legal description and or plat information
of the property in order for staff to prepare the reinvestment zone materials requiredunder Chapter 312 of the Texas Tax Code.
4. Applicant shall complete a Due Diligence Form which authorizes the City to obtain
and review any and all information needed to evaluate an application for an
economic development incentive, including business financial statements, creation
Denton Tax Abatement Policy Page 6
documents, and credit rating. The City may request additional information relatedto the creditworthiness or financial position of a business in the process of
reviewing and evaluating the application for economic development incentive.5. Applicant shall complete all forms and information detailed in the Incentive
Application and submit the Incentive Application and all additional required
information to the Economic Development Department, City of Denton, 401 N. ElmStreet, Denton, TX 76201.
6. All information in the application package detailed above will be reviewed for
completeness and accuracy. Additional information may be requested as needed.
7. The application will be distributed to the appropriate City departments for internal
review and comment. Additional information may be requested as needed.8. Fiscal agents of the City may review the application for comment and
recommendation. Additional information may be requested as needed.
9. The Denton Economic Development Partnership board (EDPB) serves as an
advisory body, which makes recommendations to the City Council regarding
whether economic development incentives should be offered in each individual
case. Its recommendation shall be based upon an evaluation of information
submitted in the incentive application and any additional information requested by
the EDPB or presented to the EDPB. The EDPB will consider the application at
a regular or special-called meeting(s). All meetings of the EDPB shall be held in
compliance with the Texas Open Meetings Act, Chapter 551 of the Texas
Government Code. Additional information may be requested as needed. Therecommendation of the EDPB will be forwarded, with all relevant materials, to the
City Council.
10. If the City Council decides to grant a tax abatement, it shall call a public hearing toconsider establishment of a tax reinvestment zone in accordance with Section
312.201 of the Texas Tax Code. The reinvestment zone must meet one or more of
the criteria of Section 312.202 of the Texas Tax Code
11. The City Council may consider adoption of an ordinance or resolution approving
the terms and conditions of a contract between the City and the applicant governing
the provision of the tax abatement or incentive and the commitments of the applicant,
including all the terms required by Section 312.205 of the Texas Tax Code and such
other terms and conditions as the City Council may require.
12. The City reserves the authority to enter into tax abatement agreements at differing
percentages and/or terms as set forth in the guidelines of this Policy, consistent with
the requirements of Chapter 312 of the Texas Tax Code. The City also reserves
the authority to enter into incentive agreements under Chapter 380 of the Texas LocalGovernment Code. The City has a separate policy for Chapter 380 incentive
programs.
Section 312.003 of the Texas Tax Code makes confidential information provided to the City as a
part of this application that describes the specific processes or business activities to be conducted
or the equipment or other property to be located on the property, This information is not subject to
public disclosure until the incentive agreement is executed. Section 522.131 of the Texas
Government Code (Texas Public Information Act) makes confidential information which relates to
economic development negotiations between the City and a business prospect that the City seeks
Denton Tax Abatement Policy Page 7
to have locate, stay or expand in or near the territory of the City. The information must relate to a
trade secret of the business prospect or commercial or financial information which the business
prospect can demonstrate based on specific factual evidence that disclosure would cause substantial
competitive harm to the person from whom the information was obtained or information about a
financial or other incentive being offered to the business prospect by the City or by another person.
Information about a financial or other incentive being offered to the business prospect is required
to be disclosed when an agreement is made with a business prospect. The City will respond to
requests for disclosure as required by law and will assert exceptions to disclosure as it deems
relevant. The City will make reasonable attempts to notify the applicant of the request so it may
assert its own objections to the Attorney General.
Any incentive
1.
2
3
4.
5.
agreement will address various issues, including but not limited to, the following:
General description of the project
Amount of the incentive and percent of value to be abated each year
Method of calculating the value of the abatement
Duration of the abatement, including commencement date and termination date
Complete legal description of the property as provided in the deed granting title to the
owner of the property
Kind, number, location and timetable of planned improvement
Specific terms and conditions to be met by applicant, which will be based on the
information submitted by the applicant in the Incentive Application and/or other
approprIate crrterra
The proposed use of the facility and nature of construction
Contractual obligations in the event of default, violation of terms or conditions,
delinquent taxes, recapture, any decrease in valuation, administration and assignment.
6
7.
8
9.
Businesses receiving an incentive are asked to use diligent efforts to purchase all goods and
services from Denton businesses whenever such goods and services are comparable in availability,
quality and price. The City of Denton also encourages the use, if applicable, of qualified
contractors, subcontractors and suppliers who are historically underutilized businesses based on
information provided by the General Services Commission pursuant to Chapter 2161 of the
Government Code. Businesses receiving an incentive are encouraged to use diligent efforts to hire
local contractors and local subcontractors where possible during construction of the project.
Businesses receiving incentives are asked to endeavor to make available, or endeavor to cause
lessees or assignees to make available full-time or part-time employment for Denton residents. In
this effort, the business, lessee or assignee is encouraged to recruit from the low-moderate income
Census tracts as further defined by the U.S. Department of Housing and Urban Development’s
(HUD) Qualified Census Tracts (QCT) map shown in Figure 1. HUD defines QCTs as “census
tracts in which one-half or more of the households have incomes below 60 percent of the area
median income or the poverty rate is 25 percent of [or] higher.
Denton Tax Abatement Policy Page 8
Figure 1: 2022 Qualified Census Tracts in Denton
Map Options : Char I Reset I Full Screen
QCT Legend: – T,a,t o„une • UHTC rr,1,a • 202? www bMW THats
SADDA Legend: – FUR Boundary –. ZeTA Bolmdaly • 2022 SInaI DDA Part DDA Non Metro DDA
The 2022 QuaIIfied Census Tracts (acTS) and Dtffioult Development Areas (DDAs) are e#ecttve January 1. 2022. The 2022 chslgnaUons use data from the 2010 Decennial census. The
duignation methodology is explained in the federal Register notice published Septemtnr 9, 2021
Map Options
12 Current Zoom Level
[] Show DifHcuH Devebpmenl Areas (Zoom 7+)
a Color acT Quaified Tracts (Zoom 7+)
U Show Tracts Dianne (Zoom 11 +)
[] Shay FMR QUines (Zoom 4+)
[] Show UHTC Prqecls (Zown ql+)
Click here for full screen map
Select Year
@ 2022
Q 202r
Tax Abatement
New, expanding, and modernizing businesses may be considered for a tax abatement if a minimum
threshold of $5 million in ad valorem value will be created by the project. Once a determination has
been made that a project is eligible for a tax abatement, the strategic growth areas, public benefit
factors and considerations will serve as a basis for determining amount and term of abatement.
To qualify to receive the grant or rebate, companies must meet the minimum threshold of projected
tax value for the project in the first 24 months from the execution of the agreement or as specified
in the tax abatement agreement. The minimum threshold is at least 90% of the incentivized
projected tax value for new projects and 75% of the tax value for expansion projects. Minimum
job related thresholds, if applicable, will be at least 90% of the jobs in the application for that year,
or as required by the agreement.
If, upon initial application, a project qualifies for tax abatement under the guidelines set forth in
this Policy, the City may consider the following considerations in evaluating the project and the
abatement percentage:
Denton Tax Abatement Policy Page 9
•
•
•
•
•
Generates new utility customers (priority consideration for larger customers);
Encourages new business markets/suppliers and entrepreneurship (the project is from an
industry not significantly represented in the local economy or is a new business startup orentrepreneurial endeavor)
Creates knowledge-based jobs, as documented by the applicant (An average wage that is
above the average wage in Denton County or at least 25 percent of jobs requiring a college
bachelor’s degree);
Increases higher wage jobs (includes an average annual wage of $65,000 or greater for all
positions or at least 25% of the positions have an annual wage of $75,000 or greater);
Pays a living wage for all new employees in accordance with the current “Living Wage”
from the MIT Living Wage Calculator for Denton County;
Engages in sustainable practices (Renewable energy will be generated, stored, or utilized for
the project or the project incorporates significant environmentally sustainable practices that
include: Leadership in Energy and Environmental Design (LEED) certification, recycling
initiatives, the manufacture of sustainable materials or products that support sustainable
industries, or the incorporation of clean technology);
Spur infill development or redevelopment (Project is to develop/redevelop a property in a
manner that reduces urban sprawl and or increases density in a desirable area; project
includes use of existing facility that has been vacant for at least two years);
The project is an international or national headquarters facility; and
Provides child care assistance to employees that may include: on-site child care services;
vouchers or other financial assistance for child care; backup or temporary child care
services; flexible hours or remote work accommodations; and flexible spending accounts
for child care expenses.
•
•
•
All abatements are subject to final approval of the City Council. Even though a project may meet
the criteria as set forth in this Policy, an application may be denied at the discretion of the City.
The incentive shall not apply to any portion of the land value of the project.
The City may consider the use of incentives to retain existing businesses, which propose to improve
or redevelop property within the City limits. The City may also take into consideration the
expansion/redevelopment of existing businesses that create new or additional higher wage or
knowledge-based jobs. The incentive will only apply to the increased valuation of the improvements
over the appraised value of the property prior to such improvements as same is established by the
Denton Central Appraisal District the year in which the tax abatement agreement is executed. The
City may also consider other tax incentives authorized by law.
Denton Tax Abatement Policy Page 10