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HomeMy WebLinkAbout26-0924RESOLUTION NO. 26-0924 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, APPROVING THE ESTABLISHMENT OF POLICIES, GUIDELINES, AND CRITERIA GOVERNING CHAPTER 380 INCENTIVES; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City Council desires to promote economic development within Denton; and WHEREAS, Chapter 380 of the Local Government Code allows the City to establish programs to promote state or local economic development and to stimulate business and commercial activity in the City, including programs for providing tax rebates, loans and grants of public money; and WHERAS, this policy seeks to promote economic development, increase employment, and stimulate business and commercial activity within the City of Denton for the benefit of the public and therefore meets the requirements under Chapter 380 of the Texas Local Government Code; and WHEREAS, on May 7, 2024, the City Council of the City of Denton approved the current guidelines and criteria, known as the Denton Chapter 380 Policy ("Policy"), by passing Resolution No. 24-822; and WHEREAS, the City Council deems it in the public interest to continue to be eligible for participation in incentives and to adopt policies, guidelines, and criteria for tax incentives; 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 Chapter 380 Policy. SECTION 2. From and after the effective date of this Resolution, the attached Denton Chapter 380 Policy shall constitute the policies, guidelines, and criteria for incentive agreements for the City of Denton in accordance with Chapter 380 of the Local Government Code. SECTION 3. The City Council reasserts its decision to participate in Chapter 380 Agreements and other incentives. The City Council provides certain incentives to applicable business enterprises which are established in the City in accordance with the applicable provisions of Chapter 380 of the Local Government Code and in accordance with the Denton Chapter 380 Policy . SECTION 4. This Resolution shall become effective immediately upon its passage and approval. The motion to approve this resolution was made by Jill Jester and seconded by Nick Stevens , the resolution was passed and approved by the following vote Aye Nay Abstain Absent Mayor, Chris Watts: Jordan Villarreal, District 1: Nick Stevens, District 2: Suzi Rumohr, District 3: Joe Holland, District 4: George Ferrie, At Large Place 5: Jill Jester, At Large Place 6: PASSED AND APPROVED this the 27th ATTEST: KRISTI GILBERT, CITY SECRETARY APPROVED AS TO LEGAL FORM: MACK REINWAND, CITY ATTORNEY 5cceE scot[ Bray Deputy City Attomcy BY: Zj- day of October MR19 WATTS, MAYOR 2026. EXHIBIT A CITY OF DENTON CHAPTER 380 POLICY i i i i i i i i nu yr %-,y r, God �I 8 Elm R Den o ri I4 ti vide 'crf�� c ;rt�• 121 or DENTON Office of Economic Development Statement of Policy The City of Denton is committed to promoting economic growth and redevelopment that expands and diversifies the tax base; creates and retains quality Jobs; enhances the quality of life for residents; protects human health and the environment; and secures new customers for municipal utilities. Local economic development Incentives serve as a tool for the City to use in accomplishing 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 Incentives with the City's strategic focus areas and ensure a positive return on investment for the community. 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 Incentives, as described herein, are governed by Chapter 380 of the Texas Local Government Code (hereinafter referred to as "Chapter 380"). 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: • Inclusion, • Collaboration, • Quality Service, • Strategic Focus, and • Fiscal Responsibility. 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. The City considers Incentives to be strategic investments in organizations, developments, or Projects that benefit the community, are in alignment with the 2020 Economic Development Strategic Plan, and comply with all program criteria, policies, and guidelines adopted by the City Council. While this policy is used to outline the procedures and criteria for granting Incentives, the City is not under any obligation to provide an Incentive to any applicant. All Incentives 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. This policy is designed to help establish a public purpose and catalyze investment that would not otherwise occur at the scope or length of time without additional public investment. The following will be taken into consideration when reviewing a Project requesting Incentives: Denton Chapter 380 Incentive Policy Page 2 A Project may be ineligible for Incentives if a building permit for new construction or alteration has been issued; or the purchase of an existing building has been executed (excluding existing businesses seeking to expand). 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 benefits. 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 rebates, or termination of Agreement(s). Grantees will also be responsible for making periodic reports on their investments and hiring, as well as providing the City access to records to verify the reports. Incentive Tools and Programs New, expanding, and modernizing businesses may be considered for an Incentive. The City may consider the use of Incentives to retain existing businesses, which propose to improve or redevelop property within the City limits and/or create new or additional Higher Wage jobs. Tax Rebates will only apply to the increased valuation of the Improvements and/or Business Personal Property over the appraised value of the Improvements and/or Business Personal Property prior to the Project as is established by the Denton Central Appraisal District the year in which the Agreement is executed. Tax Rebates shall not apply to any portion of the land value of the Project. To qualify to receive the Incentive, companies must meet a minimum threshold defined in an Agreement of projected tax value for the Project in the first 24 months after a permit is issued. The minimum threshold is at least 75% of the incentivized projected tax value for new Projects and 50% of the tax value for Expansion Projects. The Office of Economic Development has target industry sectors and Ecosystems for recruitment that will be given priority consideration: • Advanced Manufacturing; • Advanced Mobility; • Aviation/Aerospace; • Creative Industries and Cultural Venues; • Information Technology; • Life Sciences; • Renewable Energy; and • Research and Development While these targeted industry sectors and Ecosystems will be given priority consideration, not being in a targeted industry does not disqualify a business from applying for an Incentive if it meets other requirements under the policy. If, upon initial application, a Project qualifies for an Incentive under the guidelines set forth in this Policy, the City may consider the economic and fiscal impacts, targeted industries, public benefit Denton Chapter 380 Incentive Policy Page 3 factors, and the following priority considerations in evaluating the Project and the grant or rebate percentage: • 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; • Demonstrates a commitment to community support or involvement through monetary or in -kind support of local nonprofits, public institutions, or community organizations; • 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 or entrepreneurial endeavor); • Establishes public -private partnership(s), including 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; • Involves a significant relationship with a public school district or institution of higher education; • Increases Higher Wage Jobs (Denton County Average Wage and excluding benefits); • 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 manufacturing of sustainable materials or products that support sustainable industries, or the incorporation of clean technology); • Spurs 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 property or an existing facility that has been vacant or underutilized for at least two years); • The Project is an international or national headquarters facility; • Provides benefits to employees that may include: on -site childcare services; adult care; vouchers or other financial assistance for child or adult care; backup or temporary childcare services; flexible hours or remote work accommodations; and flexible spending accounts; 401(k) matching/pension; tuition reimbursement; or other benefits; • Meets economic development priorities listed in the Design Downtown Plan, Southeast Denton Master Plan or Denton Municipal Airport Master Plan; • Redevelops retail fagade and site improvements (demolition, remediation, signage, landscaping, and parking lot), addresses retail leakage (retail stores, restaurants, shopping centers, malls, etc.), or offers unique goods, services, or a brand not currently offered in the Denton city limits. This consideration is designed to help address beautification, unmet demand, and minimize retail leakage from the City into the surrounding trade area; • Develops Class A office space • Recruits a business that supports the supply chain of a local business/industry; Denton Chapter 380 Incentive Policy Page 4 At least 25% of local contractors used in construction or 25% of new jobs will be filled by Denton residents; and Other priorities or considerations as determined by City Council. Chapter 380 Grants or Loans The City may consider Incentives to businesses utilizing its authority under Chapter 3 80 of the Texas Local Government Code. Chapter 380 states that a municipality may establish and provide for the administration of one or more programs for making loans and grants of public money and providing personnel and services of the municipality, to promote state or local economic development and to stimulate business and commercial activity in the municipality. When the City determines that Incentives are required to retain existing businesses that propose to improve or redevelop property within the City limits, the City Council may consider granting an incentive on a case -by -case basis. The City may also consider other Incentives authorized by law. The City may provide cash Incentives and grants under Chapter 380, including but not limited to: • Relocation Grants; • Expansion Grants; • Headquarters Grants; • Utility Grants; • Redevelopment Grants; and • Research and Development Grants. Denton Chapter 380 incentive programs are detailed below. Based Aircraft Incentive: Specific considerations for a based aircraft Incentive will include expansion of the tax base, annual fuel consumption, and contribution to the growth and development of Denton Enterprise Airport (DTO). Newly based aircraft may be eligible for an Incentive if a minimum of $1 million in ad valorem value will be created by the aircraft. Aircraft must be operational, airworthy, and based at DTO. Values may not be combined to reach the $1 million minimum. Entrepreneurial/Tech Incentive: The City may offer cash Incentives through headquarters, recruitment, matching and/or job -based grants to support entrepreneurs, tech -enabled startups, or rapid growth businesses to encourage Higher Wage Jobs in Denton. A residency bonus grant may also be granted for each eligible new Job with a primary dwelling in the city limits of Denton during the coverage period. This program has a separate Entrepreneurial/Tech Incentive application. Site Readiness "Qualified Site" Grant: the City may provide funding assistance for endeavors to make properties more developable. This may include, but is not limited to, grants or Tax Rebates to support the completion of a Phase I Environmental Assessment, title review, environmental remediation, and coordinating with the Texas Commission on Environmental Quality. Denton Chapter 380 Incentive Policy Page 5 Job -based Incentives: may also be considered for businesses creating Higher Wage Jobs. Table 1 below establishes a stratified job -based grant framework. A job grant may be provided in addition to another tax or entrepreneurial/tech grant. A job grant may be provided once per year on each new eligible Job added, provided that in each such year, the grantee is only eligible if either (a) the average salary of the new Jobs added that year is equal to or greater than the Denton County average wage, or (b) at least 25% of the new Jobs created that year pay a salary equal to or greater than $75,000. A residency grant may also be considered at $500 per new job added with proof of residency within Denton City limits. Eligible new Jobs are capped in the Agreement and are reimbursable over the term of the grant. Table 1: Job Based Grant Table rJobsqual to or > than $100,000 $5,000qual to $90,000-$99,999 $2,500 qual to $75,000-$89,999 $1,000 Jobs equal to $65,000-$74,999 $500 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 online Incentive Application Form. The application Form will not be considered until it is administratively complete. The Economic Development Director or the City Manager, or their designee, may amend the Incentive Application Form at their discretion from time to time. Applicant shall be responsible for obtaining and submitting the most recent Incentive Application Form from the City. 2. Applicant shall prepare a map or other documents providing the following: precise location of the property 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 Form, or the application may be considered incomplete. 3. 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 documents, and credit rating. The City may request additional information related to the creditworthiness or financial position of a business in the process of reviewing and evaluating the application for economic development Incentive. 4. All information in the application package detailed above will be reviewed for completeness and accuracy. Additional information may be requested as needed. 5. The application will be distributed to the appropriate City departments for internal review and comment. Additional information may be requested as needed. 6. Fiscal agents of the City may review the application for comment and recommendation. Additional information may be requested as needed. 7. A third -party underwriter may also be used to review the Project and present Denton Chapter 380 Incentive Policy Page 6 possible options or recommendations. Additional information may be requested as needed. 8. 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 Form 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. The recommendation of the EDPB will be forwarded, with all relevant materials, to the City Council. 9. 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 Incentive and the commitments of the applicant, including all the terms required by Chapter 380 and such other terms and conditions as the City Council may require. 10. The City reserves the authority to enter into Incentive Agreements at differing rebate percentages and/or terms as set forth in the guidelines of this Policy, consistent with the requirements of Chapter 380. 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 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. 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 Sub -contractors 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 Denton Chapter 380 Incentive Policy Page 7 Census tracts as further defined by the U.S. Department of Housing and Urban Development's (HUD) Qualified Census Tracts (QCT). 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 or higher." 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 Property and Business Personal Property, as appraised by the Denton Central Appraisal District ("DCAD"/or "District"), after any exemptions have been applied. "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. "Default" is an event in which a party to an Agreement has failed to meet performance measures and to perform under prescribed cures. "Ecosystem(s)" incorporates a number of elements, which include: anchor institutions, major emerging players, competitions and events, building blocks, local capital and public awareness.I "Expansion" means an investment in fixed assets that will result in an increase in occupied building areas, increased employment, or higher Assessed Taxable Value of Real Property or Business Personal Property by a firm already located in the City. "Higher Wage" means having an annual wage equal or greater than the Denton County Average wage, excluding benefits. "Improvement(s)" 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 Rebate or any other Incentives not prohibited by state or federal law. ' TIP Strategies. Economic Development Strategic Plan: City of Denton Texas. 2020. Denton Chapter 380 Incentive Policy Page 8 "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. "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 improving performance 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. The terms "modernize" and "modernizing" shall have corresponding meanings. "Project" means the combination of proposed Capital Investment, Improvements, and economic activity that is submitted in an Incentive Application Form. "Real Property" means land or Improvements affixed thereto. "Sustainable Materials" or products related to manufacturing may include but are not limited to: biobased; recyclable; pollution reduction equipment or systems; and reclaimed goods. "Tax Rebate(s)" means a grant of funds by the City based on tax revenue received from the Project, paid after receipt of such tax revenue. 2 Massachusetts Institute of Technology's (MIT) Living Wage Calculator for Denton County. https:Hlivingwage.mit.edu/counties/4812 1. Denton Chapter 380 Incentive Policy Page 9