OWNER-OCCUPIED RENOVATIONS/DEVELOPMENT
TAX ABATEMENT PROGRAM

CITY OF WACO GUIDELINES & POLICY STATEMENT

PROGRAM GOALS:

It is the City of Waco's goal to promote development within the Brazos River Corridor, in an effort to improve the local economy and enhance the quality of life for its citizens. Insofar as these goals are served by enhancing the value of the local tax base and increasing economic opportunities, the City of Waco will give consideration to providing a tax abatement for owner-occupied developments and/or renovations that create mixed use facilities (retail and/or commercial with residential) in the Brazos River Corridor located within the Waco city limits.

The Owner-Occupied Renovations/Development Tax Abatement Program is an economic development tool designed to provide Incentivization for the redevelopment/renovation of a substantial number of substandard, deteriorating and/or vacant structures within the aforementioned target area. This tax abatement program is intended to contribute to area development by attracting additional capital and human investment to the area for business, employment and residential purposes.

DEFINITIONS:

A. Abatement: full or partial exemption for ad valorem taxes of eligible properties in a reinvestment zone designated as such for economic development purposes.

B. Agreement: a contractual agreement between a property owner and a taxing jurisdiction for the purpose of a tax abatement.

C. Base Year Value: the assessed value of either the applicant's real property and improvements located in a designated reinvestment zone on January 1 of the year prior to the execution of the agreement plus the agreed upon value of any property improvements made after January 1 of that year but before the execution of the agreement, and/or the assessed value of any tangible personal property located on the owner's real property on January 1 of the year prior to the abatement period covered by the agreement.

D. Economic Life: the number of years a property improvement is expected to be in service in a facility; provided, however, in no event shall the number of years exceed the depreciation allowance specified in the Federal Internal Revenue Service Code.

E. Facility: property improvements completed or in the process of construction which together comprise an integral whole.

F.  Modernization: replacement and upgrading of existing facilities, which increase 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.

G. Personal Property: equipment and/or tools used, or for use, in the operation of the business applying for tax abatement other than inventory, supplies, and/or office equipment.

H. Real Property: area of land defined by legal description as being owned by the business applying for a tax abatement, including any improvements thereto, which is to be improved and valued for property tax purposes, and which is to be included in the reinvestment zone.

I. Reinvestment Zone: or a tax abatement district is an area designated as such for the purpose of a tax abatement as authorized by the City of Waco in accordance with Texas Tax Code Annotated Section 312.201 (Vernon 1992) as amended.

PROGRAM POLICY:

It is the policy of the City of Waco that consideration will be provided in accordance with the guidelines, criteria and procedures outlined in this document. This policy applies to the owners of real property. Project consideration will include the potential impact of the reinvestment project on the immediate and surrounding area.

A. Authorized Facility : a tax abatement may be granted for the modernization and occupancy of an existing facility, which contributes to the retention or expansion of a major employer or the attraction of a major investment, which offers a significant contribution to the local area tax base. The economic life of the facility and its improvements must exceed the life of the abatement agreement. Projects eligible to apply for a tax abatement under this policy include: Class A office, retail, restaurant, residential and/or commercial facility.

B. Eligible Property : a tax abatement may be granted for improvements to real and personal property to the extent allowed by state law. No abatements will be granted for inventory or supplies, including office equipment.

C. Value of Abatement: authorized facilities may be granted an abatement on all or a portion of the increased taxable value of eligible property over the base year value for a period not to exceed 5 years for real property and qualified personal property.

PROGRAM GUIDELINES:

Each applicant for tax abatement must comply with project impact data requests for information by endeavoring to provide the most accurate estimates possible.

The eligibility requirements are as follows:

Investment in a Structure	Abatement	Max. # of Years*
$50,000 & up	90%	5
$40,000 – 49,999.99	80%	4
$30,000 – 39,999.99	70%	3
$20,000 – 29,999.99	60%	3
$10,000 – 19,999.99	50%	2

* Length of abatement period is commensurate with the length of lease/occupancy terms, but shall not exceed maximum number of years listed.

PROGRAM CONSIDERATIONS:

PROCEDURAL GUIDELINES:

Any person, partnership, organization, corporation or other entity desiring that the City of Waco consider providing a tax abatement to encourage location or relocation within the target area of Waco shall be required to comply with the following procedural guidelines. No representations made herein considered binding unless and until approved by the City of Waco City Council.

Preliminary Application Steps:

A. Applicants shall submit an application and pay a filing fee to cover the review and processing of the application (including notice publication costs). The cost for filing an application for a tax abatement is $100.

An application will not be processed without the total amount of the filing fee being paid in advance. Only complete applications will be processed for Council consideration.

B. Revisions to the original application prior to approval of an agreement which will reduce the value by 10% or greater will require the applicant to pay a second application fee to cover administrative changes.

C. Applicants shall address all criteria questions outlined under the Section titled “Project Impact Data”.

D. A complete legal description of the property shall be provided.

E. The applicant shall provide a site plan showing the precise location of the property; all roadways within 500 feet of the site; all existing land uses and zoning within 500 feet of the site; and the kind, number and location of all proposed improvements.

F. The City may request that an applicant provide substantial of the economic feasibility of the overall project to assist in determining the long-term benefit to the City.

G. The applicant shall submit all information detailed in this policy to the City Manager, City of Waco, P.O. Box 2570, Waco, Texas 76702-2570.

H. All information in the application package will be reviewed for completeness and accuracy. The application will be distributed to the appropriate City departments for internal review and comments. Additional information may be requested as needed.

I. Copies of the application package and staff comments will be provided to the City Council.

Consideration of the Application:

A. The City Council will consider the tax incentive request at meetings conducted pursuant to the Open Meetings Act and Chapter 312 of the Texas Tax Code. Additional information may be requested as needed.

B. The City Council may consider a resolution calling a public hearing to consider the establishment of a reinvestment zone. If the subject property is in an existing reinvestment zone, no public hearing is necessary.

C. The City Council may hold the public hearing and determine whether the project is feasible and practical and would be of benefit for the land to be included in the zone and to the City after expiration of the tax abatement agreement.

D. The City Council may consider adoption of an ordinance designating the area described in the legal description of the proposed project as a tax abatement reinvestment zone.

E. The City Council may consider adoption of a resolution that approves the terms and conditions of an agreement between the City and the applicant, and governs the provision of the tax abatement.

F. The governing bodies of McLennan Community College District and McLennan County may consider ratification of a tax agreement with the applicant. The City's action in offering and entering into a tax abatement agreement with the applicant does not guarantee that any of the aforementioned taxing entities will enter into a tax abatement agreement with the applicant also.

DESIGN CONSIDERATIONS:

Architectural:

INSPECTION OF THE PROJECT:

During the term of such agreement, the City of Waco will have the right to inspect the project facility during regular business hours to ensure compliance with the agreement and accuracy of the owner certification.

PROJECT IMPACT DATA:

In responding to the following questions, the applicant should indicate the appropriate time frames in which the proposed events and/or resulting impacts will occur, where applicable. It is understood that the responses to these questions will be, out of necessity, estimates only.

However, the applicant should endeavor to provide the most accurate estimates possible based upon available information. The applicant may be requested by the City to describe the methodologies utilized to respond to the questions and supply supporting documentation.

Proposed Improvements:

• Identify and describe the kind, number and location of all proposed real or personal property improvements/additions and discuss the project's development schedule.
• What infrastructure construction will be required to serve the proposed project? What is the cost of this construction?

Fiscal Impact:

• How much real and personal property value will be added to the tax roll by the end of the abatement period?
• Will the project generate any sales tax?
• How will this proposed project affect existing business and/or office facilities?
• What will be the cost to the City of Waco to provide municipal services to the proposed project?
• What will be the estimated fiscal impact on the local school district? County government? Other taxing entities?

Community Impact:

• What affect (approximately) will the proposed project have on the area's residential community? Local housing market?
• What environmental impact, if any, will be created by the project?
• Is the proposed project compatible with the City's Comprehensive Plan and Zoning Ordinance? Brazos Corridor Development Plan? Public Improvement District goals?
• Will rezoning and platting/replatting be required?

The criteria outlined in this section, along with any other relevant requested information, will be used to determine whether or not it is in the best interest of the City to offer a tax abatement to a particular applicant. Specific considerations will include the degree to which the individual project furthers the goals and objectives of the targeted redevelopment area, as well as the relative impact of the project on the community.

RECAPTURE:

If a project is not completed as specified, or if the terms of the tax abatement agreement are not met, the City has the right to cancel or amend the abatement agreement and abated taxes shall become due to the City and other affected taxing units as provided by law. If a project that is granted a tax abatement ceases to operate or is no longer in conformance with the tax abatement agreement, the agreement shall not be effective for the period of time during which the project is not operating or is not in conformance.

If the project granted a tax abatement fails or refuses to meet its obligations and commitments under the agreement, it shall be responsible and obligated to repay to the City the incentives, including the value of in-kind incentives, received from the City. Repayment of incentives shall be made by the project upon 60 days demand by the City. Repayment of the incentives shall be made on a pro-rata basis based on the percentage of non-compliance by the project. All tax abatement agreements shall contain a provision calling for repayment of the taxes previously abated, in a pro rata amount, in the event of breach of the terms of the agreement.

EFFECT OF SALE, ASSIGNMENT OR LEASE OF PROPERTY:

No tax abatement rights may be sold, assigned or leased without the approval of the City Council. Any sale, assignment or lease of the property may result in forfeiture of all tax abatement rights and subject the tax abatement recipient to repayment of all or part of the amount of taxes previously abated.