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Tax Abatement Guidelines and Criteria
Mitchell County is committed to the promotion of developments in all portions of the county and to improving the quality of life for its citizens. This guideline will establish a uniform policy of tax abatement designed to provide long term significant positive economic impact on the community. Except as otherwise provided, all contracts will be identical.
The Mitchell County Commissioners’ Court reserves the right to negotiate a tax abatement agreement in order to compete favorably with other communities.
It is the goal of Mitchell County to grant tax abatements on the same terms and conditions as the other taxing entities having jurisdiction on the property. However, nothing herein shall limit the discretion of Mitchell County Commissioners’ Court to consider, adopt, modify or decline any tax abatement request.
This policy is effective as of October 9, 2006 and shall at all times be kept current with regard to the needs of Mitchell County and reflective of the official views of the Commissioners’ Court and shall be reviewed every two years.
I. Guidelines and Criteria
In order to be eligible for designation as a reinvestment zone and receive tax abatement, the planned improvement must add at least $1,000,000.00 in taxable value to the tax roll of eligible properties (except in the designated Main Street area where there are no minimums) and the cumulative abatement may not exceed $300,000.00 per year.
In consideration of the request for designation as a reinvestment zone and to receive tax abatement, the following factors will be considered:
Jobs. The projected new jobs created, the retention of existing jobs, the types of jobs, the average payroll and the number of local persons hired.
Fiscal Impact. The amount of real and personal property value that will be added to the tax roll, the infrastructure improvements by the County that will be required by the facility, and the infrastructure improvements made by the facility.
Community Impact. The business opportunities of existing local vendors, the revitalization of a depressed area, the impact on the taxing entities, and the employment opportunities of the project.
II. Abatement Authorization
Authorized Date: A facility shall be eligible to apply for tax abatement if it has applied for such abatement prior to the commencement of construction provided that such facility meets the criteria granting tax abatement in reinvestment zones created in Mitchell County.
Creation of New Values: Abatement may only be granted for the additional value of eligible property improvements made subsequent to the filing of the application for tax abatement and specified in the abatement agreement between Mitchell County and the property owner or lessee, subject to such limitations as Mitchell County may require.
New and Existing Facilities: Abatement may be granted for the additional value of eligible property improvements made subsequent to and specified in an abatement agreement between Mitchell County and the property owner or lessee, subject to such limitations as Mitchell County may require.
Eligible Property: Abatement may be extended to the value of buildings, structures, fixed machinery and equipment, site improvements and related fixed improvements necessary to the operation and administration of the facility.
Ineligible Property: The following types of property shall be fully taxable and ineligible for tax abatement: land, supplies, tools, animals, furnishings and other forms of movable personal property, housing and deferred maintenance.
Owned/Leased Facilities: If a leased facility is granted abatement, the agreement shall be executed with the lessor and the lessee.
III. Standards for Tax Abatement
The following factors, among others, shall be considered in determining whether to grant tax abatement:
Value of existing improvements, if any
Type and value of proposed improvements
Productive life of proposed improvements
Number of existing jobs to be retained by proposed improvements
Number and type of new jobs to be created by proposed improvements
Amount of local payroll to be created
Whether new jobs to be created will be filled by persons residing, or projected to reside, within Mitchell County
Amount which property tax base valuation will be increased during term of abatement and after abatement
The costs to be incurred by Mitchell County resulting from the new improvements
The amount of ad valorem taxes to be paid to Mitchell County during the abatement period considering (a) the existing values, (b) the percentage of new value abated, (c) the abatement period, and (d) the value after expiration of the abatement period
The population growth of Mitchell County as a direct result of new improvements
The types and values of public improvements, if any, to be made by applicant
The impact on the business opportunities of existing businesses
The attraction of other new businesses into the area
Each eligible applicant shall be reviewed on its merits utilizing the factors provided above. After such review, abatement may be denied entirely or may be granted to the extent deemed appropriate after full evaluation.
IV. Taxability
From the execution of the abatement to the end of the agreement period, taxes shall be payable as follows:
The value of ineligible property as provided in Abatement Authorization above shall be fully taxable.
The base tax value of existing eligible property as determined each year shall be fully taxable.
The additional value of new eligible property shall be fully taxable at the end of the abatement period.
V. Application for Tax Abatement
Any present or potential owner or lessee of taxable property in Mitchell County may request the creation of a reinvestment zone and tax abatement by filing a written application with the County Judge.
The application shall consist of:
A general description of the new improvements to be undertaken
A descriptive list of the improvement for which an abatement is requested
A map and property description, or site plan
A time schedule for undertaking and completing the proposed improvements
In the case of modernization, a statement of the assessed value of the facility, separately stated for real and personal property for the tax year immediately preceding the application
Financial and other information as deemed appropriate for evaluating financial capacity of applicant
Upon receipt of completed application, Mitchell County shall notify in writing the presiding officer of the governing body of each taxing unit in the County. Before acting upon the application, Mitchell County shall, through public hearings, afford the applicant and a designated representative of any affected jurisdiction the opportunity to show cause why the abatement should or should not be granted. Notice of a public hearing shall be clearly identified on an agenda posted prior to the hearing and published in a newspaper of general circulation at least seven days before the hearing.
VI. Agreement
After approval of the tax abatement request, Mitchell County Commissioners’ Court shall formally pass a resolution and execute an agreement with the owner and/or lessee of the facility which shall include:
Estimated value to be abated and the base year value
Percent of value to be abated each year
The commencement date and termination date of the abatement
The proposed use of the facility, nature of construction, time schedule for undertaking and completing the planned improvements, map, property description and improvements list
Contractual obligations in the event of default, violation of terms or conditions and delinquent taxes recapture
Provision for access and inspection of the property by Mitchell County to ensure compliance with agreement
Such agreement shall normally be executed within sixty (60) days after the applicant has forwarded all necessary information and documentation to the Commissioners’ Court.
VII. Recapture
In the event that the facility is completed and begins producing product or service, but subsequently discontinues for any reason except fire, explosion, accident or natural disaster for a period of more than one (1) year during the abatement period, the agreement shall terminate and so shall the abatement of taxes for the calendar year during which the agreement is terminated. The taxes otherwise abated for that calendar year shall be paid to Mitchell County within sixty (60) days from the date of termination.
Should Mitchell County determine that a company or individual is in default according to the terms and conditions of the agreement, the County shall notify the company or individual in writing at the address stated in the agreement, and if such is not cured within sixty (60) days from the date of such notice, the agreement shall be terminated.
In the event that the company or individual allows its ad valorem taxes owed Mitchell County to become delinquent and fails to timely and properly follow the legal procedures for their protest and/or contest; or violates any of the terms and conditions of the abatement agreement and fails to cure same during the cure period, the agreement shall be terminated and all taxes previously abated by virtue of the agreement will be recaptured and paid within sixty (60) days of the termination.
VIII. Administration
The Chief Appraiser of the Mitchell County Appraisal District shall annually determine an assessment of the real and personal property comprising the reinvestment zone. Each year the company or individual receiving abatement shall furnish the Appraiser with such information as may be necessary for the abatement. Once value has been established, the Chief Appraiser shall notify the Commissioners’ Court of the amount of the assessment.
The agreement shall stipulate that employees and/or designated representatives of Mitchell County Commissioners’ Court will have access to the reinvestment zone during the term of the abatement to inspect the facility to determine if the terms and conditions of the agreement are being met. All inspections will be made only after giving twenty-four (24) hours prior notice and will only be conducted in such manner as to not unreasonably interfere with the construction and/or operation of the facility. All County inspections will be made with one or more representatives of the company or individual and in accordance with safety standards.
Upon completion of construction, a designated representative of Mitchell County shall annually evaluate each facility receiving abatement to insure compliance with the agreement and a formal report shall be made the Commissioners’ Court.
All proprietary information acquired by Mitchell County Commissioners’ Court for purposes of monitoring compliance with the terms and conditions of an abatement agreement shall be considered confidential.
IX. Assignment
Abatement may be transferred and assigned by the holder to a new owner or lessee of the same facility upon the approval by resolution of the Mitchell County Commissioners’ Court, subject to the financial capacity of the assignee and provided that all conditions and obligations in the abatement agreement are guaranteed by the execution of a new contractual agreement with Mitchell County.
The contractual agreement with the new owner or lessee shall not exceed the termination date of the abatement agreement with the original owner and/or lessee.
No assignment or transfer shall be approved if the parties to the existing agreement, the new owner or new lessee are liable to any affected jurisdiction for outstanding taxes or other obligations.
Approval shall not be reasonably delayed or withheld.
X. Sunset Provision
These Guidelines and Criteria are effective upon the date of the adoption and will remain in force for two (2) years, unless amended by the Mitchell County Commissioners’ Court, at which time all reinvestment zones and tax abatement agreements created pursuant to these provisions will be reviewed to determine whether the goals have been achieved. Based on that review, these Guidelines and Criteria may be modified, renewed or eliminated, providing that such actions shall not affect existing contracts.
XI. Glossary
“Abatement” means the full or partial exemption from ad valorem taxes of certain property in a reinvestment zone designated by Mitchell County for economic development purposes.
“Affected jurisdiction” means Mitchell County, any municipality, taxing entity or school district which is located in Mitchell County that levies ad valorem taxes upon and/or provides services to property located within the proposed or existing reinvestment zone designated by Mitchell County Commissioners’ Court.
“Agreement” means a contractual agreement between a property owner and/or lessee and Mitchell County.
“Base year value” means the assessed value of eligible property on January 1 preceding the execution of the agreement.
“Facility” means property improvements completed or in the process of construction which together comprise an integral whole.
“Modernization” means the upgrading and/or replacement of existing facilities which increases the productive input or output, updates the technology or substantially lowers the unit cost of the operation. Modernization may result from the construction, alteration or installation of buildings, structures, fixed machinery or equipment. It shall not be for the purpose of reconditioning, refurbishing or repairing.
“New facility” means improvements to real estate previously undeveloped which is placed into service by means other than , or in conjunction with, expansion or modernization.
“New jobs” means a newly created employment position on a full-time permanent basis. Two or more part-time permanent employees totaling an average of not less than 40 hours per week may be considered as one full-time permanent employee.