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RE 11-14-95.2 A RESOLUTION OF THE CITY OF COPPELL, TEXAS RESOLUTION NO. 111495.2 A RESOLUTION OF THE CITY OF COPPELL, TEXAS, APPROVING THE TERMS AND CONDITIONS OF A TAX ABATEMENT AGREEMENT BY AND BETWEEN THE CITY OF COPPELL, TEXAS, VARI-LITE INC., SHOWCO, INC., SHOWCO CREATIVE SERVICES, INC., CONCERT PRODUCTION LIGHTING, INC., IRIDEON, INC. AND AN UNAFFILIATED TEXAS ENTITY THAT WILL BE FORMED PRIOR TO THE CLOSING SCHEDULED FOR DECEMBER 7, 1995 FOR THE PROPERTY DESIGNATED AS TAX ABATEMENT REINVESTMENT ZONE NO. 7; AUTHORIZING ITS EXECUTION BY THE MAYOR; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council has been presented a proposed Tax Abatement Agreement by and between the City of Coppell, Texas, and Vari-Lite, Inc., Showco, Inc., Showco Creative Services, Inc., Concert Production Lighting, Inc., and Irideon, Inc., a copy of which is attached hereto as Exhibit "A" and incorporated herein by reference; and WHEREAS, a new independent unaffiliated Texas entity will be formed immediately prior to thc closing (hereinafter called the "Independent Owner") scheduled for December 7, 1995 for the property designated as Tax Abatement Reinvestment Zone No. 7; and WHEREAS, upon full review and consideration of the proposed Agreement, and all matters attendant and related thereto, the City Council is of the opinion and finds that a Tax Abatement Agreement substantially meeting the terms and conditions hereof should be approved, and that the Mayor should be authorized to execute such Agreement on behalf of the City of Coppell, Texas after the formation of the "Independent Owner"; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF COPPELL, TEXAS, that: 1. The City Council finds that the improvements proposed to be built upon the Premises described in the Agreement will enhance the economic vitality of the community through a combination of new capital investment, increased sales tax revenues, and the creation of additional job opportunities. 2. The tax abatement to be granted by the Agreement will not include inventories and supplies. 3. The improvements proposed for the Premises will accomplish the tax abatement guidelines of the City of Coppell, Texas. AGG07860 4. The City Manager delivered to the presiding officer of the governing body of each taxing unit in which the property subject to the Tax Abatement Agreement is located, a written notice that the City of Coppell, Texas, intends to enter into the Agreement. The notice given by the City Manager included a copy of Tax Abatement Agreement which is substantially meeting the terms and conditions of the Tax Abatement Agreement approved by this Resolution. 5. This Resolution and a Tax Abatement Agreement substantially meeting the terms and conditions of the Tax Abatement Agreement attached hereto are hereby approved by the affirmative vote of the majority of the members of the City Council of the City of Coppell, Texas, at a regularly scheduled meeting of the City Council. 6. This Resolution shall become effective immediately from and after its passage, provided that the Mayor is authorized to execute a Tax Abatement Agreement substantially meeting the terms and conditions of the Tax Abatement Agreement attached hereto after the formation of the "Independent Owner". After execution by all parties, the Tax Abatement Agreement shall be effective for the tax year 1997 and following for the term thereof. DULY RESOLVED AND ADOPTED by the City Council of the City of Coppell, Texas, on this the 14th day of November, 1995. CITY OF COPPELL, TEXAS TOM MORTON, MAYOR ATFEST: LI-NDA GRAU,' ASSISTANT CITY SECRETARY APPROVED AS TO FORM: PETER G. SM/YFH, CITY ATTORNEY (PGS/ct 11-10-95) AGG07860 STATE OF TEXAS § § TAX ABATEMENT AGREEMENT COUNTY OF DALLAS § This Tax Abatement Agreement (the "Agreement") is entered into by and between the City of Coppell, Texas (the "City"), a home rule city and municipal corporation of Dallas County, Texas, duly acting herein by and through its Mayor, and ("Owner"), and Vari-Lite, Inc., a Delaware corporation, Showco, Inc., a Delaware corporation, Showco Creative Services, Inc., a Delaware corporation, Concert Production Lighting, Inc., a Delaware corporation, and Irideon, Inc., a Delaware corporation (collectively, "Vari-Lite"), each acting by and through its authorized officer. WITNESSETH: WHEREAS, on the 14th day of November, 1995, the City Council of the City of Coppell, Texas, (the "City"), passed an Ordinance (the "Ordinance") establishing Tax Abatement Reinvestment Zone No. 7 (the "Zone"), for commercial/industrial tax abatement, as authorized by the Property Redevelopment and Tax Abatement Act, Chapter 312 of the Texas Tax Code, as amended (the "Tax Code"); and WHEREAS, on the 12th day of September, 1995, the City adopted an amended guidelines for tax abatement (the "Tax Abatement Guidelines") attached hereto as Exhibit "A" and made a part hereof for all purposes; and WHEREAS, the Tax Abatement Guidelines contain appropriate guidelines and criteria governing tax abatement agreements to be entered into by the City as contemplated by the Tax Code; and WHEREAS, the City has adopted a resolution stating that it elects to be eligible to participate in tax abatement; and WHEREAS, in order to maintain and enhance the commercial and industrial economic and employment base of the Coppell area, it is in the best interests of the taxpayers for the City to enter into this Agreement in accordance with said Ordinance, the Tax Abatement Guidelines and the Tax Code; and WHEREAS, the Owner's and the Vari-Lite Entities' relocation and expansion efforts described herein will create permanent new jobs in the City; and WHEREAS, the City Council finds that the contemplated use of the Premises (hereinafter defined), the contemplated improvements to the Premises in the amount set forth in this Agreement, and the other terms hereof are consistent with encouraging development of the Zone in accordance with the purposes for its creation and/or in compliance with the Tax Abatement Guidelines, the Ordinance adopted by the City, the Tax Code and all other applicable laws; and WHEREAS, the City Council finds that the improvements sought are feasible and practicable and would be of benefit to the land to be included in the Zone and to the City after expiration of this Agreement; and WHEREAS, a copy of this Agreement has been furnished, in the manner prescribed by the Code, to the presiding officers of the governing bodies of each of the taxing units in which the premises to be subject to this Agreement is located; and WHEREAS, the City desires to enter into an agreement with the Owner and Vari- Lite, the proposed owners of property within the Tax Abatement Reinvestment Zone No. 7 for the abatement of taxes pursuant to Chapter 312 of the Tax Code, as amended; NOW, THEREFORE, in consideration of the mutual benefits and promises contained herein and for good and other valuable consideration, the adequacy and receipt of which is hereby acknowledged, including the expansion of primary employment, the attraction of major investment in the Zone, which contributes to the economic development of Coppell and the enhancement of the tax base in the City, the parties agree as follows: GENERAL PROVISIONS 1. The Owner is the owner of that real property described in Exhibit "B" attached hereto and made a part hereof for all purposes (the "Premises"), which Premises are located within the city limits of the City and within the Zone. Vari-Lite is the lessee of the Premises and the Owner of the tangible personal property that will be located on the Premises. 2. The Premises are not in an improvement project financed by tax increment bonds. 3. This Agreement is entered into subject to the rights of the holders of outstanding bonds of the City. 4. The Premises are not owned or leased by any member of the Coppell City Council or any member of the Coppell Planning and Zoning Commission, or any member of the governing body of any taxing units joining in or adopting this Agreement. Tax Abatement Agreement - Page 2 TAX ABATEMENT AU'I~ORIZED 5. This Agreement is authorized by the Texas Property Redevelopment and Tax Abatement Act of the Texas Tax Code, Chapter 312, and in accordance with the City Tax Abatement Guidelines and Criteria, and approved by resolution of the City Council of the City authorizing the execution of this Agreement. 6. Assuming an investment of at least $5.5 million in taxable assets, and subject to the terms and conditions of this Agreement, the City hereby grants the Owner and Vari- Lite an abatement of ad valorem taxation on real and/or personal property of seventy-five percent (75%) for a period of five (5) years. The tax abatement granted to the Owner is expressly contingent upon the Owner as lessor being contractually obligated to pay the ad valorem taxes for the personal property located in the Premises. The actual percentage of taxes subject to abatement for each year of this Agreement will apply only to the portion of the taxable value of the real property and of the tangible personal property located on the real property, that exceeds that property's taxable value for the year in which this Agreement is executed (base year/1995). The tax abatement for tangible personal property may only apply to the personal property added to the real property after this Agreement is executed. Taxable value of property for each year of abatement less base year taxable value = excess taxable value subject to abatement % above. 7. The period of tax abatement herein authorized shall be five (5) years, beginning on January 1, 1997 and continuing until December 31, 2001, unless otherwise amended by the parties pursuant to the Tax Code. 8. During the period of tax abatement herein authorized, Vari-Lite shall be subject to all City taxation not abated, including but not limited to, sales tax and ad valorem taxation on any other land, inventory and supplies. DEFINITIONS 9. Wherever used in this Agreement, the following terms shall have the meanings ascribed to them: A. The Premises shall mean the property described on Exhibit "B" attached hereto and incorporated herein for all purposes including any improvements and personal property excluding inventory which is added to the property subsequent to the execution of this Agreement; B. The Improvements shall mean the contemplated improvements described herein located on the Premises and as further described in the plans submitted to the City, including but not limited to buildings, structures, tangible personal property, equipment, and fixtures added to the Premises other than inventory. Tax Abatement Agreement - Page 3 AGG0785A C. The Total Assessed Tax Value shall mean the total assessed taxable value on January 1 of any tax year of the Premises, any Improvements located on the Premises and the tangible personal property, excluding inventory, located on the Premises. D. The Base Year Tax Value shall mean the total assessed taxable value for the year in which the Tax Abatement Agreement is executed (1995). E. The First Year of the Tax Abatement Agreement shall be 1997, unless otherwise agreed to by the parties. F. CertifledAppraised Value means the appraised value of the Premises owned by the Owner and by Vari-Lite as certified by the Dallas Cemral Appraisal District as of Januaxy 1 of each year in which the tax abatement is granted. IMPROVEMENTS 10. The Owner owns a 32.8332 acre tract of land known as the Albany Project, Coppell, Texas, being described in Exhibit "B" and agrees to construct on the Premises approximately 200,000 - 225,000 square feet of warehousing and distribution facilities. The cost of the Improvements should exceed $5.5 Million Dollars. The approximate location of such Improvements are shown on the Site Plan of the Premises attached hereto as Exhibit "C" and made a part hereof for all purposes. Nothing in this Agreement shall obligate owner to construct Improvements on the Premises, but said Improvements are a condition precedent upon initiation of tax abatement pursuant to this Agreement. 11. Subject to the terms and conditions of this Agreement, the Owner and Vari- Lite are entitled to an abatement of ad valorem taxation on real property and personal property of seventy-five percent (75%), conditioned upon the Owner, its successors or assigns diligently constructing the aforesaid improvements. CONSTRUCTION OF IMPROVEMENTS 12. As a condition precedent to the initiation of tax abatement pursuant to this Agreement, the Owner will diligently and faithfully, in good and workmanlike manner, pursue the completion of the contemplated improvements on or before September 30, 1997, as good and valuable consideration for this Agreement, and that all construction of the Improvements will be in accordance with all applicable state and local laws, codes, and regulations, (or valid waiver thereof); provided, that the Owner shall have such additional time to complete and maintain the Improvements as may be required in the event of "Force Majeure," if the Owner is diligently and faithfully pursuing completion of the Improvements. For this purpose, "Force Majeure" shall mean any contingency or cansc beyond the reasonable control of the Owner including, without limitation, acts of God or the public Tax Abatement Agreement - Page 4 AGG0785A enemy, war, riot, civil commotion, insurrection, adverse or inclement weather, government or de facto governmental action (unless caused by acts or omissions of the Owner), fires, explosions or floods, strikes, slowdowns or work stoppages. 13. The Owner agrees to maintain the Improvements during the term of this Agreement in accordance with all applicable state and local laws, codes, and regulations. 14. The City, its agents and employees shall have the right of access to the Premises during construction to inspect the Improvements at reasonable times and with reasonable notice to the Owner or Vari-Lite, as the case may be, and in accordance with their visitor access and security policies, in order to insure that the construction of the Improvements are in accordance with this Agreement and all applicable state and local laws and regulations (or valid waiver thereof). GENERAL REQUIREMENTS 15. Construction plans for the Improvements constructed on the Premises will be filed with the City. The plans for such Improvements as filed shall be deemed to be incorporated by reference herein and made a part hereof for all purposes. 16. The Owner agrees from the date a certificate of occupancy is issued until the expiration of this Agreement to continuously operate and maintain the Premises as an office, warehouse and distribution center, or any other activity consistent with local zoning, in compliance with all applicable federal, state and local laws. 17. After completion of the improvements, the Owner shall certify in writing to the City the construction cost of the Improvements. Such certification shall be signed by all parties to this Agreement and shall then be attached hereto as Exhibit "D", and such Exhibit shall become a part of this Agreement for all purposes. The Owner and Vari-Lite shall annually certify to the City that they are in compliance with each term of this Agreement. 18. The Premises and the Improvements constructed thereon at all times shall be used in the manner (i) that is consistent with the City's Comprehensive Zoning Ordinance, as amended, and (ii) that, during the period taxes are abated hereunder, is consistent with the general purposes of encouraging development or redevelopment within the Zone. DEFAULT: RECAPTURE OF TAX REVENUE 19. In the event the Owner or any of the Vari-Lite Entities (hereinafter referred to as "Defaulting Party") fail in performance of any of the following conditions: (i) completion of the Improvements in accordance with this Agreement or in accordance with applicable State or local laws, codes or regulations; (ii) have any delinquent ad valorem or State sales taxes owed to the City (provided such party retains its right to timely and Tax Abatement Agreement - Page 5 AGG0785A properly protest such taxes or assessment); or (iii) breaches any of the terms and conditions of this Agreement, then such "Defaulting Party", after the expiration of the notice and cure periods described in Paragraph 20 below, shall be in default of this Agreement. As liquidated damages in the event of such default, the "Defaulting Party" shall, within sixty (60) days after demand, pay to the City all taxes which otherwise would have been paid to the City without benefit of a tax abatement with interest at the statutory rate for delinquent taxes as determined by Section 33.01 of the Tax Code as amended but without penalty. The parties acknowledge that actual damages in the event of default termination would be speculative and difficult to determine. The parties further agree that any property tax revenue lost, including interest as a result of this Agreement, shall be recoverable against such "Defaulting Party", its successors and assigns and shall constitute a tax lien on the property the subject of this Agreement owned by the "Defaulting Party" and shall become due, owing and shall be paid to the City within sixty (60) days. 20. Upon breach by the Owner or any of the Vari-Lite Entities of any obligations under this Agreement, the City shall notify the "Defaulting Party" in writing, who shall have sixty (60) days from actual receipt of the notice in which to cure any such default. If the default cannot reasonably be cured within a sixty (60) day period, and such "Defaulting Party" has diligently pursued such remedies as shall be reasonably necessary to cure such default, then the period in which the violation must be cured shall be automatically extended for an additional sixty (60) days. 21. If a "Defaulting Party" fails to cure the default within the time provided as specified in Paragraph 20 above or, as such time period may be extended, then the City at its sole option shall have the right to terminate this Agreement with respect to the "Defaulting Party" by written notice to such party. 22. Upon termination of this Agreement pursuant to Paragraph 20 above, all tax revenue abated with respect to the terminated party as a result of this Agreement shall become a debt to the City as liquidated damages, and shall become due and payable not later than sixty (60) days after a notice of termination is made. The City shall have all remedies for the collection of the recaptured tax revenues provided generally in the Tax Code for the collection of delinquent property tax. The City at its sole discretion has the option to provide a pay back schedule. The computation of tax revenue abated for the purposes of the Agreement shall be based upon the full taxable value without tax abatement for the years in which tax abatement hereunder was received by the terminated party with respect to the Premises, as determined by the Dallas Central Appraisal District, multiplied by the tax rate of the years in question, as calculated by the City Tax Assessor-Collector. Penalties as provided for delinquent taxes shall accrue after expiration of the sixty (60) day payment period. Tax Abatement Agreement - Page 6 AGG0785A ANNUAL APPLICATION FOR TAX EXEMPTION 23. It shall be the responsibility of the Owner and Vari-Lite, pursuant to the Texas Tax Code, to collectively file an annual exemption application form with the Chief Appraiser for each appraisal district in which the eligible taxable personai property has situs. A copy of the exemption application shall be submitted to the City for review. SUCCESSORS AND ASSIGNS 24. This Agreement shall be binding on and inure to the benefit of the parties to it and their respective legal representatives, successors, and assigns. This Agreement may be assigned with the consent of the City, which consent shall not be unreasonably withheld. NOTICE 25. AIl notices required by this Agreement shall be addressed to the following, or other such other party or address as either party designates in writing, by certified mail, postage prepaid or by hand delivery and shall be deemed to be delivered only upon actual receipt thereof: If intended for Vari-Lite, to: If intended for the Owner, to: Mr. Mike Herman Vice President - Finance Vari-Lite, Inc. 201 Regal Row Dallas, Texas 75247 With a copy to: Cyril D. Kasmir, Esq. Kasmir & Krage, L.L.P. 2001 Bryan Tower, Suite 2700 Dallas, Texas 75201-3059 If intended for City, to: City of Coppell, Texas City Manager P. O. Box 478 Coppell, Texas 75019 Tax Abatement Agreement - Page 7 AGG0785A CITY COUNCIL AUTHORIZATION 26. This Agreement was authorized by resolution of the City Council approved by its Council meeting on the 14th day of November, 1995, authorizing the Mayor to execute this Agreement on behalf of the City. SEVERABILITY 27. In the event any section, subsection, paragraph, sentence, phrase or word herein is held invalid, illegal or unconstitutional, the balance of this Agreement shall stand, shall be enforceable and shall be read as if the parties intended at all times to delete said invalid section, subsection, paragraph, sentence, phrase or word. APPLICABLE LAW 28. This Agreement shall be construed under the laws of the State of Texas. Venue for any action under this Agreement shall be the State District Court of Dallas County, Texas. This Agreement is performable in Dallas County, Texas. ENTIRE AGREEMENT 29. This Agreement embodies the complete agreement of the parties hereto, superseding all oral or written previous and contemporary agreements between the parties and relating to the matters in this Agreement, and cannot be modified without written agreement of the parties to be attached to and made a part of this Agreement. 30. The provisions of this Agreement are hereby declared covenants running with the Premises and are fully binding on all successors, and assigns of the Owner and Vari-Lite who acquire any fight, title, or interest in or to the property, or any part thereof. Any person who acquires any right, title, or interest in or to the property, or any part hereof, thereby agrees and covenants to abide by and fully perform the provisions of this Agreement with respect to the right, title or interest in such property. RECORDATION OF AGREEMENT 31. A certified copy of this Agreement shall be recorded in the Deed Records of Dallas County, Texas. Tax Abatement Agreement - Page 8 AGG0785A EXECUTED in duplicate originals this the__ day of ,1995. CITY OF COPPELI.., TEXAS By: TOM MORTON, MAYOR VARI-LITE, INC. CONCERT PRODUCTION LIGHTING, INC. By: By: SHOWCO, INC. IRIDEON, INC. By: By:. SHOWCO CREATIVE SERVICES, INC. OWNER By:. By:. Tax Abatement Agreement - Page 9 ^GG0785A MAYOR'S ACKNOWLEDGEMENT STATE OF TEXAS § COUNTY OF DALLAS § BEFORE ME, the undersigned authority, a Notary Public in and for the State of Texas, on this day personally appeared Tom Morton, Mayor of the City of Coppell, Texas, a municipal corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said City of Coppell, Texas, a municipal corporation, that he was duly authorized to perform the same by appropriate resolution of the City Council of the City of Coppell, and that he executed the same as the act of said City for the purpose and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the day of ,19 Notary Public, State of Texas My Commission Expires: Tax Abatement Agreement - Page 10 AGG0785A CORPORATE ACKNOWLEDGEMENT STATE OF TEXAS COUNTY OF DALLAS § BEFORE ME, the undersigned authority a Notary Public in and for the State of Texas, on this day personally appeared , being the of Vari-Lite, Inc., a Delaware corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said Vari-Lite, Inc., a Delaware corporation, and that he executed the same as the act of said corporation for the purpose and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the day of , 19 Notary Public, State of Texas My Commission Expires: Tax Abatement Agreement - Page 11 AGG0785A CORPORATE ACKNOWLEDGEMENT STATE OF TEXAS § COUNTY OF DALLAS § BEFORE ME, the undersigned authority a Notary Public in and for the State of Texas, on this day personally appeared , being the of Showco, Inc., a Delaware corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said Showco, Inc., a Delaware corporation, and that he executed the same as the act of said corporation for the purpose and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the day of , 19 Notary Public, State of Texas My Commission Expires: Tax Abatement Agreement - Page 12 A(}G0785A CORPORATE ACKNOWLEDGEMENT STATE OF TEXAS § COUNTY OF DALLAS § BEFORE ME, the undersigned authority a Notary Public in and for the State of Texas, on this day personally appeared , being the of Showco Creative Services, Inc., a Delaware corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said Showco Creative Sexx4ces, Inc., a Delaware corporation, and that he executed the same as the act of said corporation for the purpose and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the day of , 19 Notary Public, State of Texas My Commission Expires: Tax Abatement Agreement - Page 13 AGG0785A CORPORATE ACKNOWLEDGEMENT STATE OF TEXAS § COUNTY OF DALLAS § BEFORE ME, the undersigned authority a Notary Public in and for the State of Texas, on this day personally appeared , being the of Concert Production Lighting, Inc., a Delaware corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said Concert Production Lighting, Inc., a Delaware corporation, and that he executed the same as the act of said corporation for the purpose and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the day of , 19 Notary Public, State of Texas My Commission Expires: Tax Abatement Agreement - Page 14 AGG0785A CORPORATE ACKNOWLEDGEMENT STATE OF TEXAS § COUNTY OF DALLAS § BEFORE ME, the undersigned authority a Notary Public in and for the State of Texas, on this day personally appeared , being the of Irideon, Inc., a Delaware corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said Iddeon, Inc., a Delaware corporation, and that he executed the same as the act of said corporation for the purpose and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the day of , 19 Notary Public, State of Texas My Commission Expires: Tax Abatement Agreement - Page 15 AGG0785A CORPORATE ACKNOWLEDGEMENT STATE OF TEXAS § COUNTY OF DALLAS § BEFORE ME, the undersigned authority a Notary Public in and for the State of Texas, on this day personally appeared , being the of (Owner), a , known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said (Owner), a and that he executed the same as the act of said corporation for the purpose an~ consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the day of , 19 Notary Public, State of Texas My Commission Expires: Tax Abatement Agreement - Page 16 AGG0785A CITY OF COPPELL, TEXAS GUIDELINES FOR TAX ABATEMENT GENERAL PURPOSES AND OBJECTIVES The City of Coppell is committed to the promotion of high quality development in all parts of the City and to an ongoing improvement in the quality of life for its citizens. Insofar as these objectives are generally served by the cn_hancement and expansion of the local economy, the City will on a case by case basis give consideration to providing incentives as a stimulus for economic development in Coppell. It is the policy of the City that such consideration will be provided in accordance with the procedures and criteria outlined in this document. Nothing herein shall imp~ or suggest that the City_ of Covvell is under obligation to provide any incentive to any avvlicant. ~Ill applicants shah be considered on a case by case basis. According to the Property Redevelopment and Tax Abatement Act, codified at Chapter 312 of the Texas Tax Code, the City may only grant tax abatement on the increment in value added to a particular property by specific development proposal which meets the economic development goals and objectives of the City. The tax abatement may only apply to the real estate portion of the project or the tangible personal property added to the real estate or both. Inventory and supplies may not be included. Tax abatements are granted to the owners of real and personal property; for projects where the' real estate is leased, special terms and conditions may be provided in the agreement. MINIMUM STANDARDS FOR TAX ABATEMENT To be Considered eligible for a tax abatement, the proposed project and/or property must meet the following criteria: Tax Abatement Guidelines - Page 1 Ed. 8/17/95 AGGO6FAF 1. An investment of at least $5.5 million in taxable assets. The acquisition cost of the real estate is not included in computing the amount of taxable assets. Construction costs are not necessarily indicative of the taxable value of the property. (The taxable value is determined by the Central Appraisal District as of January 1 of each year.) 2. The project makes a substantial contribution to redevelopment efforts. 3. The project has high visibility, image impact, or is of a significantly higher level of development quality. 4. The project is an area which rnigh[ not otherwise be developed because of restraints of topography, ownership patterns, site configuration, or other constraints. 5. The project stimulates concentration of employment and/or commercial activity. 6. A project submitted for tax abatement shall be subject to fiscal impact analysis to determine whether or not the services required for the facility will exceed the amount of taxes generated if an abatement was provided. No tax abatement will be offered to a project that generates negative costs to the City. Applicants must provide a written narrative detailing how a project meets the above minimum standards. OBJECTIVE CRITERIA The following criteria is designed to evaluate specific components common to all applicants. 1. How much property tax base will be added? There must be at least $5.5 million in tax base added to the property to be eligible for tax abatement. 2. How much local annual payroll will be created? 3. How many new jobs will be created? 4. An investment of at least $5.5 million in taxable assets. Tax Abatement Guidelines - Page 2 Ed. 8/17/95 AGGO6FAF The applicant must respond in written narrative format to the following: 1. Is the project sponsor a local company? 2. What types and values of public improvements, if any, will be made by the applicant? 3. Will the applicant be the owne~ or lessee? If lessee, are occupancy commitments akeady existing? 4. Does or can the project meet all relevant zoning, subdivision and other legal requirements? 5. What impact will the project have on other taxing units? (Coppell Independent School District) 6. Are the new jobs to be created likely to be filled by Coppell's local labor force? 7. Will the project increase the business opportunities of existing local businesses? 8. Is the project consistent with the comprehensive plan of the City? 9. Is the level of quality significantly higher than the typical projects of a similar use? Are site amenities provided such as landscaping, public art, water fountains, plazas, etc.? 10. Does the project pose any negative environmental, operational, visual or other impacts (i.e. pollution, noise, traffic congestion, etc.)? AMOUNT OF TAX ABATEMENT The above criteria will be used to determine whether it is in the best interest of the City to provide tax abatement to a particular applicant. The categories itemized below have been identified as desirable for the community. Once a determination has been made that a tax abatement is in the best interest of the City, the value and term of the abatement will be determined from the following: Tax Abatement Guidelines - Page Ed. 8/17/95 1. Tax abatements are available for both new facilities and structures and for the expansion and modernization of existing facilities and structures. The City of Coppell would provide up to 75% tax abatement for a warehousing and distribution facility, up to 50% abatement for a fabrication and assembly facility, and 25% for a manufacturing and processing facility. The following definitions shall apply to the aforementioned categories. Warehousing and Distribution - Temporary storage of materials received in bulk for later transfer or shipment in smaller lots and in combination with other ~naterials received. Fabrication and Assembly- The connection of standard, previously manufactured components to form a consumer product. Manufacturing and Processing - The combining of raw materials to form finished products which are physically altered and result in consumer products. Any other uses, not elsewhere listed in this policy, will have to be considered on an individual basis to evaluate the desirability and compatibility of the proposed use for the community. All determined "desirable uses" by the City will receive no more than 75% tax abatement. 2. Tax abatements are for a period of five (5) consecutive tax years; however, the City may delay the commencement of the tax abatement until January 1 of the second year following the year in which the tax abatement agreement is executed (i.e. tax abatement agreement is entered into during calendar year 1994 -- the first year of taxes subject to abatement would be January 1, 1996). 3. A project may be granted a tax abatement on real and/or personal property for a period of up to five years, depending on the evaluation of the tax abatement guideline criteria. The actual percentage of taxes subject to abatement for each year of an agreement will be determined from the schedule provided below; and will apply only to the portion of the taxable value of the real property or of the tangible personal property located on the real property, or both that exceeds that property's taxable value for the year in which the agreement is executed (base year). The tax abatement agreement for tangible personal property may only apply to the personal property added to the real property after the agreement is executed. Tax Abatement Guidelines - Page 4 Ed. 8/17/95 AGGO6FAF SC~D~E Assuming an investment of at least $5.5 Percentage of abatement of the excess million in taxable assets, the amount bytaxable value which the total assessed taxable value of the real property and/or tangible Warehousing and Distribution - personal property, or both exceeds the Maximum 75% assessed taxable value for the property in the year the agreement is executed (base Fabrication and Assembly - Maximum year). Manufacturing and Processing - Maximum 25% [taxable value of property for each year of abatement - base year taxable value = excess taxable value subject to abatement % above] PROCEDURAL GUIDELINES Any person, organization or corporation desiring that the City consider providing tax abatement to encourage location or expanded operation within the city shall comply with these procedural guidelines. Nothing within these guidelines sM be construed to suggest that the City_ is under any_ oblieation to provide any aba~ernent to any_ a~vlica~t even (f certain criteria are satisfied. The City_ reserves the dght to reject an~ ap£lica~on. APPLICATION Applicant should submit an application for tax abatement to the City Manager addressing the above criteria including a legal description of the property and a plat showing the precise location of the property, all roadways within five hundred feet of the site, and all existing zoning and land uses within five hundred feet of the site. APPLICATION REVIEW PROCESS The application will be reviewed by the Tax Abatement Committee consisting of the City Manager, three representatives from the Economic Development Partnership, the Chairman of the Finance Committee and the City's Tax Assessor. The Committee will serve as an advisory body to the City Council in determining whether a tax abatement should be offered. The Committee's recommendation shall be based upon a subjective evaluation of the Tax Abatement Guidelines - Page 5 Ed. 8/17/95 AGGO6FAF completed application. The committee may invite representatives from the Coppeli Independent School District, Dallas County, Tarrant County or Denton County, to participate in the review. All information submitted will be reviewed for completeness, accuracy, and according to the guidelines and criteria. Additional information may be requested as needed. The application may be distributed to appropriate City departments for internal review and comments. Copies of the complete application package and staff comments, if any, will be provided to other taxing entities (Coppell Independent School District, Dallas, Tarram or Denton County). The staff will make recommendations on the application to the Tax Abatement Committee. If needed, the Tax Abatement Committee will meet with the applicant. The recommendation of the Tax Abatement Committee will be forwarded to the chief administrative officer of other applicable taxing units. Based on the recommendation of the Committee the City Council may consider a resolution calling a public hearing to consider the establishment of a tax reinvestment zone. (Before the City may enter into a tax abatement agreement, the property involved must be designated as a reinvestment zone.) City Council then holds a public hearing to determine whether or not the property involved should be designated as a reinvestment zone; and whether the project is feasible and practical and would be a benefit for to the City after expiration of the agreement. (At the public hearing, the City staff and/or the applicant may make a presentation following which interested persons may speak for or against the designation.) After the public hearing the City council will consider adoption of the resolution designating the area described in the legal description of the proposed project as a tax abatement reinvestment zone. The resolution will further authorize the City Manager to negotiate an agreement with the applicant governing the provision of the tax abatement. ADOPTION OF AGREEMENT Any tax abatement agreement must include the following: 1. General description of the project. Tax Abatement Guidelines - Page 6 Ed. 8/17/95 AGc06rar 2. Amount of tax abatement. 3. Method for calculating the value of the abatement. 4. Term of the abatement. 5. Legal description of the property. 6. Type, number, location and timetable of planned improvements. 7. Any specific terms or conditions to be met by applicant. The agreement will be presented to the City Council for adoption whereupon it will be executed by the City Manager and by the specified official of any other participating taxing unit. Should the terms o~ the tax abatement a_ereement subsequently not be ~atisfied, the tax abatement shall be null and void and all abated taxes will immediate~ become due and £ayable to the City of Coppell and any_ other taxing ~isdiction pu, lic~t~ating in the tax abatement agreement. Provisions to this effect will be inco_rvorated into the a?eement. Tax Abatement Guidelines - Page 7 Ed. 8/17/95 AGGO6FAF 16:31 CIT~ ]OPPELL ENGINEERING 4 214 965 { ~' NO. 530 10/~7/~5 11:~8 CITY COPPELL ENGINEERING ~ 21~ 965 r '~ NO. 51? ~0~