Policies of Galveston County on Tax Increment Reinvestment Zone Financing.

as approved by the Commissioners' Court of Galveston County.

On this the 28th day of July, 2003, the Commissioners' Court of Galveston County, Texas convened in a regularly scheduled meeting with the following members thereof present:

JAMES D. YARBROUGH, County Judge;

EDDIE BARR, Commissioner, Precinct No. 1;

EDDIE JANEK, Commissioner, Precinct No. 2;

STEPHEN D. HOLMES, Commissioner, Precinct No. 3;

KEN CLARK, Commissioner, Precinct No. 4; and

MARY ANN DAIGLE, County Clerk

when the following proceedings, among others, were had, to-wit:

Whereas, the expanded options available to municipalities and developers and the popularity of public/private partnerships in the various types of development require a procedural, operational and philosophical statement to assist municipalities and developers and the County and,

Whereas, in these policies on Tax Increment Financing Galveston County states the desire to assist the cities of Galveston County in meeting their financial goals as regards future development and,

Whereas, Galveston County knows that public/private partnerships increase developer abilities to focus on quality development and encourages such improvements in the communities of the County.

Now Therefore Be It Resolved, that The County of Galveston, Texas has established these policies and guidelines for those municipalities seeking incentives from the County for development projects utilizing tax increment financing (TIF/TIRZ).

The policy addresses the issues of eligible projects, reimbursable expenses and debt financing.

The County recognizes a distinction between a "Developer TIRZ" created by petition under Chapter 311 Section 311.005(a)(5) of the Tax Code and a "Community Driven TIRZ" created by determination of a municipality that the zone meets certain standards as described by the law in Sec. 311.005. "Criteria for Reinvestment Zone." These policies apply specifically to a Developer TIRZ.

Definitions of words are as presented in Subtitle B. Special Property Tax Provisions Chapter 311, Section 002 Tax Increment Financing Act of the Texas Tax Code. Further definitions are created by this policy.

Waiver of 60 day notice of public hearing will be considered only with the Preliminary Project Plan and Reinvestment Zone Financing Plan ("the Preliminary Plan") including estimated project costs, a specific request for waiver from the municipality creating the TIRZ, and the proposed date of the public hearing.

The request from the municipality for waiver of the 60 day notice of public hearing or, should that not occur, the request for County participation in the zone must include the most recent City Financial Advisor Report.

The most recent City Financial Advisor Report should include specific reference to the financing methodology(ies) expected to be utilized. (for example; direct reimbursement or bond reimbursement) and the expected interest rates to be paid.

Consideration of the waiver of public hearing will be made within 14 days of application.

Participation by the County in the TIRZ will be made only upon request from the municipality creating the TIRZ.

Participation by the County in the TIRZ will be made only after analysis by County staff, or a member of the Commissioners' Court, of the value described in the project plan that would be attributable to the County according to these policies.

The County may seek more than one position on a the TIRZ board.

The County encourages all the municipalities to utilize Third Party Administration for created zones. Such administration removes the burden of zone activity from the city's financial offices and provides expertise in zone management that each city in the county need not develop.

The County will consider the level of tax participation only upon receipt of the city-approved final Project Plan and Reinvestment Zone Financing Plan ("the Plan") and a request for tax participation from the municipality creating the TIRZ.

The Plan should include detailed itemized breakdown of all expense items. Major road projects must be sufficiently described such that Galveston County can perform it's own cost analysis.

The Plan should include descriptions of reports specific to the project and report frequency.

The County require the inclusion a 'cost of services' factor payment to the County for the project based on County analysis of the project and the historical impacts of previous or ongoing projects.

The County will receive a request for participation in a zone from the municipality and act on that request in a purposeful manner.

The County will consider the Plan in determining the level of tax participation to pay.

The County will determine the level of Tax Increment Participation.

The County will not pay for landscaping not required by law, water or sewer work, interior streets, curb or gutter that do not connect with a county road or state highway or spur.

The County will not pay for any items excluded by the adopted, published policies of the municipality.

Although the County encourages attractive and pleasing developments the County will not pay for any project amenities, facilities or services deemed solely included as a marketing tool to the benefit of the project.

The County will not consider participation beyond 20 years. The County may seek an evaluation stopping point or re-evaluation date to assess the project progress and establish a new level of participation. At such a date the County may continue to participate, modify the level of participation or cease participation altogether.

The Interlocal agreement between the municipality creating the TIRZ and the County will include certain limitations and requirements on the TIRZ. Those include:

Limitation as to size. The TIRZ may not be increased in size without approval of the County.

Limitation as to term. The TIRZ may not be increased in term without the approval of the County

Limitation as to spending. The TIRZ may not spend money outside of the approved plan without the approval of the County.

Requirement as to termination. The TIRZ must be extinguished earlier if the plan is completed early and the funds are available to the financial obligations of the zone.

Limitation as to projects. No projects outside of the prescribed boundaries of the zone will be considered without the approval of the County.

Limitations as to payments of the Tax Increment Participation

 

The County is not obligated to pay Tax Increment Participation that has not been collected.

The County is not obligated to pay any portion of any funds that come to the County as a result of penalties and interest due on taxes and paid by taxpayers in the zone.

The County is not obligated to pay any expenses of the zone at the end of the term of the Interlocal Agreement not specifically described in the Interlocal Agreement.

Zone progress reporting above and beyond state reporting will be required to include at least: An Executive Summary or Highlights page; Percent complete on the development, individual projects of significance (particularly transportation features); tax income and tax income history for comparison purposes; reimbursements or bond payments made.

Amendments to zones in existence as of the date of these guidelines will be considered under these guidelines and in the context of the original Interlocal Agreement.

The final interlocal agreement between the municipality and the County will be considered by the Galveston County Commissioners' Court upon request by the municipality creating the TIRZ.

The Galveston County Commissioners' Court cannot dictate the office procedures and timing of activities in the offices of the Tax Assessor/Collector. These issues should be of high importance to all of the interlocal agreement participants. The zone developer and the respective municipal financial office should make every effort to familiarize themselves with the current procedures and timing of activities in that office.

UPON MOTION DULY MADE AND SECONDED, the above Resolution was unanimously passed on this the day of , 2003.

COUNTY OF GALVESTON, TEXAS

BY:

EDDIE BARR, Comm., Pct.#1                        JAMES D. YARBROUGH, County Judge

EDDIE JANEK, Comm., Pct.#2                       STEPHEN D. HOLMES, Comm., Pct#3

ATTEST:

MARY ANN DAIGLE,                                      KEN CLARK, Comm., Pct.#4

County Clerk

Tax Code definitions

§ 311.002:

(1) "Project costs" means the expenditures made or estimated to be made and monetary obligations incurred or estimated to be incurred by the municipality establishing a reinvestment zone that are listed in the project plan as costs of public works or public improvements in the zone, plus other costs incidental to those expenditures and obligations. "Project costs" include:

(A) capital costs, including the actual costs of the acquisition and construction of public works, public improvements, new buildings, structures, and fixtures; the actual costs of the acquisition, demolition, alteration, remodeling, repair, or reconstruction of existing buildings, structures, and fixtures; and the actual costs of the acquisition of land and equipment and the clearing and grading of land;

(B) financing costs, including all interest paid to holders of evidences of indebtedness or other obligations issued to pay for project costs and any premium paid over the principal amount of the obligations because of the redemption of the obligations before maturity;

(C) real property assembly costs;

(D) professional service costs, including those incurred for architectural, planning, engineering, and legal advice and services;

(E) imputed administrative costs, including reasonable charges for the time spent by employees of the municipality in connection with the implementation of a project plan;

(F) relocation costs;

(G) organizational costs, including the costs of conducting environmental impact studies or other studies, the cost of publicizing the creation of the zone, and the cost of implementing the project plan for the zone;

(H) interest before and during construction and for one year after completion of construction, whether or not capitalized;

(I) the cost of operating the reinvestment zone and project facilities;

(J) the amount of any contributions made by the municipality from general revenue for the implementation of the project plan; and

(K) payments made at the discretion of the governing body of the municipality that the municipality finds necessary or convenient to the creation of the zone or to the implementation of the project plans for the zone.

(2) "Project plan" means the project plan for the development or redevelopment of a reinvestment zone approved under this chapter, including all amendments of the plan approved as provided by this chapter.

(3) "Reinvestment zone financing plan" means the financing plan for a reinvestment zone described by this chapter.

(4) "Taxing unit" has the meaning assigned by Section 1.04.

Policy definitions:

(5) "Landscaping" is defined as dirt work in prelude to the care and maintenance of lawns, yards, or ornamental trees or other plants; planning of or the establishment of lawns, yards, or ornamental trees or other plants including hard structures such as waterfalls, decorative walls or brickwork, paving, or contouring, including the use of berms, swales, and terraces and other than utilitarian improvements not required by law.

"Developer TIRZ" is a zone created by petition under Chapter 311 Section 311.005(a)(5) of the Tax Code.

"Community Driven TIRZ" is a zone created by determination of a municipality that the zone meets certain standards as described by the law in Sec. 311.005. Criteria for Reinvestment Zone.

"Tax Increment Participation" means the amount of the Galveston County tax levied and collected on the Captured Appraised Value which Galveston County agrees to contribute to the TIRZ for a given year.

"Tax Increment Fund" means the tax increment fund created by Galveston in the Galveston Treasury.

"Board of Directors" means the board of directors of Reinvestment Zone

"City Financial Advisor" means an employee of the city or contract individual whose responsibility to the municipality includes the analysis of proposed TIRZ projects or a third party TIRZ administrator, hired by the city, whose specialty is the analysis or TIRZ and/or other public/private financial arrangements.

311.005. Criteria for Reinvestment Zone

(a) To be designated as a reinvestment zone, an area must:

(1) substantially arrest or impair the sound growth of the municipality creating the zone, retard the provision of housing accommodations, or constitute an economic or social liability and be a menace to the public health, safety, morals, or welfare in its present condition and use because of the presence of:

(A) a substantial number of substandard, slum, deteriorated, or deteriorating structures;

(B) the predominance of defective or inadequate sidewalk or street layout;

(C) faulty lot layout in relation to size, adequacy, accessibility, or usefulness;

(D) unsanitary or unsafe conditions;

(E) the deterioration of site or other improvements;

(F) tax or special assessment delinquency exceeding the fair value of the land;

(G) defective or unusual conditions of title; or

(H) conditions that endanger life or property by fire or other cause;

(2) be predominantly open and, because of obsolete platting, deterioration of structures or site improvements, or other factors, substantially impair or arrest the sound growth of the

municipality; or

(3) be in a federally assisted new community located in the municipality or in an area immediately adjacent to a federally assisted new community;

(4) Deleted by Acts 1989, 71st Leg., ch. 1106,  27; or

(5) be an area described in a petition requesting that the area be designated as a reinvestment zone, if the petition is submitted to the governing body of the municipality by the owners of property constituting at least 50 percent of the appraised value of the property in the area according to the most recent certified appraisal roll for the county in which the area is located.

(b) In this section, "federally assisted new community" means a federally assisted area that has received or will receive assistance in the form of loan guarantees under Title X of the National Housing Act,1 if a portion of the federally assisted area has received grants under Section 107(a)(1) of the Housing and Community Development Act of 1974.2