THE ON OF KERRVILLE, TEXAS January 30, 1997 TO' Cart Browning, Kerrville Independent School District Bob Denson, Kerr County John Mosty, Upper Guadalupe River Authority SUBJ: Notification of City of Kerrville's Tax Abatement Agreement with William and Lyndia Rector, owners of property at 707 Water Street (The Davis Building). Dear Sirs: The city of Kerrville has officially executed an agreement with the Rector's to allow for the abatement of taxes for improvements made to the above menUOne property. In accordance with state laws which govern tax abatement you now have 90 days from the execution of the agreement to either abate taxes at the same level as the city or to not abate taxes. Since the agreement was dated December ] 0, 1996 you will have until March 10 to take action on this matter. Again, there is no penalty for choosing not to abate The Rectors have made improvements to this property amounting to an increase over base value of approximately $108,000. Based vn this investment the percentage of this amount that would be eligible for abatement during a five year period would be 75°ru the first year, 65°, o the second, g5°.ro the third, 45% the fourth, and 35°,o the fifth and final year. I would encourage you to take action on this matter as soon as practical at vne of your upcoming meetings. I have included a copy of the sigmed agreement with this letter. Thank you in advance for your help and should you have any questions or desire my presence at one of your meetings to explain this issue please do not hesitate to contact me. Sincerely, ~~` K rk McCar ~ l Director of Human Resources and a ~~ ~ ~.~I~~ Economic Development cc: David Oehler, Kerr Appraisal District William R. and Lyndia Rector BOOJUNCiIONHIGHWAY . KERRVILLE,iEXAS781Y285069 . 210(257-8000 ~,~~ ~i zo P lc Rr ~1 ~ o w H i~ °' A KERB CENTRAL APPRAISAL DISTRICT b~~ iY7 ';' 1'.O. Roz IRRS IR7fi ,I~m~muw Hu.uwev KFaxvILLq T:xws 7R029•IRII$ V.,,r~a I10)N95~5211 Pwt (1101 R95~5227 Uecernber 30, 1996 David L. Jackson, Attorney at Law Wallace, Mosty, Machann, Jackson & Williams 820 Main Street, Suite 100 Kerrville, Texas 78028 RE: Property ID R23922 -Block 24, Lot 2 pt, brown Addition William R. And Lyndia Rector Dear Mr. Jackson: After review of a Protest of Value filed in behalf of the above referenced property, ik is my opinion that the value should be adjusted for 1996 to the notice value of $98,155. A copy of this fetter wilt be forwarded to the taxing jurisdictions, in order that they might adjust the taxes due on the property prior to December 31, 1996, should Mr. Rector desire to pay his taxes by that date. If you have any further questions, do not hesitate to contact this office. Sin~ely, i David O. Oehler, RPA Chief Appraiser DDOlrec cc: Kerr County Tax AssessorlCollector Kerrville tSD Tax Assessor/Collector TAX ABATEMENT AGREEMENT This Tax Abatement Agreement ("Agreement") is entered into by and between the City of Kerrville, Texas, a home rule city and Municipal Corporation of Kerr County, Texas, duly acting herein by and through its Mayor, hereinafter referred to as "Cit}~' and William R. Rector and wife, Lyndia A. Rector, hereinafter referred to collectively as "Owner". WITNESSETH: WHEREAS, on May 9, 1995, the City Council of the City of Kerrville, Texas, passed Ordinance No. 95-11 establishing Reinvestment Zone No. 2, City of Kerrville, Texas, for commerciaUindustrial tax abatement, hereinafter referred to as "Ordinance No. 95-11", as authorized by Chapter 312, Tax Code, V.A.T. S. as amended, hereinafter referred to as the "Code"; and WHEREAS, the City has adopted Resolution No. 90-106, as amended by Resolution No. 90-114 and reaffirmed by Resolution No. 95-110, which resolution adopted appropriate guidelines and criteria governing reinvestment zones and tax abatement agreements to be entered into by the City as contemplated by the Code; and WHEREAS, in order to maintain and/or enhance the commerciaUindustrial economic and employment base of the Kerrville area to the long-term interest and benefit of the City and County, in accordance with Ordinance No. 95-11 and the Code; and WHEREAS, the contemplated use of the Premises, as hereinafter defined, the contemplated improvements to the Premises in the amount as set forth in this Agreement and the other terms hereof are consistent with encouraging development of said Reinvestment Zone No. 2 in accordance with the purposes for its creation and are in compliance with Ordinance No. 95-11 and the guidelines and criteria adopted by the City and all applicable law; and WHEREAS, the Improvements as defined helow constitute a major investment within Reinvestment Zone No. 2 that will substantially increase the appraised value of property within the zone and will contribute to the retention or expansion of primary and secondary employment within the City and County; and WHEREAS, the City finds that there will be no substantial adverse affect on the provision of city services or on its tax base and the planned use of the Premises will not constitute a hazard to public safety, health, or welfare, NOW THEREFORE, the parties hereto do mutually agree as follows 1. The property to be the subject of this Agreement shall be that property described in Exhibit "A", attached hereto and made a part hereof and shall be hereinafter referred to as "Premises". The Owner shall promptly commence construction of the renovations to the Premises, described in Exhibit `B" (hereinafter referred to as "Improvements"), with total construction cost of approximately Fifty Thousand and no/100 Dollars ($50,000) and to be substantially complete on or about December 31, 1996; provided, that Owner shall have such additional time to complete the Improvements as may be required in the event of "force majeure" if Owner is diligently and faithfully pursuing completion of the Improvements. For this purpose, "force majeure" shall mean any contingency or cause beyond the reasonable control of Owner, including, without limitation, acts of God or the public enemy, war, riot, civil commotion, insurrection, governmental or de facto governmental action (unless caused by acts or omissions of Owner), fires, explosions or floods, and strikes. The date of completion ofthe Improvements shall be defined as the date a Certificate of Occupancy is issued by the City of Kerrville. The Owner agrees and covenants to diligently and faithfully, in a good and workmanlike manner, pursue the completion of the Improvements as a good and valuable consideration of this Agreement. Owner further covenants and agrees that all construction of the Improvements will be in accordance with all applicable state and local laws and regulations or valid waiver thereof. In further consideration, Owner shall thereafter, from the date a Certificate of Occupancy is issued until the expiration of this Agreement, continuously operate and maintain the Premises as a retail gift shop. The Owner agrees and covcnants that the Improvements shall provide employment according to the following accumulative schedule: By June 1, 1997 3 jobs The Owner shall provide to the City annual manpower reports, attached hereto as Exhibit "E" and made a part hereof, not later than June 30 of each year this agreement is in effect indicating the number of employees on the payroll on June 1 of that year. Regardless of anything contained herein to the contrary, the failure by Owner to provide the number ofjobs set out in the above schedule shall not be considered an event of default as defined in paragraph 6 below unless the number ofjobs actually provided is less than seventy- five percent (75%) of number set out in the schedule. If the actual number ofjobs provided at the end of any year is less than the scheduled number but is seventy-five percent (75%) or more, then the percentage of tax abatement for the following year as provided in Paragraph 11, below, shall be reduced for that year. The percentage of tax abatement shall be reduced by the same percentage that the actual number ofjobs are less than the scheduled number of jobs. Byway of illustration, the schedule requires 3 jobs by June 1, 1997, but if only 2 jobs are provided, then the tax abatement for 1997 shall be reduced from 75% to 50% (i.e. 2/3 = 66.7% of required jobs, thus 75% less 25%). In the event that (1) the Improvements for which an abatement has been granted are not 2 completed in accordance with this Agreement, or (2) Owner allows its ad valorem taxes owed the city to become delinquent and fails to timely and properly follow the legal procedures for protest and/or contest of any such ad valorem taxes, or (3) Owner breaches any of the terms or conditions of this Agreement other than Paragraphs 4 or 5, then this Agreement shall be in default. In the event that the Owner defaults in its performance of (1), (2), or (3) above, then the City shall give the Owner written notice of such default and if the Owner has not cured such default within thirty (30) days of said written notice, or, if such default cannot be cured by the payment of money and cannot with due diligence be cured within a 90-day period owing to causes beyond the control of the Owner, this Agreement may be terminated by the City. Notice shall be in writing and shall be delivered by personal delivery or certified mail to: William R. Rector 107 Larry Lee Drive Kerrville, TX 78028 7. As liquidated damages in the event of default as described in Paragraph 6, above, and in accordance with Section 312.205, Tax Code, V.A.T.S., as amended, all taxes which otherwise would have been paid to the City without the benefit of abatement (but without the addition of penalty; interest will be charged at the statutory rate for delinquent taxes as determined by Section 33.01 of the Tax Code) will become a debt to the City and shall be due, owing and paid to the City and within sixty (60) days of the expiration of the above- mentioned applicable cure period as the sole remedy of the City. The City shall have all remedies for the collection of the recaptured tax revenue as provided generally in the Tax Code for the collection of delinquent property taxes. The parties acknowledge that actual damages in the event of default and termination would be speculative and impossible to determine. 8. Owner represents and warrants that the Premises does not include any property that is owned by a member of City's council or boards, agencies, commissions, or other governmental bodies approving, or having responsibility For the approval of, this Agreement. 9. The terms and conditions of this Agreement are binding upon the successors and assigns of all parties hereto. This Agreement cannot be assigned by Owner unless written permission is first granted by City, which pernilssion shall not be unreasonably withheld. No assignment shall be approved if the assignor or assignee are indebted to the City for ad valorem taxes or other obligations. 10. It is understood and agreed between the parties that the Owner, in performing its obligations hereunder, is acting independently, and the City assumes no responsibilities or liabilities in connection therewith to third parties. Owner agrees to indemnify and hold City harmless from any and all kinds of claims, losses, damages, injuries, suits, or judgments arising from the intentional or negligent acts of Owner, its heirs, successors, representatives, assigns, 3 employees, agents, or contractors. 11. The Owner further agrees that the City, its agents and employees shall have the right to enter upon the Premises at any reasonable time to inspect the Improvements in order to determine whether the construction of the Improvements is in accordance with this Agreement and all apphcable Federal, State, and Local laws, ordinances, and regulations or valid waiver thereof. After completion of the Improvements, the City shall have the continuing right to enter upon and inspect the Premises at any reasonable time to determine whether the Premises are thereafter maintained and operated in accordance with this Agreement. If the City determines that a default of this Agreement not otherwise described in Paragraphs 5 and 6, above, has occurred, the City may, in addition to any other authorized enforcement action, provide to the Owner written notice of such default. For the purposes of this Agreement, the Owner shad have ten (10) days from the date of the notice to cure or remedy such violation. If the Owner fails or refuses to cure or remedy the violation within the ten (10) day period, the Owner is subject to the forfeiture, at the discretion of the City, of any right to any tax abatement for a portion of the period or the entire period covered by the Tax Abatement Agreement. 12. Subject to the terms and conditions of this Agreement, and subject to the rights and holders of any outstanding bonds of the City, a portion of ad valorem real property taxes from the property otherwise owed to the City shall be abated. City hereby acknowledges that it is not aware of any terms or conditions of any outstanding bonds which would invalidate this Agreement. Said abatement shall be an amount equal to the below-stated percentages assessed upon the increased value of the Property and Improvements over the value in the year ur which this Agreement is executed, in accordance with the terms of this Agreement and all applicable state and local regulations. The percentage of abatements aze as follows: Year 1997 75% abatement Year 1998 65% abatement Year 1999 55% abatement Year 2000 45% abatement Yeaz 2001 35% abatement These abatements shall be for 5 years beginning January 1, 1997. 13. The Owner agrees and covenants that the attached application for tax abatement (Exhibit "C") is a part of this agreement, and Owner further warrants that the information provided in that application is true and correct and that any materially false or misleading information that is provided to the taxing jurisdictions maybe grounds for termination of the agreement, with possible liability for recovery of abated taxes. 14. It is understood and agreed by the City and the Owner that if the Premises has been designated and taxed as agricultural land pursuant to Chapter 23, Subchapter C, Tax Code, 4 V.A.T. S., that this Agreement shall not be effective and no abatement granted until Owner has removed the agricultural use designation and all taxes due pursuant to Section 23.55, Tax Code, V.A.T.S., as amended, (roll back taxes) have been paid. 15. This Agreement was authorized by Resolution of the City Council at its Council meeting on the 10th day of December, 1996, authorizing the Mayor to execute the Agreement on behalf of the City. 16 This Agreement is performable in Kerr County, Texas. WITNESS OR HANDS THIS ~O_ DAY OF _~~~Q~/~.~._, 19~~. CITY OF KERRVILLE, ATTEST: Sheila Brand, City Clerk APPROVED AS TO FORM: By: ~~~ 3 Kevin B. Laughlin, Ci Attorney By: / William R. ctor By: Lyndia .Rector D'\WPDOCS\ECOOEVLP`CONTRACTTax Abat m[.wpd EXHH3IT "A" PROPERTY DESCRIPTION Part of Lot 2, Block 24, J.D. Brown's Addition, City of Kerrville, Kerr County, Texas, otherwise known as 707 Water Street, Kerrville, Texas EXHIBIT "B" DESCRIPTION OF IMPROVEMENTS Renovation of existing downtown building for use as retail space. CITY OF KERRVILLE TAX ABATEMENT APPLICATION Company Name . C r2 i c K 6T S Address: 70~ G.~ATE2 sT2£ET~ !te/rn/;//-c Telephone: X10-89~-~Gzz Name (s) of Principal Owner, Partners, or Directors of the Company or Corporation: Willigrn R. RGC.lo2 ADD Lc~NC~'A m. /~c c7R Contact Person: L ytipl.A l~'ec7a2 Address: io7 ~aaar ~.~, K=aA/;1/.~,Trns Telephone: Afo_a s~-3svx Type of Business operation Proposed: G;f % s/oP, A~A~TA,f.,iTs Cv/.sT,a:Ar) Current Location: ay/ EARL cA~2~ KfRn///lr Years In Business: /oysa~s Expected Date of Opening: o~Tod¢R 9,r59S Please provide a brief description of the project: (ie., new building, building expansion, type of construction, 1' square footage) f1 c1~0 /A~~dN d~ l7AViS (;/~/~~NG~ ~ow,v srAinS -FpQ Gi~r $~oP, ur ST,{i2$ ~'e2 3 2£5~~-~,•~T:k/ fl~a2Tm fv Ts Ay/'!'e z; •~aTs/Y Rooo S~.,a~ca -F~.T' Note: Certain Additional Drawings May Be Required Prior to Approval. Proposed COSt OZ Improvements . $ So, ppo (E.k ACT ~ o s ~ ~ ~ b.~ ~PO v,'c~, lNT z a.., .e v~~i2 RASp!/?ieN ,vp. 9S-llo, p-~ APnif 2S 1995-. Appl;cs),v% ,'s ;./ Dow.. Tow,J RE;v~tsT,,.r,~T zc,/[~t-z, IT "C" In addition to the 'application, please your application. information provided 'on Page 1 of this provide the following information with 1. A plat showing the precise location of the property, all roadways within 200 feet of the site, and all existing zoning and land uses on the site and within 200 feet of the site. P1-cast <•- Ai%~~~<~ 2. A comp7_ete legal description of the property. PFLaT of 1.oT 2 !3/oG/< Aye )32owN ~7o T+9o~ wn7'ic sTx t~T} 3. Any other information you feel will assist the City in determining the economic impact of the project on the City of Kerrvilnle. 6N~ o~ !t-r /3 u;)~.'~cS RANO/nT