(7)(e)
CITY COMMISSION REGULAR MTG
- Meeting Date:
- 05/20/2020
- Title:
- Submitted By:
- Rhomari Jackson, City Secretary
- Department:
- City Secretary
Information
ACTION REQUEST (Brief Summary)
Consider and take action on Resolution No. 20-042, affirming the City's support of Marathon Petroleum Company LP (Marathon) Texas Enterprise Zone Project Application to the State of Texas.
BACKGROUND
Under State Law, the Office of the Governor – Economic Development and Tourism Division through the Texas Economic Development Bank administers the Texas Enterprise Zone (TEZ) Program. According to the Texas Enterprise Zone Act, Chapter 2303, Texas Government Code, the purpose of the program is to encourage job creation and retention and capital investment in areas of economic distress.The City has done a number of Enterprise Zone application approvals in the past. Mostly for Valero. The city is allowed to nominate up to 6 (called credits) application every two years. This is the second of two Marathon is applying for on this agenda. And Valero was granted on earlier this year.
The program allows a refund of $2,500 for each job created or retained of sales tax paid (State's portion only). State Law allows each participating community with a population less than 250,000 to nominate up to six (6) projects per biennium. In the current biennium, the City has nominated one business for project designation. Should this project and the next agenda item project both be approved, that would still allow the City to nominate 3 more applications by November 2021. Typically, the City only nominates one per biennium and there are no other projects pending other than Gulf Coast Ammonia that may qualify for any credits that the City is aware of at this time.
Marathon currently owns and operates the Galveston Bay Refinery in Texas City, Over the last five years, Marathon has invested over $500 million at its Galveston Bay Refinery, and over the next five years, Marathon anticipates investing in excess of $400 million at its Galveston Bay Refinery in projects related to fuel gas product recovery aimed at increasing refinery productivity. While the projects look similar, they are different.
As of January 24, 2020, Marathon employed 1,574 employees at its Galveston Bay Refinery in Texas City and expects to maintain and retain its existing level of employment for benefit under the Texas Enterprise Zone Program. There is no fiscal impact to the City of Texas City as a result of nominating Marathon as an Enterprise Project, and in no way is the City of Texas City committing any of its local taxes for refunds as part of the enterprise project designation.
The program allows a refund of $2,500 for each job created or retained of sales tax paid (State's portion only). State Law allows each participating community with a population less than 250,000 to nominate up to six (6) projects per biennium. In the current biennium, the City has nominated one business for project designation. Should this project and the next agenda item project both be approved, that would still allow the City to nominate 3 more applications by November 2021. Typically, the City only nominates one per biennium and there are no other projects pending other than Gulf Coast Ammonia that may qualify for any credits that the City is aware of at this time.
Marathon currently owns and operates the Galveston Bay Refinery in Texas City, Over the last five years, Marathon has invested over $500 million at its Galveston Bay Refinery, and over the next five years, Marathon anticipates investing in excess of $400 million at its Galveston Bay Refinery in projects related to fuel gas product recovery aimed at increasing refinery productivity. While the projects look similar, they are different.
As of January 24, 2020, Marathon employed 1,574 employees at its Galveston Bay Refinery in Texas City and expects to maintain and retain its existing level of employment for benefit under the Texas Enterprise Zone Program. There is no fiscal impact to the City of Texas City as a result of nominating Marathon as an Enterprise Project, and in no way is the City of Texas City committing any of its local taxes for refunds as part of the enterprise project designation.
ANALYSIS
FISCAL IMPACT:
This incentive is a rebate of the State’s portion of the sales tax and does not affect the City in anyway.
This incentive is a rebate of the State’s portion of the sales tax and does not affect the City in anyway.