Authorizing a Waiver of Right to Terminate provision 16.6 of the 312 Tax Abatement Agreement between the City of Texas City and Gulf Coast Ammonia LLC., for failure to place the improvement in service by December 31, 2024.  

In September 2019, the City of Texas City formally approved a Chapter 312 (tax abatement) Agreement with Gulf Coast Ammonia LLC.  The tax abatement agreement is for a ten (10) year period.  The terms of the agreement required Gulf Coast Ammonia LLC., to begin construction of the facility within two (2) years of the effective date of the agreement; construct a facility with a minimum value of $450,000,000; comply with the executed Chapter 380 Economic Development and Performance Agreement, and complete improvements and have those improvements in service by December 31, 2024.

Each of the above requirements of the agreement have been fulfilled except for being in service by December 31, 2024.  Due to unforeseen issues with equipment, the start-up of the facility will not meet the deadline of being in service December 31, 2024.  As a result of this delay, Gulf Coast Ammonia LLC., is requesting a waiver of provision 16.6 of the 312 agreement.  It is anticipated the plant will start up within the next six (6) months.

It is important to note that Gulf Coast Ammonia LLC., is in compliance with all other terms of the agreement and has exceeded the $450,000,000 in infrastructure improvement on the ground and is current on all payments to the City for the 380 Economic Development Agreement and the Charitable Contribution requirement.  The proposed action has no negative financial impacts on the City of Texas City.  

Staff recommends approval of a Waiver of Right to Terminate section 16.6 of the 312 Tax Abatement provision for failure to place improvements in place and to have the plant operational by December 31, 2024.  Staff further recommends this provision be extended to December 31, 2025.