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2015-09-03

Will businesses follow tax abatement?

By Judith Pannebaker BCC Editor

As Bandera County Judge Richard Evans always says, "When you're on commissioners court, you only have to count to three." During a special meeting on Tuesday, August 25, Precinct 1 Commissioner Bob Grimes took the judge's advice, with the result being a newly minted tax abatement program for the county.
Explaining his proposal, Grimes called the tax abatement "a tool available to county government under the Texas Tax Code to facilitate either the expansion of existing businesses in the community, or to attract new business and investment in the community." The tax code, he said, outlines specifics on establishing reinvestment zones and developing a tax abatement program.
Commissioners also approved hiring the Austin law firm of Allison, Bass and Associates, LLP to set up the program at a cost of $10,000, which will come out of the general fund.
"The proposed tax abatement is at the sole discretion of commissioners court," Grimes said. "If a proposed project is not considered 'Bandera friendly' or if the economic benefit or jobs created are insufficient to support the requested abatement, the request will be denied."
Residents may recall a multi-year tax abatement given to Bandera Downs Racetrack, which closed before the county could recoup any forfeited taxes.
New so-called "Bandera friendly" businesses would be those that are protective of the environment and natural resources and would not compete with existing businesses.
As examples of new business established in other Texas counties, Grimes cited wind farms, natural gas and power plants, ethane units, solar farms and pipe plants, as well as a hotel-condominium conversion, a Buc-ee's, wine tasting establishment and pasta plant. "An abatement program is far-reaching and not just limited to large industrial projects," he said.
Speaking to the court in favor of the tax abatement program, former banker Sully Woodland referenced graduates of county high schools who leave the county and never return. "We have an obligation to the grads to give them employment opportunities," he said. "Without a tax abatement program, we can't compete with surrounding counties in attracting new businesses. They have the advantage."
To a query by Evans about whether in his 35 years as a banker, Woodland had been asked by anyone about an abatement program, Woodland said, "No," but added, "but that was then and this is now. What are we doing on Highway 16 and would an abatement have made a difference to businesses wanting to locate there? It's just another way to attract businesses."
Also decrying the necessity for graduates to leave the area, Fidel Ramirez said that from kindergarten through twelfth grade, it costs $96,000 per student in the Bandera Independent School District. "And we don't get anything in return," Ramirez said. He told the court, "Tax abatement choice is yours. It's not automatic, but just another tool in the box."
However, Precinct 4 Commissioner Jordan "Jody" Rutherford vociferously opposed any tax abatement, saying that the county's roads and infrastructure cannot support increased commercial development. He suggested that a tax abatement program go through the school district because "the district is more lucrative."
Rutherford also feared that litigation would be forthcoming should the court "pick and choose" among businesses requesting tax abatement. "There won't be enough lawyers if we get sued," he said.
Agreeing that the Bandera Independent School District levies the highest taxes in the county, Grimes said he hoped the school district would look to the future of the county with regard to possible business investment.
"The county will not be giving anything away on the front end," he reiterated.
To a query from Rutherford about the type of businesses being solicited, Grimes said, "There a $1.1 million property on Highway 16 South (the former Bandera Chevrolet) that would be perfect as a data storage center. It would be foolish not to offer an abatement to a company like that."
He continued, "Bandera's biggest industry is tourism. Tourism sustains this community but it doesn't build the community. We have to protect our resources, but not close our eyes to other opportunities."
Ramirez added, "These businesses could employ 15 people. We're not talking about Toyota."
"If there was a hotel at Bandera Downs, it would make a big increase in the county's HOT (Hotel Occupancy Tax) revenues," said Precinct 2 Commissioner Bobby Harris, who described the abatement as "just another tool in our box to use." After noting that 50 percent of residents travel outside the county for employment, he added, "I don't know about the rest of you, but when I'm on the road, I want all my tools in my toolbox."
After an at times heated discussion, Grimes' proposed tax abatement program passed by a 3-2 margin with Evans and Rutherford casting "nay" votes.
After the vote, Evans said, "We just have a philosophical difference toward tax abatement." Explaining further, he said, "If someone came to me with a business plan that included a tax abatement at the top, I'd tell him to come back with a better business plan."