PRESENTER: Presenter
Jeff Jewell, Economic and Community Development Director
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SUBJECT: Title
Approval of a resolution issuing a statement of eligibility for the City of New Braunfels to participate in a tax abatement, pursuant to Texas Tax Code Chapter 312.
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DEPARTMENT: Economic and Community Development
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COUNCIL DISTRICTS IMPACTED: 4
BACKGROUND INFORMATION:
City Council approved Ordinance No. 2024-90 at its November 25, 2024 meeting and voted to unanimously designate Reinvestment Zone 2024-1 for tax abatement purposes, pursuant to Chapter 312 of the Texas Tax Code.
Section 312.002 of the Texas Tax Code requires cities to adopt tax abatement guidelines and criteria before entering into tax abatement agreements or designating an area as a reinvestment zone. Additionally, Section 312.002 provides that cities’ tax abatement guidelines and criteria expire after two (2) years. City Council last renewed the tax abatement guidelines and criteria on August 14, 2023 with Resolution No. 2023-R48; City Council will consider renewing tax abatement guidelines and criteria in August 2025.
After designating a Reinvestment Zone (Reinvestment Zone 2024-1), the third required step of the tax abatement process is to approve a resolution identifying a statement of abatement eligibility in which City Council elects to be eligible to participate in a tax abatement. This step is pursuant to Chapter 312.002(a) of the Texas Tax Code.
Project Summary
Continental Automotive Systems is a world-leading manufacturer of automotive technologies. The company started in 1871 in Hanover, Germany manufacturing soft rubber products and tires for carriages and bicycles. In 2019, the company invested significantly for the construction and rollout of its 205,000 square foot New Braunfels facility and employs over 400 with plans to employ 576 by 2027. Currently, the company has more than $171 million in taxable value at its New Braunfels facility.
At present, the New Braunfels facility is competing for an expansion project within Continental’s Americas footprint. The new facility would require an additional 65,000 square feet of manufacturing space and will employ 100 additional jobs. Continental has indicated it plans an additional investment of more than $100 million if New Braunfels is selected for the expansion. Details of the tax abatement and fiscal impact are still under negotiation and will be considered later. This step is legally required to enter a tax abatement agreement at a future date.
ISSUE:
Before the City may enter into a Tax Abatement Agreement with Continental, the City is required to approve a resolution identifying a statement of abatement eligibility in which City Council elects to become eligible to participate in a tax abatement.
STRATEGIC PLAN REFERENCE:
☒Economic Mobility ☐Enhanced Connectivity ☐Community Identity
☐Organizational Excellence ☐Community Well-Being ☐N/A
FISCAL IMPACT:
There is no fiscal impact to approve this resolution. A proposed tax abatement agreement would include relevant fiscal impacts in the future at the time of its consideration.
Recommendation
RECOMMENDATION:
Staff recommends approval of the resolution identifying the City of New Braunfels as eligible to participate in a tax abatement.