PRESENTER: Presenter
Jeff Jewell, Economic and Community Development Director
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SUBJECT: Title
Adoption of the Second Amendment to the Chapter 380 Agreement between the City of New Braunfels and HD Supply Facilities Maintenance, Ltd.
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DEPARTMENT: Economic and Community Development
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COUNCIL DISTRICTS IMPACTED: All
BACKGROUND INFORMATION:
The City of New Braunfels requested a formal abatement of the existing sales tax sharing arrangements between the HD Supply Facilities Maintenance, Ltd., City and NBEDC.
The City and HD Supply have a Chapter 380 Agreement that shares sales tax produced by the company equally between the two parties. In the summer of 2021, HD Supply notified the City it was evaluating a change to its business model that would affect how sales taxes are collected. HD Supply indicated that the proposed sales tax sourcing changes by the comptroller were a factor in their motivation to change the business model. The changes evaluated by HD Supply would redirect all sales currently sourced to the New Braunfels location. HD Supply and City staff have negotiated an earlier abatement of the agreement to help mitigate the financial impact to the City of New Braunfels and the New Braunfels Economic Development Corporation.
HD Supply’s proposed changes redirect sales tax collections beginning February 1, 2022. Adoption of the agreement would allow the City and EDC to keep 100% of the sales tax collected for the months of December 2021 and January 2022.
ISSUE:
The amendment would allow the City to retain 100% of sales tax collected for two additional months.
FISCAL IMPACT:
In consideration of the potential statewide changes to sales tax sourcing procedures, the fiscal year 2022 budget removed the net benefit from this agreement. Therefore, there is no projected budgetary impact. Staff anticipates that the change will be reflected in reduced monthly sales tax collections, beginning with the February collections.
Recommendation
RECOMMENDATION:
Staff recommends adoption of the Amendment.