PRESENTER: Presenter
Jeff Jewell, Economic and Community Development Director
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SUBJECT: Title
Public hearing and first reading of an ordinance regarding the designation of Reinvestment Zone No. 2024-1 for tax abatement purposes, pursuant to Chapter 312 of the Texas Tax Code.
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DEPARTMENT: Economic and Community Development
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COUNCIL DISTRICTS IMPACTED: 4
BACKGROUND INFORMATION:
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.
Chapter 312 of the Texas Tax Code allows tax abatement agreements within a designated reinvestment zone and requires that the City hold a public hearing before it can adopt an ordinance designating such an area. Section 312.201 allows the governing body of a municipality, by ordinance, designate as a reinvestment zone an area, or real or personal property in the taxing jurisdiction or extraterritorial jurisdiction (ETJ) of the municipality.
This agenda item identifies the public hearing and first reading of such an ordinance. This proposed ordinance would designate Reinvestment Zone No. 2024-1 as 47.497 acres located approximately at 440 Kohlenberg Road, New Braunfels, Texas for tax abatement purposes.
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 employee 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 establish the zone 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 designate a reinvestment zone where the proposed project is to take place. This designation requires a public hearing and a finding by City Council that designating such a zone is reasonably likely to contribute to the retention or expansion of primary employment or to attract major investment to the zone.
STRATEGIC PLAN REFERENCE:
☒Economic Mobility ☐Enhanced Connectivity ☐Community Identity
☐Organizational Excellence ☐Community Well-Being ☐N/A
FISCAL IMPACT:
There is no fiscal impact to create the reinvestment zone. A proposed tax abatement agreement would include relevant fiscal impacts at the time of its consideration.
Recommendation
RECOMMENDATION:
Staff recommends approval of the first reading of the ordinance thus designating Reinvestment Zone 2024-1 as 47.497 acres located approximately at 440 Kohlenberg Road, New Braunfels, Texas for tax abatement purposes.