PRESENTER: Presenter
Jeff Jewell, Economic and Community Development Director
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SUBJECT: Title
Public hearing, discussion, and possible action on a resolution reauthorizing the City of New Braunfels Tax Abatement Policy.
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DEPARTMENT: Economic and Community Development
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COUNCIL DISTRICTS IMPACTED: Citywide
BACKGROUND INFORMATION:
Chapter 312 of the Texas Tax Code authorizes the City to grant tax abatements to promote and retain high-quality development to the City and increase the quality of life for its citizens - only after the City elects to become eligible to participate in tax abatement and adopts a Tax Abatement Policy that establishes guidelines and criteria governing its tax abatement program.
Tax abatements provide a mechanism for the City to exempt all or a portion of the City’s portion of the property tax from taxable real property, personal property, or both. The ability to exempt a portion of property taxes for economic development purposes is an important tool for the recruitment, expansion and retention of businesses. Before a tax abatement can be granted, the city must publish notice of and hold a public hearing, provide notice to other taxing entities, establish a reinvestment zone by ordinance or order, and approve of the agreement at a public meeting. A tax abatement may not exceed 10 years.
The City last approved a Tax Abatement Policy in August 2023, and it was effective for two years from the date of adoption. Should any amendments to the policy be required during the two-year period, a super majority vote of the City Council in favor of the amendments would be required. The policy must be renewed every two years by the City Council. The proposed policy would be effective from August 1, 2025 to July 31, 2027 - unless amended or repealed by at least a three-fourths vote of the City Council. The only change proposed in the renewal is the removal of a non-refundable fee. Given the dearth of tax abatement applications since the policy was adopted, staff does not believe the fee is justified at this juncture. A modest fee may be proposed in the City’s annual review of service and facility fees during the annual budget process.
ISSUE:
Tax Abatement Policies are to be renewed every two years. The prior approval, in August 2023, is in place until July 31, 2025.
STRATEGIC PLAN REFERENCE:
☒Economic Mobility ☐Enhanced Connectivity ☐Community Identity
☐Organizational Excellence ☐Community Well-Being ☐N/A
FISCAL IMPACT:
The fiscal impact of the policy adoption is indeterminate and contingent upon the particulars of any future agreements adopted under the policy. The incentive approval process includes a fiscal impact analysis and staff only recommends incentive amounts that provide a net fiscal benefit - positive revenues to the community after determining the costs of service delivery - to the community over a 10 year period. There were no tax abatements approved in the program’s prior authorization period between 2023 to present.
Recommendation
RECOMMENDATION:
Staff recommends approval of the resolution and renewal of the City’s Tax Abatement Policy.