Travis County Commissioners Court
August 30, 2005
Item 39
39. Consider and take appropriate action on economic incentives for the following: a. Resolution indicating election of Travis County to participate in tax abatement; b. Travis County economic development program policy, including tax abatement and rebate; c. Draft agreement with home depot for economic incentives under the economic development program; and d. Proposal for basic terms of agreement with samsung for economic incentives under the economic development program. Ms. Gearhart did give us early this morning a sort of a latest of the latest revised policy, plus the draft home depot contract as well as a revised tax abatement policy and an agreement.
>> judge, you know, tied into that, you know, we have all got a great desire to get this put to bed in terms of getting these documents done, so we took the liberty of spending a couple of hours of quality time trying to proof and get a readability especially y'all in the economic development program policy. Really just a more rearrangement of things, so it has a more natural flow as opposed to your reading it, you had to go up to something, back to something, it was -- made it very difficult to -- to just read and so we hope that we met the readability factor as well. That we worked through all of this. So we did find a little typo, Margaret, we have already caught it on the actual order on the first page of our backup. It's obviously in precinct 4. We know that.
>> so -- in terms of the tax abatement, we need to approve the resolution.
>> yes. The resolution is first, right.
>> [indiscernible] corrected. That will be fine.
>> okay. Any issues with the resolution? It is fairly straightforward. Most of them have -- most of them this short?
>> no, this is the shortest.
>> move approval.
>> and I have will be given a corrected version to sign later today?
>> yes.
>> all in favor? That passes by unanimous vote. B the Travis County economic development program policy, including tax abatement and rebate, we talked a little bit about the 10 years versus 20 years last time. And under the economic program policy, we think that we have the authority to do 20 years. This will be --
>> 20 years in they are using the rebate. If a company chooses the tax abatement method, 10 years will be the maximum. If they choose the rebate method, the maximum would be 20 years.
>> the difference being that --
>> the tax abatement statute, there is a statute that governor verbs tax a-- vof agains tax abatement under chapter 312 of the Texas tax code. It limits terms under those agreements to 10 years. There is no such limitation on other economic development agreements that the court would come up with under their own policy. The rebate agreement doesn't have that limitation. The court previously, in our other economic development policy, had a 20 year limitation. That's a maximum. The court can choose to -- to limit an agreement shorter than that if they want to.
>> but in terms of how the incentive is processed -- what is the difference between the abatement and the rebate?
>> under an abatement, depending on the terms of the agreement, the company -- the value would be given to the property after the improvements and the difference between that value and the value of the property when the agreement began, those taxes wouldn't be paid. If there's a 50% abatement, the company would pay 50% of the improvements. If there is a rebate agreement, the company will pay 100% and then the county will rebate back to the company the amount that's allowed under the agreement.
>> so our discussion was that the old abatements that we are used to makes a lot more sense to us, but legally the rebate, if we want to go to 20 years may be the option -- the only option that we have left.
>> right.
>> and on home depot, they were wanting a 10-year --
>> yes.
>> well in advance of the abatement route because that's what they wanted in terms of the term. And then any other company that wanted something longer than that, we have another option for them, that's the rebate.
>> okay. I did see the language regarding the reinvestment zone.
>> yes.
>> under the -- the chapter 312 of the tax code, if you are doing a straight tax abatement agreement under that chapter, there would have to be a reinvestment zone designated by the government tall entity. The county is limit understand those cases to designating a reinvestment zone only if the property is located outside the limits of the municipality. So the property would have to be just within the county. What we are doing our tax abatement under is chapter 381 of the local government code. There's a subsection in there that authorizes counties to do tax abatement under economic development and it guides the county to use certain portions of that chapter 312, which governs tax abatements and then it limits those to the extent that it's practicable. So in instances where, for instance, the property is located within a municipality, whether that's the city of Austin or manor or any other municipality, the county under 312 wouldn't be able to designate a reinvestment zone. But 381 allows or authorizes the county to do things to the extent that they are practicable. So if there's property located within the municipality, then the court would need to look and determine that designation of that reinvestment zone was impracticable, but the subcommittee had agreed to recommend that we still go ahead and apply the criteria that would have governed a reinvestment zone to show the county's intent to go with the intent of that law. And -- and go ahead and apply that in looking at the properties that are proposed.
>> so in the draft agreement with home depot on page 3, we indicate a finding that designation of a reinvestment zone, under this agreement is impracticable.
>> yes.
>> how would we document that? Let's say that finding was questioned by somebody who wanted to know --
>> I would say that all that you would have to say is under the statute, only the county can designate if it's in county property, not in a municipality. So it could be impractice yam for us to do that because we are not authorized --
>> the city can do is that that.
>> the city of Austin can do that, if the city chose to do that for us. And school districts also have a separate authority to do these, but we're not authorized under the statute, it doesn't say that the county can use a school district reinvestment zone. If the city were to do one, the county could use that, but at this time the city of Austin doesn't have a tax abatement program and at this point I don't think anticipates having one. So that wouldn't be something that they would be doing.
>> okay. So we find that it's impracticable for us to designate one, but we also find that the property substantially complies with the statutory requirements.
>> right.
>> so how do we document that finding? Second one.
>> there would be any way that the court wanted to. One, in this case, in the home depot case, it's been designated a reinvestment zone by a school district already. So that would be initial evidence that that was there. I would recommend that each time we actually look at the property, go down the list of criteria that's in chapter 312 and make sure that it matches up and that could be separate documentation. So we have to do that on -- with samsung.
>> yes.
>> samsung chooses to go rebate. If there's a rebate agreement, the reinvestment zone doesn't apply.
>> we are stuck with the 10 versus 20 years.
>> if they go rebate, you have the option of going to 20 years. But you don't have to worry about the reinvestment zone. That's not required for a rebate agreement.
>> for a rebate.
>> yeah.
>> so -- so with samsung is the rebate?
>> if that's what they choose. If they want more than 10 years.
>> there wouldn't be a concern with the reinvestment zone in that case. But there are other legal issues that there are some concerns.
>> okay. 312 is the abatement, 381 is the rebate.
>> 312 of the tax code, 381 of the local government code. Those are cited in your guidelines under .001 a and b.
>> okay. Those were the biggest issues that -- that surfaced over the last few weeks.
>> I just wanted to make sure, because this is a change, marietta and I wanted to be very up front in terms of one of the changes. When you are on the economic development agreement, starting with page 3, to kind of show you how some of this stuff got reformatted, we had real issues of well this is required, but waivable. Well, there were ports of it that was -- parts that was required and it was actually the amount that was waivable. So what we have starting on page 36 the economic development agreement is where we start with what are required elements and all of these requirements are mandatory and there are no changes with one exception. We moved and I will have to tell you that I felt very strongly about this, about the thing that we had in there about the environment, that the projects be completed in a manner that preserves and respects the natural environment, that they shall not violate any of these federal, state or local legislation or regulations in regards to the environment on this project. And that the property may not be located over an environmentally sensitive aquifer or contributing zone, this was a in -- in a different section but we didn't say it was not waivable. I felt very strongly about that, in terms of -- for some folks it's very important that we ought not to be offering economic incentives for people to be locating over the aquifer and environmentally sensitive areas, it was just one more way we could steer development in a positive way. To our desired development zone and to the areas where it's not only appropriated, appropriate but appreciated. But it doesn't mean that somebody can't locate over the aquifer. You just can't come in and ask for tax incentives and a break in terms of going someplace that we are really in so many ways trying to steer people over to -- over to a desired development zone. I thought that that -- I wanted to make sure that people understood this is not a new provision, it just got moved to a place that says it is not subject to waiver. Then after that, we finally, marietta figured out the magic words, requirements with discretionary elements. It means we still need to know what your capital investment is, but there is play about what that number can be. All of those things that we had talked about, there aren't any changes here, it's just how it's being displayed about requirements with discretionary elements. We talk about the dollar amount and the different minimums, creation of jobs. Things that have play. Then put altogether things that are called additional criteria, granting approval and determining maximum incentive amounts, it was the idea that since we have got up to amounts in the different categories of investment, to kind of give people a sense, a cheat sheet, if you have it, of the kinds of things that could get you the maximum amounts of rebates so that when somebody says well how did you arrive at that decision, Commissioner, I could go well let me get out my list. You can kind of mark off of why you had a thought process. Again this is not new. It's just a display of how we put it altogether. But the environmental one moved segments and I felt really strongly about that, I think others in this community will feel very strongly about it as well.
>> do you know what language the city of Austin has in its policy?
>> no, not at this point.
>> [indiscernible]
>> I bet. We stole that language to begin with when we were dealing with the domain and it wasn't located on an --
>> I?m pretty sure that we have language. I?m not sure whether it's under something that can be waived or can't be waived. How they can align those elements.
>> in terms of being consistent with deals that we had already given a thumbs up to in the unofficial or official capacity, it would not negatively impact anything that we were talking about. Freescale already talked about that they were going into the east Austin corridor and any expansion of corporation would be occurring up in Williamson county. Not at the oak hill site. Home depot was certainly no problem, this is not any indication at all with the samsung agreement, this is one of those prospective looking out there, making sure it's non-waivable. I wanted to make sure that everybody caught that, that was a change, not in language, but in location. It's not waiverable.
>> put a note by that one to discuss in executive session.
>> all right.
>> if you can contact the city, if we can get their language between now and executive session.
>> all right.
>> would there be any exceptions. I know you said there was no exceptions. Let's use a and d as an example. A and d has not asked for any concessions. I mean, abatement or rebate. Complied with -- with the set rules and regulations that were done -- kirk, was it done in your mayor's deal. Was that pre-you or was that yours?
>> no, it was -- staff did that -- [indiscernible]
>> okay. I mean, I would think that that would be one of those -- you know, because it is easy to say but there are just no exceptions to this. Anything over recharge, I mean, recharge contributing whatever, whichever criteria we are going to use, but if somebody has something preset where -- where we could come in, we have already got that. But oh, by the way, we would like to have these other things perhaps this is going to supersede, you are not going to be able to ask for anything, would that be, would that be the case.
>> this is the court's decision to make. This could be put in the b section that has discretionary elements and made something that the court could waive on the decision by the court to do so. It could be left in subsection a where it's not waivable. That's the court's decision as to which sex to put that in.
>> Gerald, I think we were trying to be consistent with what actually was the situation going on, with the free sale proposal, there was a great deal of discussion over at the city council about that none of their abatements and incentives were really to put more stuff on the ground at the oak hill site. So it's all tied into the east site, appropriate and we were there, too. That other things would happen up at the Williamson county site, not at the oak hill site. So it is being consistent there. I know it is no surprise that a.m.d. Is not asking for anything because they don't even want to trigger that, I think, divisive discussion that you would be pitting the environment against a corporate citizen. It's one that it doesn't mean they can't go in there, they just can't get tax breaks in order to go in there. I think that's prudent public policy.
>> I think that it's -- it's probably -- it sounds good, it prudent to pass something that is not -- you know, that apparently is not even approachable with regards to -- to might we look at this if other considerations you know are given, why I have a hard time with is just drawing a circle around southwest and putting a line through it and there is nothing that you can do out here -- if -- even if you are asking for something -- I mean let's say you probably could ask for some fairly innocuous considerations, I don't know what they would be. It's hard to sit up here and hypothesize about what we might be able to come up with, but -- but it always makes me a little uncomfortable to just say no this is the line, you can't cross this, nothing else that you would do would just for being out here. I think that's -- if we can put it somewhere where we could at least look -- plenty of places in these agreements where we have the discretion, be it job creation, be it this, that, I don't think any of us would that do that flippantly. It would have to be something that really was a good sell. And I?m -- I would rather not even tie my hands to the point where hey, guys, we said you can't. It doesn't make any difference [laughter] what you are willing to do, I mean,.
>> I would disagree with you there, Gerald. Quite frankly, a and b seems to be proceeding full steam ahead on a location of their choosing. And they -- it does give them a choice, they could have chosen something in the desired development zone and I think they seriously did look at things in the desired development zone and they could have gotten rebates. Under the policies of the city of Austin and Travis County. But for -- for their reasons they have chosen to proceed on with a site that is grandfathered in, you can't get those kinds of deals on that land anymore. They were able to find a grandfathered site as did we when we built our precinct 3 office building by the way.
>> I?m sorry that I used them as an example. I shouldn't have brought up a.m.d. I?m saying hypothetically, something happens, [multiple voices] they have the ability to do that --
>> they are a fantastic example because they are looking at proceeding ahead with that site in southwest Travis County, no matter what, and with no tax abatement agreements.
>> well, they are not a good example given that they already had a deal cut. I?m just saying that -- if we had somebody -- for example, if they didn't have that agreement and they were coming in, there were some businesses that come in that want to comply with s.o.s., quite frankly have a hard time doing it in southwest Travis County, I would like to have the ability to at least look, you know, I doubt any elected body is going to get a majority of its folks to vote for something, but as -- as the representative of a particular area, I see how difficult it is for me to do a number of things in southwest Travis County. So I just -- I mean, I hate to put something that is so rigid in, don't even ask us because this is what the rule is, it happened on -- on the 30th of August, 2005. That is what we voted for. I mean, all that I?m saying is let's make sure that we would -- I would like a little bit of wiggle room. However we have to do that with wiggle, knowing that it's going to be difficult if I ever wanted to do something with it, where somebody come to me, I would tell them, look them in the eye, say you know what? You are asking -- you are trying to get over, you know, a pretty high bar here, but --
>> we are never going to be able to get people into historically, economically disadvantaged areas. We are never going to get people into the desired development zone, if they know there's wiggle room, there's an out, they can be on the west side where they -- you know, where the land might be prettier because we are willing to offer tax breaks. You have got to be able to say here's a great place to go and we'll give you the economic incentives to get there. Or pick the other one and you are on your own. But there are also in some of these areas costs that are borne by the government by locating in some of these more fragile governmental areas, things this get picked up on water quality, transportation infrastructure which is insufficient, there are other costs that are off book. I?m telling you that there is already a fire storm in this community, whether it's just justified or not, about a.m.d. Locating there and they are not even asking for a tax break. Can you imagine what it would be if the added on layer to all of this is they wanted economic incentives to locate on the aquifer and I just don't see that that is someplace where we ought to waiver.
>> I don't think it's ever going to be easy. I?m saying if we make it impossible then I think that we take a part of this community that not everybody feels that you shouldn't have some industry in southwest Travis County. And I?m saying that if there are things that you can meet, and there are deals that you can cut, at some point in time, I would like to have the flexibility before somebody doesn't say your rule is that you can't even ask for these things. I mean, all that I?m looking for is how do I have a little bit of flexibility to look at something if some great deal came along.
>> on freescale in particular, judge this will be the last thing that I say, on freescale with that sensitivity in mind, the breaks and abatements here and at the city of Austin were not tied to the oak hill site. And they are still doing some stuff at the oak hill site, but the abatements and rebates are not tied to the oak hill site. They are not. They are attached to east Austin, which is way cool and if they are going to be making a -- adding on related to the corporation, that's going to be happening up at the city of Austin Williamson county site. But it is not happening at oak hill. They are still having a wonderful presence at oak hill. They are still a wonderful corporate citizen down in oak hill, as will a.m.d. If they choose to go there. It doesn't stop anything, but it just says that you are not going to be able to get a break on your taxes for choosing the aquifer. I just don't think that's a place that we should go. It should be a message sent up front as opposed to oh, you have some wiggle room, go get three votes. Relationship this community apart on the decision. Pitting the environment against economics, we don't have to go there.
>> Commissioner Davis?
>> thank you, judge. I applaud that what we have done this far. I applaud the efforts, we will discuss a few things in executive session as far as economic packages and scheme of doing things as we address these particular corporations that would like to have abatement or rebate. Incentives. But we -- I guess going back and looking at how we have tried to track and trace and bring about a stable flexible economy to this Austin Travis County regional approach, of course the -- the economic development is very key. But very -- but it had many, many moving parts to it. It's just not economic development there. There's a lot of things under that. The parts that I think need to be fulfilled as far as what it all about. I think what we are doing is one -- one part and one piece of this economic development engine. But it's always -- enlightening, in tune with looking at persons in this community that need to be a part of this process as far as hiring practices are concerned. The workforce or work source I think is very, very significant. The job training, the job creation, the job retention, I think a very key component for us to -- to stay as competitive as we possibly can in a market that -- that is putting a lot of pressures on -- on areas of the country, it's no doubt about it that there are other -- other places in this country that would love to have a samsung and others that have decided to locate here. So -- so with -- by saying that, I think that our relationship that we have -- the partnership effort that we have gotten and embarked upon for an example was opportunity Austin, as we look at this particular scenario, in looking at the economic disadvantaged areas, looking at the desired development zone, looking at the things that need to happen as far as land use, infrastructure, infrastructural needs, of course, the -- the labor force that will be attached to all of this I think is all in play with what we are doing here. We haven't flushed it out. We don't have a 100% guaranteed product here, but I think we need to work to the best end because really as I go through this community there are still folks that aren't where they should be economically and I think these are opportunities that we need to embark upon. So what I?m trying to say, judge, is basically that all of these things that we are talking about, as far as the economic development engine, are moving parts and I think they all need to be, in my opinion, need to be grooved up, oiled up so they can move smoothly to come to that end. I think these are some of the right things that we are doing to participate in this particular process because these folks could go someplace else, of course in my opinion that would be sending them back, as far as what we are trying to do is overcome these economic imperatives that we have experienced in a growing area, in a growing economy. I would like to put that on the table. Thank you, judge.
>> let's see if we can get the city of Austin policy, especially that provision that may answer 75% of ours. Now, would we be able to see the governor's language on the -- on the economically --
>> the definition that's in the policy is from the statute.
>> exactly.
>> for economically disadvantaged employees?
>> yes.
>> but have we seen the language that the governor used --
>> I haven't seen an agreement.
>> okay.
>> has the greater Austin chamber of commerce seen any contract for the governor -- where the governor uses that economic disadvantaged employee language? So our policy simply tracks the language in the statute?
>> we added that -- there was a reference to -- to jails, we added a specific reference to the Travis County jails and we added a specific reference to individuals receiving medical assistance through the county as far as included in that definition.
>> okay. Basically, the thrust is here you are not required to do these things, but you may pick up additional points by --
>> by doing that.
>> helping us assist economically disadvantaged employees.
>> we gave another option, they could meet the economically disadvantaged individual definition or they could through their agreement come up with a level of -- of salary and training that would indicate to us that they were hiring individuals with lower levels of training, but things that did have an upward mobility component to them, and that there would be training. There's two options to get into hiring individuals that need jobs and providing training and -- and a chance to move up.
>> okay. Any other questions or comments from the court? We do have several residents, several residents and leaders in our audience. Any comments from any of you?
>> not unless you want us to.
>> mike could one of you, kirk, you or mike -- kirt, you or mike --
>> kirt was being quite eloquent just being quiet back there, Commissioner.
>> it doesn't make any difference who answers it, kirt, you or mike. I mean, I?m going to get back to what Karen and I were talking about. I do think it sounds good for us to agree that we would not offer any kind of a rebate to anybody over sensitive whatever areas we deem that as sensitive and most people know that's usually southwest Travis County. Does the chamber see ever having a problem with that put in -- in our language?
>> the chamber has been supportive of the city of Austin's policy, which I?m not going to recall the exact language of it. I hear that you are going to try to get a copy of that. But the chamber's position has been supportive of that. And as you know in the past, when -- when the city of Austin indicated that what it was going to try to do was have a different approach to environmental and economic development issues in this community, actually created what is now known as the drinking water protection zone and the desired development zone, the chamber was supportive of it at that time as well. One of the things that has occurred since that designation first arose, and again I?m talking about the designation of a drinking water protection zone and the desired development zone, and just by way of history, in a general sense when that was originally laid out to the chamber leaders at that time, it was laid out for years we have had fights that were winner take all, all or nothing, if you will, with regard to environmental protection. And to some degree people felt like the tail was wagging the dog. In other words the environmental regulations and the most environmentally sensitive parts of our community were -- were maybe being overlaid on other parts of the community where you wanted development, where we said we wanted to steer development. That was originally laid out and was supported -- we weren't at a point in our economy, I didn't feel like, where you had companies that were coming and now saying we would like to locate in your community, we are in a worldwide global competition, we would like to have you compete in that, what will you offer us by way of incentives. So as you know, as you are all in the process of, both the city governments and the county government were faced with the digs making process of what sort of economic development policy should we put into place. The city took the position, I think rightfully so, before it was going to use tax dollars to incentivize activity, it is going to recognize the history of this communities and the voting of this community over time and say that we are -- we are going to use it as truly an incentive. We are going to incentivize you to come to our company, but also to locate in those parts of the community that the community has said as a general rule it wants desired development. And we are not going to create an incentive, if you will, to locate in the environmentally sensitive parts of the community. There are regulations of course that deal in that. But there are also companies that can make decisions that they may want to locate as Commissioner Sonleitner I think is accurately pointed out, on the freescale package, it was truly used as an incentive. If you want more incentive, then locate your jobs in a different part of the community. Again in the desired development zone. So I think as a general rule the chamber has found it's something that we can work with. Something that we recognize, we use as a selling point when we market around the country that we are a place that is aggressive and effective at protecting our environment, at the same time we are trying to cultivate an economy that is relatively clean and can literally go anywhere it wants to go in this worldwide economy. So where is it going to go? It's going to go where it's pretty, it's going to go where the water is plentiful and clean, where the air is clean, we need to be in a situation in that regard. Having a desired development zone and a drinking water protection zone and an economic development policy that doesn't create false incentives to locate in our most environmentally sensitive areas is a policy that I think we should follow.
>> kirt, the reason I asked that is because I know that sense I?ve been elected two and a half years, the chamber has indicated to me a couple of different times that there may be some asking to come to southwest Travis County. And I just want to make sure that we don't get this thing in a spot where -- because who knows, I mean, I don't know. I guess there are some people that say this is where we want to come. I mean, we know that you don't want us to be there. A.m.d., one of the deals is apparently that they think that their workforce, you know, lives close enough to this area that that's where they honestly want to be. Because there certainly were a number of other places that they could have gone that they attached it to their workforce. So I just want to make sure that the chamber of what we are -- what we may be doing right now, is that we are not asked at some point in time, now we are asking you for something that we said that we would never ask you for. If we put it in -- in black and white, then, you know, the ambiguity is gone. It's like this is all you can do. That's all that I?m saying. Everybody knows how most people feel in this community about dumping things or allowing a lot of impervious cover over environmentally sensitive properties. We all understand that. But we also know that this community and the chamber is very aggressive with going out and finding companies to come into the area. So maybe when I was asked that, maybe that was a.m.d., maybe we knew what we were going to be asking and we weren't going to be asking for incentives and that deal was cut with lantana, maybe that was it. I just got the impression that it might have been another company --
>> Commissioner, I don't think that you have ever seen the chamber, at least in my experience over the past two years, ask any governmental entity for an incentive package for a company to locate in the drinking water protection zone. And the chamber has been, as I indicated, supportive of the city of Austin's policy. I believe I can speak and say that the chamber is supportive, would be supportive of this policy. As outlined by Commissioner Sonleitner without the waiver provision. And the chamber understands the rules. Of course one of the things that the business community said for years during the course of the environmental wars, if you will, was just give us some certainty.
>> uh-huh.
>> one of the things that tes some certainty so that when the chamber is doing its marketing, when the chamber is doing its recruiting, it can say: we want you in this region. We want you to participate in this region. But you need to understand that if you go into the drinking water protection zone, there will not be tax incentives whether they be by way of rebate or by way of abatement for you to locate there. However, if you go in the desired development zone, we have incentives and in fact we will use those incentives to incentivize you to go in those areas. One of the reasons that I think we are having such success in the downtown area is that there was a policy instituted by the city post 1997 that said if you will locate in downtown, which is the really desired development zone, there will be certain incentives available for that. That creates certainty, we can market based upon that. And I think at the same time be proud that what we are doing is also enhancing quality of life issues which is another part of what we use to market.
>> kirt, I understand what you are saying. Again, I?m just looking for ways -- let's say freescale leaves.
>>
>> [one moment please for change in captioners]
>>
>> ...let's say your disaster scenario for the freescale site were to occur. If we thought, oh, my goodness, we can't let this go, you just need a three-fourths vote of this Commissioners court and we can change that from waivable to non-waivable.
>> four-fifths. Well -- [overlapping speakers].
>> I understand what Commissioner Daugherty is saying, but the point is, I guess -- and I spoke with amd personally. We had a long discussion in my office with their representatives. And of course at that time I asked them if they could come to ddt and there were some opportunities that were allowed for them to be there under the economic incentives and everything else, that they had some opportunities as far as people really wanting to work with them over there to locate in the ddz, but of course they chose to stay where they are. And I mean, that's their call, but it's not that they have not been asked to relocate in the ddz. And we had some outstanding conversations in that regard, so I understand what the chamber is saying as far as looking at the dw z and the ddz, which is already established and move things off the environmentally sensitive area, but again, that was -- this particular policy does address a few of these things, and it's all about economic development, and we all benefit from it because it's a very competitive world out there. And I think we need to do what we can do to make sure we get some of these folks to locate here in Travis County.
>> there is some value in the county policy on projects over the aquifer being the same as the city of Austin's.
>> I think we'll go back to -- I remember -- I?ll kind of repeat myself, but I remember mediating, if you will,, refereeing would be another term, some of the divisions and great divisiveness in this city, which I used to refer to as jump ball politics, where it was winner take all on the issues of environment and economic development. I think one of the reasons we've gotten well past that, maybe not completely past it, but we've made real progress is because we did what many in the economic development arena asked for, and that was to provide some means of certainty. The phrase used to be, just tell us what the rules are and we'll live within them. To get to your point, judge, the chamber feels comfortable that it can market this region, it can do well in creating the 72,000 jobs that opportunity Austin seeks to create, with a policy like the city of Austin has passed. If the county passes a policy that it is substantially the same or similar, that just creates additional certainty. It is one that we feel comfortable that we can market and deal with. And I?ll repeat myself, and I believe support from the standpoint that the environmental protection of this community is something the chamber is able to market as a selling point for an economy that can go anywhere in the world it wants to go. The creative workforce, the educated workforce that we talk about, it wants to live in places that are environmentalty sensitive, neat, clean, and where they can raise their children. And I think if you have -- you pass policies that emphasize that, it actually can be used as an asset.
>> this has been enlightening, y'all.
>> I?ve sure had fun.
>> next issue? Thank y'all. Next issue regarding these? Now, on the draft home depot agreement, have we shared this with them?
>> no. Go ahead.
>> then move that we approve the draft home depot agreement and that we share that with the home depot reps because I know they will want to get back with us on some changes based on our history with them, right?
>> oh, I?m sure. That was negotiated.
>> seconded by Commissioner Davis. Any more discussion? That would be item number -- that would be 39-c. Discussion? All in favor? That passes by unanimous vote. On b, that the policy -- I guess we may as well wait and see if you get what the city has, and that seems to be the one issue. Garrett bledsoe and nelson lender and I recall plessy versus ferguson when we think of the three-fourth or five.
>> four-fifths?
>> yeah, four out of five.
>> I already made a note to change that.
>> excellent suggestion, judge.
>> I don't want to get midnight phone calls about that tonight.
>> actually, that brings up that if we actually had a member out that particular day, you would need to get all four Commissioners as opposed to you would get three. And what we had, the intent here is that a super majority of the court on a day that we are a full court is what you need. We wanted to make it a very high bar, but one that is not insur monthable, Gerald, if there were circumstances.
>> okay. And as to d, the samsung draft agreement, we -- it should be a simple matter of plug plg -- last week we talked about specific terms, plugging those into the draft policy and sending that out. Could we have that ready later this week?
>> probably.
>> okay. And should we send that to the chamber?
>> [inaudible - no mic].
>> okay. Later this week, is that 6:00 o'clock Friday or 5:00 Thursday? 5:00 Thursday she said at the latest. Okay.
>> judge, what we want to make sure is that the vp, which was the economic development program, then from that all things flow. So that was just -- that was where mar retta and I spent a good portion of our work was trying to get that whipped into shape so that these draft agreements could get punched out in a form that is very readable and understandable and really nails it in terms of what's required and what is not waiverable versus there's flex.
>> and it's my understanding that the samsung would be a 20-year rebate agreement, the draft?
>> I?m seeing nods in the audience.
>> right.
>> now, mr. Leroy nellis, our financial incentives expert and assistant director of budget and planning, calculated the financial incentive to be 48 and a half million dollars, not the 38 million that we had heard about before last Friday.
>> and basically what I -- I took the "austin american-statesman" article and took the 50.6 million tax abatement that was quoted there for the city of Austin in regard to the terms the city was using. I did receive an update from the city of Austin this morning that their 50.6 is really 47.6. And the number the judge, I gave him last Friday, the 48.5 million, would probably be reduced down to about 45.6 million. So -- 45.6, over a 20 year period, assuming an 80% abatement. And using the same assumptions on the construction of the plant and the equipment being brought in at the same schedule that the city of Austin used.
>> you understand that the city of Austin's incentive package was different. They were not doing an 80 --
>> that's correct. [overlapping speakers].
>> 75% for the second 10 years. Right. And I did a projection based on 80% for 20 years.
>> now, I?m a little perplexed because their tax rate is different from ours. We're offering more of a rebate, but there's only a two-million-dollar difference over 20 years between two entities that have a very different tax rate. And we were offering a different set of assumptions here as well.
>> they did 100% for the first 10 years.
>> which should have racked up --
>> 75% for the second 10.
>> they're only five percent off the second 10 years. Again, it just -- common sense to me says there's only a two-million-dollar difference between 80 all the way for 20 and 1 and 75?
>> well, our tax rate in the preliminary budget is 4864, and the city's tax rate in their preliminary budget is 4395.
>> that's a big --
>> it's a 10.6% increased tax rate for Travis County. Now, I will be glad -- I did receive this morning the spreadsheet the city of Austin, and I can do an actual calculation with the Travis County, I just didn't have it last Friday.
>> is that the real number or it's using the net present value? Because we had the same situation on the domain where the numbers were so radically different, and it really was we were looking at the true cost and they were doing kind of a discount. It's a presentation thing, but I think the voters are just wanting the bottom line, what's the number? Because I?m supportive of both.
>> I?ll be glad to redo the calculation with the actual numbers.
>> we put our computer skills to the test trying to locate the tax rate of the county in new york that we're competing against. So if y'all could get us that, it would help.
>> let me just say, bill derry berry did some extensive searching on Friday for albany county that the city of albany is located in, and I would behoove you to look at their budget because they get over $100 million, that county does, from sales tax. It's a totally different budgetary entity in the state of new york from the state of Texas and Travis County.
>> and having -- that's where I used to live in that area and my dad worked in new york city, there's this thing called an income tax up there, where if you worked in new york, you were paying new york city taxes and new york state taxes and also paying taxes in the state of connecticut. And by the way, it does snow there. I don't know if anybody has taken a look at the weather reports for the two cities, they are radically different.
>> but you never want to get into a conversation about income tax because you lose. I mean, when you've got 42 states that have it and you've got seven or eight -- I mean, we can puff up like we don't have an income tax, but when you're getting murdered on property taxes, people go, uh, duh. I think the important thing to have, especially since we've got the reporter on the back row, here is where we get beat up in this community. The article gets written about here's what a giant company is going to get in 10 years and 20 years versus -- I don't mind you saying that, but let's put something in there about the added value to this, and especially since we're doing it 80/20. I would certainly hope that we would get to show that if you're taking 20% of a three billion dollar gig, then you're having our tax rate divided by 100 at $600 million. I mean, it is not exactly like a company is coming in here and we are not benefitting. I mean, what happens to us in this community is if there's only one set of numbers that goes into an article, it gives a lot of cannond forker for radio cannond forker. And we are not raising dollars to say wait a minute, this is not just a runway street. We are benefitting I don't understand what we would be benefitting because to date there are still people that think that home depot, every retail operation that you walk into in this community, that it's a home depot thing. I have never seen an article say, this is not home depot retail. I mean, let's tell the story. And sometimes I think it's -- the stories get told if we're pretty good at whenever we get asked for those sound bites about, well, yeah, somebody is going to profit handsomely for this, but it sure makes it easier because we've only got one-- the chronicle loves to get all over me anyway, but we've got one paper in town, and it's helpful for us to have a full story when those sort of things start coming around. So marty, I?m not talking to you, I?m singing to you, coach. I sure hope that whenever I read this article tomorrow that there are a few more of those stats in there that somebody reading this says I never heard that.
>> [inaudible - no mic]. [overlapping speakers].
>> we're still being taxed on 700 million dollars' worth of property for Travis County, and I?m sure they're going to think that that's still a pretty big bill. The hospital district will get taxation on 3.5 billion dollars' worth of property. There's nothing being taken away from the hospital district.
>> marty, are you getting all this? [ laughter ]
>> he and I talked about it.
>> a final word?
>> just wanted to follow up on Friday when I gave the 48.5 million dollars' worth of tax abatement for samsung projected that there was also 12.1 million that Travis County would receive in new tax revenue. So I think that's the point you wanted to be made.
>> that should go in the newspaper.
>> all right. We'll call up part of this item in executive session this afternoon.
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Last Modified:
Wednesday, August 31, 2005 12:10 PM