Travis County Commissioners Court
January 12, 2010,
Item 22
22 is to consider and take appropriate action on letter requesting that Travis County be included within the service area of foreign trade zone no.
183, sponsored by the foreign trade zone of central Texas, inc.
and what I did was provide a copy of the letter request, sort of modeled that request to the court, and we have with us today -- are you still president?
are you --
>> I'm still president.
I've got two more weeks to go.
I'm joe biding.
I'm the senior vment for economic development with the Round Rock chamber of commerce.
as the judge said, I'm still the chair of the board of directors for foreign trade zone for central Texas.
what we have right now, we have a unique opportunity given to us by the department of commerce that is allowing us to expand the purview of our zone in a very inexpensive and timely, efficient way.
normally when you seek foreign trade zone status, an easy zone is nine months in link to get all the federal approvals, and what the federal government has done for us in an amazing stance is if you will go ahead and predesignate some areas and let us rule on that now, that will shorten that process from nine months down to about three months.
so it being an economic development business, that gives us an opportunity, if a company has to us and has a very short time frame in which to work, we can say to them, yes, we've got this whole area already preapproved so let's just pick the site and get you on with your business.
what we are proposing is that we change the boundaries of our original zone, which was Williamson travis and hays county, to add caldwell and bastrop.
so that, in a nutshell there's no obligation to the county.
as you heard me say, you've already been included in our original zone boundaries.
what I need is a letter of support that -- your continued support of this as we go forward with our application in washington.
>> so by submitting this letter, if a company wants to locate in this area and wants the benefit of the foreign trade zone, our letter has indicated if you're in Travis County, Travis County is on board?
>> yes, what will happen is the feds will send us back a new area of influence that will include the whole five-county areas, and so when -- let's say a site selector starts doing a search for a company in our nation, they can just google on and find out our site is ready to go, and we've got all these buildings and so forth and we can help them go about their business.
>> questions?
>> yes.
so this is the equivalent of samsung moving to the bahamas to operate?
>> well, said another way, the reason samsung moved here is because they got a foreign trade zone benefit.
>> that is speculation on your part, is it not?
>> no, it's not.
they have a subzone.
>> but you are -- it's speculation as to whether that was the reason why they moved here.
it was an element in their decision, perhaps --
>> I'm not saying it's the single reason.
>> thank you for that concession.
so by --
>> let the gentleman finish.
>> okay.
>> that's quite all right.
go ahead.
>> [laughter]
>> by being located in one of these zones, -- let me find the phrase -- has the benefit of exempting the business from state or local property taxes.
state or local property taxes.
>> on some certain inventory items.
>> we live in a state that has a notoriously lumpy distribution of tax burden.
>> I would agree with that.
>> and we have seen some intents at the legislative level to even out, particularly with regard to inventory taxes the extraordinary lumpiness in the distribution of that tax burden.
it appears that this would add yet more lumpiness.
>> and what you would have to do is decide, would it be better to have a competitive advantage to add more tax base and more jobs to our area versus having a smaller piece of the pie or no pie at all.
that's --
>> and thereby distributing the tax burden to individual property owners rather than corporate property owners?
>> it is the case that -- I can't think of a single company that has used this benefit in our area that has not provided many, many more times of the tax base and the value of the jobs and the benefits to the community than it cost for that small increment of losing those tax dollars.
dell, samsung see top, tico westing house in Round Rock, wayne dresser in Travis County, the seeko instruments down by the airport, they have all brought in quite a bit of good-paying jobs, all with benefits and provided new tax base for all of our jurisdictions.
>> I cannot vote favorably on this item at this time.
I will need another week to further explore this, because it is an economic development tool.
I need to be sure that as an economic development tool I am not wittingly or unwittingly contributing to what I see as severe in the inequities in our tax level both at the state and local level, particularly in regard to property taxes.
>> do you request a one-week courtesy?
>> yes, we have seen evidence over the last several months of serious inequities in our local tax -- property tax burdens with regard to corporate -- properties held by corporations versus property held by individuals, and that is something of great concern to us.
>> okay.
is there anything in particular you would like to have me show you or help you with?
>> I will be happy to contact you with a laundry list.
>> okay.
be glad to help.
>> before we move on, can you by way of example, though, perhaps using samsung or one of the industries already here using foreign trade zone, describe how the foreign trade zone works for them?
is it the entirety of their commercial complex that's designated as foreign trade zone or only where they're holding inventories that specifically
>> [indiscernible] --
>> let me use the tico westing house plan in Round Rock.
tico has an area -- and I'm thinking it's about 100 feet square that's got big yellow stripes around the age, trade zone way -- blah, blah, blah, it's part of the federal rules.
tico stands for taiwanese electric company, by the way.
and so tico receives certain raw materials from taiwan that comes through customs, get on train, comes to Round Rock, comes into our zone there, comes into that area and they do various things in the manufacturing phase.
they still haven't paid duty on that yet.
they're deferring that duty, is what's going on.
if they -- let's say they're turning an
>> [indiscernible] for an electric -- armature for an electric motor, they never paid duty on that because it never goes into the duty of the u.s., but when a motor goes in, it's sold to a user in the u.s., then they paid the duty on that.
that's the savings for the company.
they're deferring -- they're going to pay it sooner or later, but they're deferring that duty right there.
>> but they don't pay property taxes on the area that they set aside for holding that inventory?
>> no, that's -- you can't make that blanket statement.
we have to consider each one and how it's set up.
>> some examples, companies that I see here really pay -- I know pay property taxes to us.
but the primary focus is on the inventory.
>> yes.
>> but it could impact other areas.
>> it could impact other areas.
>> and mr. Rhodes in his backup did a little analysis, and the $2.1 million of certified railroad rolling stock, is that in Travis County specifically?
>> yes, sir.
>> so when we apply our tax rate to them, we lost $9,000.
>> approximately, yes, sir.
>> yeah.
what we don't know is what property taxes or taxes on other equipment there we received.
>> correct.
>> and so --
>> excuse me, judge.
did you say railroad rolling stock?
>> this says certified railroad rolling stock.
there is the author to your right there, our budget director.
you may want to chat with him later.
>> [laughter] since we're going to postpone this a week -- yeah, it's a little complicated and --
>>
>> [inaudible] it wasn't based on any foreign trade
>> [inaudible].
>> so I guess I'm trying to understand how that has anything to do with a foreign trade zone.
>> if the
>> [inaudible] take action, because this is irrevocable.
once it's done it's always done, is that correct?
>> what happens is each time a company wants to have a zone activated, they must make application to our board first, okay, and then we send letters to all the taxing jurisdictions to seek out their input and is the impact too great.
now, usually -- the one that's affected the most has been our school districts, and a couple of times we have had to really spend an extra amount of time going through the analysis and finding out if there was a benefit or a hindrance to the school districts.
but I'm still baffled about the question about the rolling -- railroad rolling stock.
>> yeah, what is that?
>> we'll get mr. Rhodes to contact you and he can give you the source of that information.
>> okay.
>> but if we were -- let's say that a particular company wanted to take advantage of this program, they would submit a request to you or your --
>> to the board.
>> -- the board.
the board or somebody would conduct some sort of analysis, then notify the impacted jurisdictions.
those jurisdictions would be given an opportunity to say yea or nay --
>> yes.
>> based on --
>> and you could attach a letter to their application.
the company could decide whether to go forward or not, okay, and then you could attach a letter to their application that if that shows up in washington that the tacks jurisdiction is not -- taxes jurisdiction is not for this, they're going to have a problem and ask more questions and get to the heart of this thing and get the answers everybody wants.
>> let's say after two years we don't like the impact and we want to terminate our relationship?
do we just do a letter doing that?
>>
>> [inaudible] reversible, because --
>> let us know that next time.
next week is what we got in mind?
having it back on -- we'll try to give you a response then, mr. Vines.
>> okay.
>> and that's the 19th of January.
>> thank you.
>> thank you.
>> 23, and thanks for your patience, also.
I didn't realize you were here until -- were you here this morning?
>> yes, sir.
very interesting day.
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Last Modified:
Tuesday, January 12, 2010 6:37 PM
