City Council approves two Tax Abatements to businesses
By: Jose G. Landa, Copyright 2015, Eagle Pass Business Journal, Inc.
The Eagle Pass City Council discussed and approved two resolutions creating reinvestment zones for two real properties within the City limits and authorized Administration for the preparation of property tax abatements for these two properties between their owners and the City of Eagle Pass at their Tuesday, April 7, 2015 meeting, becoming the first two tax abatements approved under the City’s new Tax Abatement Ordinance which was approved by the City Council on December 3, 2013.
One of the reinvestment zones was requested by Pro Trans International under agenda item No.15 and will be located at the Industrial Park Subdivision 3822-3880 Adams Circle near Highway 57 behind the soon to be opened Brown of Eagle Pass Dealership. The second property requesting a tax abatement was under agenda item No 16 by the Walgreen’s Company, whose property is legally described as Lot 1 in the plat of IBC Bank Subdivision located at 2341 East Main Street in Eagle Pass.
During the course of the agenda item No. 15, Eagle Pass City Planning Director Bryan Shea stated that the Tax Abatement Review Committee had met on March 19, 2015 to review the applications.
Regarding the Pro Trans International request, Shea stated that “Their proposal is that they will construct an 80,000 square foot warehouse for trans-loading. The process revolves around two parts, the first is to designate the property into a reinvestment zone and that is what the committee is recommending to the city council to do through a resolution.”
Shea noted that the Pro Trans International investment will be close to $6,000,000.
Shea further stated that as part of that resolution it would also entail negotiating a final contract with Pro Trans International including all the details such as the term of years, jobs to be created in the community, and how the tax abatement would work.
Shea stated that it is the recommendation of the City Planning Department for the City Council to adopt the resolution to create a reinvestment zone for the Pro Trans International property legally described as Lot 4-5 in Block 1 of 57 Industrial Park Subdivision (3822 Adams Circle and 3380 Adams Circle) and authorize the preparation of a property tax abatement agreement for the property as set forth in the City of Eagle Pass Tax Abatement Ordinance.
Councilman Rudy Villalpando asked Shea how many years would the Pro Trans International tax abatement agreement would be for. Shea replied that it was set for 10 years but that the final terms of it still had to be negotiated and brought back to City Council for approval.
Councilman Villalpando also raised an important question on how many jobs was this tax abatement agreement bring to the City of Eagle Pass. Shea replied that at least 21 jobs will be created in the City as a result of this tax abatement agreement if approved.
Councilman Villalpando raised another key question regarding whether any toxic and hazardous chemicals would be stored at this Pro Trans International warehouse.
Shea and legal counsel Heriberto Morales stated that under the City’s commercial zone ordinances there are certain regulations that are set and have to be adhered to by these businesses within that zoning classification and that those concerns would be addressed in the tax abatement agreement negotiations between the City and Pro Trans International.
Mayor Ramsey English Cantu addressed certain concerns including the amount of jobs that were to be created as specified under the guidelines of the tax abatement ordinance that was approved by city council and how the city must assure a fair agreement depending on the fact as to the amount of years of tax relief that are to be awarded to the entity.
“There is nothing that says it has to be 10 years abatement. It can be a shorter period depending on structuring a time frame based on employment, based on investment, and everything,” said Cantu.
“If they were going to bring 300 jobs then we can look at a longer term of abatement, but if it’s going to be a smaller company then we should be looking at shorter abatements for that,” said Mayor Cantu.
Mayor Cantu and Councilman Villalpando’s concerns note that just because the Tax Abatement Ordinance provides up to a 10 year tax abatement period, it does not mean that the City has to give every company the 10 year tax relief or abatement. Don’t give the baby away on the first attempt. The larger the investment and number of jobs to be created in the community, then the larger the period of tax abatement or relief should be considered. This will be an important issue City taxpayers will keep an eye on as they are the ones mostly affected by the City granting tax abatements. Although these companies will not be paying City taxes for the agreed period of years of tax abatement, the City will be required to provide all services to these companies such as water, fire and police protection, which will cost taxpayers monies.
Mayor Cantu noted that the City is attempting to be pro-active and aggressive towards attracting new businesses and investments into the community which will create new jobs and later increase the tax base.
City Council discussed certain issues such as a time frame depending on the amount of jobs created and concerns over the storage of toxic and hazardous materials. City Council concurred that the tax abatement proposals should establish a set guidelines and categories to guide the City in determining the length of years of tax abatement to offer businesses.
City Council unanimously approved agenda item No.15, the tax abasement for Pro Trans International, conditionally for a term of tax abatement years to no more than 5 years with options to be added in the future. The final terms of the tax abatement agreement will be negotiated in further detail and will be presented to the City Council for final approval in the immediate future.
With regard to the Walgreen’s tax abatement agreement under agenda item No.16, City Council approved a resolution creating a reinvestment zone for the property legally defined as Lot 1 in the plat of IBC Bank Subdivision (2341 East Main Street) and authorized the preparation of a property tax abatement agreement for the property as set forth in the City of Eagle Pass Tax Abatement Ordinance.
“This is a request just as the previous one and this is from Walgreen’s and they do state that they will create 25 new jobs by January 1, 2016. These are to include 8 full time jobs and 17 part time jobs. This business is already operating,” said City Manager Gloria Barrientos.
City Council discussed their concerns about how this business was already operating but that they had already approached the City with their interest to participate in the tax abatement program since its original passage in December 2013.
Shea stated that it was the Tax Abatement Review Committee’s recommendation that City Council adopt the resolution creating a reinvestment zone and establish tax abatement for Walgreen’s.
City Council discussed reporting requirements that those obtaining tax abatements should adhere to and also concurred that the amount of years of the Walgreen’s tax abatement agreement should be no more than five years.
City Council unanimously approved the resolution for the Walgreen’s reinvestment zone.
The terms of the Walgreen’s tax abatement agreement will be worked out in further detail and will be presented to the City Council at a future date for approval.
