Multiple entities in Georgetown have been making moves to encourage economic development in the city.
The Georgetown ISD board of trustees approved the Freeport Tax exemption in June, a form of relief for business property taxes. Now that Williamson County, the city of Georgetown and the school district have all passed the exemption the city has triple Freeport Tax exemption status, which businesses look for when searching for new locations, officials said.
The city has recently encouraged the development of speculative buildings, or structures developed with no tenants signed on, Georgetown Economic Development Director Mark Thomas said. One of those large-scale buildings is available for lease, and a second is aiming for completion by the end of 2016.
“In our individual communities, [economic developers] are trying to locate the big job generators and those [businesses] that build big buildings and have large inventory, all of which add revenue to our community and create jobs,” Thomas said.
Freeport Tax exemption
The exemption, which was established by the Texas Legislature in 1989, allows taxing jurisdictions to opt out of taxing certain goods shipped out of state by local businesses. To qualify for the exemption, those goods in the manufacturing, processing or fabricating businesses must be transported out of state within 175 days of originally being acquired or manufactured.
“[The exemption] allows Texas to be competitive with outside states for larger manufacturing and distribution companies, who typically use the exemption,” Thomas said.
In the 2013 tax year, five Georgetown companies filed for city and county Freeport Tax exemptions on $18.6 million in goods. Thomas said because GISD did not have the exemption at the time, those companies paid about $250,000 in taxes to the district.
He said some companies will not consider moving to an area unless the county, city and school district have all approved the exemption.
The school district’s loss in tax revenue would be offset by a payment in lieu of taxes agreement with each manufacturer for the first year, Thomas said. By the second year the state’s school funding formula will adjust to make up for the tax break, he said.
“We wanted to make sure [the exemption] didn’t affect the school district negatively [when it was approved],” Thomas said. “Nobody wanted to see money taken away from schools.”
GISD Chief Financial Officer Steve West said the tax revenue impact is relatively small so now is the best time to implement the exemption.
“If you don’t have [the Freeport exemption] in place, you have less advantage than other entities that do have it in place in terms of growing your tax base,” West said. “If you’re the odd man out, then you stand to definitely lose businesses that you could have had otherwise, and the capital infrastructure that they would build is going to generate new tax dollars.”
The district’s approval of the Freeport exemption will take effect in 2016.
Building for the future
Along with promoting growth through the tax exemption, Georgetown’s economic development department has also encouraged the construction of speculative buildings.
Thomas said 80 percent of businesses in need of space are searching for space already built, of which Georgetown does not have many.
“In the world of Williamson County, and especially Georgetown, we just don’t have that many buildings that are available,” he said.
His office reached out to local developers to encourage building structures in advance so the city can be competitive for new projects.
Two developers took the initiative to construct large-scale speculative buildings that could be used for manufacturing facilities or office tenants.
Michael Novik, a developer from California who has constructed other projects in Georgetown, built the Inner Visions Corporate Center on SE Inner Loop. The center includes two buildings—one is 27,500 square feet, and one is 33,000 square feet. A third could be constructed in the future.
Each building was created as flexible industrial and office space, Novik said. Each structure can be configured for multiple tenants or for a single tenant depending on the amount of space needed.
“We felt that in Georgetown they have the theme ‘Work, play and shop,’ and you always have the ability to play and shop, but you didn’t always have the ability to work,” he said. “So we thought that the need was right; it was a good time to undertake this kind of project.”
The second speculative building is a 60,000-square-foot facility being built by Texas Outdoor Power Equipment east of the Georgetown Municipal Airport. When the Texas Outdoor Power owners sought to build an 80,000-square-foot distribution center years ago, the city worked with them to bring the necessary infrastructure to that area, Thomas said.
“We knew they would build the 80,000-square-foot distribution center, but we also knew that putting in the road, water and wastewater [infrastructure] would create a site on which a new building could be built,” he said.
Texas Outdoor Power co-owner Tim Elliott said the company hopes to have the building finished by the end of this year.
Meanwhile, Thomas is hoping more developers in the area will also consider creating speculative buildings.
“It’s amazing how [developers] say they might do something someday, and then when they decide that someday is here, [we have] the space they need now,” he said.
