Adriana Cruz, Greater San Marcos Partnership president, said Amazon's decision to open a distribution center in San Marcos was due in part to the prospect of triple Freeport exemption.[/caption]
The economic development allure of Hays County could double or triple as entities in the area consider exempting companies from inventory tax, regional economic development leaders said.
San Marcos, Kyle and Buda are the lone cities in the Greater Austin Chamber of Commerce’s five-county region that offer the Freeport Tax exemption but do not have the exemption at either the county or school district level.
The result is those cities do not often get considered when companies aiming to benefit from the exemption want to move to the Austin area, said Charisse Bodisch, senior vice president for economic development with the Austin chamber.
Bodisch said consultants for prospective economic development projects in the region have said they are not interested in talking to cities that do not have triple Freeport exemption, when the exemption is in place at all three levels.
“These [companies] are targets that we want to go after,” she said. “But if you don’t have the tools to go after them you may not even get the first look at that company anyway.”
Companies in Freeport-exempt areas do not pay inventory tax on goods moved into their facilities and out of the state within 175 days.
The Greater San Marcos Partnership, a public-private organization that works to bring economic development to the Greater San Marcos area, which includes Hays and Caldwell counties, is negotiating with 14 Hays County businesses that would be affected by the Freeport exemption.
GSMP President Adriana Cruz said the companies would have to agree to a phase-in period of three years. Should the county pass the Freeport exemption, companies would pay all Freeport taxes in the first year of the agreement, 75 percent in the second year and 50 percent in the third year. After that their Freeport goods would be exempt from taxation, she said.
“The goal and the belief is that the elimination of this tax will make us more competitive for some economic development projects."
-Adriana Cruz, Greater San Marcos Partnership president
Hays County Commissioner Will Conley said the exemption would be a welcome addition to the county’s economic development incentives.
“The GSMP is the official economic development agent of the county. We work hand-in-hand,” Conley said. “Once the [affected businesses have agreed to the phase-in period] the county will move forward with that agreement.”
San Marcos CISD has agreed to enact the exemption once Hays County becomes a Freeport-exempt entity.
“The goal and the belief is that the elimination of this tax will make us more competitive for some economic development projects,” Cruz said. “And the increase in other values—the property tax [revenue] increase—will make up that difference [of eliminating the Freeport tax].”
Amazon.com Inc. announced in August plans to open a distribution center in San Marcos. Cruz said a key factor in attracting the company to San Marcos was the prospect of triple Freeport exemption.
Cruz said the GSMP’s aim is to achieve triple Freeport-exempt status in as many area communities as possible. For Kyle and Buda to become triple Freeport-exempt cities they will need Hays CISD, along with the county, to approve the change.
HCISD spokesperson Tim Savoy said the GSMP met with Superintendent Michael McKie and Deputy Superintendent Carter Scherff on Aug. 28 to discuss the implications of enacting a Freeport exemption in the district.
Moak, Casey & Associates, an Austin-based school finance firm, will examine the effect of exempting Freeport goods in HCISD. Unlike with other taxing entities, the exemption affects school districts not only in the revenue collected from property taxes but also the funding they receive from the state.
“They are going to run the numbers and see what the impact would be on the school district,” Savoy said. “Until we know what that would be, we are just in the research stage of it.”
