Officials: City’s electric utility helps lower taxes

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Round Rock developments north of University Boulevard are part of Georgetown power grid

When it opens in 2015, Bass Pro Shops will become part of a major retail and medical development area at University Boulevard and I-35. Although the developed area—which includes Scott & White Hospital–Round Rock, Round Rock Premium Outlets and the H-E-B Plus opening this fall—is located in Round Rock’s city limits, it is also located in the city of Georgetown’s electric utility service area and will benefit the city of Georgetown and its taxpayers with increased utility revenue.

The utility revenue is transferred to the general fund and makes up about 14 percent of its annual revenue, Georgetown Chief Financial Officer Micki Rundell said.

“In a perfect world and in perfect conditions, that retail and all of that business would be inside the city [of Georgetown], but of course, it’s not,” she said. “It would be better if they were inside our city, but if they are not inside our city, the next best thing is being our electric customer.”

The city’s electric utility covers a 42-square-mile area encompassing a majority of Georgetown and extends south around I-35 to FM 1431/University Boulevard.

The utility is one of about 70 municipally owned utilities in the state, according to the Texas Comptroller’s office.

“The best thing the forefathers of Georgetown ever did was to hold on and continue to own their public power system when many cities did not,” Rundell said. “There were probably times in the past 100 years that it would have been a lot easier to sell it, but they didn’t. It’s probably been one of the best assets that we’ve managed to maintain.”

Electric load

Georgetown’s service territory was established in the late ’70s and early ’80s, Rundell said, which gave the city the ability to build electric utility infrastructure to the University Boulevard area.

“We knew we were never going to be able to annex it because the [extraterritorial jurisdiction]line had been established,” Rundell said. “So it was like, ‘Why don’t we think about doing something outside of the box?'”

In 2005 as the city of Georgetown was finalizing agreements with Simon Properties to build Wolf Ranch Town Center, Rundell said city officials laid the groundwork to be the main electric provider for the Round Rock Premium Outlets also being developed by Simon Properties.

“It’s eight years later, and it has definitely paid off,” she said. “By getting our foot in the door with Simon [Properties], it allowed us to establish relationships with Scott & White and Barshop & Oles—the [H-E-B Plus] developer.”

Lower taxes

Each year the city transfers a portion of revenue raised by the city-owned utilities, including the electric utility, into the city’s general fund to help lower taxes as a return on the city’s investment into the utilities, Rundell said.

“There is a lot of electricity that is used in that area. It is a nice contribution to the city’s general fund that comes in without any other [services going out],” she said, adding that although the city provides the electric service, it does not have to provide any other services, such as police protection. “[And] it is a benefit to our citizens to have that type of retail and services so close.”

About 7 cents of every dollar an out-of-city customer pays to the utility makes up that return on investment, or ROI, Georgetown Utilities Financial Analyst Chris Foster said.

“[The ROI] comes back to the taxpayers and citizens,” Rundell said. “Because we get that ROI and we own that electric utility and it comes in as a revenue to fund police, fire, library and [other city services], it’s that much less in property taxes that we have to generate.”

Rundell said without the ROI, the city’s property tax rate could be about 9 cents per $100 of property valuation higher.

“It truly is a benefit,” she said. “The direction that we’ve been given from our City Council is to take advantage of the opportunities that we are provided from our utilities and truly operate them like a business.”

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