The city of Hutto has changed its process when it comes to economic development to align with City Manager Odis Jones’ “open for business” mantra.

Hutto collects 8.25 cents in sales tax for every dollar spent in the city, of which a half cent is funneled to the Hutto Economic Development Corp., which works to entice businesses to move to or expand in Hutto.

Since voters approved the half cent direction of sales tax funds toward economic development in 1996, the city has collected and disbursed funds as a Type A economic development corporation, which is one of many changes Jones has led.

“This year the theme has been preparation,” said Jones, who was hired by City Council in December. “Next year you’ll see growth. We are doing more with less, lowering the tax rate, and adding to our police and public works departments. We’ll repair the roads, fix the drainage systems and work smarter, not harder.”

Hutto has formed a Type B corporation, which allows the city to seek a broader base of businesses than what Type A allows, usually associated with a smaller city growing into a larger city.

Type A corporation revenue may be used to fund land, buildings, equipment, facilities and some infrastructure, but Type B allows funds to be used for all that Type A can do, along with funding to entice professional and amateur sports and athletic facilities, retail businesses, entertainment options, restaurants, public safety facilities and affordable housing. City Council voted to develop a Type B corporation July 6 after a month of discussion.

Why switch to Type B?

The timing for the switch was right, according to Jones and confirmed by City Council’s vote.

“Our growing population is asking for more,” Jones said. “When it comes to entertainment, we can’t use [Type A] funds to incentivize retail or
restaurants.”

Jones said although the city has hit a population number comfortable for many businesses to locate in Hutto, the fact the annual household income is at $80,000 is also a positive factor for Hutto. Businesses desire a location with higher household incomes.

In order to encourage growth, the economic development corporation can provide incentives to businesses wishing to make Hutto home.

In order to have the half cent tax switch from Type A to Type B, voters must approve the measure, which will be on the Nov. 7 ballot. The half cent tax to the HEDC equaled $860,203 in fiscal year 2015-16. That was up from $768,895 in FY 2014-15 and $668,341 in FY 2013-14. This year’s revenue is estimated at more than $1 million, with the jump attributed to the H-E-B Plus and surrounding stores at Gattis School Road and
SH 130.

“It is not a tax increase,” Mayor Doug Gaul said of the November vote. “It’s moving the money from one fund to another.”

City Council members agreed the timing, based on Hutto’s quick growth, is right for the change, aligning Hutto with larger surrounding cities and allowing them to compete for the same types of businesses.

Round Rock and Pflugerville both have Type B corporations. Round Rock has a seven-member board of Round Rock residents that promotes economic development in the city, receiving a half cent portion of the city sales tax.

Round Rock’s development works in a partnership with Round Rock Chamber, which actively works to bring businesses to the city.

The Pflugerville Community Development Corp. is a seven-member board that manages the Type B corporation, funded by a half cent share of Pflugerville’s sales tax. It works much the same way as the revamped Hutto Economic Development Corp.

New Direction

In a memo dated June 16 to all council members other than Anne Cano and including newly elected but not sworn-in council members Scott Rose and Terri Grimm, Jones said the Hutto Economic Development Corp. had not brought results to the city. He said lavish travel expenses could be excused if they yielded “results at a 1:3 ratio” for bringing new business to Hutto.

“But, with a 0:119 record after the Hutto Economic Development Corporation has received more than $6 million in sales tax revenue since 2009, I cannot in good conscience recommend anything but moving to a Type B corporation, which requires a total restructuring of the current EDC and re-establishing new leadership that will be more accountable to the City Council that provides superior fiscal transparency and oversight.”

At the time, Cano was a member of City Council and on the Hutto Economic Development Corp. Type A board, where she had served since her appointment in 2008. She became a council member in 2009 and did not run for re-election at the end of her last term, which ended when her replacement, Rose, was sworn in June 19.

City Council started working toward a new economic development board in July. The council voted to change its ordinance that called for board members of the Hutto Economic Development Corp. and other committees to be Hutto residents to the requirement that they are residents of Williamson County.

When pressed at an August City Council meeting about the legality of the ordinance change, Jones said the city attorney’s due diligence showed Hutto could change its ordinance if the population was less than 20,000 at the last census.

Although Jones and no one else in Hutto has claimed the 2017 population is below 25,000 residents, the state of Texas statute reverts to the 2010 U.S. Census Bureau population number of 14,698 when it comes to appointing members to an economic development board.

On July 20 the council appointed seven members to the newly formed Type B board. Those board members include Chairman Bill Gravell Jr., Vice Chairman Bryon Borchers, Secretary Russell Metcalf, Treasurer Nelson Nagle, Daniel Thornton, Roger Harris and Jason Wirth.

A motion by Council Member Nate Killough followed to replace the Type A board members with the Type B board members and allow them to serve on both boards through the transition leading to the election.

Three of the seven new board members live in the city of Hutto. Gravell lives in Jarrell, Nagle lives in Round Rock, Wirth lives in Georgetown and Metcalf lives in the Hutto extraterritorial jurisdiction.

“We’re going to be kind and respectful to everybody,” Gravell said. “I think you’re going to see we are fair. I believe the future is the brightest for Hutto than any other community in Texas. Our best days are ahead of us.”

Off the board are Cano, Chairman Mario Perez, appointed in 2005, Doug Fell (2011), Garry Guthrie (2016), Jeff Coombs (2015), Gerry “Kim” Engram (2015) and Jazlyn Wiles (2016).

Killough said he appreciated the work of the board members who were replaced and said it was a tough decision to make the change.

Staff change Followed

Tim Chase, the president and CEO of the Hutto Economic Development Corp., came to the city in 2015. Under fire in the Jones memo regarding expenditures, the City Council voted on July 24 to suspend Chase from working on Economic Development Corp. business.

Chase said all trips and expenditures questioned in the Jones memo were legitimate business expenses and not wasted money.

A week later, on Aug. 1, Chase was relieved of duties through a separation agreement.

“We have an agreement and we’re going to retire and look forward to it,” Chase said as he left City Hall with his wife. “We’re going to spend some time with our grandchildren.”

Cano said Chase was well respected and did a fine job for Hutto. While she said Hutto’s best days are ahead, she said it is better off because of the groundwork done by Chase and board members in the past.

“This council doesn’t understand economic development,” Cano said recently. “When we hired Odis, we felt he would be able to get things done. And he has. There were deals on the table ready to go.”

Guthrie, another former board member and a downtown Hutto business owner and resident, said he believes Hutto is on the cusp of positive growth.

“It doesn’t happen overnight and a lot of work has been done by some very good people,” Guthrie said. “I believe we have some things coming that will blow Hutto out of the water.”

Future moves

Jones said it is up to City Council to hire a new economic development president and CEO. In late August, the new board announced its first project, and sent it to City Council for its approval on Aug. 17.

A development agreement with the JRS Co., a family-owned company that manufactures sign frames and holders will move its headquarters from California. The company will build a 50,000-square-foot headquarters and employ 70 people in its $6 million facility.

Incentives for the project, included some moving expenses and a 50 percent tax abatement.

“The economic development corporation brought this home,” Jones said. “It’s the first of many projects we will bring to town.”