“This has been a great relationship and, quite honestly, it changed the trajectory of Round Rock,” Place 2 City Council member Rene Flores said.
The impact
The agreement between Dell and Round Rock represents the first Chapter 380 economic development agreement within the state of Texas, resulting in the tech company locating its global headquarters in Round Rock in 1994.
“The 1993 agreement established the terms that kickstarted the sustainable growth of Round Rock. ... The terms of the original agreement solidified what is now a statewide philosophy of performance-based economic development programs,” Assistant City Manager Brooks Bennett said.
Largely expanding the city’s property tax base, the agreement has resulted in the completion of a list of major infrastructure projects for the city, which have individually cost millions of dollars, including:
- Expansion of water plant
- Additional wastewater treatment plant
- Major road projects
- Development of 570 acres into Old Settlers Park
“We are grateful for having a 30-year relationship that's been very successful. We couldn't have asked for a better partner and community, and we're super excited about what the future holds,” said John Howard, director of public policy and government affairs for Dell.
The details
The amendment approved by City Council extends the termination date of the contract from December 2053 to December 2099. The terms of the Chapter 380 agreement remained unchanged.
Under a Chapter 380 agreement, a company and taxing entity negotiate a contract to provide tax incentives for the company in return for development or redevelopment, generating additional sales tax revenues or enhancing the city’s property tax base, according to Round Rock’s economic development transparency website.
These programs often provide payments, or grants, from the city to the company that represent property tax and sales tax abatements.
Dell receives a 50% share from the property taxes it pays and retains 31.25% of the portion of sales tax it generates from the city of Round Rock, according to city documents.
What else?
Having the company’s global headquarters located within the city has generated an estimated 3.5 million jobs, according to city officials.
Over the life of the agreement, the city of Round Rock has seen more than $429 million in sales tax revenues. The state of Texas has also cashed in on $2 billion in sales tax revenues from Dell.
The sales tax component of the agreement "is so impactful on city operations," it has prompted Round Rock to enact a policy to reduce the dependence on a single taxpayer, according to a statement from city officials.
Any net sales tax revenue received from Dell over 15% of the revenue being funneled to the city’s general fund are then directed to a separate fund—the general self-finance construction fund—that is used for one-time capital improvement expenditures.
The fund has been used for projects such as the recent relocation of the Palm House as part of downtown enhancements as well as providing partial funding for the construction of the three-story library building that opened in 2023.
Diving in deeper
Place 1 City Council member Michelle Ly said Dell was the reason her family moved to Round Rock, as her parents worked in the semiconductor industry that followed Dell to Central Texas.
However, Ly is not the only example of the deep roots and relationships that have strengthened Dell’s stake in the community. Place 5 City Council member Kristin Stevens recalled her father, Charlie Culpepper, taking her to the site of the Dell campus while it was under construction. Culpepper was mayor of Round Rock in 1993, helping to broker the deal that brought Dell to the city.
Bob Bennett, a former city manager who also helped negotiate Dell's arrival in Round Rock, attended the City Council meeting, watching as his son, Assistant City Manager Brooks Bennett, presented the details of the amended agreement to council members.
Quote of note
“Dell Technologies’ impact on our community has been profound and transformative, and Round Rock’s modern evolution is directly linked with Dell’s growth,” Mayor Craig Morgan said in a statement. “This agreement put our strong business environment on the map [globally].”
Morgan emphasized the importance of the city's global presence as recent development and other mega-tech companies have come to the region in recent years.
