Jersey Village offers sales tax incentives to bring Argos USA regional sales office to city

In a move that Jersey Village officials said could provide millions in additional sales tax revenue to the city annually, the city has made an agreement with Argos USA LLC—a supplier of ready-mix concrete and cement—to offer sales tax incentives if the company relocates its regional sales office to Jersey Village from its former Energy Corridor location.

The agreement was announced Aug. 20 at the Jersey Village City Council meeting following an executive session. However, as of press time, Argos USA has not signed the lease on the Jersey Village property.

"I think it bodes very well for the economic future of our community," Mayor Justin Ray said. "We’re going to become known as a city that encourages business, a city that works with business to better the business and the community as a whole."

As a part of the deal, Jersey Village will reimburse a portion of the sales tax revenue generated by the company for the next 10 years in what is known as a Chapter 380 agreement. The city will reimburse 80 percent of sales tax revenue back to Argos, but the total reimbursement for each year is capped at $1.25 million, and a cap of $10 million has been placed on the entire 10-year period, City Manager Austin Bleess said.

The estimate for how much additional sales tax revenue the city would collect—more than $1 million for its general fund and another $1 million for its crime control district—are based on projections for total sales from the Argos office of about $200 million per year.

Purchases in Jersey Village are subject to an 8.25 percent sales tax, with 6.25 percent going to the state, 1.5 percent going to the city's general fund and 0.5 percent going to the city's crime control fund. In this hypothetical scenario, about $3 million in additional revenue would be raised for the general fund, $1.25 million of which would be reimbursed to Argos as a part of the Chapter 380 agreement. The $1 million that would be raised for the crime control fund would not be subject to reimbursement, officials said.

Council Member Bobby Warren said he hopes the boost in sales tax revenue will provide the city with an opportunity to reduce the property tax burden in the future, including by possibly increasing the homestead exemption or lowering the tax rate.

"One of my long-terms goals when I joined the Jersey Village City Council was to shift the burden of funding general city services away from property taxes and work toward building a more robust sales tax base," Warren said in an Aug. 21 statement. "Over time, I am hopeful that I can persuade my colleagues on City Council to begin reducing the property tax burden on our residents as the new sales tax revenues are realized."

The city and crime control district collected about $3.1 million and $1.5 million in total sales tax revenue, respectively, in fiscal year 2016-17. Projections for FY 2017-18 show the entities collecting $3 million and $1.4 million, respectively.

Argos was awarded contracts to supply ready-mix concrete for several area projects this past year, including expansions at the Houston Methodist Willowbrook Hospital and the FedEx Distribution center in Cypress. In the company's second quarter financial statement released Aug. 13, officials projected a positive outlook for the rest of 2018, citing growth in the residential sector that is expected to continue.

As a part of the Chapter 380 agreement, a minimum of 4,000 square feet of space must be occupied, Bleess said. Although the agreement has been approved, Argos is still in lease negotiations so the location of the office has not been finalized, he said.

The agreement also requires Argos to bring 15 new jobs to the area, but city officials said the company will bring 25 jobs. The Argos staff is aiming to relocate to the new Jersey Village office by Jan. 1, Bleess said.
By Shawn Arrajj
Shawn Arrajj serves as the editor of the Cy-Fair edition of Community Impact Newspaper where he covers the Cy-Fair and Jersey Village communities. He mainly writes about development, transportation and issues in Harris County.