Lakeway City Council approved revisions to the city's economic development incentive policy at a June 15 meeting. The policy will provide a framework for evaluating economic development incentives on a case-by-case basis.
Economic development incentives are financial tools offered by government bodies to promote economic growth and strengthen long-term financial stability, per city documents.
Zooming out
Lakeway has historically not offered or approved any economic development incentives as the city’s “strong residential tax base, high quality of life and market desirability” have allowed the city to grow without the need for formal incentives, according to city documents.
The city has instead relied on market-driven development and private investment to attract businesses. As a result, Lakeway has never approved Chapter 380 agreements, tax abatements or other formal incentive tools.
In January, City Council discussed a nearly $47 million economic incentive agreement for a development at The Square at Lakeway, but the developer withdrew the request.
The issue
Available property zoned for commercial use in Lakeway is becoming scarce and competition for desired businesses is increasing regionally, compelling the city to start recruiting businesses that meet the community’s needs, according to city documents.
Surrounding communities are also starting to utilize incentives to attract employers and generate sales tax, including Bee Cave’s Economic Development Fund.
“As we become more and more developed ... [the Economic Development Incentive Policy] will give us more options,” City Council member Wes Hook said.
The details
Lakeway aims to prioritize the recruitment of businesses that generate meaningful sales tax, diversify the local economy, provide services currently lacking in the community, support long-term fiscal sustainability and are consistent with the vision and goals of the city's comprehensive plan, Ashby Grundman, assistant city manager said.
“We want to make sure the policy provides a positive return on investment for the city,” Grundman said.
Lakeway city staff have been developing the policy with the guidance of City Council for several months, with the most recent update changing the incentive eligibility requirements.
For a project to be eligible for incentives, the projected annual revenues to the city after incentives have been paid must exceed the highest annual city tax revenues generated by the property during the following five years.
The project must also demonstrate that city participation influences feasibility, timing, scope or investment.
The changes clarify that projected revenues may include property tax revenue, sales tax revenue and other city revenue related directly to the project.
What they're saying
"It's been a long time to get the document this far along and I do appreciate all the input that's been given," Mayor Thomas Kilgore said.
