In a 4-1 vote, Universal City Council approved a resolution establishing guidelines and criteria for tax abatement agreements July 15. Council member Bernard Rubal was the lone dissenting vote.
A tax abatement program is an agreement between a taxpayer and a local taxing unit that exempts at least part of the increase in the value of a property from taxation, according to the Texas Comptroller.
What happened
Abatements must be offered to local companies for either new facilities or the expansion of existing ones. Abatements must be “performance-based" or provide cost-benefit advantages to the local economy, according to agenda documents.
To obtain abatement, a property must create at least one new full-time employee and have up to $500,000 in added value as assessed by an appraisal district. A typical five-year abatement term would see 100% abatement in the first year, followed by 20% drops each subsequent year, agenda documents state.
Additional abatements can be triggered by properties that create at least 30 full-time employees and have over $1 million in added value, according to agenda documents.
Council reserves the right to accept and/or amend abatements on a case-by-case basis, City Manager Kim Turner said.
What the council is saying
Rubal said that while the resolution was a “footstep for things that may happen in the future,” it won’t be fair to businesses that won’t be eligible for abatements.
“There can be tremendous gains, but there can also be tremendous losses with regards to revenue issues,” Rubal said.
Council members Bear Goolsby and William Shelby said they like the resolution as another tool to entice property owners to invest in Universal City.
“While I can relate to what council member Rubal is saying, I’m seeing down the road and I’m seeing the opportunities open up, and it’s not like we have to accept everything that comes in. We have to hear it, but we don’t have to accept it,” Goolsby said.
Shelby said eliminating the tool before the city has the chance to use it would not be forward-thinking.
“We don’t have to use it, but if we don’t have it, we don’t have the option to think about using it,” Shelby said.
Next steps
The resolution establishing a tax abatement program and its guidelines is the first step before designating city Reinvestment Zones, Turner said.
According to the city's website, two Reinvestment Zones with abatement agreement potential—the Reunion Reinvestment Zone and the Aviation District Reinvestment Zone—will come back as ordinances to council Aug. 5 for a first reading.
A second reading of the ordinances is scheduled for Aug 19.
