Tax Abatement Zone For Downtown Introduced
"From The Desk Of The City Administrator"
2/22/2012 by BY VINCE DIMAGGIO
THE TEAGUE CHRONICLE STAFF were given the opportunity to be a part of the first meeting of cousins who never knew each other. Carol Ann Measels Bice of Round Rock, Texas and Georgia Measels Walsh of Missouri City, Texas met for the first time in the Chronicle office on Monday, February 20th. Ms. Bice and Ms. Walsh had both been on Ancestry.com doing their genealogy and looking for lost relatives when Ms. Walsh looked up Ms. Bice's father's name and found her name listed. She sent Ms. Bice a message and planned to meet. Ms. Bice got lost and came into the Chronicle office for help. Ms. Walsh was found and the meeting took place. Ms. Walsh's grandfather and Ms. Bice's father were half brothers.
At the City Council meeting on February 14, I introduced the idea of creating a tax abatement zone for the downtown. The Council approved the idea unanimously, and while we will not be able to fully implement the idea until May, (the Council still needs to adopt guidelines on how the program will work, as required by State law), this represents a major effort to offer economic development incentives to both property owners and business owners in the downtown.
Property tax abatement is a fairly simple concept. When a property is improved internally or externally, the property's fair market value usually increases, which usually means higher property taxes. However, with property tax abatement, the difference between the old tax rate (before the property was improved) and the new tax rate (after the property is improved) can be abated or waived, in whole or in part. This means essentially that despite an increase in overall market value of the property, the property owner would still pay the old tax rate (or the old rate plus a fractional increase). The idea being that this provides the property owner an incentive to: 1) improve the appearance of their building; and 2) offer the premises for lease at a more reasonable rate.
Sales tax abatement is a simple concept as well. The City first establishes guidelines for the business. These guidelines can be anything from what the gross annual receipts are expected to be, or how many Teague residents are employed in the business, or a similar incentive. Then based on the number of those criteria the business owner achieves, a certain percentage of the local sales tax (2%) is returned to the business owner. The City cannot abate any part of the State sales tax, which is 6.25%. The City must also make special "findings" that the business will "stimulate business and commercial activity."
Used in tandem, both property and sales tax abatement represent incentives designed to help both property owner and business owner.
This new "Economic Development Incentive Zone" would extend from 3rd Avenue to 6th Avenue along both sides of Main Street - essentially from the railroad tracks to the old City Hall. Both new and existing businesses and property owners would be able to propose "Tax Abatement Agreements" which would require review by staff and approval by the City Council. Once the concept receives final approval by the City Council, likely in April, interested property owners and businesses can inquire about the program at City Hall.